SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
--------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 18, 2000
-----------------
DIGITAL VILLAGE WORLD TECHNOLOGIES INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in Charter)
Nevada 88-0404114
- --------------------------------------------------------------------------------
(State of Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
8980 Fraserwood Court, Unit 10 Burnaby B.C., Canada, T5J 5HJ
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (604) 438-3598
----------------------------
BODY CONCEPTS INC.
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(Former name or Former Address, if Changed Since Last Report)
Item 7. FINANCIAL STATEMENT, FINANCIAL INFORMATION AND EXHIBITS.
(b) Financial Statements of Business Acquired. Audited Financial Statements for
Acquisition of Digital Village World Technologies (Canada).
1
MOEN AND COMPANY
CHARTERED ACCOUNTANTS
PO Box 10129
1400 IBM Tower Telephone: (604)662-8899
701 West Georgia Street Fax: (604)662-8809
Vancouver, BC V7Y 1C6
- --------------------------------------------------------------------------------
REPORT ON THE REVIEW OF PRO FORMA FINANCIAL INFORMATION
-------------------------------------------------------
To the Directors and Stockholders of
Digital Village World Technologies, Inc. (formerly Body Concepts, Inc.)
(A Nevada Corporation) (A Development Stage Company)
We have reviewed the pro forma adjustments reflecting the acquisition of Digital
Village World Technologies (Canada) Inc. described in Note 1 and the application
of those adjustments to the historical amounts in the accompanying pro forma
consolidated condensed balance sheet of Digital Village World Technologies, Inc.
as of December 18, 2000 and the pro forma consolidated condensed statement of
income and loss for the period from January 1, 2000 to December 18, 2000. These
historical consolidated condensed financial statements are derived from the
historical unaudited financial statements of Digital Village World Technologies,
Inc., which were reviewed by us, and of Digital Village World Technologies
(Canada) Inc. which were reviewed by us, appearing elsewhere herein. Such pro
forma adjustments are based on management's assumptions as described in Note 2.
Our review was conducted in accordance with standards established by the
American Institute of Certified Public Accountants.
A review is substantially less in scope than an examination, the objective of
which is the expression of an opinion on management's assumptions, the pro forma
adjustments, and the application of those adjustments to historical financial
information. Accordingly, we do not express such an opinion.
The objective of this pro forma financial information is to show what the
significant effects on the historical information might have been if the
acquisition of Digital Village World Technologies (Canada) Inc. had occurred at
an earlier date. However, the pro forma consolidated condensed financial
statements are not necessarily indicative of the results of operations or
related effects on financial position that would have been attained if the
above-mentioned acquisition had actually occurred earlier.
Based on our review, nothing came to our attention that caused us to believe
that management's assumptions do not provide a reasonable basis for presenting
the significant effects directly attributable to the above-mentioned acquisition
of Digital Village World Technologies (Canada) Inc. described in Note 1, that
the related pro forma adjustment do not give appropriate effect to those
assumptions and that the pro forma column does not reflect the proper
application of those adjustments to the historical financial statement amounts
in the pro forma consolidated condensed balance sheet as of December 18, 2000,
and the pro forma consolidated condensed statement of income for the period from
January 1, 2000 to December 18, 2000.
"Moen and Company"
Chartered Accountants
Vancouver, British Columbia, Canada
February 19, 2001
2
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC
(formerly Body Concepts, Corp.)
(A Nevada Corporation)
(A Development Stage Company)
Pro Forma Consolidated Condensed Balance Sheet
December 18, 2000
(In US Dollars)
(Unaudited)
This pro forma financial information should be read in conjunction with the
attached notes number 1-17, inclusive, and the historical financial
information contained therein
Assets
Current Assets
Cash and cash equivalents (note 3) $100,897
Accounts receivable (note 4) 10,285
--------
111,182
Fixed Assets, at cost less accumulated depreciation (note 2) 83,028
Intangible Assets - goodwill (note 5) 48,070
--------
$242,280
========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued (note 6) $ 15,032
Current portion of loan (note 8) 6,811
Due to related party (note 7 (b)) 144,423
--------
166,266
--------
Long-term Liabilities
Loan payable (note 8) 10,785
--------
Stockholders' Equity
Capital stock (note 10)
Authorized
62,500,000 common shares at $0.0004 par value
Issued
12,865,000 common shares 5,146
Paid in capital in excess of par value of stock 75,750
--------
80,896
Deficit, accumulated during the development stage (note 2) (15,199)
Cumulative translation (note 2) (468)
--------
65,229
--------
$242,280
========
Approved on behalf of the board:
"Richard Wang" , Director
- ---------------------------
"Edward Chen" , Director
- ---------------------------
3
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Corp.)
