U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Fiscal Year Ended: December 31, 2000
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to _____
Commission file number 0-27737
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eSportbike.com, Inc.
(Name of small business issuer in its charter)
Nevada 77-0454856
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Suite #700-509 Richards St.,Vancouver, B.C., Canada, V6B 2Z6
---------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(604) 692-2520
--------------
(Issuers telephone number)
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Securities registered under Section 12(b) of the Exchange Act: NONE Securities
registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.001
(Title of class)
Check whether the issuer (1) 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. Yes X No
--- ---
Check if there is no disclosure of delinquent filers pursuant 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. [ ]
State issuer's revenues for its most recent fiscal year. $ 5608.00
As of May 15, 2001, there were 16,400,000 shares of the Registrant's
common stock, par value $0.001, issued and outstanding. The aggregate market
value of the Registrant's voting stock held by non-affiliates of the Registrant
was ____________________ as of May 15, 2001.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
Transitional Small Business Disclosure Format (check one): Yes No X
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TABLE OF CONTENTS
Item Number and Caption Page
PART I
Item 1. Description of Business.....................................4
Item 2. Description of Property.....................................6
Item 3. Legal Proceedings...........................................6
Item 4. Submission of Matters to a Vote of Security Holders.........6
PART II
Item 5. Market for Common Equity and Related Stockholder Matters....7
Item 6. Management's Discussion and Analysis or Plan of Operations..8
Item 7. Financial Statements........................................9
Item 8. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure....................................9
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act...........9
Item 10. Executive Compensation.....................................10
Item 11. Security Ownership of Certain Beneficial Owners and
Management.................................................10
Item 12. Certain Relationships and Related Transactions.............11
Item 13. Exhibits and Reports on Form 8-K...........................11
3
PART I
ITEM 1 DESCRIPTION OF BUSINESS
General
On January 15, 2001, Sinoray Technology Limited ("Sinoray")acquired a
majority interest in eSportsBike.com, Inc. (the "Company")[pursuant to a vote of
shareholders of the Company (the "Acquisition")]. Sinoray through it wholly
owned subsidiary corporation Legend Sequent (Beijing) Computer Technical
Services Co., Ltd. provides proprietary software solutions and support services
to some of China's largest banks. Legend develops and implements proprietary
banking software applications, which include ATM device management, online
banking transaction processing and routing formatters. Legend products target
virtually all electronic banking delivery channels including existing credit and
debit cards, home banking, point of sale transactions, Internet banking and
security solutions.
Since the Acquisition, the Company has continued its development of the
eSportbike.com web site. The Company intends to merge the business of
eSportbike.com and Sinoray within the next 12 months. The Company then intends
to further develop the sportbike web site-based business and add the existing
business of Sinoray. The Company also plans to seek strategic acquisitions of
new clients and companies also servicing the software needs of major Asian
banks.
Prior to the Acquisition, the Company was an Internet start-up company
focused on meeting the needs of the sportbike and motorcycle audience online.
The web site is a location where such individuals can publish pictures of their
bikes, share information, communicate, shop and discover relevant content
targeted to their specific interests. Launched in November 1998 as Sportbike
Online http://www.sportbikeonline.com, the Company has achieved over 1 million
unique visitors through 2000. Since re-launching eSportbike.com in March 2000,
the site has enjoyed significant growth. Monthly banner ad views increased from
approximately 1,300,000 in September 2000 to 2 million in December 2000.
History
The Company was organized as Morenci Corp., a Nevada Corporation, for
the purpose of creating a corporate vehicle to seek, investigate and, where
appropriate, acquire an interest in one or more business opportunities presented
to it by persons or firms who or which desire to seek perceived advantages of a
publicly held corporation.
Morenci was incorporated on April 7, 1997 and was formed specifically
to be a "clean public shell," for the purpose of either merging with or
acquiring an operating company. The Company ceased all activities from October
29, 1996 to July 9, 1999 and was considered dormant. On July 9, 1999, the
Company obtained a certificate of renewal from the State of Nevada. Since July
9, 1999, the Company has been in a developmental stage and has not commenced
planned principal operations. On March 2, 2000 the Company entered into an
agreement whereby the Company, in a reverse merger, purchased the assets of
eSportbike.com, Inc. The Company also changed its name to eSportbike.com, Inc.
Prior to March 2000, the Company had not engaged in any operations other than
organizational matters.
The Company's authorized capital stock is 100,000,000 shares of common
stock, par value $0.001 per share. It is quoted and traded from time to time on
the National Association of Security Dealers, Inc.'s (the "NASD's") OTC Bulletin
Board under the trading symbol "ESPB.
The executive offices of the Company are located at Suite #700-509
Richards St., Vancouver, B.C., Canada, V6B 2Z6. Its telephone number is (604)
692-2520.
CERTAIN TRENDS AND UNCERTAINTIES
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company is hereby filing
cautionary statements identifying important risk factors that could cause the
Company's actual results to differ materially from those projected in
forward-looking statements of the Company made by or on behalf of the Company.
