U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
X Quarterly report under section 13 or 15(d) of the Securities Exchange Act of
- ----
1934 for the quarterly period ended March 31, 2001.
____ Transaction report under section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ________ to __________.
Commission File No.: 0-30851
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(Name of small business in its charter)
Nevada 88-0404114
(State or other Jurisdiction of Incorporation) (IRS Employer Id. No.)
Unit 10, 8980 Fraserwood Court
Burnaby, British Columbia
Canada V5J 5H7
(Address of Principal Office)
Issuer's telephone number: (604) 438-3598
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities 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 _____
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. At March 31, 2001, there were
12,895,000 common shares outstanding with a par value of $0.001.
Transitional Small Business Disclosure Format (Check one):
Yes No X
------- -------
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
The unaudited financial statements of the registrant for the three month periods
ended March 31, 2001, and March 31, 2000, are appended hereto. The financial
statements reflect all adjustments which are, in the opinion of management,
necessary so as to ensure a fair statement of the results for the interim period
presented.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the accompanying
financial statements for the three-month periods ended March 31, 2001 and March
31, 2000 and the Annual Report for the fiscal year ended December 31, 2000 on
Form 10KSB filed by the Company on April 17, 2001.
Certain statements in this report and elsewhere (such as in other filings by the
Company with the Securities and Exchange Commission, press releases,
presentations by the Company or its management and oral statements) may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as "expects",
"anticipates", "intends", "plans", "believes", "seeks", "estimates", and
"should" and variations of these words and similar expressions, are intended to
identify these forward-looking statements. The Company undertakes no obligation
to publicly release the result of any revisions to these forward-looking
statements, which may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Comparison of the three-month periods ended March 31, 2001 and March 31, 2000.
Overview
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. ("DV-Canada") in exchange for the
issuance of 8,490,000 shares of its authorized but previously unissued common
stock. The acquisition was accounted for as a purchase, and accordingly, the
operating results for DV-Canada are reported only for the period subsequent to
the acquisition.
The Company is a development stage company and, through its wholly owned Chinese
foreign enterprise Tianjin Navada Digital World Technologies Co. Ltd. ("WOFE"),
will manage the operations of a Chinese domestic joint venture, CNTime Group,
pursuant to the terms of a profit sharing agreement ("PSA") dated May 2, 2000
which provides for the Company to receive 80% of the profits from the operations
of the Chinese domestic joint venture with the Company required to provide
capital of at least $4,000,000 over the twelve month period commencing in May
2000. In the event that the Company is unable to (i) provide the required
capital or (ii) obtain an extension for providing the capital, the profit
allocation under the Profit Sharing Agreement will be adjusted based on the
percentage of capital actually contributed.
Results of Operations
Management of the Chinese domestic joint venture, CNTime Group, has not yet
commenced and a revision of the PSA is currently in the process of re-
negotiation. Management believes that a revised PSA will be
formalized during the second quarter of 2001. Revenue for the quarter was solely
interest earned on deposited funds and was $3,766 compared to $755 in 2000.
Expenses during the quarter, which included costs of operations of DV-Canada,
which was acquired by the Company on December 18, 2000, were $118,342 as
compared to $1,343 for the comparable period in 2000. As a result, for the
quarter ended March 31, 2001, the Company had a net loss of $114,576, as
compared to a loss of $588 for the same quarter of 2000.
General and Administrative Expenses
General and administrative expenses were $71,885 for the period ended March 31,
2001 versus $1,343 for the corresponding period in 2000. The increase was
primarily due to the addition of operating costs of DV-Canada which included
expenditures of $23,676 for professional fees, $11,824 in telephone and
utilities costs and $14,055 for travel and promotion. Salaries and benefits
expenses increased to $46,457 for the period ended March 31, 2001, from a
minimal amount in the corresponding period in 2000. The increase was mainly the
result of an increase in the number of administrative staff associated with the
acquisition of DV-Canada.
Liquidity and Capital Resources
The Company expects to incur a loss as a result of expenses associated with
compliance with the reporting requirements of the Securities Exchange Act of
1934, costs related to launch of its Chinese operations and continuation of the
Canadian business. The Company expects to launch its Chinese operations
coincident with finalizing the terms of the PSA and confirmation of an equity
financing being completed.