(A Nevada Corporation)
(A Development Stage Company)
Pro Forma Consolidated Condensed Statement of Income and Loss
for the Period from January 1, 2000 to December 18, 2000
(In US Dollars)
(Unaudited)
This pro forma financial information should be read in conjunction with the
attached notes number 1-17, inclusive, and the historical financial
information contained therein
Revenue
Interest and other income $2,712
------
Administration costs
Bank charges and interest 269
Office costs 300
Professional fees 3,871
Transfer agent and filing fees 200
------
4,640
------
Net loss for the period $1,928
======
Net loss per share
Basic $ 0
======
Diluted $ 0
======
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Corp.)
(A Nevada Corporation)
(A Development Stage Company)
Pro Forma Consolidated Condensed Statement of Earnings (Deficit)
for the Period from January 1, 2000 to December 18, 2000
(In US Dollars)
(Unaudited)
This pro forma financial information should be read in conjunction with the
attached notes number 1-17, inclusive, and the historical financial
information contained therein
Deficit, December 31, 1999 $(13,271)
Net loss for the period from January 1, 2000 to December 18, 2000 (1,928)
--------
Deficit, December 18, 2000 $(15,199)
========
4
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 1. ORGANIZATION AND NATURE OF BUSINESS
The Company was incorporated under the laws of the State of Nevada on
September 15, 1998, as Body Concepts, Inc. On May 25, 2000 the Company
changed its name from Body Concepts, Inc. to Digital Village World
Technologies, Inc.
On May 19, 2000 the Company increased its authorized capital stock from
25,000,000 common shares with a par value of $0.001 to 62,500,000
common shares with a par value of $0.0004.
On May 19, 2000 the Company completed a 2.5:1 forward split of its
outstanding stock. This forward split increased the number of issued
and outstanding shares from 1,750,000 common shares to 4,375,000 common
shares.
Pursuant to the terms of a share exchange which was effective as of
December 18, 2000, the Company acquired all of the issued and
outstanding stock of Digital Village World Technologies (Canada) Inc.
("DVC") in exchange for the issuance of 8,490,000 shares of its
authorized but previously unissued shares of common stock, which shares
were valued at par value for purposes of the acquisition. The
acquisition was accounted for as a purchase, and accordingly, the
operating results for DVC will be reported only for the period
subsequent to the acquisition. Assets and liabilities of DVC at the
date of acquisition on December 18, 2000, are as follows:
Assets
Cash and cash equivalents $ 56,725
Accounts receivable 10,285
Fixed assets, net 83,028
--------
150,038
--------
Liabilities
Accounts payable 13,161
Current portion of loan 6,811
Due to related company 20,000
Due to related parties 144,423
--------
184,395
Long-term loan 10,785
--------
195,180
--------
Net assets (liabilities) (45,142)
Cumulative translation, included in above,
Booked in stockholders' equity of the Company 468
--------
(44,674)
Goodwill on acquisition (note 5) 48,070
--------
Issuance of 8,490,000 common shares at par value $ 3,396
========
5
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 1. ORGANIZATION AND NATURE OF BUSINESS (cont'd)
DVC is a Canadian company incorporated in the Province of British
Columbia, Canada. DVC is an internet content provider that provides bi-
lingual content, of Chinese and English, and technical services to
companies in China, and provides third party internet services such as
web design, web hosting and content development for firms that
specialize in naturopathic and traditional eastern health sciences in
North America.
The historical information of Digital Village World Technologies, Inc.
that is the basis for the pro forma information at December 18, 2000 is
as follows:
Summary Balance Sheet
Assets
Cash $ 44,171
Advances to related company 20,000
--------
$ 64,171
========
Liabilities
Accounts payable 1,871
--------
Stockholders' equity
Capital stock - par value 1,750
- additional paid-in capital 75,750
--------
77,500
Deficit (15,200)
--------
22,300
--------
$ 64,171
========
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These financial statements have been prepared in accordance with
Accounting Principles Generally Accepted in the United States
("USGAAP).