The Company cautions readers that these factors, among others, could cause the
Company's actual results to differ materially from those expressed in any
projected, estimated or forward-looking statements relating to the Company. The
following factors should be considered in conjunction with any discussion of
operations or results by the Company or its representatives, including any
forward-looking discussion, as well as comments contained in press releases,
presentations to securities analysts or investors, or other communications by
the Company. In making these statements, the Company is not undertaking to
address or update each factor in future filings or communications regarding the
Company's business or results, and is not undertaking to address how any of
these factors may have caused changes to discussions or information contained in
previous filings or communications. In addition, certain of these matters may
have affected the Company's past results and may affect future results.
4
OPERATING LOSSES
The Company has incurred net losses of approximately $252,026, $4,000
and $100 for the fiscal years ended December 31, 2000, December 31, 1999 and
December 31, 1998, respectively. Such operating losses reflect developmental and
other start-up activities. The Company expects to incur losses in the near
future. The Company's operations are subject to numerous risks associated with
establishing any new business, including unforeseen expenses, delays and
complications. There can be no assurance that the Company will achieve or
sustain profitable operations or that it will be able to remain in business.
FUTURE CAPITAL NEEDS AND UNCERTAINTY OF ADDITIONAL FUNDING
The Company was not engaged in any active operations through December
2000, or during 1999 and 1998, and thus, the revenues generated are not
representative of those that will be generated once the Company becomes fully
operational. Revenues are not yet sufficient to support the Company's operating
expenses and are not expected to reach such levels until the first or second
quarter of 2002. Since the Company's formation, it has funded its operations and
capital expenditures primarily through private placements of debt and equity
securities. See "Recent Sales of Unregistered Securities." Since the
Acquisition, the Company plans to merge with Sinoray and to continue the
Sportbike website business and the existing business of Sinoray. The Company
also intends to seek strategic acquisitions of companies and clients servicing
the software needs of major Asian banks. To accomplish these goals, the Company
expects that it will be required to seek additional financing in the future.
There can be no assurance that such financing will be available at all or
available on terms acceptable to the Company.
RISK OF LOW-PRICED STOCKS
Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act
of 1934 (the "Exchange Act") impose sales practice and disclosure requirements
on certain brokers and dealers who engage in certain transactions involving "a
penny stock."
Currently, the Company's common stock is considered a "penny stock" for
purposes of the Exchange Act. The additional sales practice and disclosure
requirements imposed on certain brokers and dealers could impede the sale of the
Company's common stock in the secondary market. In addition, the market
liquidity for the Company's securities may be severely adversely affected, with
concomitant adverse effects on the price of the Company's securities.
Under the penny stock regulations, a broker or dealer selling "penny
stock" to anyone other than an established customer or "accredited investor"
(generally, an individual with net worth in excess of $1,000,000 or annual
income exceeding $200,000 individually, or $300,000 together with his or her
spouse) must make a special suitability determination for the purchaser and must
receive the purchaser's written consent to the transaction prior to sale, unless
the broker or dealer or the transaction is otherwise exempt. In addition, the
penny stock regulations require the broker or dealer to deliver, prior to any
transaction involving a penny stock, a disclosure schedule prepared by the
Securities and Exchange Commission (the "SEC") relating to the penny stock
market, unless the broker or dealer or the transaction is otherwise exempt. A
broker or dealer is also required to disclose commissions payable to the broker
or dealer and the registered representative and current quotations for the
Securities. In addition, a broker or dealer is required to send monthly
statements disclosing recent price information with respect to the penny stock
held in a customer's account and information with respect to the limited market
in penny stocks.
5
THE VOLATILITY OF OUR STOCK PRICE.
Our quarterly operating results may fluctuate significantly as a result
of a variety of factors, many of which are outside of our control. These factors
include:
o the amount and timing of orders for our services or products;
o disruptions in the supply of delivering services or products;
o seasonal variations in the sale of our services or products; and
o general economic conditions.
LACK OF TRADEMARK AND PATENT PROTECTION
The Company relies on a combination of trade secret, copyright and
trademark law, nondisclosure agreements and technical security measures to
protect its products. Notwithstanding these safeguards, it is possible for
competitors of the Company to obtain its trade secrets and to imitate its
products. Furthermore, others may independently develop products similar or
superior to those developed or planned by the Company.
COMPETITION
The Company faces competition with respect to Sinoray's operations.
There are a number of companies servicing the software needs of the major Asian
banks. However, in the opinion of Management, the specific market niche of
Sinoray is very specialized and few companies are able to combine the unique
software and operational knowledge of Sinoray. Companies like IBM, SLM Software
and EDS all provide certain software solutions to these banks. There are also
several domestic Chinese corporations that provide some aspects of development
and support to these banks. Sinoray uniquely provides a bridge between the
western standards of credit and debit card companies and Asian operating
procedures that makes them valuable to their clients. However, many of Sinoray's
competitors operating in the Asian markets have greater financial resources than
the Company.
The Company also faces competition with respect to its sport bike
business from a wide variety of sport bike specific web sites, many of which
have substantially greater financial, marketing and technological resources than
the Company.
