SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
-------------------
[ ] 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. 000-27621
Studio Bromont Inc.
-------------------
(Exact name of Registrant as specified in its charter)
Florida 95-4720231
----------------- ---------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2300 W. Sahara Ave., Suite 500
Las Vegas, Nevada 89102
------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (514) 891-9070
---------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act: 50,000,000 shares
of common stock
Check whether the issuer (l) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. [ ]
Revenues for 2001 were $___________.
The aggregate market value of the voting stock held by non-affiliates computed
by reference to the last reported sale price of such stock as of May 16, 2002 is
$760,000.
The number of shares of the issuer's Common Stock outstanding as of May 16, 2001
is 9,668,224.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]
PART I
This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Actual results could differ materially from those projected in the
forward-looking statements if assumptions upon which the forward-looking
statements are based do not turn out to be true. The assumptions upon which the
forward-looking statements are based include without limitation:
- The Company will obtain funding sufficient to execute its business plan.
- The Company will eventually achieve revenues from the commercialization of
the client software known as "Gnotella" sufficient to sustain the operations of
the Company or will obtain other business interests or products that are
commercially viable.
ITEM 1. Description of Business
History
The Company was organized on July 17, 1992, under the laws of the state of
Florida. The initial name of the Company was American Financial Seminars, Inc.
Since its inception, the Company has sought out various business opportunities,
none of which have been successful over a sustained period of time. On February
22, 2001, 3838421 Canada Inc., a Canadian corporation ("3838421"), sold,
transferred and assigned to the company its exclusive worldwide license to use
and commercialize the client software known as the Gnotella Client ("Gnotella")
and its associated trademark license. The business operations of the Company
from February 22, 2001, through approximately December 17, 2001, was
commercializing Gnotella and promoting peer-to-peer computing generally. In or
around December, 2001, the development of Gnotella ceased and the Company began
looking for other businesses or products that had potential for profit. The
Company retained its rights in Gnotella and could commence developing Gnotella
again in the future in the event the Company can obtain sufficient funding to do
so and determines that it is in the best interest of the Company to do so.
In or around February, 2002, the Company entered into a plan of reorganization
with Studio Bromont Inc. If the plan had been consummated, the business
operations of the Studio Bromont Inc. would have become the business operations
of the Company. The plan of reorganization was never closed, and in or around
March, 2002, the plan expired according to its terms and was never consummated.
In contemplation of the transactions set forth in the plan, the Company changed
its name to Studio Bromont Inc. and that remains the name of the Company as of
the date of this filing.
The business of the Company at the present time continues to be the searching
out of products or businesses that the Company can acquire that have potential
for profit.
General
The business objectives discussed herein are extremely general and are not
intended to be restrictive on the discretion of the Company's management.
Management anticipates that it may be able to participate in only one potential
business venture, due primarily to the Company's limited capital.
Selection of a Business
The Company anticipates that businesses for possible acquisition will be
referred by various sources, including its officers and directors, professional
advisors, securities broker-dealers, venture capitalists, members of the
financial community, and others who may present unsolicited proposals. The
Company will not engage in any general solicitation or advertising for a
business opportunity, and will rely on personal contacts of its officers and
directors and their affiliates, as well as indirect associations between them
and other business and professional people. By relying on "word of mouth", the
Company may be limited in the number of potential acquisitions it can identify.
While it is not presently anticipated that the Company will engage unaffiliated
professional firms specializing in business acquisitions or reorganizations,
such firms may be retained if management deems it in the best interest of the
Company.
The Company will not restrict its search to any particular business, industry,
or geographical location, and management reserves the right to evaluate and
enter into any type of business in any location. The Company may participate in
a newly organized business venture or a more established company entering a new
phase of growth or in need of additional capital to overcome existing financial
problems. Participation in a new business venture entails greater risks since
in may instances management of such a venture will not have proved its ability,
the eventual market of such venture's product or services will likely not be
established, and the profitability of the venture will be unproved and cannot be
predicted accurately. If the Company participates in a more established firm
with existing financial problems, it may be subjected to risk because the
financial resources of the Company may not be adequate to eliminate or reverse
the circumstances leading to such financial problems.
The analysis of new businesses will be undertaken by or under the supervision of
the officers and directors. In analyzing prospective business, management will
consider, to the extent applicable, the available technical, financial, and
managerial resources; working capital and other prospects for the future; the
nature of present and expected competition; the quality and experience of
management services which may be available and the depth of that management; the
potential for further research, development, or exploration; the potential for
profit; the perceived public recognition or acceptance of products, services, or
trade or service marks; name identification; and other relevant factors.