Development stage company
The accompanying financial statements have been prepared in accordance
with the provisions of Statement of Financial Accounting Standard No.
7, "Accounting and Reporting by Development Stage Enterprises".
Use of estimates
The preparation of financial statements in conformity with USGAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the dates of the financial statements and the
reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
6
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Cash and cash equivalents
Cash and cash equivalents consist of cash on deposit and highly liquid
short-term interest bearing securities with a maturity at the date of
purchase of three months or less.
Income Taxes
Provisions for income taxes are based on taxes payable or refundable for
the current year and deferred taxes on temporary differences between the
amount of taxable income and pretax financial income and between the tax
bases of assets and liabilities and their reported amounts in the financial
statements. Deferred tax assets and liabilities are included in the
financial statement at currently enacted income tax rates applicable to the
period in which the deferred tax assets and liabilities are expected to be
realized or settled as prescribed in FASB Statement No. 109, Accounting for
Income Taxes. As changes in tax laws or rate are enacted, deferred tax
assets and liabilities are adjusted through the provision for income taxes.
Compensated absences
Employees of the corporation are entitled to paid vacations, sick days and
other time off depending on job classification, length of service and other
factors. It is impractical to estimate the amount of compensation for
future absences, and accordingly, no liability has been recorded in the
accompanying financial statements. The corporation's policy is to
recognize the costs of compensated absences when paid to employees.
Net loss per share
The Company adopted Statement of Financial Accounting Standards No. 128
that requires the reporting of both basic and diluted earnings per share.
Basic earnings per share is computed by dividing net income available to
common shareowners by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contacts to
issue common stock were exercised or converted into common stock. In
accordance with FASB 128, any anti-dilution effects on net loss per share
are excluded.
Disclosure about fair value of financial instruments
The Company has financial instruments, none of which are held for trading
purposes. The Company estimates that the fair value of all financial
instruments at June 30, 2000 as defined in FASB 107, does not differ
materially from the aggregate carrying values of its financial instruments
recorded in the accompanying balance sheet. The estimated fair value
amounts have been determined by the Company using available market
information and appropriate valuation methodologies. Considerable judgment
is required in interpreting market data to develop the estimates of fair
value, and accordingly, the estimates are not necessarily indicative of the
amounts that the Company could realize in a current market exchange.
7
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Concentration of credit risk
Financial instruments that potentially subject the Company to a significant
concentration of credit risk consist primarily of cash and cash equivalents
which are not collateralized. The Company limits its exposure to credit
loss by placing its cash and cash equivalents with high credit quality
financial institutions.
Fixed assets
Fixed assets are stated at cost less accumulated depreciation. Depreciation
is recorded on the following rates:
Office equipment - 20% per annum on the declining balance basis
Vehicles - 30% per annum on the declining balance basis
Computer equipment - 30% per annum on the declining balance basis
As at December 18, 2000, the fixed assets and accumulated depreciation
are as follows:
Accumulated Net Book
At Cost Depreciation Value
------- ------------ --------
Office equipment $ 6,010 $ 580 5,430
Vehicles 33,144 4,794 28,350
Computer equipment 57,577 8,329 49,248
------- ------------ --------
$96,731 $ 13,703 $ 83,028
======= ============ ========
Long-lived assets
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
asset in question may not be recoverable. This standard did not have a
material effect on the Company's results of operations, cash flows or
financial position.
Foreign currency translation
The functional currency of the parent Company Digital Village World
Technologies, Inc. is the United States Dollar and of Digital Village World
Technologies (Canada) Inc. is the Canadian Dollar and the reporting
currency on a consolidated basis is the United States Dollar.
8
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
The assets, liabilities, and operations of the Company are expressed in the
functional currency of the Company in United States Dollars. Operations of
the subsidiary Digital Village World Technologies (Canada) Inc. are in
Canadian Dollars and in conformity with US GAAP they are translated into
the reporting currency, the United States Dollar.
Monetary assets and liabilities are translated at the current rate of
exchange.
The weighted average exchange rate for the period is used to translate
revenue, expenses, and gains or losses from the functional currency to the
reporting currency.
The gain or loss on translation is reported as a separate component of
stockholders' equity and not recognized in net income. Gains or losses on
remeasurement are recognized in current net income.
Gains or losses from foreign currency transactions are recognized in
current net income.