The cash balance at the end of the period was $5,931 compared to $64,535 at
March 31, 2000. This decrease was primarily due to increases in expenditures
related to the acquisition of DV-Canada during 2000 and operating costs
thereafter. For the period ended March 31, 2001, the Company's operating
activities used net cash of $91,626 compared to a positive cash gain of $306 in
the comparable period for 2000. The Company's financing activities during the
period provided net cash of $10,000 which consisted of a private placement of
10,000 shares of common stock at a price of $1.00 per share which also provided
the investor with warrants to purchase up to 5,000 additional common shares at a
price of $2.00 per share any time prior to February 20, 2002.
The Company has historically relied upon sales of its common stock, debt
instruments and loans from related parties to finance its operations. Additional
financing will be required to meet its obligations under the PSA and for current
and long-term development, marketing, and working capital. The Company continues
to pursue opportunities to undertake private equity financings. There can be no
assurance that such financings will take place or, if so, that it will be on
acceptable terms. The failure to obtain adequate financing will result in the
Company's operations being delayed, curtailed or prevented, and the Company may
be required to suspend or substantially modify its operations.
There were no income taxes incurred for the reporting period.
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any pending or to the best of its knowledge, any
threatened legal proceedings. No director, officer or affiliate of the Company,
or owner of record or of more than five percent (5%) of the securities of the
Company, or any associate of any such director, officer or security holder is a
party adverse to the Company or has a material interest adverse to the Company
in reference to pending litigation.
ITEM 2. SALE OF UNREGISTERED SECURITIES
In February 2001, the Company accepted funds in the amount of $10,000 as payment
for 10,000 unregistered restricted shares of its common shares sold in reliance
upon the transaction exemption afforded by Regulation S under the 1933 Act. The
transaction also included 10,000 warrants which allowed for the warrant holder
to acquire one additional share of the Company's stock for each two warrants, at
a price of $2.00 at any time prior to February 20, 2001. Also during the period,
the Company issued 20,000 restricted common shares pursuant to Regulations at a
price of $1.00 per share as compensation to Yang Geng Qi, a resident of Beijing,
China in consideration of a consulting service agreement entered into on March
10, 2001 between the Company and Yang Geng Qi.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the reporting period, no matters were submitted to a vote of security
holders.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. (i) The following is a list of exhibits filed as part of this
quarterly filing on Form 10QSB.
- Financial statements for the period ended March 31, 2001.
b. Filings on Form 8-K
(1) Form 8K filed on January 2, 2001 which reported the
following items:
- Change in control to Tianjin Teda Yu Cheng Group Co.
Ltd. as at December 18, 2000.
- Acquisition of 100% of the equity of a private
Canadian company, Digital Village World
Technologies (Canada) Inc. as at December 18,
2000.
- Change in certifying accountant from Parker & Co.
to Moen and Company as at December 28, 2000.
(2) Form 8K/A filed on January 23, 2001 which included a
letter from the Company's previous auditor, Parker &
Co., confirming that during their management, there
were no disagreements on any matter of accounting
principles or practice, financial statements,
disclosure or auditing scope or procedure or any
reportable event.
(3) Form 8K/A filed on March 5, 2001 which included the
pro forma financial statements of the Company
reflecting the acquisition of Digital Village World
Technologies (Canada) Inc. as at December 18, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DIGITAL VILLAGE WORLD
TECHNOLOGIES INC.
/s/ Richard Wang
-----------------------------------
Richard Wang, President
Date: May 18, 2001
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
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
--------------------------------------
To the Directors and Shareholders of
Digital Village World Technologies, Inc. (formerly Body Concepts, Corp.)
(A Nevada Corporation)
(A Development Stage Company)
We have reviewed the accompanying Consolidated Balance Sheet of Digital Village
World Technologies, Inc. (formerly Body Concepts, Corp.) (A Nevada Corporation)
(A Development Stage Company) as of March 31, 2001, and the Statement of
Operations, Cash Flows and Changes in Stockholders' Equity for the three month
period then ended. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with United States generally accepted accounting principles (GAAP).
"Moen and Company"
Chartered Accountants
Vancouver, British Columbia, Canada
May 17, 2001
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(FORMERLY BODY CONCEPTS, INC.)