The decision to participate in a specific business may be based on management's
analysis of the quality of the other firm's management and personnel, the
anticipated acceptability of new products or marketing concepts, the merit of
technological changes, and other factors which are difficult, if not impossible,
to analyze through any objective criteria. It is anticipated that the results
of operations of a specific firm may not necessarily be indicative of the
potential for the future because of the requirement to substantially shift
marketing approaches, expand significantly, change product emphasis, change or
substantially augment management, and other factors.
The Company will analyze all available factors and make a determination based on
a composite of available facts, without reliance on any single factor. The
period within which the Company may participate in a business cannot be
predicted and will depend on circumstances beyond the Company's control,
including the availability of businesses, the time required for the Company to
complete its investigation and analysis of prospective business, the time
required to prepare
appropriate documents and agreements provided for the Company's participation,
and other circumstances.
Acquisition of a Business
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, or other reorganization with
another corporation or entity; joint venture; license; purchase and sale of
assets; or purchase and sale of stock, the exact nature of which cannot not be
predicted. Notwithstanding the above, the Company does not intend to
participate in a business through the purchase of minority stock positions.
Further, the Company does not have the assets necessary to make a business
acquisition with cash. Therefore, any acquisition would have to be in exchange
for Company stock. On the consummation of a transaction, it is likely that the
present management and shareholders of the Company will not be in control of the
Company. In addition, a majority or all of the Company's directors may, as part
of the terms of the acquisition transaction, resign and be replaced by new
directors without a vote of the Company's shareholders.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of the transaction, the Company may agree to register such securities either at
the time the transaction is consummated, under certain conditions, or at
specified times thereafter. Although the terms of such registration rights and
the number of securities, if any, which may be registered cannot be predicted,
it may be expected that registration of securities by the Company in these
circumstances would entail substantial expense to the Company. The issuance of
substantial additional securities and their potential sale into any trading
market may have a depressive effect on such market.
The Company will comply with all federal and state disclosure laws in connection
with the acquisition of any target company including providing shareholders with
audited financial statements when required. The Company also intends to provide
shareholders with information including audited financial statements regarding a
target company even if it is not required when it is reasonably possible to do
so. If such disclosure is not required, it may be necessary in some instances,
such as when time restraints will not permit disclosure, for the directors to
determine that it is in the best interest of the shareholders to consummate an
acquisition short of all possible disclosure.
Operation of Business After Acquisition
The Company's operation following its acquisition of a business will be
dependent on the nature of the business and the interest acquired. It may be
expected that the business will present various risks, which cannot be predicted
at the present time.
Government Regulation
It is impossible to predict the government regulation, if any, to which the
Company may be subject until it has acquired an interest in business. The use
of assets and/or conduct of business which the Company may acquire could subject
it to environmental, public health and safety, land use, trade, or other
governmental regulations and state or local taxation. In selecting a business
in which to
acquire an interest, management will endeavor to ascertain, to the extent of the
limited resources of the Company, the effects of such government regulation on
the prospective business of the Company. In certain circumstances, however, such
as the acquisition of an interest in a new or start-up business activity, it may
not be possible to predict with any degree of accuracy the impact of government
regulation. The inability to ascertain the effect of government regulation on
prospective business activity will make the acquisition of an interest in such
business a higher risk.
Competition
The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experiences in business. There
is no assurance that the Company will be successful in obtaining suitable
investments.
Gnotella
As mentioned previously, the Company continues to own certain rights with
respect to the commercialization of Gnotella software, though the exact status
of and value of those rights may be subject to dispute. It is certain, however,
that at the present time there is no development of nor promotion of Gnotella in
behalf of the Company. It remains uncertain as to whether such development and
promotion will commence in the future.
Gnotella is a real time peer-to-peer online search and file-sharing program run
from a user's desktop as a servent (a server and a client in a peer-to-peer
network). Gnotella allows users to interface directly with each other with no
intermediate or central authority. Users access and download Gnotella, which
installs onto their computers. Once installed and executed on a computer
connected to the Internet, the software locates other computers utilizing
Gnotella or compatible software, and connects to one or more such computers, as
determined by the user.
The totality of computers connected to each other utilizing Gnotella or
compatible software is known as the Gnutella Network. Once connected, a user
can search the Gnutella Network for files matching his or her search criteria,
and download the files located onto his or her own computer. Gnotella allows
users to search for and share any type of digital file, including without
limitation, word processing, audio, video, text, spreadsheets, and software. A
user can typically connect to and search thousands to tens of thousands of peers
in the network, and can gain access to terabytes of information.
There have been downloads of Gnotella version 0.9.8 from users in 121 countries
on five continents. Despite the wide usage of the software as previously made
available to the Internet public by the Company, the software was distributed
basically free of charge. The Company was ultimately unsuccessful in developing
a revenue structure that would return to the Company revenues sufficient to
continue to develop and provide the software to the public.