Fixed assets are measured at historical exchange rates that existed at the
time of the transaction.
Depreciation is recorded at historical exchange rates that existed at the
time the underlying related asset was acquired.
An analysis of the changes in the cumulative translation adjustment as
disclosed as part of stockholders' equity, is as follows:
Period from Jan. 1 Year Ended
to Dec. 18, December 31,
------------------ -------- --------
2000 1999 1998
------------------ -------- --------
Beginning balance $ -- $ -- $ --
Change during the period (468) -- --
------------------ -------- --------
Ending balance $ (468) $ -- $ --
================== ======== ========
Fixed assets are translated at historical exchange rates that existed at
the time of the transaction.
The effect of exchange rate changes on cash balances forms part of the
reconciliation of change in cash and cash equivalents during the period.
9
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 3. CASH AND CASH EQUIVALENTS - $100,897
The total for cash and cash equivalents as at December 18, 2000, is made
up as follows:
Cash in bank current accounts $ 93,563
Petty cash 667
Short term deposits - one month term GIC 6,667
--------
Net book value $100,897
========
Note 4. ACCOUNTS RECEIVABLE - $10,285
The accounts receivable of $10,285 as at December 18, 2000 is the Canadian
Goods and Services Taxes refundable
Note 5. INTANGIBLE ASSETS, GOODWILL - $63,511
On December 18, 2000 the acquisition of Digital Village World Technologies
(Canada) Inc. included liabilities that exceeded the assets by $44,674 and
the consideration of 8,490,000 treasury shares at par value of $0.0004 per
share or $3,396, resulted in goodwill on the transaction of $48,070 that
is being amortized over ten years, commencing January 1, 2001.
Note 6. ACCOUNTS PAYABLE - $15,032
Details of the total of accounts payable and accrued as at December 18,
2000, are as follows:
Blake, Cassels & Graydon, LLP $ 3,929
Frascona, Joiner, Goodman and Greenstein, P.C.
Accrued legal fees 1,871
Telephone Bills 762
Mr. Wang Shen - consulting fee 968
Amex Bank - visa 2,037
Payroll and payroll deductions payable 5,465
-------
Total $15,032
=======
10
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 7. RELATED PARTY TRANSACTIONS - DVC
a) By a directors' resolution dated January 10, 2000, each of Mr.
Richard Wang, Director and President of the Company, Mr. Edward
Chen, Director and Vice-president of the Company and Mr. Yuwen
Cheng, Director and Chairman of the Company will be paid CAD$8,000
per month as director's fees commencing January 1, 2000 and Mr.
Stephen Dadson, Director and CEO of the Company will be paid
CAD$8,000 per month as director's fees commencing June 1, 2000.
Payment of such director's fees may be deferred till such time
until the Company has had a public offering, or as the Board of
Directors otherwise decides in view of the financial position of
the Company.
As at December 18, 2000, the above resolution was cancelled by a
letter signed by the above four directors.
During the period ended December 18, 2000, fees paid to the related
parties are as follows:
Richard Wang $18,333
Edward Chen 18,333
Yuwen Cheng 18,333
Stephen Dadson 6,667
-------
$61,666
=======
b) The amount of $144,423 is due to a related party, Tianjin Teda Yu
Cheng Group, as at December 18, 2000 for loans that they have
advanced to the Company. This amount is unsecured, non interest
bearing, with no specific terms of repayment.
Note 8. LOAN PAYABLE - $17,596
As at January 1, 2000, Mr. Richard Wang, Director and President of the
Company transferred a loan to DVC which was signed by him on June 21,
1999 with Ford Credit Canada Limited for financing of CAD$40,869 for
purchase of a new vehicle with the interest rate of 0.10% per annum for
a total of 48 payments with each payment of CAD$851.44 principal and
interest. The first payment commenced on July 21, 1999 and the last
payment is due on June 21, 2003. This loan is guaranteed by the Mr.
Richard Wang. As at December 18, 2000, the principal balance is as
follows:
Initial loan $27,246
Repayment to December 18, 2000 9,650
-------
Balance, December 18, 2000 17,596
Current portion of loan 6,811
-------
Loan term loan at December 18, 2000 $10,785
=======
11
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 9. LEASE OBLIGATIONS
a) Vehicles Lease
On January 19, 2000, DVC entered into a 36 month lease with
Lansdowne Dodge City Ltd. for a vehicle to be used by the Company.
