SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ________ to
________
Commission File No. 33-55254-35
ENVIRONMENTAL DEVELOPMENT CORPORATION
(Exact name of Registrant as specified in its charter)
NEVADA 87-0500742
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
R.R. # 2, SITE 25, COMP. 6
NELSON, B.C., CANADA V1L5P5
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (250) 352-6880
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
As of March, 1998, there is no aggregate market value of the voting stock held
by non-affiliates of the registrant.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of March, 1998
$.001 PAR VALUE CLASS A COMMON STOCK 4,000,000 SHARES
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
ITEM 1. Business
The Company was incorporated under the laws of the State of Nevada on March 14,
1990. The Company's operations up until February of 1998 consisted of the
investigation of potential business ventures which, in the opinion of
management, would provide a source of eventual profit to the Company.
In February of 1998, the Company acquired the following four companies: (1)
Specialty Coatings Ltd., an Alberta, Canada corporation; (2) Mike McCarthy
Construction Ltd., a British Columbia, Canada corporation; (3) B.C. Thermal
Dynamic Coatings, Inc., a British Columbia, Canada corporation; and (4) West
Kootnay Lite-Form Ltd., a British Columbia, Canada corporation. The four
companies were acquired in a stock-for-stock exchange pursuant to Section
368(a)(1)(B) of the Internal Revenue Code.
The Company is still in the organizational stage of development, though the
replacement of existing management has been completed, and, therefore, not much
additional information is presently available. Once the organizational process
has been completed, the Company intends to manufacture roofing products, oil
field tank wraps and supplies, and market a lite-form building process.
Initially, the market for the Company's products will be limited to North
America.
ITEM 2. Properties
The Company currently owns no properties, but leases an office and shop in
Nelson, B.C., where it intends to establish its corporate headquarters. This
arrangement is expected to continue indefinitely.
ITEM 3. Legal Proceedings.
Neither the Company nor any of its affiliates, subsidiaries, directors, or
officers is a party to any material pending legal proceedings.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to the Company's security holders for a vote during the
fiscal year ending December 31, 1997.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholders Matters.
There currently is not a trading market for the Company's $.001 par value common
stock nor has there been a trading market for the Company's stock since its
inception.
As of March, 1998, there were 384 record holders of the Company's common stock.
The Company has not previously declared or paid any dividends on its common
stock and does not anticipate declaring any dividends in the foreseeable future.
2
<PAGE>
ITEM 6. Selected Financial Data.
ENVIRONMENTAL DEVELOPMENT CORPORATION
SUMMARY OF OPERATIONS
DECEMBER 1997
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Assets............. 0 0 0 0 0
Revenues................ 0 0 0 0 0
Operating Expenses.... 0 0 0 0 0
Net Earnings (Loss).. 0 0 0 0 0
Per Share Data
Earnings (Loss)....... 0 0 0 0 0
Average Common Shares
Outstanding..... 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
</TABLE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
The Company has had no operational history and has yet to engage in business of
any kind. All risks inherent in new and inexperienced enterprises are inherent
in the Company's business. The Company has not made a formal study of the
economic potential of any business.
As of March, 1998, the Company has not had adequate time since the acquisition
discussed in ITEM 1, above, to assess its current liquidity or its presently
available capital resources, such as credit lines, guarantees, etc.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company has no market risk sensitive instruments or market risk exposures.
ITEM 8. Financial Statements and Supplementary Data.
See Item 14.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not Applicable.
PART III
ITEM 10. Directors and Executive Officers of the Registrant.
The following table shows the positions held by the Company's officers and
directors. The directors were appointed shortly after the acquisition referred
to in ITEM 1, above, and will serve until the next annual meeting of the
Company's stockholders, and until their successors have been elected and have
qualified. The officers were appointed to their positions, and continue in such
positions, at the discretion of the directors.
3
<PAGE>
Name Age Position
Arnie Gustafson 42 President, Director
Wilfred Walker 53 Director
Marilyn Auriat 43 Secretary/Treasurer, Director
ARNIE GUSTAFSON has 20 years of experience in oil and gas, and has founded
several companies in this field. Mr. Gustafson has served as president,
vice-president, secretary/treasurer, CEO, and board chairman for several
different companies. Mr. Gustafson most recently served as secretary/treasurer
of B.C. Thermal Dynamic Coatings, Inc., a subsidiary of the Company.
WILFRED WALKER has been a member of the Iron Workers Union for the past 20
years, and has been president of his own company during that time period as
well. Mr. Walker most recently served as president of West Kootnay Lite-Form,
Ltd., a subsidiary of the Company.
MARILYN AURIAT has 25 years of experience as an accountant and has previously
been a member of the board of directors of a publicly traded company. Ms. Auriat
most recently served as a director of Specialty Coatings, Ltd., a subsidiary of
the Company.
ITEM 11. Executive Compensation.