(A Nevada Corporation)
(A Development Stage Company)
Consolidated Balance Sheets
March 31, 2001 and 2000
(In US Dollars)
(Unaudited)
2001 2000
------------ ----------
Assets
Current Assets
Cash and cash equivalents (note 3) $ 5,931 $ 64,535
Accounts receivable (note 4) 11,706 --
Prepaid expenses and deposit 5,107 --
------------ ---------
22,744 64,535
------------ ---------
Fixed Assets, at cost (note 2) 83,028 --
Less: accumulated depreciation (5,855) --
------------ ---------
77,173 --
------------ ---------
Goodwill, at cost (note 5) 48,070 --
------------ ---------
$ 147,987 $ 64,535
============ =========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued (note 6) $ 15,360 $ 894
Current portion of loan (note 8) 6,811
Due to related party (note 7(b)) 144,423 --
------------ ---------
166,594 894
------------ ---------
Long-term Liabilities
Loan payable (note 8) 8,514 --
------------ ---------
Stockholders' Equity
Capital stock (note 10)
Authorized
62,500,000 common shares at $0.0004 par value
Issued
12,895,000 common shares (2000 - 4,375,000 shares - post split) - par value 5,158 1,750
Paid in capital in excess of par value of stock 105,738 75,750
------------ ---------
110,896 77,500
Deficit, accumulated during the development stage (137,665) (13,859)
Cumulative translation (note 2) (352) --
------------ ---------
(27,121) 63,641
------------ ---------
$ 147,987 $ 64,535
============ =========
Approved on behalf of the board:
"Richard Wang" , Director
- ---------------------
"Edward Chen" , Director
- ---------------------
See Accompanying Notes and Independent Accountants' Review Report
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(FORMERLY BODY CONCEPTS, INC.)
(A Nevada Corporation)
(A Development Stage Company)
Consolidated Statements of Operations
(In US Dollars)
(Unaudited)
Cumulative From Three Months
Inception Date Ended
of Sep. 15, 1998 March 31,
to March 31, ----------------------------------------
2001 2001 2000
------------------ ---------------- --------------
Revenue
Interest and other income $ 7,620 $ 3,766 $ 755
------------------ ---------------- --------------
Administration Costs
Advertising 712 -- --
Bank charges and interest 1,025 520 33
Consulting 7,327 1,323 --
Depreciation 5,855 5,349 --
License, dues and insurance 985 --
Office costs 3,496 3,178 --
Rentals and leases 8,270 6,049 500
Professional fees 31,613 23,676 550
Salary and benefits 30,404 26,457 --
Stock-based compensation 20,000 20,000 --
Telephone and utilities 12,357 11,824 --
Transfer agent and filing fees 7,247 5,911 260
Travel and promotion 15,994 14,055 --
------------------ ------------------ --------------
145,285 118,342 1,343
------------------ ---------------- --------------
Net profit (loss) for the period $ (137,665) $ (114,576) $ (588)
================== ================ ==============
Basic and diluted profit (loss) per share $ (0.01) $ (0.00)
================ ==============
Weighted average number of
common shares used to
compute basic and fully
diluted loss per share 12,875,000 4,375,000
================ ==============
See Accompanying Notes and Independent Accountants' Review Report
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(FORMERLY BODY CONCEPTS, INC.)
(A Nevada Corporation)
(A Development Stage Company)
Consolidated Statements of Cash Flows
(In US Dollars)
(Unaudited)
Cumulative From Three Months
Inception Date Ended
of Sep. 15, 1998 March 31,
to March 31, -----------------------------
2001 2001 2000
------------- ------------ ----------
Cash derived from (used for)
Operating activities
Profit (loss) for the period $ (137,665) $ (114,576) $ (588)
Items not requiring use of cash
Depreciation 5,855 5,349 --
Stock-based compensation 20,000 20,000
Cumulative translation (352) 116 --
Changes in non-cash
working capital items
Accounts receivable (11,706) (1,386) --
Prepaid expenses and deposit (5,107) (5,107) --
Accounts payable and accrued 15,360 (4,319) 894
------------- ------------ ---------
(113,615) (99,923) 306
------------- ------------ ---------
Financing activities
Issuance of shares 90,896 10,000 --
Loan payable 15,325 (1,703) --
Due to related parties 144,423 -- --
------------- ------------ ---------
250,644 8,297 --
------------- ------------ ---------
Investing activities
Capital assets purchased (83,028) -- --
Goodwill (48,070) -- --
------------- ------------ ---------
(131,098) -- --
------------- ------------ ---------
Cash and cash equivalents, increase (decrease)
during the period 5,931 (91,626) 306
Cash and cash equivalents, beginning of period 97,557 64,229
------------- ------------ ---------
Cash and cash equivalents, end of period $ 5,931 $ 5,931 $ 64,535
============= ============ =========
See Accompanying Notes and Independent Accountants' Review Report
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(FORMERLY BODY CONCEPTS, INC.)