Lease payments are expensed as they are incurred. Lease obligations
are as follows:
2000 CAD$7,333
2001 CAD$8,000
2002 CAD$8,000
2003 CAD$ 667
b) Lease of Premises
DVC has lease obligations for office premises in 2001 for
CAD$25,369.
Note 10. CAPITAL STOCK
a) Authorized: 62,500,000 common shares with a par value of $0.0004
par value.
b) Issued and outstanding as at December 18, 2000, are as follows:
Additional
Issued Number of Par Paid-in
Date Shares Value Capital Total
------- ---------- ------ ---------- -------
private placement 9/15/98 1,000,000 $1,000 $ 1,500 $ 2,500
private placement 12/31/98 750,000 750 74,250 75,000
---------- ------ ---------- -------
Balance 12/31/98 1,750,000 1,750 75,750 77,500
---------- ------ ---------- -------
Balance 12/31/99 1,750,000 1,750 75,750 77,500
---------- ------ ---------- -------
Balance, before
forward split 5/19/00 1,750,000 1,750 75,750 77,500
========== ====== ========== =======
2.5:1 forward split 5/19/00 4,375,000 1,750 75,750 77,500
Share exchange 12/18/00 8,490,000 3,396 3,396
---------- ------ ---------- -------
Balance 12/18/00 12,865,000 $5,146 $ 75,750 $80,896
========== ====== ========== =======
12
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 11. INCOME TAXES
a) The most recent Federal Income Tax filing for the Company for the
US was for the year ended December 31, 1999, disclosing no income
taxes payable to the US Internal Revenue Service.
b) There is a loss of $15,199 carried forward that may be applied
towards future profits.
No deferred income taxes are recorded as an asset. A reserve has
been claimed that offsets the amount of tax credit available from
use of the loss carry forward because there is presently no
indication that these tax losses will be utilized.
Note 12. FINANCIAL INSTUMENTS
The Company's financial instruments consist of cash and cash
equivalents, accounts receivable, accounts payable and accrued,
accrued payroll deductions payable, management fees payable current
portion of loan due to related party and long-term loan payable .
It is management's opinion that the Company is not exposed to
significant interest, currency or credit risks arising from these
financial instruments. The fair value of these financial statements
approximates their carrying values.
Note 13. PENSION AND EMPLOYMENT LIABILITIES
The Company does not have liabilities as at December 18, 2000, for
pension, post-employment benefits or post-retirement benefits. The
Company does not have a pension plan.
Note 14. UNAUDITED FINANCIAL INFORMATION
The accompanying financial information as of December 18, 2000 is
unaudited. These financial statements include all of the
adjustments which, in the opinion of management, are necessary to
fair presentation of the Company's financial position and results
of operations. All such adjustments are of a normal and recurring
nature. These financial statements should be read in conjunction
with the Company's audited financial statements at December 31,
1999.
13
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 15. NEW BUSINESS - PROFIT SHARING AGREEMENT
By agreement for reference dated May 1, 2000, Digital World Technologies
Inc, subsequently renamed Digital World Technologies (Canada) Inc.,
("DVC") entered into an agreement with TianJin TEDA Yu Cheng Group Co
Ltd., a wholly owned subsidiary of the People's Daily Newspaper Group in
China with its principal place of business in Tianjin, the People's
Republic of China.("Yu Cheng").
(a) Proposed New Business Operations.
(i) Yu Cheng has formed a new domestic Chinese company called
Yuxun Digital Hi-Tech Co Ltd. ("Yuxun") which is a local
Internet Service Provider (ISP) in the Tianjin region;
(ii) Yuxun has agreed to form a domestic joint venture with
Tianjin Chuang Xian Information Development Co Ltd ("Chuang
Xian") that will assume Yuxun's ISP business and Chuang
Xian's IT services to form a new business (New Business);
(iii) The New Business requires working capital; Yu Cheng is the
controlling shareholder of DVC and as such wishes to advance
the business of DVC in China by having DVC provide overall
management for the New Business and to raise working capital
for the New Business in accordance with this agreement.
(b) Management of New Business / Working Capital
(i) YU Cheung hereby appoints DVC to be its manager to manage the
affairs of the New Business for a term of 25 years, unless
terminated earlier as provided herein, provided that (ii)
(ii) DVC assumes the responsibility for raising all working
capital requirements of the New Business.