The marketplace for Sport Bike specific web sites is still in its
infancy. Many of the web sites are not commercial, and the biggest commercial
sites are almost all strictly relying on advertisers and not e-commerce sales.
Several sites compete in this market, but no one has emerged as an industry
leader. We have identified competition in terms of specific content and
e-commerce applications that are relevant to our industry. The Company competes
with several companies in respect of its sportbike operations, including but not
limited to Motorcycle Online http://www.motorcycle.com, 2wf.com
http://www.2wf.com, Motorcycle World http://www.motorcycleworld.com, Motorcycle
Superstore http://www.motorcycle-superstore.com and Imotorcyclestore.com
http://www.imotorcyclestore.com.
As of May 21, 2001, the Company had one (1) employee.
ITEM 2 DESCRIPTION OF PROPERTY
Since 1997 all administrative activities of the Company have been
conducted by corporate officers from either their home or business offices.
Currently, there are no outstanding debts owed by the Company for the use of
these facilities and there are no commitments for future use of the facilities.
At December 31, 2000, the Company had a working agreement with the
Company president to use 600 square feet of office space, telephones and
secretarial services supplied on a gratis basis. Since March 2001, the Company
is provided office space by Public Idea Capital Ltd., also on a gratis basis.
Charles Spooner is a shareholder and director of Public Idea Capital Ltd.
ITEM 3 LEGAL PROCEEDINGS
Not Applicable.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were subject to a vote of security holders during the fourth
quarter of the fiscal year 2000.
6
PART II
ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company's Common Stock is quoted and traded from time to time on
the NASD's OTC Bulletin Board under the symbol "ESPB." The following table
presents the high and low bid quotations for the Common Stock as reported by the
NASD for each quarter during the last two years. Such prices reflect inter-
dealer quotations without adjustments for retail markup, markdown or commission,
and do not necessarily represent actual transactions.
Set forth below are the highs and lows of the Company common stock as reported
on the NASD OTCBB for each quarter during the last two fiscal years and the
first quarter of 2001:
1999: High Low
First Quarter - -
Second Quarter - -
Third Quarter - -
Fourth Quarter - -
2000:
-----
Quarter high trade low trade
First Quarter 6.00 2.938
Second Quarter 4.438 .156
Third Quarter .40 .08
Fourth Quarter .30 .07
2001
----
First Quarter .17 .075
DIVIDENDS
The Company has never declared or paid any cash dividends. It is the
present policy of the Company to retain earnings to finance the growth and
development of the business and, therefore, the Company does not anticipate
paying dividends on its common stock in the foreseeable future.
The number of shareholders of record of the Company's common stock as
of May 15, 2001 was approximately thirty-six (36).
RECENT SALES OF UNREGISTERED SECURITIES
There have been no unregistered sales of the Company's securities.
In connection with organizing the Company, on April 18, 1997,
twenty-eight (28) persons consisting of its officers, directors, and other
individuals were issued a total of 1,000 shares of common stock at a value of
$.001 per share. On May 6, 1999, those outstanding shares were forward split
1,000 to 1, resulting in a total of 1,000,000 shares outstanding.
On February 23, 2000, Daniel L. Hodges, a founder of the Company,
returned 800,000 shares to the treasury and the shares were canceled, resulting
in 200,000 remaining shares outstanding.
On February 23, 2000 the Company declared a forward split 27 to 1,
resulting in a total of 5,400,000 shares outstanding.
7
On March 20, 2000, the Company issued 5,000,000 shares of the Company
common stock to each of Robert E. McLauchlan and Kent Courtice and 1,000,000
shares to M. Gregg Marshall for services to the Company as officers and
directors.
On March 13, 2001, Robert McLauchlan and Kent Courtice each transferred
5,000,000 shares of the Company common stock to Sinoray. In exchange, Xue Ming
Liang and Public Idea Capital Ltd. assumed two hundred and twenty thousand
dollars ($220,000) in debt that the Company owed to McLauchlan and Courtice.
ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Plan of Operations.
Since Sinoray acquired a majority interest in the Company in January
2001, the Company has continued its development of the eSportbike.com web site.
The Company intends to merge the business of eSportbike.com and Sinoray within
the next 12 months. The Company then intends to further develop the sportbike
web site-based business and add the existing business of Sinoray. The Company
also plans to seek strategic acquisitions of new clients and companies also
servicing the software needs of major Asian banks.
Sinoray provides software solutions and ongoing support to major
Chinese banks to assist them in implementing credit and debit card strategies
for their customers. Even though Sinoray clients are large banks, they have not
offered credit or debit cards to their customers on a large scale. This is
rapidly changing and all major Asian banks are issuing credit cards to the bulk
of their urban customers. This rapid expansion together with the technological
requirements to interface with international credit card services such as Visa,
Mastercard and American Express for domestic and foreign users has placed
considerable technical demands on the banks. As a result, they have outsourced
these services as they generally do not have the capability and resources
internally to meet these needs. Sinoray's management have many years of direct
experience developing and supporting similar software solutions in China and
internationally.
