UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Savannah River Group, Inc.
(Name of small business issuer in its charter)
Nevada 76-0616474
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
688 West Hastings Street, Suite 910, Vancouver, BC, Canada V6B 1P1
Address of principle executive offices) (Zip Code)
Issuer's telephone number (604) 632-3820
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
To be so registered each class is to be registered
Securities to be registered under Section 12(g) of the Act:
_________________________________Common Stock par value $0.001
(Title of class)
(Title of class)
PART I
Item 1. Description of business
General
Savannah River Group, Inc. was incorporated under the laws of the State
of Nevada on August 19, 1999, and is in its early developmental and
promotional stages. To date, Savannah River Group, Inc.'s only activities
have been organizational, directed at acquiring its principal asset,
raising its initial capital and developing its business plan. Savannah
River Group, Inc. has not commenced commercial operations. Savannah River
Group, Inc. has no full time employees and owns no real estate. Savannah
River Group, Inc.'s business plan is to determine the feasibility of
selling Vitamineralherb.com products to specific markets. Should Savannah
River Group, Inc. determine that the plan is feasible, it intends to market
high-quality, low-cost vitamins, minerals, nutritional supplements, and
other health and fitness products to medical professionals, alternative
health professionals, martial arts studios and instructors, sports and
fitness trainers, other health and fitness professionals, school and other
fund raising programs and other similar types of customers via the Internet
for sale to their clients.
Acquisition of the license
On February 14, 2000, Savannah River Group, Inc. acquired a sub-license
agreement with David R. Mortenson & Associates. The License Agreement
grants an exclusive right to distribute Vitamineralherb.com products to
health and fitness professionals in the state of Colorado via the Internet.
Savannah River Group, Inc. acquired the license under the terms of a
settlement agreement by and between Savannah River Group, Inc. and
Mortenson & Associates, an affiliate of Vitamineralherb.com. Mortenson &
Associates had granted Savannah River Group, Inc. a license to distribute
and produce an oxygen enriched water product, called "Biocatalyst," for
remediation of sewage and waste water in septic tanks and waste water
treatment facilities. Mortenson & Associates acquired its right to
sublicense Biocatalyst to Savannah River Group, Inc. from NW Technologies
Inc. As a result of a legal dispute between David R. Mortenson, Mortenson
& Associatesand NW Technologies, Mortenson & Associates was unable to
fulfill its obligations to Savannah River Group, Inc. under the license.
Under the terms of the settlement agreement, Vitamineralherb.com, an
affiliate of Mortenson & Associates, granted to Savannah River Group, Inc.
the license to distribute Vitamineralherb.com products in part for its
agreement not to pursue its claims against Mortenson & Associates.
Savannah River Group, Inc. paid a total consideration of $2,000.00 for the
Vitamineralherb.com license. Vitamineralherb.com has granted a total of 43
licenses in the United States, Canada and England.
The license
Savannah River Group, Inc. has a three-year license to market and sell
vitamins, minerals, nutritional supplements, and other health and fitness
products to medical professionals, alternative health professionals,
martial arts studios and instructors, sports and fitness trainers, other
health and fitness professionals, school and other fund raising programs
and other similar types of customers via the Internet for sale to their
clients. Savannah River Group, Inc.'s territory is the state of Georgia.
The license will be automatically renewed unless Savannah River Group, Inc.
or Vitamineralherb.com gives the other notice of its intent not to renew.
Vitamineralherb.com has agreed to provide certain business
administrative services to Savannah River Group, Inc., including product
development, store inventory, website creation and maintenance,
establishment of banking liaisons, and development and maintenance of an
order fulfillment system, thereby enabling Savannah River Group, Inc. to
focus strictly on marketing and sales. Vitamineralherb.com's website is
operational and it is able to accept payment by check, money order, wire
transfer or credit card (Visa and Master Card). Vitamineralherb.com's
website address is: www.vitamineralherb.com. Vitamineralherb.com has a
third party clearing bank that clears Visa and Mastercard payments and
immediately forwards the payments to Vitamineralherb.com's bank. Some
services, such as development of the website and the order fulfillment
system will be provided by Vitamineralherb.com, while others, such as
product development and store inventory, will be provided by the product
supplier. Vitamineralherb.com sets the price for products based on the
manufacturer's price, plus a mark up which provides a 10% commission to
Vitamineralherb.com and a profit to Savannah River Group, Inc.
Savannah River Group, Inc. and its customers will also be able to
request quotes for and order custom-formulated and custom-labeled products
via the website. Three different labeling options are available to
customers: First, products may be ordered with the manufacturer's standard
label with no customization. Second, the fitness or health professional
may customize the labels by adding its name, address, and phone number to
the standard label. In most cases, these labels would be a standardized
label with product information and a place on the label for the wording
"Distributed by." This gives these health and fitness professionals a
competitive edge. Third, labels may be completely customized for the
health or fitness professional.
When a fitness or health professional becomes a client, Savannah River
Group, Inc.'s salesperson will show the client how to access the
Vitamineralherb website. The client is assigned an identification number
that identifies it by territory, salesperson, and business name, address,
and other pertinent information. The health or fitness professional may
then order the products it desires directly through the Vitamineralherb.com
website. It is anticipated that the customer will pay for the purchase
with a credit card, electronic check ("e-check"), or debit card. All
products will be shipped by the manufacturer directly to the professional
or its clients.
The website is maintained by Vitamineralherb.com, and each licensee pays
an annual website maintenance fee of $500. All financial transactions are
handled by Vitamineralherb.com's Internet clearing bank. The
Vitamineralherb webmaster downloads e-mail orders several times a day,
checks with clearing bank for payment and then submits the product order and
electronic payment to International Formulation and Manufacturing.
Vitamineralherb.com then forwards the money due Savannah River Group, Inc.
via electronic funds transfer, Vitamineralherb's software tracks all sales
through the customer's identification number, and at month end, e-mails to
Savannah River Group, Inc. and customer a detailed report including sales
commissions. Vitamineralherb has indicated that it will use e-commerce
advertising such as banner ads on major servers and websites, as well as
trying to insure that all major search engines pick Vitamineralherb.com
first. Sales originating from the website to customers located in the state
of Georgia will automatically be assigned to Savannah River Group, Inc.
Background on the manufacturer and distributor
On June 9, 1999, Vitamineralherb.com entered into a manufacturing
agreement with International Formulation and Manufacturing, Inc., a
nutraceuticals manufacturing firm, located in San Diego, California, USA.
International Formulation and Manufacturing is a contract manufacturer of
vitamin, mineral, nutritional supplement, and alternative health products
for various marketing organizations; International Formulation and
Manufacturing does no retail marketing. In addition to a line of standard
products, International Formulation and Manufacturing is able to
manufacture custom blended products for customers. International
Formulation and Manufacturing also has the capability to supply privately
labeled products for Savannah River Group, Inc.'s customers at a minimal
added cost.