(c) Profit Sharing
(i) Yu Cheung hereby agrees that 80% of the net profits of the
New Business (Profit Allocation) will be earned by DVC
provided DVC raises the required working capital, as
hereinafter defined, and provides the senior management, as
hereinafter defined, for the New Business. )
(ii) Net Profits will be defined according to GAAP as determined
by the auditor of the New Business, approved by DVC.
(iii) The parties agree that semi-annually Net Profits will be
determined and 20% thereof, or such other amount agreed to by
the parties, shall be retained by the New Business as working
capital and that the balance distributed to the parties on a
80/20 basis, at each parties option. Either party may choose
to leave their portion of the Net Profits in the New Business
as addition to a loan account owed to that party by the New
Business.
14
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 15. NEW BUSINESS - PROFIT SHARING AGREEMENT (cont'd)
(d) Management
(i) DVC will form a new Chinese firm, a wholly owned foreign
enterprise (WOFE) which will provide no fewer than two senior
executives, at DVC's cost, to provide on-going executive
management for the New Business.
(ii) Yu Cheng agrees that DVC may appoint 2 out of 5 persons to be
directors of the New Business.
(e) Conversion to Equity
The parties acknowledge that it is their intention to treat DVC's
Profit Allocation as a substitute to owning 80% of the equity of
the New Business and therefore as and when the rules of China
permit DVC to own, through the WOFE, shares in the New Business, it
is agreed that the parties will take such steps as are necessary to
have shares issued to the WOFE and upon such event occurring the
Profit Allocation will be adjusted, to ensure that the underlying
80/20 arrangement is adhered to.
(f) Capital
(i) DVC, through the WOFE, will provide capital of not less than
$4M US contributed over 12 months or as otherwise agreed to
by the parties hereto.
(ii) In the event that the Capital is not raised within the said
12 months, the Profit Allocation shall be adjusted based on
the percentage actually raised of the $4M.
(iii) Yu Cheung will assist the WOFE to have all capital
contribution registered as loans to the New Business in order
to ensure that when the New Business is able that DVC will be
able to repatriate the Capital out of China should DVC so
elect.
(g) Annual Budget
The parties agree that they will on an annual basis agree upon an
annual budget, prepared in accordance with GAPP and that unless
otherwise agreed the New Business will be managed in accordance
with the annually agreed upon budget.
(h) Assignment
The Parties agree that DVC may assign this agreement to any 3rd
party provided that any assignee agrees to be bound by the terms of
this agreement.
(i) Termination
(i) This Agreement shall terminate and be of no further force or
effect if DVC fails to meet any material obligation of this
Agreement; or DVC files a voluntary petition in bankruptcy,
or an involuntary petition in bankruptcy is filed against
DVC, or DVC is liquidated or its business transferred to a
receiver, or DVC makes a general assignment of all its assets
on behalf of creditors.
15
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 15. NEW BUSINESS - PROFIT SHARING AGREEMENT (cont'd)
(ii) Upon the occurrence of any event as set out in i(i), above,
Yu Cheng shall send a written notice to DVC stating the
nature of the breach. If the breach is curable DVC shall have
thirty days from the date of the notice to cure.
(j) Notice
Notices as to disputes or termination to be given under this
Agreement shall be signed by the party giving such notice and
mailed by certified or registered mail, addressed to the party to
be notified at its then current business address as set forth at
the beginning of this Agreement or as subsequently changed by
giving notice. Notice as to address changes, pricing changes,
warranty changes and other matters relating to policy and business
may by given to such addresses, by facsimile transmission, telex,
telegram or first class mail. Notices by mail shall be deemed given
three days after mailing.
(i) In the event a dispute arises in connection with the
interpretation or implementation of this Agreement, the
parties to the dispute shall attempt in the first instance to
resolve such dispute through amicable consultations. If the
dispute cannot be resolved in this manner within thirty (30)
days after first conferring, then any or all parties to the
dispute may refer the dispute to arbitration by the Beijing
International Arbitration Committee ("Committee"). The number
of arbitrators shall be three. The claimant(s) in the dispute
shall appoint one arbitrator within thirty (30) days of
filing notice of the arbitration, and the respondent(s) in
the dispute shall appoint one arbitrator within thirty
(30) days thereafter. If the respondent fails to so appoint
an arbitrator, the Arbitration Centre shall appoint the
second arbitrator. The two arbitrators thus appointed shall
choose the third arbitrator, and if they fail to do so within
thirty (30) days after the appointment of the second
arbitrator, the third arbitrator shall be appointed by the
Committee. The arbitration proceedings shall be conducted in
the English language.