The Company's sportbike business is focused on meeting the needs of the
sportbike and motorcycle audience online. The website is a location where such
individuals can share information, publish pictures, communicate, shop and
discover relevant content targeted to their specific needs.
The e-commerce industry in which the Company operates the sportsbike
business is an intensely competitive one, where brand recognition, quality of
site content, merchandise selection, convenience, price, and service are
critical factors. The Company has many established competitors, ranging from
local single unit operations to large multi-national operations. Some of these
competitors have substantially greater financial resources and may be
established or indeed become established in areas where the Company operates.
The industry may be affected by changes in customer tastes, economic, and
demographic trends. Factors such as inflation, increased supplies costs and the
availability of suitable employees may adversely affect the entertainment
industry in general and the Company in particular. In view of the Company's
limited financial resources and management availability, the Company will
continue to be at a significant competitive disadvantage vis-a-vis the Company's
competitors.
Results of Operations.
From April 7, 1997 to July 9, 1999 the Company was an inactive
corporation. Since July 9, 1999 the Company has been a development stage company
and had not begun principal operations. Accordingly, comparisons with prior
periods are not meaningful.
LIQUIDITY AND CAPITAL RESOURCES
The Company has met its capital requirements through the private sale
of its common stock .
Since the Company's re-activation in July 9, 1999, the Company's
principal capital requirements have been the funding of its development.
The Company intends to merge the businesses of eSportBike.com and
Sinoray. Sinoray is an operating company which internally generates adequate
cash flow to fund its own operations. Sinoray has the opportunity to acquire
additional clients and businesses which may require additional capital to
service and develop.
8
After the completion of its expansion plans, including the proposed
merger of Sinoray and eSportbike.com, Inc., the Company expects future
development and expansion will be financed through cash flow from operations and
other forms of financing such as the sale of additional equity and debt
securities, capital leases and other credit facilities. There are no assurances
that such financing will be available on terms acceptable or favorable to the
Company.
ITEM 7 FINANCIAL STATEMENTS
The financial statements of the Company and supplementary data are
included beginning immediately following the signature page to this report. See
Item 13 for a list of the financial statements and financial statement schedules
included.
ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
As a result of the previously reported change of control the registrant
engaged a new independent accountant as the principal accountant to audit the
registrant's financial statements. The new independent accountant is James
Stafford, Chartered Accountant. The change in accountants, which was effective
August 1, 2000 was recommended by the registrant's chief financial officer and
approved by the board of directors.
There were no disagreements with the former accountant on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure.
Prior to the new engagement, the registrant had not consulted the new
accountant regarding: (i) the application of accounting principles to a specific
completed or contemplated transaction, or the type of audit opinion that might
be rendered on the financial statements, or any advice as to any accounting,
auditing or financial reporting issue; or (ii) any matter that was the subject
of a disagreement with the previous accountant.
The registrant has provided the former accountant, Robison, Hill & Co.
Certified Public Accountants, Salt Lake City, Utah with a copy of the
disclosures it is making in response to this item in this Form 10-KSB and has
requested the former accountant to furnish a letter addressed to the Securities
and Exchange Commission stating whether the former accountant agrees with the
statements made and, if not, stating the respects in which it disagrees. The
registrant shall file the letter as an exhibit to this Form 10-KSB.
PART III
ITEM 9 DIRECTORS EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
Executive Officers and Directors
The members of the Board of Directors of the Company serve until the
next annual meeting of stockholders, or until their successors have been
elected. The officers serve at the pleasure of the Board of Directors. The
following table sets forth the name, age, and position of each executive officer
and director of the Company:
Director's Name Age Office Term Expires
--------------- --- ----- ------------
Xue Ming Liang 44 President & Director next annual meeting
Charles Spooner 50 Director next annual meeting
Set forth below is certain biographical information, present occupation
and business experience for the past five years of each director and executive
officer of the Company. Officers of the Company are elected by the Board of
Directors and hold office until their successors are chosen and qualified, until
their death or until they resign or have been removed from office. All corporate
officers serve at the discretion of the Board of Directors.
9
Xue M Liang is the President and Director of the Company and a member
of the Board of Directors since March 2000. Prior to joining the Company he was
a Vice Technical Director for the Bank of China from March 1992 to May 2000,
specializing in financial software applications and development.
Charles Spooner joined the Company as a member of the Board of
Directors in March 2000. He has been President and Director of Sonrae
Corporation since 1982. Sonrae Corporation is a private investment company with
interests in consulting, hospitality, oil and gas and real estate. Since October
2000 he is also a shareholder and director of Public Idea Capital Ltd., a
private management consulting company and subsidiary of Sonrae Corporation.
Daniel Hodges, former sole Director, President, Chief Financial Officer
and Secretary of the Company, and W. Scott Marshall, former President and
Director of the Company, each resigned his position as an officer and director
of the Company during the calendar year 2000. Robert McLauchlan, Chief Executive
Officer and Director of the Company, and Kent Courtice, President, Secretary and
Treasurer of the Company, each resigned his position as an officer and director
of the Company in connection with the Acquisition.
