-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JcRUQNfBAqXf04GiA/rTVKQ7uvilVtxtX+4jBZcnRV8DMVgS2Es15yL+NkMWRSbf Nl3K6wPN3xcMhnNfv8Oztg== 0001015402-01-000526.txt : 20010223 0001015402-01-000526.hdr.sgml : 20010223 ACCESSION NUMBER: 0001015402-01-000526 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLANET EARTH RECYCLING INC CENTRAL INDEX KEY: 0001083722 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 980208988 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-27295 FILM NUMBER: 1545648 BUSINESS ADDRESS: STREET 1: 435 MARTIN ST CITY: BLAINE STATE: WA ZIP: 98230 BUSINESS PHONE: 3603321350 MAIL ADDRESS: STREET 1: 435 MARTIN ST CITY: BLAINE STATE: WA ZIP: 98230 FORMER COMPANY: FORMER CONFORMED NAME: MAGIC BAG CORP DATE OF NAME CHANGE: 19990909 10QSB 1 0001.txt U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2000 ---------------------- [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------------ ----------------- Commission File Number: 0-27295 --------------- PLANET EARTH RECYCLING INC. (Exact name of small business issuer as specified in its charter) NEVADA 98-0208988 ------ ------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 435 MARTIN STREET BLAINE, WA 98230 (Address of principal executive offices) (360) 332-1350 (Issuer's telephone number, including area code) Check whether the issuer (1) filed all reports to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: As of February 7, 2001, 20,315,000 shares of common stock, par value $0.001 were issued and outstanding. Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X] - 1 - PLANET EARTH RECYCLING INC. (Formerly Adventure Minerals Inc.) TABLE OF CONTENTS Page ---- PART I - FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . 3 Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . .3 Balance Sheet as of December 31, 2000 and June 30, 2000 (unaudited) .3 Income Statement for the six months ended December 30, 2000 and June 30, 2000 (unaudited) . . . . . . . 4 Income Statement for the three months ended December 30, 2000 (unaudited) . . . . . . . . . . . . . . . . . . 5 Statements of Cash Flows for the Six months ended December 30, 2000 and June 30, 2000 (unaudited) . . . . . . . 6 Notes to the Financial Statements (unaudited) . . . . . . . . . 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . 12 PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 19 Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . .19 Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . 19 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 19 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 - 2 -
PLANET EARTH RECYCLING INC. (Formerly Adventure Minerals Inc.) PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - -------------------------------- CONSOLIDATED BALANCE SHEET As at DECEMBER 31, 2000 (Unaudited) ASSETS DECEMBER 31, 2000 JUNE 30, 2000 - ------ ------------------ -------------- CURRENT ASSETS Cash in Bank $ 2,067,539 $ 1,877,144 Funds held in Trust 99,987 - Accounts Receivable - Trade 1,553,041 488,830 Accounts Receivable - Other 93,420 25,757 Prepaid expenses 15,420 71,741 ------------------ -------------- $ 3,735,686 $ 2,463,472 CAPITAL ASSETS (Notes 2 (d) and 3) 23,580 20,881 LICENSE (Note 2 (e) and 8 (b)) 925,000 975,000 PROJECT DEPOSIT 17,170 - MINERAL PROPERTY - 1,681 EXPLORATION ADVANCE - 8,299 ------------------ -------------- TOTAL ASSETS $ 4,795,157 $ 3,469,333 ================== ============== LIABILITIES & SHAREHOLDER'S EQUITY - ---------------------------------- CURRENT LIABILITIES Accounts Payable (Note 9) $ 318,096 $ 149,677 Deferred Revenue (Notes 2 (c) and 4) - 1,392,573 Note Payable (Note 5) 1,000,000 1,000,000 ------------------ -------------- 1,318,096 2,542,250 ------------------ -------------- SHAREHOLDER'S EQUITY - -------------------- CAPITAL STOCK (Note 1) 2,033 2,034 ADDITIONAL CONTRIBUTED CAPITAL 52,217 52,217 RETAINED EARNINGS 3,422,811 872,832 ------------------ -------------- 3,478,061 927,083 ------------------ -------------- $ 4,795,157 $ 3,469,333 ================== ==============