On July 5, 2001, Vitamineralherb.com entered into a Letter of Agreement
with Gaia Garden Herbal Dispensary, located in Vancouver, British Columbia,
Canada. Gaia Garden has agreed to provide, at a pre-determined wholesale
price, vitamin and herbal products to Vitamineralherb.com, its license
holders and clients. Gaia Garden Herbal Dispensary also has the capability
to supply privately labeled products for Savannah River Group's individual
clients and customers.
Implementation of business plan: Milestones
Savannah River Group, Inc.'s business plan is to determine the
feasibility of selling Vitamineralherb.com products to targeted markets.
Should Savannah River Group, Inc. determine that its business plan is
feasible, it intends to employ salespeople to call on medical
professionals, alternative health professionals, alternative health
professionals, martial arts studios and instructors, sports and fitness
trainers, other health and fitness professionals, school and other fund
raising programs and other similar types of customers to interest these
professionals in selling to their clients high-quality, low-cost vitamins,
minerals, nutritional supplements and other health and fitness products.
These professionals would sell the products to their clients via the
Internet. Savannah River Group, Inc. will achieve implementation of its
business plan by meeting the following milestones:
Milestone 1: Market Survey. Management of Savannah River
Group, Inc. has retained a company to perform a marketing survey
of the State of Georgia. The survey was conducted by
DealBuzz.com Corp. during the third week of July, 2001. The
survey consisted of contacting over 200 chiropractors, health and
fitness facilities and alternative medical practitioners. The
results were very encouraging with 55% of the prospective
customers responding favorably. The cost of the survey was
$1,500.00 and was paid for by the President of the company.
Milestone 2: Hire Salespeople. Should Savannah River Group,
Inc. determine that the exploitation of the license is feasible,
it will then have to engage salespeople to market the products.
Savannah River Group, Inc. expects that it may hire two
salespeople during its first year of operation. The hiring
process would include running advertisements in the local
newspaper and conducting interviews. It is anticipated that
hiring the salespeople may take four to eight weeks. The cost of
recruiting salespeople, not including compensation, is estimated
at $3,000.00.
Our plan is to have them initially cover the major cities,
thereby keeping expenses to a minimum. The more rural areas and
smaller towns will be pre-qualified by telephone marketing prior
to making actual sales calls. We plan to pay our sales people
with a basic draw against commissions of approximately $1,500 per
month. The management of Savannah River Group, Inc. plans to
move forward with the recruitment and hiring of an initial sales
staff within the next nine months. The company has received no
commitment for the funds required to accomplish the hiring of a
sales staff.
Milestone 3: Establish an Office. Savannah River Group, Inc.
would then have to establish an office or offices for the sales
force in the appropriate market or markets. This would include
an office, equipment such as computers and telephones, and sample
inventory for the salespeople. It is anticipated that it may
take eight to twelve weeks to locate acceptable office space and
select and purchase equipment. The expense of office rental,
equipment and inventory samples is estimated to be $45,000 per
year.
Milestone 4: Development of Advertising Campaign. The next step
would be to develop an advertising campaign, including
establishing a list of prospects based on potential clients
identified in the market survey, and designing and printing sales
materials. It is anticipated that it would take approximately
six to ten weeks to develop the advertising campaign, although,
depending on the availability of resources, Savannah River Group,
Inc. will attempt to develop its advertising campaign
concurrently with establishing an office. The cost of developing
the campaign is estimated at approximately $12,000 per year.
Milestone 5. Implementation of Advertising Campaign. We believe
that direct mail is the best and most effective method of
reaching our potential clients/customers. Since we are targeting
a fairly narrow segment of the population as potential retailers,
we believe a well designed mail piece and cover letter with
follow up by telephone should be adequate to introduce us to our
potential clients. The design and production of a mailing piece
is estimated at $6,000.
Milestone 6: Generation of Revenues. The management of Savannah
River Group, Inc. believes that a planned, steady growth pattern
will best serve the company. By keeping costs low and
concentrating first on the major population centers, we believe
that we can generate revenues in a short period of time. We hope
that clients would begin placing orders within weeks of a sales
call, but it may take several months before people begin to
purchase products.
No commitment to provide additional funds have been made by
management or shareholders. Accordingly, there can be no
assurance that any additional funds will be available on terms
acceptable to Savannah River Group, Inc.
Growth of the Internet and electronic commerce
The Internet has become an increasingly significant medium for
communication, information and commerce. According to NUA Internet
Surveys, as of February 2000, there were approximately 275.5 million
Internet users worldwide. At the IDC Internet Executive Forum held on
September 28-29, 1999, IDC stated that in 1999 US $109 billion in
purchases were impacted by the Internet. IDC's vice president, Sean
Kaldor, indicated that figure is expected to increase more than ten-
fold over the next five years to US $1.3 trillion in 2003, with $842
million completed directly over the Web. Savannah River Group, Inc.
believes that this dramatic growth presents significant opportunities
for online retailers.
We have assembled some of the available data regarding Internet
commerce that will be a portion of the information that is to be
digested in order to complete our study as to feasibility.
Web Commerce: 1996 $2.6 billion
2000 $220 billion
Web Users 1996 28 million
2000 175 million
(Source: Ziff Davis)
Nearly one trillion will be spent on Information Technology (IT) in
2000, representing about 60 percent of all capital spending compared
to just 10% of all capital spending in 1980.
(Source: NUA)
Nearly half of US Internet users have purchased a product or
service online.
(Source: A. C. Nielsen - May 11, 2000)
Consumers who have used the Internet since 1995 spend an average of
$388 per transaction while those who have been online for a year only
spend an average of $187 per transaction. The equivalent figure for
those who have been using the Internet since 1997 is $298.
(Source: National Association of Business Economics)
An estimated 120 million Internet users, or 40 percent of the total
number online, have already made an online purchase, according to a
study from the Angus Reid Group. Over 50% of all online transactions
were made in the USA. US users made an average of seven purchases in
the three months before the survey, spending an average of $828. The
worldwide average spent by an individual in the same period was less
than $500.
75% of online shoppers in the US and Canada pay for e-commerce
purchases by credit card. Direct bank drafts, bank transfers and cash
on delivery are the other most favored payment methods. 93% of
Internet shoppers around the world said they are somewhat satisfied or
Asomewhat satisfied@ or Aestremely satisfied@ with their online
shopping experience.
(Source: Angus Reid Group)
Internet advertising revenue more than doubled in 1999, coming to a
year-end total of $4.62 billion.
(Source: Internet Advertising Bureau [IAB])
As of March, 2000 there was a world-wide total of 304,360,000
Internet connections. The breakdown is as follows:
Africa 2,589,000
Asia/Pacific 68,900,000
Europe 83,350,000
Middle East 1,900,000
USA & Canada 136,860,000
South Africa 10,740,000
(Source: Various; Methodology - Compiled by: NUA Internet
Surveys)
Financial results from the first quarter of this year show that
while Amazon nearly doubled its revenue, it sustained bigger losses
than during the same period last year. Despite this, sales were up
95 percent from USD294 million in 1999 to USD574 million in 2000.