The Company has not had time to make arrangements for the remuneration of its
officers and directors. No remuneration has been paid to the Company's officers
or directors prior to the filing of this form. There are no agreements or
understandings with respect to the amount or remuneration that officers and
directors are expected to receive in the future. No present prediction or
representation can be made as to the compensation or other remuneration which
may ultimately be paid to the Company's management.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of March 1998, information regarding the
beneficial ownership of shares by each person known by the Company to own five
percent or more of the outstanding shares, by each of the directors and by the
officers and directors as a group.
<TABLE>
<CAPTION>
Name and address Amount of Percent
Title of class of beneficial owner beneficial ownership of class
<S> <C> <C> <C>
Common Stock B.C. Thermal Dynamic Coatings, Inc. 2,800,000 70.00%
R.R. #2, Site 25, Comp. 6
Nelson, B.C. V1L5P5
Common Stock Capital General Corporation 366,000 9.15%
3098 So. Highland Drive, Suite 460
Salt Lake City, Utah 84106
Common Stock Arthur Lang 720,400 18.01%
645 Heather Road
Pentleton, B.C. V2A6N8
Common Stock All Officers and Directors as a Group 2,800,000 70.00%
</TABLE>
4
<PAGE>
ITEM 13. Certain Relationships and Related Transactions.
Not applicable.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Financial Statements and Financial Statement Schedules.
Financial Statements - December 31, 1997, 1996 and 1995.
Reports on Form 8-K.
There were no reports on Form 8-K filed during the fourth quarter of
1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ENVIRONMENTAL DEVELOPMENT CORPORATION
Date: March 30, 1998 By: /s/ Arnie Gustafson
Arnie Gustafson, President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: March 30, 1998 By: /s/ Arnie Gustafson
Arnie Gustafson, President and Director
Date: March 30, 1998 By: /s/ Marilyn Auriat
Marilyn Auriat, Secretary/Treasurer
and Director
5
<PAGE>
SMITH & COMPANY
A PROFESSIONAL CORPORATION OF
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: 10 WEST 100 SOUTH, SUITE 700
AMERICAN INSTITUTE OF SALT LAKE CITY, UTAH 84101
CERTIFIED PUBLIC ACCOUNTANTS TELEPHONE: (801) 575-8297
UTAH ASSOCIATION OF FACSIMILE: (801) 575-8306
CERTIFIED PUBLIC ACCOUNTANTS E-MAIL: [email protected]
- --------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Environmental Development Corporation (A Development Stage Company)
We have audited the accompanying balance sheets of Environmental Development
Corporation (a development stage company) as of December 31, 1997 and 1996, and
the related statements of operations, changes in stockholders' equity, and cash
flows for the years ended December 31, 1997, 1996, and 1995, and for the period
of March 14, 1990 (date of inception) to December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Environmental Development
Corporation (a development stage company) as of December 31, 1997 and 1996, and
the results of its operations, changes in stockholders' equity, and its cash
flows for the years ended December 31, 1997, 1996, and 1995, and for the period
of March 14, 1990 (date of inception) to December 31, 1997 in conformity with
generally accepted accounting principles.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
January 31, 1998, except for Note 5 which is dated March 30, 1998.
F-1
<PAGE>
ENVIRONMENTAL DEVELOPMENT CORPORATION
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
12/31/97 12/31/96
----------------- -----------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash in bank $ 0 $ 0
----------------- -----------------
TOTAL CURRENT ASSETS 0 0
----------------- -----------------
$ 0 $ 0
================= =================
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts payable $ 0 $ 0
----------------- -----------------
TOTAL CURRENT LIABILITIES 0 0
STOCKHOLDERS' EQUITY
Common Stock $.001 par value:
Authorized - 25,000,000 shares
Issued and outstanding 1,000,000 shares 1,000 1,000
Deficit accumulated during
the development stage (1,000) (1,000)
----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 0 0
----------------- -----------------
$ 0 $ 0
================= =================
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
ENVIRONMENTAL DEVELOPMENT CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
3/14/90
Year Year Year (Date of
ended ended ended inception) to
12/31/97 12/31/96 12/31/95 12/31/97
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 0 $ 0 $ 0 $ 0
Cost of sales 0 0 0 0
--------------- -------------- -------------- --------------
GROSS PROFIT 0 0 0 0
General & administrative
expenses 0 0 0 1,000
--------------- -------------- -------------- --------------
NET LOSS $ 0 $ 0 $ 0 $ (1,000)
=============== ============== ============== ==============
Net income (loss) per weighted
average share $ .00 $ .00 $ .00
=============== ============== ==============
Weighted average number of
common shares used to
compute net income (loss)
per weighted average share 1,000,000 1,000,000 1,000,000
=============== ============== ==============
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
ENVIRONMENTAL DEVELOPMENT CORPORATION
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock During
Par Value $0.001 Development
Shares Amount Stage
-------------- -------------- --------------
Balances at 3/14/90
<S> <C> <C> <C>