See accompanying notes to financial statements. - 3 -
PLANET EARTH RECYCLING INC. (Formerly Adventure Minerals Inc.) CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS For the 6 month period ended DECEMBER 31, 2000 (Unaudited) DEC 31, 00 JUNE 30, 00 ------------ ------------- REVENUE $ 4,151,376 $ 1,095,814 ------------ ------------- EXPENSES Advertising and promotion 903 2,881 Automotive expenses 2,498 350 Depreciation and amortization 52,426 25,532 Donation 12,581 5,103 (Gain) Loss US$exchange (65,182) 39,267 Interest Expense 35,288 18,027 Management consultants 803,786 33,888 Office and general 325,598 16,583 Professional fees 111,009 31,608 Rent 89,809 17,323 Telephone 29,891 1,565 Travel 27,740 3,036 Utilities 8,561 - Wages and benefits 191,832 25,967 Write-off of Exploration Advance 8,299 - Write-off of Mineral Property 1,681 - ------------ ------------- 1,636,719 221,130 ------------ ------------- INCOME BEFORE INTEREST INCOME 2,514,657 874,684 INTEREST INCOME 35,322 4,606 ------------ ------------- NET INCOME $ 2,549,979 $ 879,290 DEFICIT FROM MERGER - (6,458) RETAINED EARNINGS, BEGINNING OF PERIOD 872,832 - ------------ ------------- RETAINED EARNINGS, END OF PERIOD $ 3,422,811 $ 872,832 ------------ ------------- ------------ ------------- Adjusted Earnings per Share - 20,315,000 SHARES OUTSTANDING $ 0.13 $ 0.04 ------------ -------------
See accompanying notes to financial statements. - 4 -
PLANET EARTH RECYCLING INC. (Formerly Adventure Minerals Inc.) CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS For the 3 month period ended DECEMBER 31, 2000 (Unaudited) Three Months -------------- Ended -------------- Dec 31, 2000 -------------- REVENUE $ 2,341,670 -------------- EXPENSES Advertising and promotion 127 Automotive expenses 135 Depreciation and amortization 26,251 Donation 12,581 (Gain) Loss US$exchange (114,133) Interest Expense 17,644 Management consultants 444,832 Office and general 200,639 Professional fees 60,192 Rent 42,974 Telephone 16,874 Travel 15,197 Utilities 3,080 Wages and benefits 146,941 Write-off of Exploration Advance - Write-off of Mineral Property - -------------- 873,334 -------------- INCOME BEFORE INTEREST INCOME 1,468,336 INTEREST INCOME 16,461 -------------- NET INCOME $ 1,484,797 -------------- Adjusted Earnings per Share - 20,315,000 SHARES OUTSTANDING $ 0.07
See accompanying notes to financial statements. - 5 -
PLANET EARTH RECYCLING INC. (Formerly Adventure Minerals Inc.) CONSOLIDATED STATEMENT OF CASH FLOW For the 6 month period ended DECEMBER 31, 2000 (Unaudited) DEC 31, 00 JUNE 30, 00 ------------ ------------- CASH RESOURCES PROVIDED BY (USED IN) OPERATING ACTIVITES Net Income $ 2,549,979 $ 879,290 Items not involving funds Amortization 52,426 25,532 Deferred revenue realized (1,392,573) (596,817) Cash generated from (used for) operating working capital Accounts receivable - trade (1,064,211) (488,830) Accounts receivable - other (67,663) (25,757) Prepaid expenses 56,321 (71,741) Accounts payable and accrued liabilities 168,418 147,235 ------------ ------------- 202,709 (130,998) ------------ ------------- CASH RESOURCES PROVIDED BY (USED IN) FINANCING ACTIVITIES Share capital - 1 Note Payable - 1,000,000 Fund received from contract advance - 1,989,390 ------------ ------------- - 2,989,391 ------------ ------------- CASH RESOURCES PROVIDED BY (USED IN) INVESTING ACTIVITIES Acquisition of license - (1,000,000) Purchase of capital assets (5,124) (22,094) Project Deposit (17,170) Write-off of Mineral Property 1,681 Write-off of Exploration Advance 8,299 ------------ ------------- (12,314) (1,022,094) ------------ ------------- INCREASE IN CASH 190,395 1,836,299 CASH AND TERM DEPOSITS, beginning of year 1,877,144 40,845 ------------ ------------- CASH AND TERM DEPOSITS, end of year $ 2,067,539 $ 1,877,144 ============ =============