(Source: Reuters)
Global e-commerce will be worth 7.0 trillion dollars by 2004. 50%
of global sales will come from the US.
(Source: Forrester)
There is intense competition in the vitamin and herbal supplement
industry and Savannah River Group, Inc. may not be able to compete.
Many of our competitors have greater financial and other resources,
better distribution networks and better name recognition. Savannah
River Group can not guarantee that it will be able to successfully
compete in the industry and achieve any degree of profitability.
The vitamin and alternative health product market.
In Recent years, a growing awareness of vitamins, herbs, and other
dietary supplements by the general public has created a whole new
segment of the field of medicine and health care products. According
to Juniper Communications, online sales of such products are expected
to be $434 million US in the calendar year 2003, up from $1 million in
1998.
The electronic commerce industry is new, rapidly evolving and
intensely competitive, and Savannah River Group, Inc. expects
competition to intensify in the future. Barriers to entry into the
electronic commerce business are minimal and current or new
competitors can launch sites at a relatively low cost. In addition,
the vitamin supplement, mineral and alternative health product market
is very competitive and highly fragmented with no dominant leader.
Competitors can be divided into several groups including:
- - traditional vitamins, supplements, minerals and alternative health
products retailers;
- - the online retail initiatives of several traditional vitamins,
supplements, minerals and alternative health products retailers;
- - online retailers of pharmaceutical and other health-related products
that also carry vitamins, supplements, minerals and alternative health
products;
- - independent online retailers specializing in vitamins, supplements,
minerals and alternative health products;
- - mail-order and catalog retailers of vitamins, supplements, minerals
and alternative health products, some of which have direct sales
organizations, retail drugstore chains, health food store merchants,
mass market retail chains and various manufacturers of alternative
health products.
Many of Savannah River Group, Inc. potential competitors have
longer operating histories, larger customer or user base, greater
brand recognition and significantly greater financial, marketing and
other resources than we have. In addition, an online retailer may be
acquired by, receive investments from, or enter into other commercial
relationships with, larger, well-established and well-financed
companies as use of the Internet and other electronic services
increase.
Competitors have and may continue to have aggressive pricing
policies and devote substantially more resources to website and
systems development than Savannah River Group, Inc. does. Increased
competition may result in reduced operating margins and loss of market
share.
Savannah River Group, Inc. believes that the principal competitive
factors in its market are:
- ability to attract and retain customers;
- breadth of product selection;
- product pricing;
- ability to customize products and labeling;
- quality and responsiveness of customer service.
Savannah River Group, Inc. believes that it can compete favorably
on these factors. However, we will have no control over how
successful our competitors are in addressing these factors. In
addition, Savannah River Group, Inc's online competitors can duplicate
many of the products or services offered on the VitaMineralHerb.com
site.
Regulatory environment
The manufacturing, processing, formulating, packaging, labeling and
advertising of the products Savannah River Group, Inc. sells in Colorado
are or may be subject to regulation by the Food & Drug Administration which
administers the Federal Food, Drug, & Cosmetics Act along with relevant
regulation thereto. Regulated products include herbal remedies, natural
health remedies, functional foods and nutraceuticals.
The manufacturing, processing, formulating, packaging, labeling and
advertising of the products Savannah River Group, Inc. sells may also be
subject to regulation by one or more U.S. federal agencies, including the
Food and Drug Administration, the Federal Trade Commission, the United
States Department of Agriculture and the Environmental Protection Agency.
These activities also may be regulated by various agencies of the states,
localities and foreign countries in which consumers reside.
The Food and Drug Administration, in particular, regulates the
formulation, manufacture, labeling and distribution of foods, including
dietary supplements, cosmetics and over-the-counter homeopathic drugs.
Under the Federal Food, Drug, and Cosmetic Act, the Food and Drug
Administration may undertake enforcement actions against companies
marketing unapproved drugs, or "adulterated" or "misbranded" products. The
remedies available to the Food and Drug Administration include: criminal
prosecution; an injunction to stop the sale of a company's products;
seizure of products, adverse publicity; and "voluntary" recalls and
labeling changes.
Food and Drug Administration regulations require that certain
informational labeling be presented in a prescribed manner on all foods,
drugs, dietary supplements and cosmetics. Specifically, the Food, Drug, and
Cosmetic Act requires that food, including dietary supplements, drugs and
cosmetics, not be "misbranded." A product may be deemed an unapproved drug
and "misbranded" if it bears improper claims or improper labeling. The Food
and Drug Administration has indicated that promotional statements made
about dietary supplements on a company's website may constitute "labeling"
for purposes of compliance with the provisions of the Food, Drug, and
Cosmetic Act. A manufacturer or distributor of dietary supplements must
notify the Food and Drug Administration when it markets a product with
labeling claims that the product has an effect on the structure or function
of the body. Noncompliance with the Food, Drug, and Cosmetic Act, and
recently enacted amendments to that Act discussed below, could result in
enforcement action by the Food and Drug Administration.
The Food, Drug, and cosmetic Act has been amended several times with
respect to dietary supplements, most recently by the Nutrition Labeling and
Education Act of 1990 and the Dietary Supplement Health and Education Act
of 1994. The Dietary Supplement Health and Education Act created a new
statutory framework governing the definition, regulation and labeling of
dietary supplements. With respect to definition, the Dietary Supplement
Health and Education Act created a new class of dietary supplements,
consisting of vitamins, minerals, herbs, amino acids and other dietary
substances for human use to supplement the diet, as well as concentrates,
metabolites, extracts or combinations of such dietary ingredients.
Generally, under the Dietary Supplement Health and Education Act, dietary
ingredients that were on the market before October 15, 1994 may be sold
without Food and Drug Administration pre-approval and without notifying the
Food and Drug Administration. In contrast, a new dietary ingredient, i.e.,
one not on the market before October 15, 1994, requires proof that it has
been used as an article of food without being chemically altered or
evidence of a history of use or other evidence of safety establishing that
it is reasonably expected to be safe. Retailers, in addition to dietary
supplement manufacturers, are responsible for ensuring that the products
they market for sale comply with these regulations. Noncompliance could
result in enforcement action by the Food and Drug Administration, an
injunction prohibiting the sale of products deemed to be non compliant, the
seizure of such products and criminal prosecution.
