Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2010
OR
[ ] 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 0-32323
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC
(Exact name of registrant as specified in its charter)
Nevada 20-1217659
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
17800 Castleton Street, Suite 638, City of Industry, California 91748
(Address of principal executive offices)
Registrant's telephone number, including area code: (626) 581-8500
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
Common Stock, $.00001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant: (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that he registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit or post such files). Yes [ ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S- K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer," and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes [ ] No [X]
The aggregate marker value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the Registrant's most recently completed second fiscal
quarter (June 30, 2010) was approximately $1,376,245.
As of March 28, 2011, there were 4,269,947,486 shares of our common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: None
TABLE OF CONTENTS
ITEMS PAGE
----- ----
PART I
Item 1. Business 4
Item 1A. Risk Factors 10
Item 1B. Unresolved Staff Comments 10
Item 2. Properties 10
Item 3. Legal Proceedings 10
Item 4. (Removed and Reserved) 10
PART II
Item 5. Market For Common Equity and Related Stockholder Matters and
Issuer Purchases of Equity Securities 10
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Item 7A. Quantitative and Qualitative Disclosure About Market Risks 17
Item 8. Financial Statements and Supplementary Data 17
Item 9. Changes in and Disagreements with Accountants on 17
Accounting and Financial Disclosure
Item 9A. Controls and Procedures 17
Item 9B. Other Information 20
PART III
Item 10. Directors, Executive Officers and Corporate Governance 20
Item 11. Executive Compensation 23
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 25
Item 13 Certain Relationships and Related Transactions, and Director
Independence 26
Item 14. Principal Accounting Fees and Services 26
PART IV
Item 15. Exhibits, Financial Statement Schedules 27
2
CAUTIONARY STATEMENT
This Form 10-K contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Some of the statements
contained in this Form 10-K for International Building Technologies Group, Inc.
("Company") discuss future expectations, contain projections of results of
operation or financial condition or state other "forward-looking" information.
These statements are subject to known and unknown risks, uncertainties, and
other factors that could cause the actual results to differ materially from
those contemplated by the statements. The forward-looking information is based
on various factors and is derived using numerous assumptions.
Management expresses its expectations, beliefs and projections in good
faith and believes the expectations reflected in these forward-looking
statements are based on reasonable assumptions; however, Management cannot
assure current stockholders or prospective stockholders that these expectations,
beliefs and projections will prove to be correct. Such forward-looking
statements reflect the current views of Management with respect to the Company
and anticipated future events.
Management cautions current stockholders and prospective stockholders that
such forward-looking statements, including, without limitation, those relating
to the Company's future business prospects, demand for its products, revenues,
capital needs, expenses, development and operation costs, wherever they occur in
this Form 10-K, as well as in the documents incorporated by reference herein,
are not guarantees of future performance or results, but are simply estimates
reflecting the best judgment of Management and involve a number of risks and
uncertainties that could cause actual results to differ materially from those
suggested by such forward-looking statements.
Important factors that may cause actual results to differ from projections
include, for example:
* the success or failure of management's efforts to implement their
business strategy;
* the ability of the Company to raise sufficient capital to meet
operating requirements;
* the uncertainty of consumer demand for our products, services and
technologies;
* the ability of the Company to protect its intellectual property
rights;
* the ability of the Company to compete with major established
companies;
* the effect of changing economic conditions;
* the ability of the Company to attract and retain quality employees;
* the current global recession and financial uncertainty; and
* other risks which may be described in future filings with the SEC.
Words such as "anticipates," "expects," "intends," "plans," "believes,"
"seeks," "estimates," and variations of such words and similar expressions are
intended to identify such forward-looking statements. These statements are not
guarantees of future performance and are subject to certain risks, uncertainties
and assumptions that are difficult to predict. Therefore, actual results and
outcomes may differ materially from what is expressed or forecasted in any such
forward-looking statements. Unless required by law, the Company undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.
3
PART I
ITEM 1. BUSINESS.