See accompanying notes to financial statements. - 6 - PLANET EARTH RECYLCING INC. (Formerly Adventure Minerals Inc.) NOTES TO FINANCIAL STATEMENTS For the 6 month period ended DECEMBER 31, 2000 (Unaudited) 1. NATURE OF BUSINESS AND STATUS OF ACTIVITIES Planet Earth Recycling Inc. (formerly Adventure Minerals, Inc.) (the "Company") was incorporated in Nevada, USA on February 17, 1999. The Company is public and has been trading on the Over-the-Counter Bulletin Board since June, 2000. On September 15, 2000, a merger was completed with a private company (known at the time as Planet Earth Recycling Inc.), in which shares were exchanged one for one. The Company's name was formally changed to Planet Earth Recycling Inc. on November 2, 2000 following approval by the Company's shareholders at a Special Shareholders' Meeting held in Seattle, Washington. All future business will be conducted under the name Planet Earth Recycling Inc. and the symbol "PERI". Planet Earth Recycling Inc. is an integrated, multi-faceted recycling and waste management business ready to address a broad range of recyclable material including glass, plastic, paper, cardboard, metals and particularly organic wastes. The Company holds contractual rights to build, support, and supply Thermo Master(TM) Plants which employs a patent protected process to convert organic waste materials to valuable feed and fertilizer products. The Company has investment in one subsidiary, Planet Earth Operating Systems Inc., which in turn has investments in eight subsidiaries, which are consolidated and summarized as follows:
COMPANY NATURE OF BUSINESS Planet Earth Operating Services Inc. (100% owned) Operating Company (a) Earth Alliance Systems Inc. (100% owned) Total Recycling (b) Planet Earth Bio Conversion Inc. (100% owned) Licensor of technology (c) Planet Earth Design Build Inc. (100% owned) Engineering and Construction (d) Planet Earth Management Inc. (100% owned) Commissioning and Operating (e) Environmental Pulp and Paper Sludges Inc. (50% owned) Licensor of sludge technology (f) Environmental Bio Solids Solutions Inc. (50% owned) Licensor of sludge technology (g) Environmental Agri Bio Solids Inc. (50% owned) Licensor of sludge technology (h) Environmental Industrial Sludges Inc. (50% owned) Licensor of sludge technology
2. SIGNIFICANT ACCOUNTING POLICIES
(a) PRINCIPLES OF ACCOUNTING These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada applicable to a going concern, which assumes that the Company will continue operation for a reasonable period of time and will be able to realize its assets and discharge its liabilities and commitments in the normal course of operations. - 7 - PLANET EARTH RECYLCING INC. (Formerly Adventure Minerals Inc.) NOTES TO FINANCIAL STATEMENTS For the 6 month period ended DECEMBER 31, 2000 (Unaudited) These principles can differ in certain material respects from those accounting principles generally accepted in the United States but no material differences exist in these statements. (b) BASIS OF CONSOLIDATION These financial statements have been prepared using the purchase method of consolidation. The assets and liabilities of acquired companies are initially recorded at their cost. The results of operations of the acquired companies are included from the dates of acquisition. All significant intercompany transactions and balances have been eliminated on consolidation. (c) REVENUE RECOGNITION Revenue is recognized when services are performed. (d) CAPITAL ASSETS Plant and equipment is recorded at cost. Amortization is recorded on active and idle assets, computed using the 20% straight-line method to amortize the cost of the assets over their estimated useful lives. (e) LICENSES License rights are recorded at cost and are amortized on a straight-line basis over the license period (10 years) which is the Company's estimated period of benefit for these costs.