Board Meetings and Committees
The Directors presently do not receive any remuneration for service on
the Board. The Board of Directors may designate from among its members an
executive committee and one or more other committees. No such committees have
been appointed.
Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of forms 3, 4, and 5 and amendments thereto,
furnished to the Company during or respecting its last fiscal year, no director,
officer, beneficial owner of more than 10% of any class of equity securities of
the Company or any other person known to be subject to Section 16 of the
Exchange Act of 1934, as amended, failed to file on a timely basis reports
required by Section 16(a) of the Exchange Act for the last fiscal year except M.
Gregg Marshall, Robert E. McLauchlan and Kent Courtice did not file Form 3 and
Daniel Hodges did not File Form 4.
ITEM 10 EXECUTIVE COMPENSATION
Kent Courtice received a management of $14,980 from the Company during
fiscal year 2000. Other than Mr. Courtice, neither the Chief Executive Officer
nor any of the other executive officers of the Company was awarded, earned or
received any compensation from the Company during either of the Company's last
two fiscal years.
ITEM 11 SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
The table below sets forth information as to each person owning of
record or who was known by the Company to own beneficially more than 5% of the
16,400,000 shares of issued and outstanding Common Stock of the Company as of
May _, 2001 and information as to the ownership of the Company's Stock by each
of its directors and executive officers and by the directors and executive
officers as a group. Except as otherwise indicated, all shares are owned
directly, and the persons named in the table have sole voting and investment
power with respect to shares shown as beneficially owned by them.
Name and Address
of Beneficial Owners / Title of Class Shares
Directors Owned Percent
--------------------------------------------------------------------------------
Sinoray Technology Limited common stock 10,000,000* 60.98%
P.O Box 957
Offshore Incorporations Centre
Road Town, Tortola
British Virgin Islands
Xue Ming Liang common stock 10,000,000* 60.98%
Suite #700-509 Richards St.,
Vancouver, B.C., Canada, V6B 2Z6
Charles Spooner common stock 482,000 2.94%
Suite #700-509 Richards St.,
Vancouver, B.C., Canada, V6B 2Z6
M. Gregg Marshall common stock 1,000,000 6.10%
C/o Suite #700-509 Richards St.,
Vancouver, B.C., Canada, V6B 2Z6
All Executive Officers
and Directors as a Group
(3 persons) common stock 10,482,000 63.91%
-------
* Mr. Liang is a controlling shareholder and director of Sinoray.
10
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 13, 2001, Robert McLauchlan and Kent Courtice entered into an
agreement with Public Idea Capital Ltd., Xue Ming Liang, Sinoray and the Company
(the "Change in Control Agreement") whereby each of McLauchlan and Courtice
transferred 5,000,000 shares of the Company common stock to Sinoray. In
exchange, Xue Ming Liang and Public Idea Capital Ltd. assumed two hundred and
twenty thousand dollars ($220,000) in debt that the Company owed to McLauchlan
and Courtice and received the right to convert the debt into shares of the
Company common stock at a price of US$0.08 per share on a pro rata basis
proportionate to who paid the debt. Mr. Liang is a controlling shareholder and
director of Sinoray. Charles Spooner is a shareholder and director of Public
Idea Capital Ltd, which provides office space to the Company on a gratis basis.
ITEM 13. EXHIBITS, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report.
1. Financial Statements Page
Report of James Stafford, Chartered Accountant...............................F-1
Statement of Stockholders' Equity for the years ended
December 31, 2000, and 1999.............................................F-2
Balance Sheets as of December 31, 2000, and 1999.............................F-3
Statements of Operations and Deficit for the years ended
December 31, 2000, and 1999.............................................F-4
Statements of Cash Flows for the years ended
December 31, 2000, and 1999.............................................F-5
Statement of Changes in Shareholders' Equity
December 31, 2000, and 1999........................................ ....F-6
Notes to Financial Statements........................................F-7,F-8,F-9
2. Financial Statement Schedules
The following financial statement schedules required by Regulation S-X
are included herein.
All schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
3. Exhibits
(a) The following exhibits are included as part of this report:
Exhibit
Number Title of Document
------- -----------------
2.1 Change of Control Agreement dated January 15, 2001 (1)
3.1 Articles of Incorporation (2)
3.2 Amended Articles of Incorporation (2)
3.3 Bylaws (2)
11
(1) Incorporated by reference to the Registrant's quarterly report on Form
10-QSB filed on May 21, 2001.
(2) Incorporated by reference to the Registrant's registration statement on
Form 10-SB filed on October 20, 1999.
(b) Reports on Form 8-K filed.
No reports on Form 8-K were filed during the prior quarter.
12
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on it behalf by the undersigned, thereunto duly authorized.
eSportbike.com, Inc.
Dated: May 22, 2001 By:/S/Xue Ming Liang
-----------------------------
Xue Ming Liang
-----------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on this 10th day of May 2000.