BUSINESS DEVELOPMENT
International Building Technologies Group, Inc. ("Company") was incorporated as
Ten Stix Inc. on January 10, 1996 under the laws of the State of Colorado to
engage in the design, development and marketing of unique card games and other
gaming products for the gaming industry. Ten Stix, Inc. changed its domicile
from Colorado to Nevada in 2004.
During 2004, the Company amended its Articles of Incorporation to change
its name to Motorsports Emporium, Inc. in order to bring the name of the Company
in line with its then new business focus, targeting motor sports enthusiasts.
During 2004, the Company divested itself of all interest in Ten Stix Inc. and
the gaming business.
As a result of the change in control and new business focus of the Company
occasioned by the events discussed below, the Company amended its Articles of
Incorporation to change its name to International Building Technologies Group,
Inc. in 2007.
As previously reported in a Current Report on Form 8-K filed with the
Securities and Exchange Commission on October 26, 2010, we amended our Articles
of Incorporation by increasing the number of shares of our authorized capital
from four billion shares to six billion shares. As a result of this amendment,
we now have 5,950,000,000 shares of common stock authorized and 50,000,000
shares of preferred stock authorized.
BUSINESS TRANSFORMATION
The Company divested its motor sports related assets and began to focus on
its current business related to building technologies, when on May 2, 2007, the
Company entered into a Stock Sale and Purchase Agreement with Axia Group, Inc.
("Axia") and International Building Technologies, Inc. ("IBT"), pursuant to
which the Company acquired 50,000,000 shares of IBT common stock (or
approximately 80% of IBT's issued and outstanding common stock) from Axia for
consideration consisting of a (i) $1,000,000 convertible note and (ii)
20,000,000 shares of the Company's common stock. On September 25, 2007, the
Company and Axia renegotiated the purchase price of the 80% equity stake in IBT
and made a downward adjustment of $1,000,000 to the purchase price and cancelled
the convertible note.
As a result of the transaction with Axia and IBT, the Company dedicated
itself to providing innovative solutions for the construction of homes,
buildings and communities around the world, offering a complete turn-key
approach to most projects from design and engineering to materials, training and
construction assistance. Acting through, IBT, a Nevada corporation, and its
wholly owned subsidiary International Building Technologies Co., Ltd. ("IBT Hong
Kong"), a Hong Kong corporation, we are a worldwide manufacturer and developer
of light panel technology to be used in residential and commercial business,
primarily in regions that are at risk of earthquakes and hurricane-like winds.
THE COMPANY BUSINESS
The Company is in the business of manufacturing, marketing and providing
equipment and materials to the building and construction industries. The Company
is dedicated to providing unique and sustainable construction methods that can
be used in developing and developed countries around the world.
The Company is a developer and provider of a superior panel based building
technology. Our panel technology is superior to many traditional building
methods, offers greater strength and resistance to winds and hurricanes, as well
as providing a sustainable building solution that does not utilize timber,
provides high insulation values and is resistant to bugs, mold and rot. See the
discussion under "IBT Panel Technology," below.
4
Our panel technology allows for the rapid, cost effective construction of
residential, commercial, and high-rise buildings utilizing materials that are
superior in strength and appearance, economical and eco-friendly. The Company
provides customers with architectural design, panel supply, installation
supervision, engineering, training and technical support.
Drawing on decades of experience in the construction industry in China and
other countries in the Far East, the Company is seeking to develop new business
in China, as well as establishing a manufacturing facility for our equipment and
materials to customers throughout the world. We plan to manufacture equipment
for our own projects, as well as exporting equipment and materials to customers
throughout the world.
The Company has also been working with investors to establish a
Company-operated panel production factory in China's Sichuan Province. This plan
has been received with great interest by the Sichuan Construction Bureau, the
government authority in governing major construction projects in rebuilding the
earthquake region in Sichuan Province.
IBT PANEL TECHNOLOGY
As stated above, the Company is a developer and provider of a superior
panel based building technology. Our panel technology is superior to many
traditional building methods, offers greater strength and resistance to winds
and hurricanes, as well as providing a sustainable building solution that does
not utilize timber, provides high insulation values and is resistant to bugs,
mold and rot.