3. CAPITAL ASSETS Cost Acc. Amort. Net Book Value Office Equipment $26,526 $2,946 $23,580 Amortization for the period amounted to $1,617. The estimated useful life of the office equipment is five years. 4. DEFERRED REVENUE The Company entered into a consulting contract on April 1, 2000, to provide consulting and administrative services at a fixed monthly fee of $300,000.00 CDN ($198,939 US) plus all costs charged at 15%. On April 28, 2000 the first ten months were paid in advance ($3,000,000 CDN; $1,989,390 US). As at December 31, 2000 , none of that advance remained unearned. - 8 - PLANET EARTH RECYLCING INC. (Formerly Adventure Minerals Inc.) NOTES TO FINANCIAL STATEMENTS For the 6 month period ended DECEMBER 31, 2000 (Unaudited) 5. NOTE PAYABLE The Company, in connection with its acquisition of the license agreement (Note 9 (b)) is indebted by way of a $1,000,000 US note payable, due on demand at seven percent (7%) rate of interest payable both before and after maturity. Interest of $53,313 US has been accrued but only $3,313 US remains unpaid to December 31, 2000. 6. SHARE CAPITAL The Company has authorized share capital of 160,000,000 common shares par value of $0.001US and 40,000,000 shares of preferred stock having a par value of $0.001 US. Prior to the merger, there were 10,165,000 shares outstanding. On September 15, 2000 a share exchange in which 10,000,000 shares of the Company were issued for all the outstanding shares of planet earth recycling Inc. (private company) one for one. Prior to the Merger, 150,000 shares were issued for the settlement of a certain obligation. Total outstanding shares as of September 30, 2000 is 20,315,000. Price Number of Shares Total Outstanding ----- ---------------- ----------------- Cash Issue $.005 1,200,000 1,200,000 Cash Issue $.05 800,000 2,000,000 Cash Issue $.25 33,000 2,033,000 5 for 1 Split 8,132,000 10,165,000 Debt Settlement $0.001 150,000 10,315,000 Share Exchange 10,000,000 20,315,000 7. COMMITMENTS The Company rents its head office and administrative offices under operating leases. Rental payments during the period amounted to $17,323 U.S$. Aggregate minimum rental payments are $672,341 U.S.$ and approximate future rent payments for the next five years relative to signed lease agreements are as follows: U.S. $ -------- 2001 $182,805 2002 $167,841 2003 $167,841 2004 $153,854 U.S. $ --------- 2001 $182,805 2002 $167,841 2003 $167,841 2004 $153,854 8. SIGNIFICANT AGREEMENTS The Company has entered into several significant agreements during the operating period as follows: - 9 - PLANET EARTH RECYLCING INC. (Formerly Adventure Minerals Inc.) NOTES TO FINANCIAL STATEMENTS For the 6 month period ended DECEMBER 31, 2000 (Unaudited) a) Master Service Agreement. The Company has a Master Service Agreement with a corporation that allows it to have the right to construct, commission, maintain, operate, supply and broker the end product of all Thermo Master(TM) Plants built for any licensee in the world. These services are provided at a cost plus 15% rate. b) License Agreement. The Company entered into a License Agreement on March 28, 2000 to utilize the Thermo Master(TM) technology in Canada, Washington, Oregon, Nevada, Idaho, California and Hawaii. The Company has an exclusive right to build a Thermo Master(TM) Plant in any of its territories. The License was purchased for $1,000,000 US and was satisfied with a Note payable (Note 5). Amortization of $25,000 has been recorded during the period (Note 2 (e)). The License Agreement also calls for an additional payment of $1,000,000 US for every plant constructed by or on behalf of the Licensee. c) Consulting Agreement. The Company has entered into a ten month Consulting Agreement for monthly consulting and administrative services (see Note 4). This contract is renewable in October 2000 for the full rate or a reduced rate for a further nine-month period. This Contract was performed to January 31, 2001. On February 2, 2001 the Company agreed to terminate the Consulting agreement. d) Office Support, Accounting & Administration Consulting Contract. On February 2, 2001 the Company entered into a 24 Month agreement for Office support, accounting and administrative services for a flat fee of $10,000 per month for defined services, with all additional services to be provided at Cost plus 15%. e) Accounting & Administrative Consulting Contract. On February 2, 2001 the Company entered into a 24 Month agreement for accounting and administrative services for a flat fee of $60,000 per month for defined services, with all additional services to be provided at Cost plus 15%. f) Public Relations Consulting Contract. On February 2, 2001 the Company entered into a 24 Month agreement for public relations services for a flat fee of $30,000 per month for defined services, with all additional services to be provided at Cost plus 15%. g) Technology, Operations, Maintenance, Research & Development, Engineering and Training Consulting Contract. On February 2, 2001 the Company entered into a 24 Month agreement to provide required services at Cost plus 15%. Currently