Signatures Title
---------- -----
/S/ Xue Ming Liang
--------------------
Xue Ming Liang President and Director
(Principal Executive Officer)
(Principal Financial and Accounting Officer)
/S/ Charles Spooner
---------------------
Charles Spooner (Director)
13
--------------------------------------------------------------------------------
James Stafford Chartered Accountant An Incorporated Professional
--------------------------------------------------------------------------------
AUDITOR'S REPORT
To the Shareholders of
eSportbike.com, Inc.
(A development Stage Company)
I have audited the balance sheet of eSportbike.com, Inc. as at December 31, 2000
and the statements of operations and deficit, changes in shareholders' equity
and cash flows for the year ended December 31, 2000. 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 Canadian generally accepted auditing
standards. Those standards require that I plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In my opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 2000 and the
results of its operations and deficit, changes in shareholders' equity and cash
flows for the year then ended in accordance with Canadian generally accepted
accounting principles.
The balance sheet at December 31, 1999, and the statements of operations and
deficit, changes in shareholders' equity and cash flows for the period then
ended were audited by other auditors.
"James Stafford"
Vancouver, Canada Chartered Accountant
May 8, 2001
COMMENTS BY THE AUDITOR FOR U.S. READERS ON
CANADA - U.S. REPORTING CONFLICT
The preceding opinion is expressed in accordance with standards of reporting
established and generally accepted in Canada. Had the report been prepared in
accordance with United States reporting standards, my report on the financial
statements would have contained the following explanatory paragraph after the
opinion paragraph:
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered losses from operations and has a
deficit, which raises substantial doubts about its ability to continue as a
going concern. Until it achieves a continuous profitable level of operations,
the Company may be dependent upon management obtaining sufficient financing to
allow the Company to meet its objectives. This raises substantial doubt about
its ability to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
"James Stafford"
Vancouver, Canada Chartered Accountant
May 8, 2001
===============================
Suite 300, The Randall Building, 555 West Georgia Street
Vancouver, BC, Canada, V6B 1Z6
Telephone (604) 669-0711 Fax (604) 669-0754 Email j_stafford@staffordsca.com
--------------------------
F-1
eSportbike.com, Inc.
(A Development Stage Company)
Balance Sheet
(Expressed in U.S. dollars)
===================================================================================================
As at December 31
===================================================================================================
2000 1999
--------- ---------
ASSETS
------
Current assets
--------------
Accounts receivable $ 4,913 $ --
Prepaid expenses 1,155 --
--------- ---------
6,068 --
Due from shareholders -- 6,677
Capital assets (Note 3) 6,848 --
--------- ---------
$ 12,916 $ 6,677
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Bank indebtedness $ 55 $ --
-----------------
Accounts payable and accrued liabilities 16,926 2,751
--------- ---------
16,981 2,751
Due to shareholders (Note 4) 233,035 --
--------------------------- --------- ---------
250,016 2,751
--------- ---------
Shareholders' equity
--------------------
Capital stock (Note 5)
Authorized
100,000,000 common shares with a par value of $.001 per share
Issued
16,400,000 common shares at December 31, 2000 (1999 - 5,400,000) 16,400 5,400
Additional paid-in capital 3,812 3,812
Retained deficit (1,200) (1,200)
Deficit, accumulated during the development stage (256,112) (4,086)
--------- ---------
(237,100) 3,926
--------- ---------
$ 12,916 $ 6,677
========= =========
On behalf of the Board:
Xue Ming Liang, Director Charles Spooner, Director
These accompanying notes are an integral part of these financial statements.
F-2
eSportbike.com, Inc.
(A Development Stage Company)
Statement of Operations and Deficit
(Expressed in U.S. dollars)
========================================================================================================
Cumulative
Amounts from From
Inception of the Inception of the
Development Development
Stage On For the year Stage On
July 9, 1999 to Ended July 9, 1999 to
December 31, December 31, December 31,
2000 2000 1999
--------------------------------------------------------------------------------------------------------
REVENUE
-------
Advertising $ 5,608 $ 5,608 $ --
--------- --------- ---------
EXPENSES
--------
Accounting and legal 13,447 13,447 --
Advertising and promotion 100,334 100,334 --
Amortization 6,952 6,952 --
Automotive 1,860 1,860 --
Bank charges and interest 511 511 --
Consulting fees 53,901 53,901 --
Filing fees 204 204 --
Insurance 1,011 1,011 --
Internet services 10,771 10,771 --
Management fees 14,980 14,980 --
Meals and entertainment 3,781 3,781 --
Office and miscellaneous 19,007 14,921 4,086
Rent 7,751 7,751 --
Telephone 2,371 2,371 --
Transfer fees 1,389 1,389 --
Travel 25,789 25,789 --
--------- --------- ---------
264,059 259,973 4,086
--------- --------- ---------
Income (loss) before other items (258,451) (254,365) (4,086)
Interest income 1,094 1,094 --
Foreign exchange gain 1,245 1,245 --
--------- --------- ---------
Income (loss) for the year (256,112) (252,026) (4,086)
--------------------------
Deficit, accumulated during the development stage,
beginning of period -- (4,086) --
--------- --------- ---------
Deficit, accumulated during the development stage, $(256,112) $(256,112) $ (4,086)
--------------------------------------------------
end of period
------------- ========= ========= =========
Basic earnings loss per share -- $ (0.01) $ (0.00)
========= ========= =========
The accompanying notes are an integral part of these financial statements.