The Food and Drug Administration has indicated that claims or statements
made on a company's website about dietary supplements may constitute
"labeling" and thus be subject to regulation by the Food and Drug
Administration. With respect to labeling, the Dietary Supplement Health and
Education Act amends, for dietary supplements, the Nutrition Labeling and
Education Act by providing that "statements of nutritional support," also
referred to as "structure/function claims," may be used in dietary
supplement labeling without Food and Drug Administration pre-approval,
provided certain requirements are met. These statements may describe how
particular dietary ingredients affect the structure or function of the
body, or the mechanism of action by which a dietary ingredient may affect
body structure or function, but may not state a drug claim, i.e., a claim
that a dietary supplement will diagnose, mitigate, treat, cure or prevent a
disease. A company making a "statement of nutritional support" must possess
substantiating evidence for the statement, disclose on the label that the
Food and Drug Administration has not reviewed the statement and that the
product is not intended for use for a disease and notify the Food and Drug
Administration of the statement within 30 days after its initial use. It is
possible that the statements presented in connection with product
descriptions on Savannah River Group, Inc. site may be determined by the
Food and Drug Administration to be drug claims rather than acceptable
statements of nutritional support. In addition, some of Savannah River
Group, Inc.'s suppliers may incorporate objectionable statements directly
in their product names or on their products' labels, or otherwise fail to
comply with applicable manufacturing, labeling and registration
requirements for over-the-counter or homeopathic drugs or dietary
supplements. As a result, Vitamineralherb.com may have to remove
objectionable statements or products from its site or modify these
statements, or product names or labels, in order to comply with Food and
Drug Administration regulations. Such changes could interfere with Savannah
River Group, Inc.'s marketing or products and could cause us to incur
significant additional expenses.
In addition, the Dietary Supplement Health and Education Act allows the
dissemination of "third party literature" in connection with the sale of
dietary supplements to consumers at retail if the publication meets
statutory requirements. Under the Dietary Supplement Health and Education
Act, "third party literature" may be distributed if, among other things, it
is not false or misleading, no particular manufacturer or brand of dietary
supplement is promoted, a balanced view of available scientific information
on the subject matter is presented and there is physical separation from
dietary supplements in stores. The extent to which this provision may be
used by online retailers is not yet clear, and Savannah River Group, Inc.
cannot assure you that all pieces of "third party literature" that may be
disseminated in connection with the products Savannah River Group, Inc.
offers for sale will be determined to be lawful by the Food and Drug
Administration. Any such failure could render the involved product an
unapproved drug or a "misbranded" product, potentially subjecting us to
enforcement action by the Food and Drug Administration, and could require
the removal of the non-compliant literature from Vitarmineralherb.com's
website or the modification of Savannah River Group, Inc.'s selling
methods, interfering with Savannah River Group, Inc.'s continued marketing
of that product and causing us to incur significant additional expenses.
Given the fact that the Dietary Supplement Health and Education Act was
enacted only five years ago, the Food and Drug Administration's regulatory
policy and enforcement positions on certain aspects of the new law are
still evolving. Moreover, ongoing and future litigation between dietary
supplement companies and the Food and Drug Administration will likely
further refine the legal interpretations of the Dietary Supplement Health
and Education Act. As a result, the regulatory status of certain types of
dietary supplement products, as well as the nature and extent of
permissible claims will remain unclear for the foreseeable future. Two
areas in particular that pose potential regulatory risk are the limits on
claims implying some benefit or relationship with a disease or related
condition and the application of the physical separation requirement for
"third party literature" as applied to Internet sales.
In addition to the regulatory scheme under the Food, Drug and Cosmetic
Act, the advertising and promotion of dietary supplements, foods, over-the-
counter drugs and cosmetics is subject to scrutiny by the Federal Trade
Commission. The Federal Trade Commission Act prohibits "unfair or
deceptive" advertising or marketing practices, and the Federal Trade
Commission has pursued numerous food and dietary supplement manufacturers
and retailers for deceptive advertising or failure to substantiate
promotional claims, including, in many instances, claims made via the
Internet. The Federal Trade Commission has the power to seek administrative
or judicial relief prohibiting a wide variety of claims, to enjoin future
advertising, to seek redress or restitution payments and to seek a consent
order and seek monetary penalties for the violation of a consent order. In
general, existing laws and regulations apply fully to transactions and
other activity on the Internet. The Federal Trade Commission is in the
process of reviewing its policies regarding the applicability of its rules
and its consumer protection guides to the Internet and other electronic
media. The Federal Trade Commission has already undertaken a new monitoring
and enforcement initiative, "Operation Cure-All," targeting allegedly bogus
health claims for products and treatments offered for sale on the Internet.
Many states impose their own labeling or safety requirements that differ
from or add to existing federal requirements.
Savannah River Group, Inc. cannot predict the nature of any future state
or Federal laws, regulations, interpretations or applications, nor can it
determine what effect additional governmental regulations or administrative
orders, when and if promulgated, would have on its business in the future.
Although the regulation of dietary supplements is less restrictive than
that of drugs and food additives, Savannah River Group, Inc. cannot assure
you that the current statutory scheme and regulations applicable to dietary
supplements will remain less restrictive. Further, Savannah River Group,
Inc. cannot assure you that, under existing laws and regulations, or if
more stringent statutes are enacted, regulations are promulgated or
enforcement policies are adopted, it is or will be in compliance with these
existing or new statutes, regulations or enforcement policies without
incurring material expenses or adjusting its business strategy. Any laws,
regulations, enforcement policies, interpretations or applications
applicable to Savannah River Group, Inc.'s business could require the
reformulation of certain products to meet new standards, the recall or
discontinuance of certain products not capable of reformulation, additional
record keeping, expanded documentation of the properties of certain
products, expanded or different labeling or scientific substantiation.
Regulation of the Internet.
In general, existing laws and regulations apply to transactions and
other activity on the Internet; however, the precise applicability of these
laws and regulations to the Internet is sometimes uncertain. The vast
majority of such laws were adopted prior to the advent of the Internet and,
as a result, do not contemplate or address the unique issues of the
Internet or electronic commerce. Nevertheless, numerous federal and state
government agencies have already demonstrated significant activity in
promoting consumer protection and enforcing other regulatory and disclosure
statutes on the Internet. Additionally, due to the increasing use of the
Internet as a medium for commerce and communication, it is possible that
new laws and regulations may be enacted with respect to the Internet and
electronic commerce covering issues such as user privacy, freedom of
expression, advertising, pricing, content and quality of products and
services, taxation, intellectual property rights and information security.
The adoption of such laws or regulations and the applicability of existing
laws and regulations to the Internet may impair the growth of Internet use
and result in a decline in Savannah River Group, Inc. sales.
A number of legislative proposals have been made at the federal state
and local level, and by foreign governments, that would impose additional
taxes on the sale of goods and services over the Internet, and certain
states have taken measures to tax Internet-related activities. Although
Congress recently placed a three-year moratorium on new state and local
taxes on Internet access or on discriminatory taxes on electronic commerce,
existing state or local laws were expressly excepted from this moratorium.