the Company derives all its Revenue from these contracts, which are with one Corporation. - 10 - PLANET EARTH RECYLCING INC. (Formerly Adventure Minerals Inc.) NOTES TO FINANCIAL STATEMENTS For the 6 month period ended DECEMBER 31, 2000 (Unaudited) 9. RELATED PARTY TRANSACTIONS Included in accounts payable as at December 31, 2000 was $45,857 owed to the Company's President. - 11 - ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS - -------------------------------------------------------------------------------- OF OPERATIONS - -------------- This Form 10-QSB contains forward-looking statements. The words "anticipate", "believe", "expect", "plan", "intend", "estimate", "project", "could", "may", "foresee", and similar expressions identify forward-looking statements that involve risks and uncertainties. You should not place undue reliance on forward-looking statements in this Form 10-QSB because of their inherent uncertainty. The following discussion and analysis should be read in conjunction with the Financial Statements and Notes thereto and other financial information included in this Form 10-QSB that involve risks and uncertainties. Actual results could differ materially from the results discussed in the forward-looking statements. BUSINESS The Company is an integrated, multi-faceted recycling and waste management business, ready to address a broad range of recyclable materials, including glass, plastic, paper, cardboard, metals and particularly organic wastes. The Company, through one of its subsidiaries, holds contractual rights to build, support and supply Thermo Master(TM) Plants, which employ a patent protected process to convert organic waste materials to valuable feed and fertilizer products and holds an exclusive master license to own and sub-license Thermo Master(TM) Plants in Canada, California, Washington, Oregon, Nevada, Hawaii and Iowa. The Company's presence in a community means local employment, effective waste recycling opportunities and environmental improvements. The Company offers a full range of waste recycling and management services to waste generators and communities. The Company is structured as an integrated business with several subsidiaries dedicated to delivering distinct aspects of the Company's overall mandate. The following diagram shows how the Company is organized to serve its clients and shareholders: PLANET EARTH RECYCLING, INC. ---------------------------- | PLANET EARTH OPERATING SERVICES INC. ------------------------------------ | 1. EARTH ALLIANCE SYSTEMS INC. (Waste acquisition -------------------------- - Satellite centers - Tote services Transfer stations - De-packaging - Commodity broker glass, metals, plastics, paper, organics - Waste audits) 2. PLANET EARTH DESIGN BUILD INC.(Engineering - ------------------------------- Permitting - Construction services - Equipment Procurement - Turnkey recycling systems - Transfer stations - New technology development) 3. PLANET EARTH BIO CONVERSION INC. (Licenses for ------------------------------- Thermo Master(TM) Plants - Exclusive and non- exclusive territory) 4. PLANET EARTH MANAGEMENT INC. (Commissioning ----------------------------- - Training - Operating services - Support services - Complete recycling systems) - 12 - 5. ENVIRONMENTAL PULP AND PAPER SLUDGES INC. --------------------------------------------- (Licensor of Pulp and Paper sludge technology) 6. ENVIRONMENTAL BIO SOLIDS SOLUTIONS INC. ------------------------------------------- (Licensor of Bio Solid sludge technology) 7. ENVIRONMENTAL AGRI BIO SOLIDS INC. (Licensor ----------------------------------- of Agri Bio Solid sludge technology) 8. ENVIRONMENTAL INDUSTRIAL SLUDGES INC.(Licensor ------------------------------------ of Industrial sludge technology) Two of the Company's subsidiary companies produce steady cash flow by supplying construction and support services to build, operate and maintain Thermo Master(TM) Plants, Earth Alliance Satellite Centers, transfer stations, water treatment facilities and other such physical plants. These companies are expected to provide services directly, but will more likely oversee the programs and services that are delivered at the local level by local sub-contractors having the required skills. The other subsidiaries, Earth Alliance Systems Inc. and Planet Earth Bio Conversion Inc. capitalize on the unlimited potential of waste and recycling markets throughout the world. These two companies are structured to own and operate waste acquisition, recycling, organic waste conversion and commodity brokering businesses to cover the full gamut of recycling opportunities in the marketplace. The two subsidiaries will hold equity positions in the Company's growing family of plants and businesses as well as create and capture major revenues and profits. The Company is also involved in commodity businesses, whether that be the end product from Thermo Master(TM) businesses (feed or fertilizer products) or the recyclable plastics, paper, glass, metals and other recoverable materials. All subsidiary businesses are structured to operate