Employees
As of May 16, 2002, the Company has no employees other than the services of our
sole officer and director.
Subsidiaries
The Company has one subsidiary named NetworthEurope.com. It is a corporation
formed under the laws of the nation of Luxembourg. The Company holds 309 shares
of the 310 shares issued and outstanding. The subsidiary has no operations or
material assets.
Patents and Trademarks
The Company holds an exclusive worldwide license to use and commercialize
Gnotella together with its trademark license. There is no expiration on the
license or the trademark. Otherwise, the Company does not own any patents or
trademarks.
ITEM 2. Description of Property
The Company maintains its head office address at address at 2300 West Sahara
Ave., Suite 500, Las Vegas, Nevada 89102. The Company pays no rent for the use
of this address and is neither the owner nor lessee of any real property. The
Company believes that as it hires additional employees it will need to secure
additional office space to house its operations.
ITEM 3. Legal Proceedings
The Company is not a party to any material legal proceedings and to the
knowledge of the Company, no such proceedings are threatened or contemplated.
ITEM 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to the Company's security holders for a vote during
the fourth quarter of the fiscal year ended December 31, 2001.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholders
Matters
Market Information
The Company's common shares are currently listed on the OTC Bulletin Board under
the stock symbol SBRTE. The high and the low bids for the shares for each
quarter within the last two fiscal years were:
Quarter High Low
------- ---- ---
1st Quarter 2000 1 9/16 11/16
2nd Quarter 2000 1 7/8 11/16
3rd Quarter 2000 1 1/4 5/8
4th Quarter 2000 2 3/4 9/16
1st Quarter 2001 2 3/4 9/16
2nd Quarter 2001 1 11/16 5/8
3rd Quarter 2001 15/16 1/8
4th Quarter 2001 9/16 1/16
The quotations reflect inter-dealer prices, without retail mark-up, markdown or
commission and may not represent actual transactions. The source of the
quotation information for 2000 is E*TRADE, Quotes & Research. The source of the
quotation information for 2001 is Yahoo Finance.
Dividends
The Company has not declared any dividends since its incorporation. There are no
dividend restrictions that limit the Company's ability to pay dividends on its
common stock in its Articles of Incorporation or Bylaws. The Company's
governing statute, Chapter 607 of Title 36 of the Florida Statutes, does provide
limitations on the Company's ability to declare dividends. Section 607.06401 of
Chapter 607 prohibits the Company from declaring dividends where, after giving
effect to the distribution of the dividend:
1. the Company would not be able to pay its debts when they became due in
the usual course of business; or
2. the Company's total assets would be less than the sum of its total
liabilities plus the amount that would be needed, if the Company were to be
dissolved at the time of distribution, to satisfy the preferential rights upon
dissolution of stockholders whose preferential rights are superior to those
receiving the distribution.
At the present time there are no shareholders of the Company who have rights
preferential to those of the common shareholders.
Section 607.0623 of Chapter 607 allows the board of directors to issue shares of
stock pro rata to the Company's shareholders as a share dividend.
Recent Sales of Unregistered Securities
The Company did not sell of any shares of its common stock during the fiscal
year ended December 31, 2001.
ITEM 6. Management's Discussion and Analysis or Plan of Operation
Plan of Operations
Our principal asset is a license to use and commercialize the client software
known as "Gnotella" ("Gnotella"). For most of the fiscal year ended December
31, 2001, our business plan called for the development of upgrades to Gnotella
and the establishment of a broad user base for the software. During December,
2001, three of the four members of the board of directors of the Company
resigned their positions and further development and promotion of Gnotella
ceased. Since that time the remaining director has sought new business
opportunity for the Company.
For the next 12 months, the Company will continue to seek out business
opportunities in which it can engage and/or operating companies that it can
acquire. At December 31, 2001, the Company had no working capital to meet the
cash requirements of the Company. In addition, at that date the Company had
current liabilities totaling $819,880. We therefore believe the Company will
need to raise as much as $900,000 by selling common shares or by borrowing in
order to have sufficient capital to meet its needs for the next 12 months. The
Company attempted without success to raise sufficient capital to vigorously
pursue its business during 2001. Accordingly, there is significant doubt as to
whether we will be able to raise the $900,000. Therefore the day to day
operations of the Company are contingent upon our creditors allowing us to
proceed without immediate payment of our obligations and upon our ability to
raise sufficient monies to sustain minimal operations while we search for a
business opportunity. It is impossible to know at this point whether we will be
successful in this attempt.