The components of our panels are simple, but effective:
* A light weight, high tensile treated galvanized steel wire cage;
* A core of expanded polystyrene;
* Connected and held in place by a logical series of treated galvanized
trusses;
* A coat of Portland cement, either gun or manually applied to bother
sides; and
* IBT panel technology complies with European and U.S. Standard
ICBO-ER-3509
Based on standard building codes prescribed by authorities worldwide, our
IBT technology will meet and exceed the minimum requirements. This includes load
tests of transverse, vertical compression and racking shear load and fire tests
including corner room burn and fire exposure under load.
SUPERIOR STRENGTH AND VALUE
* Earthquakes
* The IBT technology system is 30% more resistant when it comes to
seismic movement when compared to the traditional block system.
* Hurricanes
* The IBT technology has a structural capacity to withstand
hurricane-like winds up to 180 km per hour.
* Fires
* The IBT technology can undertake fire exposure for more than one
and a half hours.
* Insulation
* The expanded polystyrene used in the IBT technology system has an
acoustic insulation capacity that is 4 times higher than the
traditional block system and has thermal insulation that can
isolate heat 8 times more than construction using the traditional
block system.
* Environmental Safety
* Raw materials used in the manufacturing of expanded polystyrene
do not expel toxic fumes into the atmosphere.
5
ADVANTAGES
* Versatile Design and Use
* Complete architectural freedom and flexibility, sound barrier,
security and property walls exterior and interior wall systems,
roof systems, flat and pitched. This technology can be used for
multi-story buildings, walls and floors.
* Spectacular Visual Appeal
* No evidence of prefabrication after application of concrete,
which can have a variety of finishes, smooth to heavily textured.
* Environment Friendly and Energy Saving
* No wood or timber products used, Thermal insulation allows for a
cooler internal environment. Air conditioning bills are
considerably lower.
* Cost Savings
* Significant decreases in on-site construction time and effective
use of labor due to simplicity of erection.
APPLICATIONS
* Residential Homes
* Schools
* High Rise Buildings
* Churches
* Condominiums
* Mining Shafts
* Hospitals
* Fences and Walls
* Vacation Lodges
* Medical Care Centers
* Community Buildings
We believe our panel based technology is one of the finest, strongest and
most cost effective building technologies available. Our panel based technology
is superior to other traditional building methods in terms of strength, time to
completion and resistance to the elements. Our IBT panel technology is also
versatile in its use and can be used to create unique architectural and design
elements. The results are buildings that look great and meet superior
construction standards.
Historically, IBT has completed projects in the United States, Central
America, the Caribbean, Asia, Europe and Africa.
OTHER PRODUCTS AND SERVICES OFFERED BY THE COMPANY
Currently, IBT provides Site Planning, Architectural and Engineering
Services, Contractor Services, Materials, Equipment, training and Supervision
and is engaged in projects in China utilizing our IBT technology.
FHH SINO NEW ENERGIES CO., LTD.
As previously reported in our Current Report on Form 8-K filed with the
Securities and Exchange Commission on June 2, 2010, the Company signed a
non-binding Letter of Intent on May 25, 2010, to merge with FHH Sino New
Energies Co., Ltd., a Chinese company ("FHH Sino"), located in Weihai, Shandong
Province of China. FHH Sino is a petroleum storage company that offers petroleum
storage tanks and facilities for rental to the petroleum importers/exporters is
Weihai, a coastal city in Shandong Province of Northern China.
6
According to a recent appraisal prepared by an accounting firm in
accordance with China accounting standards, the Chinese company has net assets
worth RMB 370 million (approximately US $54,000,000) and will generate annual
revenues of RMB 100 million (approximately US $14, 000,000) after its completion
of construction of Phase I and execution of rental contracts business in early
2011.
FHH Sino is currently in construction of its Phase I and has completed all
the foundation and infrastructure for its 8 storage tanks. This infrastructure
includes the supporting facilities and pipeline connecting to the harbor, which
is just 600 meters away from the storage facilities.