Further, once this moratorium is lifted, some type of federal and/or state
taxes may be imposed upon Internet commerce. Such legislation or other
attempts at regulating commerce over the Internet may substantially impair
the growth of commerce on the Internet and, as a result, adversely affect
Savannah River Group, Inc.'s opportunity to derive financial benefit from
such activities.
Conflicts of interest
Certain conflicts of interest exist between the Company and its officers
and directors. All have other business interests to which they devote
their attention and may be expected to continue to do so although
management time should be devoted to the business of the Company. As a
result, conflicts of interest may arise that can be resolved only through
their exercise of such judgement as is consistent with their fiduciary
duties to the Company.
Possible need for additional financing
The Company has very limited funds and such funds are inadequate to
implement the Company's business plan. The ultimate success of the Company
may depend on its ability to raise additional capital. The Company has not
investigated the availability, source or terms that might govern the
acquisition of additional financing. When additional capital is needed,
there is no assurance that funds will be available from any source or, if
available, that they can be obtained on terms acceptable to the Company. If
not available, the Company's operations would be severely limited and
commencement of business is impossible.
Regulation of penny stocks
The Company's securities, when available for trading, will be subject to
the Securities and Exchange Commission rule that imposes special sales
practice requirements upon broker-dealers that sell such securities to
other than established customers or accredited investors. For purposes of
the rule, the phrase "accredited investors" means, in general terms,
institutions with assets exceeding $5,000,000 or individuals having a net
worth in excess of $1,000,000 or having an annual income that exceeds
$200,000 (or that, combined with a spouses income, exceeds $300,000). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's
written agreement to the transaction prior to the sale. Consequently, the
rule may affect the ability of purchasers of the Company's securities to
buy or sell in any market that may develop.
In addition, the Securities and Exchange Commission has adopted a
number of rules to regulate "penny Stocks". Such rules included Rules 3a51-
1, 15g-1, 15g-2. 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities
and Exchange Act of 1934, as amended. Because the securities of the Company
may constitute "penny stock" within the meaning of the rules, the rules
would apply to the Company and its securities. The rules may further affect
the ability of owners of shares in the Company to sell their securities in
any market that may develop for them.
Item 2.Management's discussion and analysis or plan of operation
The following discussion and analysis of Savannah River Group, Inc.'s
financial condition and results of operations should be read in conjunction
with the Financial Statements and accompanying notes and the other
financial information appearing elsewhere in this Form 10-SB. This Form 10-
SB contains, in addition to historical information, forward-looking
statements that involve risks and uncertainties. Savannah River Group,
Inc.'s actual results could differ materially from the results discussed in
the forward-looking statements. Factors that could cause or contribute to
such differences include those discussed below, as well as those discussed
elsewhere in this Form 10-SB.
Results of operations
During the period from August 19, 1999 (date of inception) through June
30, 2001, Savannah River Group, Inc. has engaged in no significant
operations other than organizational activities, acquisition of the rights
to market Vitamineralherb products. No revenues were received by Savannah
River Group, Inc. during this period.
For the current fiscal year, Savannah River Group, Inc. anticipates
incurring a loss as a result of organizational expenses, expenses
associated with registration under the Securities Act of 1934, and expenses
associated with setting up a company structure to begin implementing its
business plan. Savannah River Group, Inc. has implemented its first
Milestone in its business plan and has determined that a viable market does
exist for its products in the state of Georgia. Savannah River Group, Inc.
intends to initiate the steps needed to implement Milestone #2.The Company
anticipates that until these procedures are completed, it will not generate
revenues and may continue to operate at a loss.
Liquidity and capital resources
Savannah River Group, Inc. remains in the development stage and, since
inception, has experienced no significant change in liquidity or capital
resources or shareholders' equity. Consequently, Savannah River Group,
Inc.'s balance sheet as of June 30, 2001, reflects total assets of $zero.
Organizational expenses of $3,700 and accounting expenses of $1,500 were
paid for by the initial shareholders and expensed to operations.
Savannah River Group, Inc. expects to carry out its plan of business as
discussed above. Savannah River Group, Inc. has no immediate expenses,
other than the $3,700 of organizational expenses incurred and paid by the
initial shareholders on behalf of the Company. Mr. Dussault and Mr. Lowry
will serve in their capacity as officers and directors of Savannah River
Group, Inc. without compensation until a market is developed for the
Vitamineralherb products.
Savannah River Group, Inc.'s business plan is to determine the
feasibility of selling Vitamineralherb.com products to targeted markets.
Should Savannah River Group, Inc. determine that its business plan is
feasible, it intends to employ sales people to call on medical
professionals, alternative health professionals, martial arts studios and
instructors, sports and fitness trainers, other health and fitness
professionals, school and other fund raising programs and other similar
types of customers to interest these professionals in selling to their
clients high-quality, low-cost vitamins, minerals, nutritional supplements,
and other health and fitness products. These professionals would sell the
products to their clients via the Internet.
In addition, Savannah River Group, Inc. may engage in a combination with
another business. Savannah River Group, Inc. cannot predict the extent to
which its liquidity and capital resources will be diminished prior to the
consummation of a business combination or whether its capital will be
further depleted by the operating losses (if any) of the business entity
with which Savannah River Group, Inc. may eventually combine. Savannah
River Group, Inc. has engaged in no discussions concerning potential
business combinations, and has not entered into any agreement for such a
combination.
Savannah River Group, Inc. will need additional capital to carry out its
business plan or to engage. No commitments to provide additional funds
have been made by management or other shareholders. Accordingly, there can
be no assurance that any additional funds will be available on terms
acceptable to Savannah River Group, Inc. or at all. Savannah River Group,
Inc. has no commitments for capital expenditures.
Item 3. Description of property
The Company has no properties, and at this time, has no arrangements to
acquire any properties. The officers of the Company currently work out of
space they already maintain for their other business interests. The
Company's main office will be at 688 West Hastings Street, Suite 910,
Vancouver, British Columbia, Canada, V6B 1P1. The Company pays no rent for
the use of the offices and has no lease agreement regarding their use.
Rent and phone services through June 30, 2001, have been estimated at
$5,500.00 and have been donated to the Company by its President.
Item 4. Security ownership of certain beneficial owners and management
The following table sets forth, as of March 31, 2001 Savannah River
Group, Inc.'s outstanding common stock owned of record or beneficially by
each Executive Officer and Director and by each person who owned of record,
or was known by Texas E. Solutions, Inc. to own beneficially, more than 5%
of its common stock, and the shareholdings of all Executive Officers and
Directors as a group. Each person has sole voting and investment power
with respect to the shares shown.
Number of Percentage of
Name Shares Held Shares Owned
J.P. Beehner 1,250,000 28%
P.O. Box 2370
Alvin, TX 77512-2370
Dorothy A. Mortenson 1,450,000(1) 32.44%
P.O. Box 5034
Alvin, TX 77512-5034
All directors and executive
Officers as a group Zero Zero
(1) Dorothy Mortenson's shares include 200,000 shares owned by her
husband, David R. Mortenson.