It should also be noted that the Company is obligated to satisfy the costs
associated with filing the required reports under the Exchange Act of 1934. It
appears at the present time that these costs will also have to be met through
the continued sale of stock or by borrowing additional funds. The Company's
current operating plan is to (i) handle the administrative and reporting
requirements of a public company; and (ii) search for potential business,
products, technologies and companies for acquisition.
ITEM 7. Financial Statements
Page
----
Title Page F-1
Independent Auditor's Report F-2
Financial Statements:
Consolidated Balance Sheet F-3
Consolidated Statement of Operations F-4
Consolidated Statement of Stockholders' Equity F-5
Consolidated Statements of Cash Flows F-6
Notes to Consolidated Financial Statements F-7
Petapeer Holdings, Inc.
(A Development Stage Company)
Consolidated Financial Statements
December 31, 2001 and 2000
BIERWOLF, NILSON & ASSOCIATES
CERTIFIED PUBLIC ACCOUNTANTS
A Partnership of 1453 South Major Street Nephi J. Bierwolf, CPA
Professional Corporations Salt Lake City, Utah 84115 Troy Nilson, CPA
--------------------------------------------------------------------------------
Independent Auditor's Report
------------------------------
Board of Directors
Petapeer Holdings, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Petapeer Holdings, Inc., (a
Florida Corporation), as of December 31, 2001 and 2000, and the related
statements of operations, retained earnings and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards,
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. 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
the significant estimates made by management, as well as evaluating the overall
financial statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the aforementioned financial statements present fairly, in all
material respects, the financial position of Petapeer Holdings, Inc., as of
December 31, 2001 and 2000, and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles, in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note #10 to the
consolidated financial statements, the Company has an accumulated deficit and a
negative net worth at December 31, 2001. These factors raise substantial doubt
about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Bierwolf, Nilson & Associates
Bierwolf, Nilson & Associates
Salt Lake City, Utah
May 17, 2002
--------------------------------------------------------------------------------
MEMBERS OF AMERICAN INSTITUTE OF CPA's, SEC PRACTICE SECTION AND
UTAH ASSOCIATES OF CPA's
Petapeer Holdings, Inc.
(A Development Stage Company)
Balance Sheet
December 31
2001 2000
------------- ------------
Assets
Current Assets
--------------
Subscriptions Receivable $ 1,333 $ 1,333
------------- ------------
Total Current Assets 1,333 1,333
Other Assets
------------
Capital Assets, Net of Depreciation 4,164
Technology Costs, Net of Amortization 26,958 -
------------- ------------
Total Other Assets 31,122 -
------------- ------------
Total Assets $ 32,455 $ 1,333
============= ============
Liabilities & Stockholders' Equity
Current Liabilities
-------------------
Accounts Payable and Accrued Liabilities $ 562,617 $ 3,384
Note Payable 99,422 -
Note Payable - Related Party 141,574 -
Accrued Interest 16,267 -
------------- ------------
Total Current Liabilities 819,880 3,384
Stockholders' Equity
--------------------
Common Stock; 50,000,000 Shares
Authorized at $0.001 Par Value;
9,668,224 & 8,500,000; Shares Issued
& Outstanding Respectively 9,668 8,500
Additional Paid In Capital (Deficit) 991,665 (7,167)
Common Stock Subscribed 231,731 -
Deficit Accumulated in the Development Stage (1,020,489) (3,384)
Less: Treasury Stock (1,000,000) -
------------- ------------
Total Stockholders' Equity (787,425) (2,051)
------------- ------------
Total Liabilities & Stockholders' Equity $ 32,455 $ 1,333
============= ============
The accompanying notes are an integral part of these financial statements
3
Petapeer Holdings, Inc.
(A Development Stage Company)
Statement of Operations
For the Years Ended December 31, and
Accumulated from November 30, 2000 to December 31, 2001
Deficit
Accumulated
During the
Development
2001 2000 Stage
----------- ----------- -----------
Revenues $ - $ - $ -
-------- ----------- ----------- -----------
Expenses
--------
General & Administrative 408,644 17 408,661
Depreciation & Amortization 14,738 - 14,738
Legal Fees 122,047 647 122,694
Salaries & Benefits 306,488 - 306,488
Travel 26,473 2,720 29,193
----------- ----------- -----------
Total Expenses 878,390 3,384 881,774
----------- ----------- -----------
Operating Income (Loss) (878,390) (3,384) (881,774)
Other Income (Expenses)
-----------------------
Interest Expense (11,138) - (11,138)
----------- ----------- -----------
Total Other Income
(Expenses) (11,138) - (11,138)
----------- ----------- -----------
Net Loss $ (889,528) $ (3,384) (892,912)
=========== =========== ===========
Loss Per Share $ (0.09) $ (0.01)
Weighted Average Shares
Outstanding 9,376,168 8,500,000
The accompanying notes are an integral part of these financial statements
4
Petapeer Holdings, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
From December 31, 2000 (Inception) to December 31, 2001
Deficit
Additional Accumulated
Common Stock Paid In
During the
Shares Amount Capital Stage
--------------------------------------------
Balance, December 31, 2000 8,500,000 $ 8,500 $ (7,167)$ (3,884)
Net Asset Deficiency of EBUX, Inc.