FHH Sino provides petroleum storage tanks for rental to petroleum companies
such as Sinochem and Sino-Petro, as well as being engaged in the business of
local fuel oil distribution. FHH Sino has its Phase II planned and has received
official approval from the Chinese authorities for additional storage tanks of
450,000 m3 and expects to commence construction of Phase II in late 2011.
The Company and FHH Sino are working together on the related merger
agreements and auditors have been engaged to commence an audit of FHH Sino in
preparation for the merger.
The Letter of Intent is subject to (i) the execution of a mutually
acceptable definitive merger or exchange agreements: (ii) there being no
material adverse change in the financial condition, business or prospects of the
Company prior to closing; (iii) final investment committee approval; (iv) local
government and regulatory approvals; (v) extension of existing employment
contracts for the Company's management; and (vi) and a guarantee of buy-back or
exchange of common stock for preferred stock (not to exceed U.S. $2,300,000)
currently held my the Company's officers or investors.
Upon signing of the Letter of Intent, FHH Sino made a U.S. $230,000 good
faith deposit with the Company.
Our President, Kenneth Yeung, has been working diligently on this
transaction and we hope to close this transaction in the third quarter of this
year. However, we can provide no assurance that this transaction will, in fact,
come to fruition, as it is dependent upon a number of factors that may not occur
or that we may not be able to control.
HOW TO CONTACT US
The Company's principal executive offices are located at 17800 Castleton
Street, Suite 638, City of Industry, California 91748. Our telephone number is
(626) 581-8500 and our facsimile number is (626) 626-7603.
COMPETITIVE BUSINESS CONDITIONS
The Company competes with many companies in the global markets and many of
our competitors are large, well funded companies who have substantially larger
staffs and resources than we have at the present time. Unlike the many companies
that compete in the global market manufacturing building materials, we are
unique. Few companies manufacture our product or anything similar in nature. We
intend to compete based on our unique technology and business and government
contacts within China.
FOREIGN CURRENCY RISK
The Company has subsidiaries operating in the foreign arena and is exposed
to foreign currency fluctuations. Currently, the Company's subsidiaries are
operating in China and Hong Kong. The Company's exposure to foreign currency
fluctuations in Hong Kong is limited as the Hong Kong Dollar is pegged against
the U.S. dollar. However, the Company's exposure to foreign currency
fluctuations in China is greater as the Chinese RMB has a floating exchange rate
based on market supply and demand with reference to a basket of currencies.
7
RAW MATERIALS AND SUPPLIES
China is the main supplier of the raw materials needed for our panels. The
Company has contact with and access to numerous suppliers of the raw materials
needed to manufacture its building panels and is not dependent on any one
supplier or limited group of suppliers.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
The Company believes that the diversity of the products and services it
offers helps alleviate the dependence on any one customer or limited group of
customers. The Company's offerings of services and products appeal to both the
retail and industrial customer base. Through the widespread use of the Company's
products and services, the Company will continue to increase its customer base.
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS
The Company's common stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934 ("1934 Act"). As a result of such registration,
the Company is subject to Regulation 14A of the "1934 Act," which regulates
proxy solicitations. Section 14(a) requires all companies with securities
registered pursuant to Section 12(g) thereof to comply with the rules and
regulations of the Commission regarding proxy solicitations, as outlined in
Regulation 14A. Matters submitted to stockholders of the Company at a special or
annual meeting thereof or pursuant to a written consent will require the Company
to provide its stockholders with the information outlined in Schedules 14A or
14C of Regulation 14; preliminary copies of this information must be submitted
to the Commission at least 10 days prior to the date that definitive copies of
this information are forwarded to stockholders.
The Company is also required to file annual reports on Form 10-K and
quarterly reports on Form 10-Q with the Commission on a regular basis, and will
be required to disclose certain events in a timely manner, (e.g. changes in
corporate control; acquisitions or dispositions of a significant amount of
assets other than in the ordinary course of business; and bankruptcy) in a
Current Report on Form 8-K.