F-3
eSportbike.com, Inc.
(A Development Stage Company)
Statement of Cash Flows
(Expressed in U.S. dollars)
=============================================================================================================================
Cumulative
Amounts from From
Inception of the Inception of the
Development Development
Stage On For the year Stage On
July 9, 1999 to Ended July 9, 1999 to
December 31, December 31, December 31,
2000 2000 1999
------------------------------------------------------------------- ---------------- --------------- ---------------
Cash flows from operating activities
------------------------------------
Loss for the year $ (256,112) $ (252,026) $ (4,086)
Item not affecting cash
Amortization of capital assets 6,952 6,952 -
---------------- --------------- ---------------
(249,160) (245,074) (4,086)
Changes in non-cash working capital items
(Increase) decrease in accounts receivable (4,913) (4,913) -
(Increase) decrease in prepaid expenses (1,155) (1,155) -
Increase (decrease) in accounts payable 16,726 14,175 2,551
---------------- --------------- ---------------
(238,502) (236,967) (1,535)
---------------- --------------- ---------------
Cash flows from investing activities
------------------------------------
Purchase of capital assets (13,800) (13,800) -
---------------- --------------- ---------------
Cash flows from financing activities
------------------------------------
Increase (decrease) in amounts due to shareholders 233,035 239,712 (6,677)
Issuance of capital stock for debt 15,400 11,000 4,400
Increase in additional paid-in capital 3,812 - 3,812
---------------- --------------- ---------------
252,247 250,712 1,535
---------------- --------------- ---------------
Increase (decrease) in cash (55) (55) $ -
---------------------------
Cash, beginning of period - - -
------------------------- ---------------- --------------- ---------------
Cash (deficiency), end of period $ (55) $ (55) $ -
--------------------------------
=================================================================== ================ =============== ===============
Cash paid during the period for interest $ - $ - $ -
----------------------------------------
=================================================================== ================ =============== ===============
Cash paid during the period for franchise and income taxes $ 250 $ - $ 250
----------------------------------------------------------
=================================================================== ================ =============== ===============
The accompanying notes are an integral part of these financial statements.
F-4
eSportbike.com, Inc.
(A Development Stage Company)
Statement of Changes in Shareholders' Equity
(Expressed in U.S. dollars)
For the years ended December 31
===================================================================================================================================
Deficit
Accumulated
Number During the
Of Shares Price Retained Development
Issued Per Share Amount Deficit Stage Total
------------------------------------------- ------------ --------- ------------ ------------ ------------ ------------
Balance at April 7, 1997 (inception)
Shares issued for debt 1,000 $ 1.00 $ 1,000 $ - $ - $ 1,000
Net loss for the period - - - - - -
------------ ------------ ------------ ------------ ------------
Balance at December 31, 1996 1,000 - 1,000 - - 1,000
as originally reported
Retroactive Adjustments:
For 1000 to 1 stock split May 6, 1999 999,000 - - - - -
For return of 800,000 shares Feb. 23, 2000 (800,000) - (800) - - (800)
For 27 to 1 stock split Feb. 23, 2000 5,200,000 - 5,200 - - 5,200
Contributed Capital - - 3,812 - - 3,812
Net loss for the period - - - (1,100) - (1,100)
------------ ------------ ------------ ------------ ------------
Restated Balance at January 1, 1997 5,400,000 - 9,212 (1,100) - 8,112
Net Loss for the period - - - (100) - (100)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 1998 5,400,000 - 9,212 (1,200) - 8,012
Net loss for the period - - - - (4,086) (4,086)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 1999 5,400,000 - 9,212 (1,200) (4,086) 3,926
Shares issued for debt 11,000,000 - 11,000 - - 11,000
Net loss for the period - - - - (252,026) (252,026)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 2000 16,400,000 $ - $ 20,212 $ (1,200) $ (256,112) $ (237,100)
=============================================== ============ ======== ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
F-5
eSportbike.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. dollars)
For the year ended December 31, 2000
1. Nature of Operations
eSportbike.com, Inc. (the "Company") was incorporated under the laws of
the state of Nevada on April 7, 1997. The Company ceased all operating
activities from its date of incorporation on April 7, 1997 to July 9,
1999. The Company is in the development stage and is developing an
Internet website which provides community, content and commerce for the
sportbike and motorcycle enthusiast.
These financial statements have been prepared in accordance with
Canadian generally accepted accounting principles with the assumption
that the Company will be able to realize its assets and discharge its
liabilities in the normal course of business rather than through a
process of forced liquidation. Continued operations of the Company are
dependent on the Company's ability to receive continued financial
support, complete public equity financing, or generate profitable
operations in the future.
Significant Accounting Policies
Cash and cash equivalents
Cash and cash equivalents represent highly liquid market investments
with original maturities of three months or less.