at Date of Reverse Take-Over (127,577)
Shares Issued for Software Rights
at $0.856 Per Share 1,168,224 1,168 998,832
Common Stock Subscriptions 221,731
Common Stock Subscriptions 10,000
Loss for the Year Ended
December 31, 2001 (889,028)
--------------------------------------------
Balance, December 31, 2001 9,668,224 $ 9,668 $1,223,396 $(1,020,489)
============================================
The accompanying notes are an integral part of these financial statements
5
Petapeer Holdings, Inc.
(A Development Stage Company)
Statement of Cash Flows
For the Years Ended December 31, and
Accumulated from November 30, 2000 to December 31, 2001
Deficit
Accumulated
During the
Development
2001 2000 Stage
----------- ---------- ------------
Cash Flows from Operating Activities
------------------------------------
Net Loss $ (889,528) $ (3,384) $ (892,912)
Adjustment to Reconcile (Loss) to Net
Cash Used by Operating Activities;
Deficiency from Subsidiary (127,577) - (127,577)
Depreciation & Amortization 14,738 - 14,738
Increase in Accounts Payable 559,233 3,384 562,617
Increase in Interest Payable 16,267 - 16,267
----------- ---------- ------------
Net Cash Provided (Used) by
Operating Activities (426,867) - (426,867)
Cash Flows from Investing Activities
------------------------------------
Payments for Technology Costs (40,655) - (40,655)
Payments for Computer Equipmen (5,205) - (5,205)
----------- ---------- ------------
Net Cash Provided (Used) by
Investing Activities (45,860) - (45,860)
Cash Flows from Financing Activities
------------------------------------
Proceeds from Stock Subscriptions 231,731 - 231,731
Proceeds from Notes Payable 99,422 - 99,422
Proceeds from Related Party Notes 141,574 - 141,574
----------- ---------- ------------
Net Cash Provided (Used) by
Financing Activities 472,727 - 472,727
----------- ---------- ------------
Net Increase (Decrease) in Cash - - -
Cash, Beginning of Period - - -
----------- ---------- ------------
Cash, End of Period $ - $ - $ -
=========== ========== ============
The accompanying notes are an integral part of these financial statements
6
Petapeer Holdings, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2002
NOTE 1 - Organization
------------------------
The Company was organized on July 17, 1992 under the laws of the state of
Florida, as American Financial Seminars, Inc. On October 26, 1998, the Company
filed an Amendment to the Articles of Incorporation changing its name to
Environmental Oil Technologies, Inc. On January 11, 1999, the Articles of
Incorporation were amended changing its name to American Industrial Minerals
Group, Inc. On April 1, 1999, Articles of Amendment were filed changing the
name to NETWORTHUSA.Com., Inc. On September 28, 2000, the Company filed an
Amendment to the Articles of Incorporation changing its name to EBUX, Inc.
During the first quarter 2001, the Company filed an Amendment to the Articles of
Incorporation changing its name to Petapeer Holdings, Inc.
NOTE 2 - Significant Accounting Policies
---------------------------------------------
A. The Company uses the accrual method of accounting.
B. Revenues and directly related expenses are recognized in the period when
the goods are shipped to the customer.
C. The Company considers all short term, highly liquid investments that are
readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
D. Basic Earnings Per Shares are computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding during the period. Diluted Earnings Per Share shall be computed
by including contingently issuable shares with the weighted average shares
outstanding during the period. When inclusion of the contingently issuable
shares would have an antidilutive effect upon earnings per share no diluted
earnings per share shall be presented.
E. Depreciation: The cost of property and equipment is depreciated over the
estimated useful lives of the related assets. The cost of leasehold
improvements is amortized over the lesser of the length of the lease of the
related assets of the estimated lives of the assets. Depreciation and
amortization is computed on the straight line method.
F. Estimates: The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Continued
7
Petapeer Holdings, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2002
NOTE 3 - Acquisition
-----------------------
Effective February 2, 2001, the Company;
H. acquired the worldwide rights to software application known as Gnotella for
consideration of $1,000,000 payable to the vendor, 3838421 Canada, Inc.
I. granted warrants to 3838421 Canada Inc., to acquire 13,300,000 common
voting shares of the Company. The warrants have no expiration date and are
exercisable at a price of $1.625 per share. At June 30, 2001, no warrants
have been exercised.