WE WILL BE SUBJECT TO THE REQUIREMENTS OF SECTION 404 OF THE SARBANES-OXLEY
ACT. IF WE ARE UNABLE TO TIMELY COMPLY WITH SECTION 404 OR IF THE COSTS RELATED
TO COMPLIANCE ARE SIGNIFICANT, OUR PROFITABILITY, STOCK PRICE AND RESULTS OF
OPERATIONS AND FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY AFFECTED.
The Company is required to comply with the provisions of Section 404 of the
Sarbanes-Oxley Act of 2002, which requires that we document and test our
internal controls and certify that we are responsible for maintaining an
adequate system of internal control procedures for the 2008 fiscal year. This
section also requires that our independent registered public accounting firm
opine on those internal controls and management's assessment of those controls.
We are currently evaluating our existing controls against the standards adopted
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
During the course of our ongoing evaluation and integration of the internal
controls of our business, we may identify areas requiring improvement, and we
may have to design enhanced processes and controls to address issues identified
through this review (see Item 9A, below for a discussion our internal controls
and procedures).
Our subsidiaries currently operating in China also have to comply with the
provisions of Section 404 of the Sarbanes-Oxley Act of 2002. However, due to
time differences, cultural differences, and differences in common business
practices, documentation and testing of our internal controls overseas will be a
longer and more difficult process.
We believe that the out-of-pocket costs, the diversion of management's
attention from running the day-to-day operations and operational changes caused
by the need to comply with the requirement of Section 404 of the Sarbanes-Oxley
Act could be significant. If the time and costs associated with such compliance
exceed our current expectations, our results of operations and the future
fillings of our Company could be materially adversely affected.
8
Our subsidiaries currently operating in China are subject to inherent risks
associated with operations in a foreign arena. IBT and IBT Hong Kong are exposed
to risks of changes in governmental policies and building codes. There is no
guarantee of current Management's ability to be notified of changes in
governmental policies and building codes in a timely manner, which could
materially affect the Company.
Aside from required compliance with foreign governmental regulations and
rules, federal and state securities laws, regulations and rules, and federal,
state and local tax laws, regulations and rules, the Company is not aware of any
other governmental regulations now in existence or that may arise in the future
that would have an effect on the business of the Company.
DEPENDENCE ON KEY EMPLOYEES AND NEED FOR ADDITIONAL MANAGEMENT AND PERSONNEL
The Company is heavily dependent on the ability of our President, Kenneth
Yeung, who has contributed essential technical and management experience to our
business. The Company will be dependent upon Mr. Yeung to recruit good
management for the Company.
In the event of future growth in administration, marketing, manufacturing
and customer support functions, the Company may have to increase the depth and
experience of its management team by adding new members. The Company's success
will depend to a large degree upon the active participation of its key officers
and employees, as well as the continued service of its key management personnel
and its ability to identify, hire, and retain additional qualified personnel.
There can be no assurance that the Company will be able to recruit such
qualified personnel to enable it to conduct its proposed business successfully.
INTELLECTUAL PROPERTY RIGHTS
The Company presently holds no intellectual property rights. The Company
intends to seek copyright and trademark protection of its trade names and
products. The Company's success and ability to compete are dependent to a degree
on the Company's name and product recognition. Accordingly, the Company will
primarily rely on copyright, trade secret and trademark law to protect its
product and brand names of products or under which the Company conducts its
business. Effective trademark protection may not be available for the Company's
trademarks.
The Company's competitors or others may adopt product or service names
similar to the Company's, thereby impeding the Company's ability to build brand
identity and possibly leading to customer confusion. The Company's inability to
adequately protect its product, brand, trade names and trademarks would have a
material adverse effect on the Company's business, financial condition and
operating results. Despite any precautions the Company takes, a third party may
be able to copy or otherwise obtain and use the Company's technology or other
proprietary information without authorization or to develop similar technology
independently.
Policing unauthorized use of the Company's products are made especially
difficult by the global nature of the Internet and the difficulty in controlling
the ultimate destination or security of products or other data. The laws of
other countries may afford the Company little or no effective protection for the
Company's intellectual property.