(A Nevada Corporation)
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
From Date of Inception on September 15, 1998 to March 31, 2001
(In U.S. Dollars)
(Unaudited)
Deficit Accum-
Number of Additional Total ulated During Total
Common par Paid-in Capital The Develop- Cumulative Stockholders'
Shares Value Capital Stock ment Stage Translation Equity
----------------------------------------------------------------------------------
9/15/98 issuance of common
stock for cash 1,000,000 $1,000 $ 1,500 $ 2,500 $ 2,500
12/31/98 issuance of common
stock for cash 750,000 750 74,250 75,000 75,000
Net loss for the year ended December 31, 1998 (737) (737)
----------------------------------------------------------------------------------
Balance, December 31, 1998 1,750,000 1,750 75,750 77,500 (737) 76,763
Net loss for the year ended December 31, 1999 (12,534) (12,534)
----------------------------------------------------------------------------------
Balance, December 31, 1999 1,750,000 1,750 75,750 77,500 (13,271) 64,229
Balance, May 19, 2000
before forward split 1,750,000 1,750 75,750 77,500 (13,271) 64,229
==================================================================================
05/19/00 2.5 to 1 forward split 4,375,000 1,750 75,750 77,500 (13,271) 64,229
12/18/00 share exchange 8,490,000 3,396 3,396 3,396
Net loss for the year ended December 31, 2000 (9,818) (9,818)
Cumulative translation (468) (468)
----------------------------------------------------------------------------------
12,865,000 5,146 75,750 80,896 (23,089) (468) 57,339
2/7/01 issuance of common
stock for cash 10,000 4 9,996 10,000 10,000
3/30/01 issuance of common
stock for compensation 20,000 8 19,992 20,000 20,000
Net loss for three months ended March 31, 2001 (114,576) (114,576)
Cumulative translation 116 116
----------------------------------------------------------------------------------
Balance, March 31, 2001 12,895,000 $5,158 $105,738 $110,896 $(137,665) $(352) $(27,121)
==================================================================================
See Accompanying Notes and Independent Accountants' Review Report
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(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 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
===============
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(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 in Chinese and English, 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)
--------
62,300
--------
$ 64,171
========
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary, Digital
Village World Technologies (Canada) Inc. All significant intercompany
transactions and balances have been eliminated.
Basis of presentation
These financial statements have been prepared in accordance with
Accounting Principles Generally Accepted in the United States
("USGAAP).
Development stage company
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(In U.S. Dollars)
(Unaudited)
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
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.
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 profit per share
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(In U.S. Dollars)
(Unaudited)
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
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 March 31, 2001 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.
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 March 31, 2001, the fixed assets and accumulated depreciation
are as follows:
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(In U.S. Dollars)
(Unaudited)
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
At Cost Accumulated Net Book
(12/18/00) Depreciation Value
------------ ------------ -----------
Office equipment $ 5,430 $ 291 5,139
Vehicles 28,350 1,586 26,764
Computer equipment 49,248 3,978 45,270
------------ ------------ -----------
$ 83,028 $ 5,855 $ 77,173
============ ============ ===========
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.
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.
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(In U.S. Dollars)
(Unaudited)
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:
Three Months Ended
March 31,
--------------------------------
2001 2000
-------------- ---------------
Beginning balance $ (468) $ --
Change during the period 116 --
-------------- ---------------
Ending balance $ (352) $ --
============== ===============
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.
Revenue Recognition
The Securities and Exchange Commission (SEC) issued Staff Accounting
Bulletin (SAB) 101, Revenue Recognition in Financial Statements, in
December 1999. The SAB summarizes certain of the SEC staff's views in
applying generally accepted accounting principles to revenue recognition
in financial statements. During the current year, the Company performed
a review of its revenue recognition policies and determined that it is
in compliance with SAB 101.
Web Site Development Expenses
Web site development expenses relate to the development of new online
services and consist of employee compensation, as well as costs for
content, facilities and equipment. The consensus in the Financial
Accounting Standards Board Emerging Issues Task Force (EITF) Issue No.
00-2, Accounting for Web Site Development Costs, requires that certain
costs to develop Web sites be capitalized (and amortized) or expensed,
depending on the nature of the costs.
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(In U.S. Dollars)
(Unaudited)
Shipping and Handing Fees and Costs
In September 2000, the Financial Accounting Standards Board Emerging
Issues Task Force (EITF) reached a final consensus on EITF Issue No. 00-
10, Accounting for Shipping and Handling Fees and Costs. This consensus
requires that all amounts billed to a customer in a sale transaction
related to shipping and handling, be classified as revenue. The Company
historically has netted shipping charges to customers with shipping and
handling costs which are included in operating expenses in the
Statements of Operations. With respect to the classification of costs
related to shipping and handling incurred by the seller, the EITF
determined that the classification of such costs is an accounting policy
decision that should be disclosed. The Company will adopt the consensus
in the Issue in fiscal 2001.