J. granted warrants to the shareholders of 3838421 Canada, Inc., to acquire
6,700,000 common shares of EBUX, Inc., (the "Company"). Effective the same
date, a director of 3838421 Canda, Inc., was appointed as sole director of
the Company. At June 30, 2001, no warrants have been exercised.
Since the above transactions and the board appointment result in the
shareholders of 3838421 Canada, Inc., acquiring control of Petapeer Holdings,
Inc., the transaction, which is referred to as a "reverse take-over", has been
treated for accounting purposes as an acquisition by 3838421 Canada, Inc., of
the net assets and liabilities of Petapeer Holdings, Inc. Under this purchase
method of accounting, the results of the operations of Petapeer Holdings, Inc.,
are included in the combined financial statements from February 22, 2001.
The reverse acquisition was a reorganization and recapitalization of a
private operating company with a public development stage company in which no
goodwill or other intangible assets were recorded as past of the transaction.
At February 22, 2001, Petapeer had a deficit of $127,577, therefore, on the
granting of the warrants to acquire 13,300,000 common shares of Petapeer, the
net asset deficiency was charged to deficit. 3838421 Canada, Inc., is deemed to
be the purchaser of Petapeer for accounting purposes.
Accordingly, its net assets are included in the balance sheet at their
previously recorded amounts. The acquisition is summarized as follows;
Current Assets
Cash $ 512
-----------
Current Liabilities
Accounts Payable 48,867
Note Payable 79,222
-----------
128,089
-----------
Net Asset Deficiency $ (127,775)
===========
All inter-company balances and transactions have been eliminated on
consolidation including the transfer of the software license rights referred to
above.
Continued
8
Petapeer Holdings, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2002
NOTE 4 - Capital Assets
---------------------------
December 30 December 31
2001 2000
----------------------------------- -----------
Accumulated Net Book Net Book
Cost Depreciation Value Value
------------------------------------------------
Computer Software $ 2,883 577 2,306 $ -
Computer Hardware 2,322 464 1,858 -
------------------------------------------------
$ 5,205 $ 1,041 $ 4,164 $ -
================================================
NOTE 5 - Commitments
-----------------------
i) Pursuant to the acquisition to acquire the software rights, the Company
will enter into employment contract with certain directors and officers.
ii) Pursuant to the acquisition agreement, the Company may issue 1,000,000
common shares to certain minority shareholders of the Companies affiliated
with the vendor in exchange for their shareholdings in those companies.
iii) The Company is required to pay a license fee equivalent to 20% of revenue
earned from the Gnotella software, plus 10% of financing proceeds to a
company with directors in common with the Company and 3838421 Canada, Inc.
The amount is payable on a quarterly basis.
NOTE 6 - Share Purchase Warrants
-------------------------------------
The Company issued 6,700,000 share purchase warrants to certain directors
and officers of 3838421 Canada, Inc., at a price of $1.625 per share. The
warrants have no expiration date. No compensation expense has been recorded on
the granting of these warrants as the exercise price of each warrant equals the
fair value of the underlying common stock as of the grant date (A.P.B. Opinion
No 25).
If compensation expense had been recorded as calculated in accordance with
the F.A.S. No. 123, the Company's loss and loss per share for the twelve month
period to December 31, 2001 would have been increased as indicated below;
Loss $(4,139,886)
Loss Per Share (0.45)
The calculation is based upon the Black Scholes pricing model with the
following assumptions; dividend yield, Nil percent for all years; expected
volatility of 152%; risk free interest rate of 5.25%, and expected life of two
years.
Continued
9
Petapeer Holdings, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2002
NOTE 7 - Share Capital
--------------------------
a) On April 16, 2001, the Company issued 1,168,224 common shares at a par
value of $0.856 per share to 3838421 Canada, Inc., the Company's
subsidiary, in satisfaction of debt of $1,000,000
b) By a private offering memorandum, dated April 16, 2001, the Company intends
to raise up to $2,000,000 by way of private placement. The Company will
issue 2,851,604 common shares at a price of $0.70136 per share, and
warrants entitling the holder to purchase one common share for each warrant
held at a price of $0.70136 per share for a one year period.
As of September 30, 2001, $231,731 has been received by way of
subscriptions.
NOTE 8 - Related Party Transactions
----------------------------------------
a) During 2001, officers and shareholders of the Company loaned the Co9mpany a
total of $141,574. The notes are unsecured, non interest bearing, and due
on demand.
b) 3838421 Canada, Inc., entered into a technology license agreement, dated
November 30, 2000, with a private placement company with common directors,
whereby it acquired the rights to the technology subsequently transferred
and assigned to Petapeer on February 22, 2001.