Item 5. Directors, executive officers, promoters and control persons
The following table sets forth the name, age and position of each
director and executive officer of Savannah River Group, Inc.
Name Age Position
Jason Dussault 26 President, Director
Shane Lowry 30 Secretary/Treasurer,
Director
Mr. Jason Dussault has been president and director of Savannah River
Group, Inc. since July 14, 2000. Mr. Dussault also serves as President of
Olivia Communications Ltd. (September 2000 - present), a company that
specializes in corporate communications for public companies. From 1997
through August 2000, Mr. Dussault was the President of Liberty One
Communications Ltd., an investor relations service firm located in British
Columbia, Canada. From 1995 through 1997, Mr. Dussault worked for Cypango
Ventures in an investor relations capacity. Cypango Ventures is a publicly
traded company on the Canadian Dealers Network Exchange (CDNX).
Mr. Shane Lowry currently serves as President of Icon Capital Group,
Inc., a company with which he has been employed since October 1997. Icon
Capital is a consulting firm, which works with emerging mining and
technology companies. Prior to his employment with Icon Capital, Mr. Lowry
was employed by Condor Goldfields, Inc., a publicly listed company trading
on the Toronto Stock Exchange. His duties included corporate development
and investor relations. Condor Goldfields, Inc. is a mining company with
operations in Canada. From July 1995 to May 1997 Mr. Lowery worked in a
similar capacity for Eaglecrest Explorations, Ltd., Cypango Ventures, Ltd.,
and U.S. Diamond Corp., all of which are based in Vancouver, B.C., Canada,
and are listed on the Vancouver Stock Exchange. Mr. Lowery became
Secretary/Treasurer and a Director of Savannah River Group on July 14,
2000.
The directors named above are elected for one-year terms at the annual
shareholders' meeting. Officers wil hold their positions at the pleasure
of the board of directors, absent any employment agreements. No employment
agreements currently exists or are contemplated.
Both Mr. Dussault and Mr. Lowry will devote their time to the Company's
affairs on an "as needed" basis. As a result, the actual amount of time
which they will devote to the Company's affairs is unknown and is likely to
vary substantially from month to month.
Item 6. Executive compensation
No officer or director has received any remuneration for Savannah River
Group, Inc. Although there is no current plan in existence, it is possible
that Savannah River Group, Inc. will adopt a plan to pay or accrue
compensation to its officers and directors for services related to the
implementation of Savannah River Group, Inc.'s business plan. Savannah
River Group, Inc. has no stock option, retirement, incentive, defined
benefit, actuarial, pension or profit-sharing programs for the benefit of
directors, officers or other employees, but the Board of Directors may
recommend adoption of one or more such programs in the future. Savannah
River Group, Inc. has no employment contract or compensatory plan or
arrangement with any executive officer or Savannah River Group, Inc. The
directors currently do no receive any cash compensation from Savannah River
Group, Inc. for their services as members of the Board of Directors. There
is no compensation committee, and no compensation policies have been
adopted.
Item 7.Certain relationships and related transactions
No director, executive officer or nominee for election as a director of
Savannah River Group, Inc., and no owner of five percent or more of
Savannah River Group, Inc.'s outstanding shares or any member of their
immediate family has entered into or proposed any transaction in which the
amount received exceeds $60,000.
Item 8. Description of Securities
Common Stock
The Company's Articles of Incorporation authorize the issuance of
25,000,000 Shares of Common Stock. Each record holder of Common Stock is
entitled to 1 vote for each share held on all matters properly submitted to
the stockholders for their vote. The Articles of Incorporation do not
permit cumulative voting for the election of directors.
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors
out of legally available funds; and, in the event of liquidation,
dissolution or winding up of the affairs of the Company, holders are
entitled to receive, ratably, the net assets of the Company available to
stockholders after distribution is made to the preferred shareholders, if
any, who are given preferred rights upon liquidation. Holders of
outstanding shares of Common Stock have no preemptive, conversion or
redemptive rights. All of the issued and outstanding shares are, and all
unissued shares when offered and sold, will be duly authorized, validly
issued, fully paid, and non-assessable. To the extent that additional
shares of the Company's Common Stock are issued, the relative interests of
then existing stockholders may be diluted.
Transfer Agent
The Company is currently serving as its own transfer agent, and plans to
continue to serve in that capacity until such time as management believes
it is necessary or appropriate to employ an independent transfer agent in
order to facilitate the creation of a public trading market for the
Company's securities. Should the Company's securities be quoted on any
exchange or OTC quotation system or application is made to have the
securities quoted, an independent transfer agent will be appointed.
PART II
Item 1.Market for common equity and related stockholder matters
No established public trading market exists for Savannah River
Group, Inc.'s securities. Savannah River Group, Inc. has no common
equity subject to outstanding purchase options or warrants. Savannah
River Group, Inc. has no securities convertible into its common
equity. There is no common equity that could be sold pursuant to Rule
144 under the Securities Act or that Savannah River Group, Inc. has
agreed to register under the Securities Act for sale by shareholders.
Except for this offering, there is no common equity that is being, or
has been publicly proposed to be, publicly offered by Savannah River
Group, Inc.
Item 2. Legal
proceedings
Savannah River Group, Inc. is not a party to any pending legal
proceeding or litigation and none of its property is the subject of a
pending legal proceeding. Further, the officer and director knows of
no legal proceedings against Savannah River Group, Inc. or its
property contemplated by any governmental authority.
The Company is not a party to any pending legal proceedings, and no
such proceedings are known to be contemplated.
No director, officer, or affiliate of the Company, and no owner of
record or beneficial owner of more than 5.0% 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 3. Changes in and Disagreements With Accountants
Not applicable.
Item 4. Recent sales of Unregistered Securities
Name of Date of Purchase Price per
Shareholder Purchase Shares Price Share
J. P. Beehner 8/20/9911,250,000 $1250.00 $0.001
Dorothy A. Mortenson 8/20/9911,250,000 $1,250.00 $0.001
David R. Mortenson 8/21/992 200,000 $200.00 $0.001
Joshua J. Mortenson 8/21/992 200,000 $200.00 $0.001
Marie M. Charles 8/21/992 200,000 $200.00 $0.001
Name of Date of Purchase Price per
Shareholder Purchase Shares Price Share
Joshua D. Smetzer 8/21/992 200,000 $200.00 $0.001
Roy Donovan
Hinton, Jr. 8/21/992 200,000 $200.00 $0.001
George R. Quan 8/21/992 200,000 $200.00 $0.001
Russell Linnell 2/15/002,3 200,000 $200.00 $0.001
Gregory Lynn Bauska 2/15/002,3 200,000 $200.00 $0.001
William Jay Pierson 2/15/002,3 200,000 $200.00 $0.001
1.Gail Gessert, PhD 2/15/002,3 200,000 $200.00 $0.001
Issued in consideration of pre-incorporation services and
expenses.