Note 3. CASH AND CASH EQUIVALENTS - $5,931
The total for cash and cash equivalents as at March 31, 2001, is made
up as follows:
Cash in bank current accounts $ 2,432
Cash in lawyer's trust account 3,499
-------------
Total $ 5,931
=============
Note 4. ACCOUNTS RECEIVABLE - $11,706
The accounts receivable of $11,706 as at March 31, 2001 is the
Canadian Goods and Services Taxes refundable
Note 5. GOODWILL - $48,070
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 after receive from proposed operations.
Note 6. ACCOUNTS PAYABLE - $15,360
Details of the total of accounts payable and accrued as at March 31,
2001, are as follows:
Blake, Cassels & Graydon, LLP $ 1,533
Frascona, Joiner, Goodman and Greenstein, P.C.
Accrued legal fees 1,871
Telephone Bills 3,512
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(In U.S. Dollars)
(Unaudited)
Office rent and courier expenses 3,634
Payroll and payroll deductions payable 4,810
-----------
Total $ 15,360
===========
Note 7. RELATED PARTY TRANSACTIONS - DVC
The amount of $144,423 is due to a related party, Tianjin Teda Yu
Cheng Group, as at March 31, 2001 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 - $15,325
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 Mr. Richard Wang. As at March 31, 2001, the principal balance is
as follows:
Initial loan $ 27,246
Repayment to March 31, 2001 11,921
------------
Balance, March 31, 2001 15,325
Current portion of loan 6,811
------------
Loan term loan at March 31, 2001 $ 8,514
============
Note 9. LEASE OBLIGATIONS
a) Vehicle 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:
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 March 31, 2001, are as follows:
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(In U.S. Dollars)
(Unaudited)
Additional
Issued Number of Par Paid-in
Date Shares Value Capital Total
------------ --------------- ----------- ------------- -------------
private placement 9/15/1998 1,000,000 $ 1,000 $ 1,500 $ 2,500
private placement 12/31/1998 750,000 750 74,250 75,000
--------------- ---------- ------------- -------------
Balance 12/31/1998 1,750,000 1,750 75,750 77,500
--------------- ---------- ------------- -------------
Balance 12/31/1999 1,750,000 1,750 75,750 77,500
--------------- ---------- ------------- -------------
Balance, before
forward split 5/19/2000 1,750,000 $ 1,750 $ 75,750 $ 77,500
=============== ========== ============= =============
2.5:1 forward split 5/19/2000 4,375,000 1,750 75,750 77,500
Share exchange 12/18/2000 8,490,000 3,396 3,396
--------------- ---------- ------------- -------------
Balance 12/31/2000 12,865,000 5,146 75,750 80,896
issued for cash 2/7/2001 10,000 4 9,996 10,000
issued for compensation 3/30/2001 20,000 8 19,992 20,000
--------------- ---------- ------------- -------------
Balance 3/31/2001 12,895,000 $ 5,158 $ 105,738 $ 110,896
=============== =========== ============= =============
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 $137,665 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, prepaid expenses and deposit,
accounts payable and accrued, 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
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(In U.S. Dollars)
(Unaudited)
The Company does not have liabilities as at December 31, 2000, for
pension, post-employment benefits or post-retirement benefits. The
Company does not have a pension plan.
Note 14. NEW BUSINESS - PROFIT SHARING AGREEMENT
By agreement for reference dated May 1, 2000, Digital Village World
Technologies Inc, subsequently renamed Digital Village 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.
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(In U.S. Dollars)
(Unaudited)
Note 14. NEW BUSINESS - PROFIT SHARING AGREEMENT (cont'd)
(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.
(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 $4 Million 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 $4 Million US.
(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
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(In U.S. Dollars)
(Unaudited)
Note 14. NEW BUSINESS - PROFIT SHARING AGREEMENT (cont'd)
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
3/rd/ 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.
(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
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(In U.S. Dollars)
(Unaudited)
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.
(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.
(k) 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.
(l) 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 15. 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
DIGITAL VILLAGE WORLD TECHNOLOGIES, INC.
(formerly Body Concepts, Inc.)
(A Nevada Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2001
(In U.S. Dollars)
(Unaudited)
(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.
(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 16. SUBSEQUENT EVENT
Proposed Equity Funding
The Company is currently in the final stages of negotiation with a
major investor with respect to an investment into the Company.
No definitive agreements have been signed at the date of these
financial statements, and would be subject to regulatory approvals.