Under the terms of the agreement dated November 30, 2000, 3838421 Canada, Inc.,
undertook to pay as consideration, 20% of revenue and 10% of financing receipts
to the private company (excluding the financing proceeds referred to in the
agreement of February 22, 2000).
NOTE 9 - Notes Payable
--------------------------
The Company has the following note payable obligations:
2001
------------
Note payable to former officer due on demand, and unsecured,
plus interest payable annually at 12%. $ 5,000
Note payable to former officer due on demand, and unsecured,
plus interest payable annually at 12% 74,222
Not payable to an individual, non interest bearing, unsecured,
and due on demand. 20,200
------------
$ 99,422
============
The amount of interest accrued to date on these notes is $16,267.
Continued
10
Petapeer Holdings, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2002
NOTE 10 - 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. Currently, the Company does not have significant cash or other
material assets, nor does it have an established source of revenue sufficient to
cover its operating costs and to allow it to continue as a going concern.
NOTE 11 - Net Earnings (Loss) Per Share
----------------------------------------------
Basic earnings (loss) per common share (BEPS) is based on the
weighted-average number of common shares outstanding during each period.
Diluted earnings (loss) per common share is based on shares outstanding
(computed as under BEPS) and dilutive potential common shares. Shares from the
exercise of the outstanding warrants were not included in the computation of
diluted loss per share, because their inclusion would have been antidilutive for
the years ended December 31, 2001 and 2000.
The following data shows the shares used in computing loss per common share
including dilutive potential common stock;
Common shares outstanding during the entire period 9,376,168
Weighted-average shares paid for, but not issued during the period -
-----------
9,376,168
Weighted-average number of common shares used in basic EPS
dilutive effect of warrants -
-----------
Weighted-average number of common shares and dilutive potential
common shares used in diluted EPS 9,376,168
===========
Continued
11
Petapeer Holdings, Inc.
(A Development Stage Company)
Notes to Financial Statements
March 31, 2002
NOTE 12 - Income Taxes
--------------------------
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", in the fiscal year ended December 31, 2000 and
has applied the provisions of the statement to the current year which resulted
in no significant adjustment.
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes", requires an asset and liability approach for financial accounting and
reporting for income tax purposes. This statement recognizes (a) the amount of
taxes payable or refundable for the current year and (b) deferred tax
liabilities and assets for future tax consequences of events that have been
recognized in the financial statements or tax returns.
Deferred income taxes result from temporary differences in the recognition
of accounting transactions for tax and financial reporting purposes. There were
no temporary differences at December 31, 2001 and earlier year; accordingly, no
deferred tax liabilities have bee recognized for all years.
The Company has cumulative net operating loss carryforwards over $1,000,000
at December 31, 2001. No effect has been shown in the financial statements for
the net operating loss carryforwards as the likelihood of future tax benefit
from such net operating loss carryforwards is not presently determinable.
Accordingly, the potential tax benefits of the net operating loss carryforwards,
estimated based upon current tax rates at December 31, 2001 have been offset by
valuation reserves in the same amount.
12
ITEM 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Company has had no changes in or disagreements with its accountants on
accounting or financial disclosures.
PART III
ITEM 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
The following information sets forth the name of the sole officer and director
of the Company, his present positions with the Company, and his biographical
information.
Name Office(s) Held
---------------- -----------------
Rodger Brulotte Director and CEO
Terms of Office
Directors of the Company are appointed for a one year term to hold office until
the next annual meeting of the holders of the Company's common stock or until
removed from office in accordance with the Company's by-laws. Officers of the
Company are appointed by the Company's board of directors and hold office until
removed by the Company's board of directors.
Rodger Brulotte
Prior to joining the Company, Mr. Brulotte worked with the Montreal Expos
baseball team for over 30 years. During this time, he played many different
roles from promotions coordinator to radio broadcaster. As promotions
coordinator, Mr. Brulotte managed the Expos' social events and implemented the
very first ticket sales department done by phone in the United States and
Canada. Mr. Brulotte also worked closely with Harrison Erickson, the company
responsible for the conception of the Seseme Street characters, to develop the
Expos' mascot, Youppie. During his time with the Expos, Mr. Broulotte also was
a part of the team recognized for the best marketing of the year in 1980 in
Major League Baseball. Mr. Broulotte became a broadcaster for the Expos in 1984
for the Montreal French radio networks.
Section 16(a) Beneficial Ownership Reporting Compliance
To the best knowledge of the Company there were four reports required by section
16(a) of the Exchange Act during the most recent fiscal year that were either
not filed or not filed on a timely basis. Otherwise, the Company has no
knowledge of any transactions that are required to be reported that were not
reported.