2. Issued in consideration of the transfer of the Company's main
asset.
3. Shares sold by original shareholders for $200.00 consideration.
The cash purchase prices indicated above are not in addition to the
consideration set forth under footnotes 1 through 3.
Each of the sales listed above was made for cash, services, or in
exchange for the Company's principal asset. All of the listed sales
were made in reliance upon the exemption from registration offered by
Section 4 (2) of the Securities Act of 1933. The Company had
reasonable grounds to believe immediately prior to making an offer to
the private investors, and did in fact believe, when such
subscriptions were accepted, that such purchasers (1) were purchasing
for investment and not with a view to distributions, and (2) had such
knowledge and experience in financial and business matters that they
were capable of evaluating the merits and risks of their investment
and were able to bear those risks. The purchasers had access to
pertinent information enabling them to ask informed questions. Two
separate filings of Form D have been made to the Securities and
Exchange Commission concerning the issuance of the aforementioned
shares. All such sales were made without the aid of underwriters, and
no sales commissions were paid.
On August 20, 1999, Savannah River Group, Inc., issued 2,500,000
shares of common stock to two shareholders in satisfaction of certain
organizational costs (approximately $2500.00) and activities performed
by the shareholders. The issuance of the shares were exempt from
registration under Rule 506 of Regulation D, and sections 3(b) and
4(2) of the Securities Act of 1933, due to the shareholders being
Savannah River Group, Inc.'s founders and serving as its initial
management, and the limited number of investors (two).
On August 21, 1999, Savannah River Group, Inc. issued a total of
2,000,000 shares of common stock to ten shareholders, one of whom is
the general partner, and nine of whom are investor participants in the
licensor of Savannah River Group, Inc.'s Biocatalyst rights. The
issuance of the common stock was exempt from registration under Rule
504 of Regulation D and section 3(b) of the Securities Act of 1933.
Savannah River Group, Inc.'s shares were valued at $0.001 per share,
and they were issued to accredited investors according to an exemption
from registration under Texas law that permits general solicitation
and general advertising so long as sales are made only to accredited
investors. If the exemption under Rule 504 of Regulation D is not
available, Savannah River Group, Inc. believes that the issuance was
also exempt under Rule 506 of Regulation D and section 3(b) and 4(2)
under the Securities Act of 1933, due to the limiting manner of the
offering, promptly filing notices of sale, and limiting the issuance
of shares to a small number of accredited investors (ten).
On February 15, 2000, four of the shareholders described above
transferred their shares to four other individuals. These four
selling shareholders received consideration of $200.00 each for their
shares. The purchasers represented and warranted to the Sellers that
Purchasers were "accredited investors" as that term is defined in Rule
501 of Regulation D under the Securities Act of 1933. These were
sales between private individuals.
Item 5. Indemnification of Directors and Officers
The Articles of Incorporation and the By-laws of the Company, filed
as Exhibits 2.1 and 2.2, respectively, provide that the Company will
indemnify its officers and directors for costs and expenses incurred
in connection with the defense of actions, suits, or proceedings where
the officer or director acted in good faith and in a manner he
reasonably believed to be in the Company's best interest and is a
party by reason of his status as an officer or director, absent a
finding of negligence of misconduct in the performance of duty.
PART FS
Savannah River Group Inc.
(A Development Stage Company)
Index
Independent Auditor's Report F-2
Balance Sheets F-3
Statements of Operations F-4
Statements of Cash Flows F-5
Statement of Shareholders' Equity F-6
Notes to the Financial Statements F-7
Independent Auditor's Report
To the Board of Directors
Savannah River Group Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Savannah River
Group Inc. (A Development Stage Company) as of June 30, 2001 and 2000
and the related statements of operations, shareholders' equity and
cash flows for the period from August 19, 1999 (Date of Inception) to
June 30, 2001 and the period from August 19, 1999 (Date of Inception)
to June 30, 2000 and the year ended June 30, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with U.S. generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the aforementioned financial statements present
fairly, in all material respects, the financial position of Savannah
River Group Inc. (A Development Stage Company), as of June 30, 2001
and 2000 and the results of its operations and its cash flows for the
period from August 19, 1999 (Date of Inception) to June 30, 2001 and
the period from August 19, 1999 (Date of Inception) to June 30, 2000
and the year ended June 30, 2001 in conformity with U.S. generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 1 to
the financial statements, the Company has not generated any revenues
or conducted any operations since inception. These factors raise
substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also
discussed in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
"Manning Elliott"
CHARTERED ACCOUNTANTS
Vancouver, Canada
July 6, 2001
Savannah River Group Inc.
(A Development Stage Company)
Balance Sheets
June 30, June 30,
2001 2000
$ $
Assets
License (Note 3) - -
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable 750 1,200
Accrued liabilities 8,000 12,000
8,750 13,200
Contingent Liability (Note 1)
Shareholders' Equity
Common Stock, 25,000,000 shares authorised
with a par value of $.001; 4,500,000 shares
issued and outstanding respectively 4,500 4,500
Donated Capital (Note 4) 22,000 -
Deficit Accumulated During the
Development Stage (35,250) (17,700)
(8,750) (13,200)
- -
Savannah River Group Inc.
(A Development Stage Company)
Statements of Operations
From August 19, 1999 Year ended From August 19,1999
(Date of Inception) June 30, (Date of Inception)
to June 30, 2001 2001 to June 30, 2000
$ $ $
Revenues - - -
Expenses
Accounting and audit 2,750 2,750 -
Amortization 667 - 667
Legal and organization
expenses 33,143 18,643 14,500
License written-off 1,333 - 1,333
Transfer agent 1,200 - 1,200
Value of services donated
by a related party (Note 4) 16,500 16,500 -
Value of rent and telephone
donated by a related party
(Note 4) 5,500 5,500 -
61,093 43,393 17,700
Net Loss Before Other Income (61,093) (43,393) (17,700)
Forgiven Debt (Note 4) 25,843 25,843 -
Net Loss (35,250) (17,550) (17,700)
Loss Per Share (.01) (.01)
Weighted Average Shares
Outstanding 4,500,000 4,500,000
Savannah River Group Inc.