profitably in their own right. The subsidiaries have been structured as distinct entities to ensure that the Company's management can track each subsidiary's performance. In addition to the wholly owned subsidiaries, four new companies owned 50% by Planet Earth Operating Services Inc. were formed that hold Licenses on Thermophilic sludge technology, to perform research and development in the following areas: 1) Industrial sludges; 2) Agri Bio Solid sludges; 3) Bio Solid sludges; and 4) Pulp and Paper sludges. This sludge research is part of the Company's constant search and discovery of new and innovative recycling technologies. - 13 - The parent company, Planet Earth Recycling, Inc., is primarily focused on the acquisition and management of corporate financing. Planet Earth Operating Services Inc. ("PEOSI") delivers all aspects of the operational side of the business through its several subsidiary companies. The Company has assembled a team of core consultants with over 300 years of combined experience in the critical sectors of its business. PEOSI is built from a company with a history of 45 years of successfully providing systems, equipment and services in the agricultural and environmental industries. It continues to deliver those services to a broad industry sector and to expand even further. Its waste management and recycling team brings experience with every major waste management firm known in North America. Within the group of key consultants resides knowledge and experience in engineering, research and development, construction, mechanical operations, public relations and marketing, waste acquisition, recycling and financing needed to conduct PEOSI's business. For more information on the business of the Company, see the report on Form 8-K dated September 15, 2000 and filed under the name Adventure Minerals, Inc. on September 29, 2000. STATUS OF OPERATIONS The Company's current operations include the following activities from signed contracts. On April 6, 2000, POESI signed a 20 year Master(TM) Service Agreement with Thermo Tech(TM) Technologies Inc. and Thermo Tech(TM) Bio Conversion Inc. The Master(TM) Service Agreement provides exclusive rights to PEOSI to provide turnkey construction, commissioning and training, maintenance services, technical services, Waste supply and End Product Purchasing for all licensees of the Thermo Master(TM) Mark III technology. This contract will provide the expertise and know-how to ensure all new licensees are delivered an operating Thermo Master(TM) Mark III Plant. Through this Master(TM) Service Agreement, the Company has signed the following contacts: 1. The Company's subsidiary Planet Earth Design Build Inc. has a Turnkey Construction Agreement with Hamilton Bio Conversion Inc. to complete the upgrade of the current facility to a Thermo Master(TM) Mark III facility. This agreement was executed on October 2, 2000. The value of this project is $10,000,000 and the project will be completed during the third quarter of the Company's year. Planet Earth Design Build Inc. is well underway on this project which is billed on a cost plus 15% basis. 2. Earth Alliance Systems Inc. has entered into a 12-year Waste Supply Agreement with Hamilton Bio Conversion Inc. to ensure the facility receives adequate raw waste for processing. This agreement was executed on October 2, 2000. Earth Alliance Systems Inc. has the collection system in place and further acquisitions will only strengthen its current Ontario market position. 3. On October 2, 2000, PEOSI signed a 12-year End Product Purchase Agreement with Hamilton Bio Conversion Inc. This agreement enables the Company to broker the valuable end product commodity to the world. - 14 - 4. PEOSI is also currently performing Accounting & Administrative Services under a Consulting agreement with Thermo Tech(TM) Technologies Inc. The Agreement provides for a $60,000 monthly fee for specific services with all additional costs charged at cost plus 15%. 5. PEOSI is also currently performing Office Support, Accounting & Administrative Services under a Consulting agreement with Hamilton Bio Conversion Inc. The Agreement provides for a $10,000 monthly fee for specific services with all additional costs charged at cost plus 15%. 6. PEOSI is also currently performing Public Relations Services under a Consulting agreement with Thermo Tech(TM) Technologies Inc. The Agreement provides for a $30,000 monthly fee for specific services with all additional costs charged at cost plus 15%. 7. PEOSI is also currently performing Technology, Operations, Maintenance, Research & Development, Engineering and Training Services under a Consulting agreement with Thermo Tech(TM) Technologies Inc. The Agreement provides for all services to be charged at cost plus 15%. 