Capital assets and amortization
Capital assets are recorded at cost, and amortization is calculated
using the straight-line method over the estimated economic useful lives
of the related assets as follows:
Furniture 5 years straight line
Computer hardware 3 years straight line
Computer software 1 year straight line
Intangibles 2 years straight line
Use of 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 at the date of the financial statements and the reported
amount of revenue and expenses during the reporting year. Actual
results may differ from these estimated amounts.
F-6
eSportbike.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. dollars)
For the year ended December 31, 2000
Financial instruments
Financial instruments are initially recorded at historical costs. If
subsequent circumstances indicate that a decline in fair value of a
financial instrument is other than temporary, the financial asset is
written-down to its fair value.
Loss per share
Loss per share is calculated using the weighted average number of
shares outstanding during the year. For the year ended December 31,
2000 and the period ended December 31, 1999, the weighted average
number of common shares outstanding was 13,958,904 and 5,400,000
respectively.
Fully diluted earnings per share consider the dilutive impact of the
conversion of any outstanding stock options and warrants as if the
events had occurred at the beginning of the year. For the year ended
December 31, 2000 and for the period ended December 31, 1999, this
calculation proved to be anti-dilutive.
Foreign exchange
The functional currency of the Company is Canadian dollars. Income statement
items are translated into U.S. dollars at the average exchange rate during the
year. At the balance sheet date, monetary items are adjusted to reflect the
exchange rate in effect at that time.
Exchange gains and losses arising on the translation or settlement of foreign
currency denominated monetary items are included in the determination of net
income for the current year.
3. Capital Assets
Accumulated Net book value
Cost Amortization 2000 1999
------------- -------------- ------------- -----------
Computer equipment $ 4,667 $ 1,556 $ 3,111 $ -
Furniture and equipment 426 85 341 -
Intangibles 6,793 3,397 3,396 -
Software 1,914 1,914 - -
------------- -------------- ------------- -----------
$ 13,800 $ 6,952 $ 6,848 $ -
F-7
eSportbike.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. dollars)
For the year ended December 31, 2000
On March 2, 2000, the Company entered into an agreement whereby the
Company purchased the assets of the proprietorship eSportbike.com, essentially
consisting of the domain name. The purchase price consisted of CDN$10,000
(US$6,793) and the assumption of liabilities in the amount of CDN$113,000. The
assumption of liabilities was later renegotiated to CDN$1. At December 31, 2000,
accounts payable includes US$6,793 of the purchase price.
4. Due to Shareholders
Amounts due to shareholders are non-interest bearing, unsecured and
have no fixed terms of repayment.
5. Capital Stock
Included as issued capital stock are 11,000,000 common shares which may
not be traded without regulatory approval.
All references in the accompanying financial statements to the number
of common shares and per-share amounts for 2000 and 1999 have been
restated to reflect the stock splits and cancellation of shares as
noted below.
During the year ended December 31, 2000 the Company issued 11,000,000
common shares valued at $11,000 to directors of the Company for
management services. (Note 6)
On May 6, 1999 the Board of Directors authorized a 1,000 to 1 stock
split and changed the authorized number of shares to 100,000,000 shares
and the par value to $.001 for the Company's common stock. As a result
of the split, 999,000 shares were issued.
On February 23, 2000 the Board of Directors authorized the acceptance
of 800,000 restricted common shares returned to the Company by its
former Officer and Director. The shares were canceled immediately upon
receipt.
On February 23, 2000 the Board of Directors authorized a 27 to 1 stock
split. As a result of this split the Company issued 5,200,000 common
shares.
6. Related Party Transactions
During the year ended December 31, 2000, the Company issued 11,000,000
common shares valued at $11,000 to three shareholders of the Company as
compensation for management services (Note 5).
During the year ended December 31, 2000, the Company paid management
fees of US$14,980 to a director of the Company.
F-8
eSportbike.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. dollars)
For the year ended December 31, 2000
7. Subsequent Events
On January 15, 2001, the Company entered into an agreement with two directors
and shareholders of the Company and certain third parties, whereby for cash
proceeds of $220,000 the directors agreed to:
a) Assign debts of $220,000 owed to them by the Company to the
third parties.
b) Transfer 10,000,000 restricted common shares of the Company
owned by them to the third parties.
c) Resign as directors of the Company
The Company also agreed that the parties assuming the debt could convert the
debt into common stock of the Company at a conversion price of $0.08 per share.
8. Income Taxes
As of December 31, 2000, the Company had a net operating loss carryforward for
income tax reporting purposes of approximately $250,000 that may be offset
against future taxable income. Current tax laws limit the amount of loss
available to be offset against future taxable income when a substantial change
in ownership occurs. Therefore, the amount available to offset future taxable
income may be limited. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater chance the
carryforwards will expire unused.
9. Comparative Figures
Certain prior period's figures have been restated to conform to the current
year's presentation.
10. United States Generally Accepted Accounting Policies
These financial statements have been prepared in accordance with generally
accepted accounting principles in Canada. These financial statements also
comply, in all material aspects, with accounting principles generally accepted
in the United States and the rules and regulations of the Securities and
Exchange Commission.
F-9