(A Development Stage Company)
Statements of Cash Flows
From August 19, 1999 Year ended From August 19, 1999
(Date of Inception) June 30, (Date of Inception)
to June 30, 2001 2001 to June 30, 2000
$ $ $
Cash Flows to Operating
Activities
Net loss (35,250) (17,550) (17,700)
Non cash items
Expenses paid by a related
party on the Company's
behalf 25,843 25,843 -
Expenses not paid with cash 2,500 - 2,500
Amortization 667 - 667
License written-off 1,333 - 1,333
Forgiven debt (25,843) (25,843) -
Value of services
and amenities donated by
a related party 22,000 22,000 -
Change in non-cash working
capital items
Accounts payable 750 (450) 1,200
Accrued offering costs 8,000 (4,000) 12,000
Net Cash Used by Operating
Activities - - -
Cash Flows from Financing Activities
Increase in shares issued - - -
Net Cash Provided by Financing
Activities - - -
Change in cash - - -
Cash - beginning of period - - -
Cash - end of period - - -
Non-Cash Financing Activities
A total of 2,500,000 shares were
issued to a former director at a fair
market value of $0.001 per share
for organization expenses 2,500 - 2,500
A total of 2,000 shares were
issued at a fair market value
of $.001 per share for the
acquisition of a
license (Note 3) 2,000 - 2,000
4,500 - 4,500
Supplemental Disclosures
Interest paid - - -
Income tax paid - - -
Savannah River Group Inc.
(A Development Stage Company)
Statement of Shareholders' Equity
From August 19, 1999 (Date of Inception)
to June 30, 2001
Deficit
Accumulated
During the
Common Stock Donated Development
Shares Amount Capital Stage
# $ $ $
Balance - August 19, 1999
(Date of Inception) - - - -
Stock issued for $2,500 of
organizational expenses 2500000 2,500 - -
Stock issued for license 2000000 2,000 - -
Net loss for the period - - - (17,700)
Balance - June 30, 2000 4500000 4,500 - (17,700)
Net loss for the year - - - (17,550)
Services and amenities
contributed by the
shareholder - - 22,000 -
Balance - June 30, 2001 4500000 4,500 22,000 (35,250)
1. Development Stage Company
Savannah River Group Inc. herein (the "Company") was incorporated
in the State of Nevada, U.S.A. on August 19, 1999. The Company
acquired a license to market and distribute a product in Virginia.
As discussed in Note 3, this license was cancelled and the Company
has retained the right to sue the vendor. As a replacement for this
license, the Company was granted additional rights to market and
distribute vitamins, minerals, nutritional supplements, and other
health and fitness products in Georgia. The grantor of the license
offers these products for sale from various suppliers on their Web
Site. See Note 4 regarding related party transactions.
In a development stage company, management devotes most of its
activities in investigating business opportunities. Planned
principal activities have not yet begun. The ability of the Company
to emerge from the development stage with respect to any planned
principal business activity is dependent upon its successful
efforts to raise additional equity financing and/or attain
profitable operations. There is no guarantee that the Company will
be able to raise any equity financing or sell any of its products
at a profit. There is substantial doubt regarding the Company's
ability to continue as a going concern.
The Company is filing a Registration Statement on Form 10-SB to
register its common shares with the United States Securities
Commission.
2.Summary of Significant Accounting Policies
(a) Year end
The Company's fiscal year end is June 30.
(b) Licenses
The cost to acquire the License was capitalized. The carrying
value of the License is evaluated in each reporting period to
determine if there were events or circumstances which would
indicate a possible inability to recover the carrying amount.
Such evaluation is based on various analyses including assessing
the Company's ability to bring the commercial applications to
market, related profitability projections and undiscounted cash
flows relating to each application which necessarily involves
significant management judgment. Where an impairment loss has
been determined the carrying amount is written-down to fair
market value. Fair market value is determined as the amount at
which the license could be sold in a current transaction between
willing parties. The License has been written-off to operations
as at December 31, 1999 due to cancellation of the Biocatalyst
License Agreement.
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a
maturity of three months or less at the time of issuance to be
cash equivalents.
(d) Revenue Recognition
The Company will receive from the Grantor of the License,
commissions of 10% of the profit on all sales made through the
Grantor's Web Site. The commission revenue will be recognized in
the period the sales have occurred. The Company will report the
commission revenue on a net basis as the Company is acting as an
Agent for the Grantor and does not assume any risks or rewards of
the ownership of the products. This policy is prospective in
nature as the Company has not yet generated any revenue.
2. Summary of Significant Accounting Policies (continued)
(e) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles 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 date of the financial statements and the
reported amounts of revenues and expenses during the periods.
Actual results could differ from those estimates.
(f) Offering Costs
In accordance with SEC staff accounting Bulletin No. 5 offering
costs may properly be deferred and charged against proceeds of
the offering. The Company has elected to charge such offering
costs to operations.
3. Licenses
(a) The Company acquired a license to market and distribute a
product in Virginia. The Company's right to use this license was
in jeopardy due to a lawsuit between the vendor of the license
and the original owner. As a result, the unamortized balance of
$1,333 was written-off to operations. The Company and its
shareholder have the right to sue for breach of contract. This
license was cancelled and all financial obligations pursuant to
the License Agreement were extinguished.
(b) As a replacement for the above license, at no additional cost,
the Company was granted additional rights to market vitamins,
minerals, nutritional supplements and other health and fitness
products through the Grantor's Web Site. The Company desires to
market these products to medical practitioners, alternative
health professionals, martial arts studios and instructors,
sports and fitness trainers, other health and fitness
practitioners, school and other fund raising programs and other
similar types of customers in Georgia. The license was acquired
on February 14, 2000 for a term of three years. The Company must
pay an annual fee of $500 for maintenance of the Grantor's Web
Site commencing on the anniversary date. The Grantor of the
license retains 10% of the profit on sales made.
The Company has conducted a marketing survey to determine its
core target market from amongst the potential clients under its
Vitamineralherb.com license. The results indicate a favorable
marketing opportunity in the State of Georgia.
4. Related Party Transaction
(a) Acquisition of License
The License referred to in Note 3 was sold to the Company by a
partnership whose general manager is the spouse of the former
Secretary/Treasurer of the Company and a former director for
consideration of 2,000,000 shares for total fair market
consideration of $2,000, also being the transferor's cost of such
license. These shares were paid evenly to the ten partners. The
replacement license was also owned by the same partnership.
(b) Donated services and amenities
Management services having a value of $16,500 and rent and
telephone having a value of $5,500 were contributed by the
President of the Company and charged to operations.
(c) Forgiveness of debt
Expenses of the Company in the amount of $25,843 were paid by the
President of the Company. The related debt was forgiven on June
30, 2001.
PART III
Index of Exhibits
3.1 Articles of Incorporation*
3.2 By-laws*
4.0 Sample Stock Certificate*
10.1 License Agreement*
23.1 Consent of Independent Auditors
* previously filed
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Savannah River Group, Inc.
By:
Dated: August 17, 2001 /s/ Jason Dussault
Jason Dussault, President
*Print name and title of signing officer under his signature.
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Accounting And Financial Disclosure" and "Interests Of Named Experts
And Counsel" and to the use of our report dated July 6, 2001 in the
Registration Statement on Form 10-SB and related Prospectus of
Savannah River Group Inc. for the registration of shares of its common
stock.
Vancouver, Canada
August 7, 2001
By: /s/ Manning Elliott
Manning Elliott
CHARTERED ACCOUNTANTS