8. Planet Earth Design Build Inc. is currently preparing 12 feasibility studies for new projects, to assess what is required in each area. These new projects can generate 12 new sites for total recycling for the Company. These current contracts enable the Company to provide its value-added services to its clients and ensure room for future expansion with new facilities and new opportunities. PLAN OF OPERATIONS The Company is in the early stages of operations and is focused on implementing and developing its business plan to meet its growth objectives. The majority of the current resources of the Company are focused on this growth. However, in addition to the current operations, the Company is pursuing several new acquisitions of companies. Firstly, an acquisition in New York. The business has an interest in a proprietary technology business and a current waste recycling facility, which the Company believes will be of benefit to its operations both financially and technologically. Negotiations are currently in the final stages, but no definitive agreement has been reached with the New York Company. The Company is also in the final stages of negotiating letters of Intent with several other companies it seeks to acquire. FINANCIAL CONDITION AND RESULTS OF OPERATIONS Six Months Ended December 31, 2000 Compared to the Seven Months Ended June 30, 2000. This information has been derived from unaudited interim financial statements for the period ended December 31, 2000 and audited financial statements for the seven-month period ended June 30, 2000. Results of operations for any interim period are not necessarily indicative of results to be expected from the full fiscal year. - 15 - The Company's operations, going forward, are the operations of the merged private company, Planet Earth Recycling Inc., as this is the continuing business. For comparison purposes this quarter, the period ended June 30, 2000 will be used. As no useful operating figures exist for the same period last year, July 1, 1999 to December 31, 1999, those figures will not be presented. Net Income ----------- For the six months ended December 31, 2000, the Company had net income of $2,549,979. This is an increase of $1,675,295 over the comparison period's operations, which produced net income of $874,684. This increase in net income is based on growing the operations of the Company. Strong growth will continue in the next quarters as the business continues to develop based on the business plan of the Company. Operating Revenue ------------------ Total revenue for the six months ended December 31, 2000 was $4,151,376. The Company increased revenue by $3,055,562 or 379% over total revenues for the seven months ended June 30, 2000, which was $1,095,814. The increase in revenues resulted from work on the Hamilton Bio Conversion project, Richmond Bio Conversion project, several new projects and continued business growth in each subsidiary. The Company's projects are all charged out on a cost plus basis to facilitate revenue growth. Operating Costs and Expenses ------------------------------- The Company had an increase in expenses of $1,415,589 during the period to $1,636,719 as compared to the expenses for the seven months ended June 30, 2000 with total operating expenses of $221,130. The increased expenses reflect the growth in operations, including increases in the number of consultants and employee's to implement the Company's business plan. Other areas of expense increases included professional fees, due to the number of business opportunities, and general and administration fees. The Company is currently charging out at cost plus 15% these costs to its contract. The Company also wrote off the cost of the exploration advance and mineral property as it turns its focus to its new business. LIQUIDITY AND CAPITAL RESOURCES The Company had cash of $2,067,539 and a working capital of $2,418,590 as of December 31, 2000. This is compared to cash of $1,877,144 and a working capital deficit of $78,778 as at June 30, 2000. The increase is a direct result of the net income during the period of $2,549,979. In addition all the Accounts Receivable - Trade of $1,553,041 were collected in January, 2001. Management estimates the monthly cash "burn rate" to be approximately $400,000 per month. The Company believes it has sufficient cash resources to operate its business over the next twelve months. Depending on market acceptance of the Company's current business model, the Company may raise additional funds, either debt or equity, to augment future growth of the business. - 16 - Management believes that current cash balances and cash flows from operations, will be sufficient to meet present growth strategies and related working capital and capital expenditure requirements. The current business plan proposes significant increases in spending when compared to historical expenditures. Management may decide to raise additional capital through the issuance of additional debt or equity securities. The Company plans to utilize a combination of internally generated funds from operations, potential debt and / or equity financings to fund its longer-term growth over a period of two to five years. The availability of future financings will depend on market conditions. A portion of the funds will be needed to grow the business through acquisitions of other businesses. The forecast of the period of time through