(Date of inception) 0 $ 0 $ 0
Issuance of common
stock (restricted)
at $.001 per share
at 3/14/90 1,000,000 1,000
Net loss for period (1,000)
-------------- -------------- --------------
Balances at 12/31/90 1,000,000 1,000 (1,000)
Net income for year 0
-------------- -------------- --------------
Balances at 12/31/91 1,000,000 1,000 (1,000)
Net income for year 0
-------------- -------------- --------------
Balances at 12/31/92 1,000,000 1,000 (1,000)
Net income for year 0
-------------- -------------- --------------
Balances at 12/31/93 1,000,000 1,000 (1,000)
Net income for year 0
-------------- -------------- --------------
Balances at 12/31/94 1,000,000 1,000 (1,000)
Net income for year 0
-------------- -------------- --------------
Balances at 12/31/95 1,000,000 1,000 (1,000)
Net income for year 0
-------------- -------------- --------------
Balances at 12/31/96 1,000,000 1,000 (1,000)
Net income for year 0
-------------- -------------- --------------
Balances at 12/31/97 1,000,000 $ 1,000 $ (1,000)
============== ============== ==============
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
ENVIRONMENTAL DEVELOPMENT CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
3/14/90
Year Year Year (Date of
ended ended ended Inception) to
12/31/97 12/31/96 12/31/95 12/31/97
-------------- -------------- -------------- --------------
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income (loss) $ 0 $ 0 $ 0 $ (1,000)
Adjustments to reconcile
net income (loss) to
cash used by operating
activities 0 0 0 0
-------------- -------------- -------------- --------------
NET CASH USED BY
OPERATING ACTIVITIES 0 0 0 (1,000)
INVESTING ACTIVITIES 0 0 0 0
-------------- -------------- -------------- --------------
NET CASH USED BY
INVESTING ACTIVITIES 0 0 0 0
FINANCING ACTIVITIES
Proceeds from sale of
common stock 0 0 0 1,000
-------------- -------------- -------------- --------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 0 0 0 1,000
-------------- -------------- -------------- --------------
INCREASE IN CASH
AND CASH EQUIVALENTS 0 0 0 0
Cash and cash equivalents
at beginning of year 0 0 0 0
-------------- -------------- -------------- --------------
CASH & CASH EQUIVALENTS
AT END OF YEAR $ 0 $ 0 $ 0 $ 0
============== ============== ============== ==============
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
ENVIRONMENTAL DEVELOPMENT CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Accounting Methods:
The Company recognizes income and expenses based on the accrual method
of accounting.
Dividend Policy:
The Company has not yet adopted any policy regarding payment of
dividends.
Income Taxes:
The Company records the income tax effect of transactions in the same
year that the transactions enter into the determination of income,
regardless of when the transactions are recognized for tax purposes.
Tax credits are recorded in the year realized. Since the Company has
not yet realized income as of the date of this report, no provision for
income taxes has been made.
In February, 1992, the Financial Accounting Standards Board adopted
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes, which supersedes substantially all existing authoritative
literature for accounting for income taxes and requires deferred tax
balances to be adjusted to reflect the tax rates in effect when those
amounts are expected to become payable or refundable. The Statement was
applied in the Company's financial statements for the fiscal year
commencing January 1, 1993.
At December 31, 1997 a deferred tax asset has not been recorded due to
the Company's lack of operations to provide income to use the net
operating loss carryover of $1,000 which will expire December 31, 2005.
NOTE 2: DEVELOPMENT STAGE COMPANY
The Company was incorporated under the laws of the State of Nevada on
March 14, 1990 and has been in the development stage since
incorporation.
NOTE 3: CAPITALIZATION
On the date of incorporation, the Company sold 1,000,000 shares of its
common stock to Capital General Corporation for $1,000 cash, for an
average consideration of $.001 per share. The Company's authorized
stock includes 25,000,000 shares of common stock at $.001 par value.
NOTE 4: RELATED PARTY TRANSACTIONS
The Company neither owns or leases any real property. Office services
were provided, without charge, by Capital General Corporation. 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 5: SUBSEQUENT EVENTS
On February 5, 1998, the Company issued 2,800,000 shares of its common
stock for all of the outstanding common stock of four Canadian
entities: Specialty Coatings Ltd., Mike McCarthy Construction Ltd.,
B.C. Thermal Dynamic Coatings, Inc., and West Kootnay Lite-Form Ltd.
The Canadian entities own the rights to various patents pending,
product designs, and other research and development work-product and
information.
Arnie Gustafson, the Company's President, controlled B.C. Thermal
Dynamic Coatings, Inc. at the time of the transaction, was a minority
shareholder in Special Coatings Ltd. and had no relationship to the
other two entities at the time of the transaction.
F-6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Environmental Development Corporation December 31, 1997 financial
statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000894551
<NAME> Environmental Development Corporation
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> (1,000)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