ITEM 10. Executive Compensation
No officer or director of the Company received any cash or non-cash compensation
from the Company during the fiscal year ended December 31, 2001. It is possible
that some officers and directors will claim that they were entitled to
compensation for the year or that compensation for the year was accrued or
should have been accrued by the Company. The Company does not know what the
total of such accrual claims might be.
ITEM 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of May 17, 2002, 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 by the directors and officers as a group.
NAME AND ADDRESS OF SHARES OWNED BENEFICIALLY PERCENT
BENEFICIAL OWNER AND OF RECORD
OF CLASS
NAME AND ADDRESS OF SHARES OWNED BENEFICIALLY PERCENT
BENEFICIAL OWNER AND OF RECORD OF CLASS
------------------- --------------------------- -----------
383421 Canada Inc. 1,168,224 12.1%
1170 Peel floor 6
c/o: Peter Martin
Montreal, QC
H3V 4S8
Crosswinds Holdings Inc. 1,500,000 15.5%
Providence House
East Hill Street
Nassau, Bahamas
AS-B & CIE S.A. 2,500,000 25.9%
9 rue des Alpes
P.O. Box 1023
CH-1211 Geneve 1
Switzerland
Robert Lockwood 900,000 9.3%
12746 Campbell Place
Surrey, British Columbia
V3V 6C8
(1) Based on 9,668,224 shares outstanding, if a person listed on this table has
the right to obtain additional shares of common stock within 60 days from
February 12, 2002, the additional shares are deemed to be outstanding for
the purpose of computing the percentage of the class owned by such person,
but are not deemed to be outstanding for the purpose of computing the
percentage of any other person.
ITEM 12. Certain Relationships and Related Transactions.
Except as noted below, none of the following persons has any direct or indirect
material interest in any transaction to which the Company is a party since the
beginning of the fiscal year ended December 31, 2000, or in any proposed
transaction to which the Company is proposed to be a party:
(A) any director or officer;
(B) any proposed nominee for election as a director;
(C) any person who beneficially owns, directly or indirectly, shares
carrying more than 5% of the voting rights attached to our
common stock; or
(D) any relative or spouse of any of the foregoing persons, or any relative
of such spouse, who has the same house as such person or who is a
director or officer of any parent or subsidiary.
On February 22, 2001, 3838421 Canada Inc., a Canadian corporation ("3838421"),
sold, transferred and assigned to the Company, its exclusive worldwide license
to use and commercialize the client software known as the Gnotella Client and
its trademark license associated therewith. Mr. Stephane Chouinard, the sole
officer and director of the Company at the time was also the CEO and a director
of 3838421. Mr. Chouinard became an officer and director of the Company as a
condition of the 3838421 transaction. In the transaction, Mr. Chouinard
received a beneficial interest in warrants for the purchase of 5,333,333 common
shares of the Company at the exercise price of $1.625 per share. Mr. Chouinard
did not receive any benefit in the transaction that was not shared pro rata by
all shareholders of 3838421. Mr. Chouinard has since renounced his warrants.
ITEM 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K
Exhibits
Exhibit 2.1: Acquisition Agreement (1)
Exhibit 3.1: Articles of Incorporation (2)
Exhibit 3.2: Articles of Amendment filed June 4, 1998 (2)
Exhibit 3.3: Articles of Amendment filed October 26, 1998 (2)
Exhibit 3.4: Articles of Amendment filed January 11, 1999 (2)
Exhibit 3.5: Articles of Amendment filed April 1, 1999 (2)
Exhibit 3.6: Articles of Amendment filed September 28, 2000 (3)
Exhibit 3.7: By-laws (3)
Exhibit 21.1: Subsidiaries of Registrant (3)
----------------
(1) Previously filed as an exhibit to the Company's filing on Form 8-K on March
9, 2001.
(2) Previously filed as an exhibit to the Company's filing on Form 10-SB on
October 13, 1999.
(3) Previously filed as an exhibit to the Company's filing on Form 10-KSB on
April 2, 2001.
Reports on Form 8-K
The Company filed no reports on Form 8-K during the last quarter of the fiscal
year ended December 31, 2000, the period covered by this report.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Studio Bromont Inc.
By: /s/ Rodger Brulotte
___________________________________
Rodger Brulotte, CEO
Date: May 17, 2002
In accordance with the Securities Exchange Act, this report has been signed
below by the following person on behalf of the registrant and in the capacities
and on the dates indicated.
By: /s/ Rodger Brulotte
___________________________________
Rodger Brulotte, Sole Director,
Principal Executive Officer,
Principal Financial Officer, and
Principal Accounting Officer
Date: May 17, 2002