which the Company's financial resources will be adequate to support operations is a forward-looking statement that involves risks and uncertainties. The actual funding requirements may differ materially from this as a result of a number of factors including plans to acquire other businesses and rapidly expand its operations. EFFECT OF FLUCTUATIONS IN FOREIGN EXCHANGE RATES The majority of the Company's current operations are located outside the United States. The functional currency for this foreign operation is the local currency. The carrying value of the Company's investments in Canada is subject to the risk of foreign currency fluctuations. Any revenues received from the Company's international operations will be subject to foreign exchange risk. RISK FACTORS THE COMPANY MAY REQUIRE ADDITIONAL EQUITY FINANCING, WHICH MAY NOT BE AVAILABLE AND MAY DILUTE THE OWNERSHIP INTERESTS OF INVESTORS. The Company's ultimate success will depend on its ability to raise additional capital. No commitments to provide additional funds have been made by management or other shareholders. 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 could be severely limited, and it may not be able to implement its business plan. If equity financing is used to raise additional working capital, the ownership interests of existing shareholders may be diluted. THE COMPANY'S OPERATING RESULTS ARE LIKELY TO FLUCTUATE SIGNIFICATLY. - 17 - As a result of the Company's limited operating history and the rapid expansion of its business operations, the Company's quarterly and annual revenues and operating results are likely to fluctuate from period to period. For this reason, you should not rely on period-to-period comparisons of the Company's financial results as indications of future results. The Company's future operating results could fall below the expectations of public market analysts or investors and significantly reduce the market price of its common stock. Fluctuations in the Company's operating results will likely increase the volatility of its stock price. THE COMPANY DEPENDS ON THE RELIABILITY AND CONTINUITY OF ITS SERVICES AS PROVIDED BY ITS SUBSIDIARIES. As a service provider, the Company is dependent upon the continued reliability of its individual subsidiaries to provide high quality services. Although the Company has reliable systems in place, and has not had any problems providing quality service, there is no guarantee that the Company will be able to continue to provide reliable services. THE COMPANY DEPENDENCE ON RELATIONSHIPS WITH BUSINESSES AND GOVERNMENTS OUTSIDE THE UNITED STATES INVOLVES RISKS. The Company depends on its ability to establish and maintain successful relationships with businesses and governments located outside of the United States. If the Company is unable to establish and maintain such relationships, it will not be able to implement the business plan in its current configuration, which will affect both its revenue stream and profit potential. In addition, the Company faces political sovereign risks of conducting international business, including risks of changing economic conditions, which may have a material adverse effect on its ability to expand its operations globally. POTENTIAL BUSINESS COMBINATIONS COULD BE DIFFICULT TO INTEGRATE AND DISRUPT BUSINESS OPERATIONS. Any acquisition of or business combination with another company could disrupt the Company's ongoing business, distract management and employees and increase the Company's expenses. If another company acquires the Company, it could face difficulties in assimilating with that company's personnel and operations. Acquisitions also involve the need for integration into existing administration, services, marketing, and support efforts. THE COMPANY DOES NOT ANTICIPATE PAYING DIVIDENDS TO ITS COMMON SHAREHOLDERS IN THE FORESEEABLE FUTURE, WHICH MAKES INVESTMENT IN THE COMPANY SPECULATIVE OR RISKY. The Company has not paid dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future. The Board of Directors has sole authority to declare dividends payable to the Company's shareholders. The fact that the Company has not and does not plan to pay dividends indicates that the Company must use all of its funds generated by operations for reinvestment in its operating activities and also emphasizes that the Company may not continue as a going concern. Investors also must evaluate an investment in the Company solely on the basis of anticipated capital gains. - 18 - PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ---------------------------- None ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - --------------------------------------------------------- None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ----------------------------------------------- (a) EXHIBITS. None (b) REPORTS ON FORM 8-K. None 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. PLANET EARTH RECYCLING, INC. /s/ Rowland Wallenius February 14, 2001 - -------------------------------- --------------------------- Rowland Wallenius, President Date - 19 - -----END PRIVACY-ENHANCED MESSAGE-----