(ii) Any award of the arbitrators shall be final and binding on
the parties. The costs of arbitration shall be borne by the
losing party, unless the arbitrators determine that this
would be inequitable. The parties agree and recognize that
any award of the arbitrators shall be recognizable and
enforceable in any court having jurisdiction over the party
against whom the award was rendered, and also wherever assets
of such party are located.
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DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 15. NEW BUSINESS - PROFIT SHARING AGREEMENT (cont'd)
(iii) The legal relations between the parties under this contract
shall be interpreted in accordance with the substantive laws
of China. Any disputes between the parties concerning their
legal obligations arising under this contract which are
submitted to arbitration pursuant to this clause shall be
decided pursuant to the substantive laws of China.
(h) Non Competition
The parties agree that during the currency of this agreement that
they will not, directly or indirectly, in any manner whatsoever, be
engaged in any business competitive to the business of New Business
or advise or be concerned with or interested or lend money to/or
guaranty the debts or obligations of a competitive business.
(m) Initial Agreement
The parties agree that this agreement is an initial agreement and
that it may be superceded by a more comprehensive agreement but
until then the parties agree this agreement will prevail.
Note 16. CONSULTING AGREEMENT - BRIAN ROBERTS
By agreement dated February 1, 2000, in accordance to the law of British
Columbia, Canada, Digital Village World Technologies Inc., subsequently
renamed Digital Village World Technologies (Canada) Inc., entered into a
Consulting Agreement with Brian Roberts ("Roberts") whereby he would
assist the Company in completion of its Business Plan and set up its
administrative systems, on a month to month basis. Either party may
terminate this agreement, with or without cause, upon thirty days notice
to the other party.
Terms and Conditions of the agreement:
(a) Remuneration
(i) The Company agrees to issue 250,000 fully paid common shares
of DVC at par value, for all services to be performed by
Roberts under this agreement
(ii) Roberts agrees to enter a pooling agreement at the time the
shares are issued wherein he agrees that he will not sell,
transfer or otherwise dispose of any of the Shares before 18
months has elapsed from the date the Shares, directly or
indirectly, become publicly traded.
17
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
December 18, 2000
(In U.S. Dollars)
(Unaudited)
Note 16. CONSULTING AGREEMENT - BRIAN ROBERTS (cont'd)
(b) Expenses
In addition to the Shares, in (a), above, DVC shall reimburse
Roberts, for all reasonable and necessary business expenses
incurred by him in the performance of his duties, including,
without limitation, expenses for travel, meals, entertainment and
other miscellaneous business expenses. Roberts shall submit to DVC
written, itemized expense accounts for approval with such
additional substantiation and justification as DVC may reasonably
request.
(c) Non-Competition
During the term of this agreement and for a term of one year after
its termination, Roberts covenants and agrees that he will not
directly or indirectly, whether as owner, shareholder, director,
agent, officer, consultant, independent contractor, or in any other
capacity whatsoever, of a corporation, partnership or
proprietorship, compete with DVC or any of its affiliates.
Note 17. SUBSEQUENT EVENTS
Proposed Equity Funding
The Company proposes a private placement to raise $6,000,000. The
proposed funding would be used for proposed joint ventures in P.R.
China and for general working capital.
The Company has commenced negotiation with investment brokers. No
definitive agreements have been finalized at the date of issuance of
these financial statements.
When terms of the funding agreement have been finalized, the Company
will file a copy thereof with Form 8K with the SEC.
On January 26, 2001, the Company signed a subscription agreement with
Mr. Wen Yao Xu, whereby Mr. Xu subscribed for 10,000 common stocks of
the Company at a price of $1.00 per share with each unit consisting of
one share and one-half warrant entitling the holder to acquire a total
of 5,000 additional common stocks of the Company at a price of $2.00,
exercisable at any time before January 20, 2002.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DIGITAL VILLAGE WORLD TECHNOLOGIES INC.
Date March 2, 2001 By: /s/ Richard Wang
---------------------- ---------------------------------------
Name: Richard Wang
Title: President
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