EMPLOYEES
As of March 30, 2011, we had one full time employee, Kenneth Yeung, who is
our President and Chief Executive Officer. We believe that our relations with
our employee are good. Our employee is not represented by a union or covered by
a collective bargaining agreement.
REPORTS TO SECURITY HOLDERS
The public may view and obtain copies of the Company's reports, as filed
with the Securities and Exchange Commission, at the SEC's Public Reference Room
at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Information on the
Public Reference Room is available by calling the SEC at 1-800-SEC-0330.
Additionally, copies of the Company's reports are available and can be accessed
and downloaded via the internet on the SEC's internet site at
http://www.sec.gov.
9
ITEM 1A. RISK FACTORS.
We are a smaller reporting company and are not required to provide the
information required by this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2. PROPERTIES.
The Company does not own any real estate.
On February 20, 2009, the Company relocated its principal executive offices
to 17800 Castleton Street, Suite 638, City of Industry, California 91748. The
new offices are being leased under a verbal sublease from Allied Consultants,
Inc., a company owned by Nelson Yeung, the brother of our President, Kenneth
Yeung. Kenneth Yeung has no financial or other interest in Allied Consultants,
Inc. The sublease rental is $3,250 per month, which covers access to and use of
office furniture and equipment owned by Allied Consultants, Inc. The sublease is
a month to month lease.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not the subject of any pending legal proceedings to the
knowledge of management, nor is there any presently contemplated against the
Company by any federal, state, or local government agency. Further, to the
knowledge of management, no director or executive officer is a party to any
action in which his interest is adverse to the Company.
ITEM 4. (REMOVED AND RESERVED).
Not applicable
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.
Until February 23, 2011, the Company's Common Stock was quoted on the
Over-the-Counter Bulletin Board under the symbol "INBG.OB." For reasons unknown
to us, on February 23, 2011, the major market maker for our Common Stock stopped
quoting our Common Stock, and stopped quoting stocks of numerous other OTC
Bulletin Board companies without even having the courtesy of advising all of
these companies in advance. As a result of such market maker's actions, our
Common Stock and the stocks of many other companies, were dropped from the OTC
Bulletin Board quotation system. We are in the process of having a new market
maker file a Form 211 on our behalf with FINRA so that our Common Stock will
once again be quoted on the OTC Bulletin Board. The market for the Company's
Common Stock is limited, volatile and sporadic and the price of the Company's
Common Stock could be subject to wide fluctuations in response to quarterly
variations in operating results, news announcements, trading volume, sales of
Common Stock by officers, directors and principal shareholders of the Company,
general market trends, changes in the supply and demand for the Company's
shares, and other factors. The following table sets forth the high and low sales
prices for each quarter relating to the Company's Common Stock for the last two
fiscal years. These quotations reflect inter-dealer prices without retail
mark-up, markdown, or commissions, and may not reflect actual transactions.
Fiscal 2010 High Low
----------- ---- ---
First Quarter (1) $.0001 $.0001
Second Quarter (1) $.0007 $.0001
Third Quarter (1) $.0005 $.0001
Fourth Quarter (1) $.0003 $.0001
Fiscal 2009 High Low
----------- ---- ---
First Quarter (2) $0.0008 $0.0001
Second Quarter (1) $0.0004 $0.0001
Third Quarter (1) $0.0002 $0.0001
Fourth Quarter (1) $0.0002 $0.0001
10
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(1) This represents the closing bid information for the stock on the OTC
Bulletin Board. The bid and ask quotations represent prices between dealers
and do not include retail markup, markdown or commission. They do not
represent actual transactions and have not been adjusted for stock
dividends or splits.
(2) This represents the closing price for the stock on the OTC Bulletin Board.
All of the above information was listed as reported by the National
Association of Securities Dealers Composite feed or other qualified inter-dealer
quotation medium.
Our common stock is considered a "penny stock." The application of the
"penny stock" rules to our common stock could limit the trading and liquidity of
the common stock, adversely affect the market price of our common stock and
increase your transaction costs to sell those shares. The Commission has adopted
regulations which generally define a "penny stock" to be any equity security
that has a market price (as defined) of less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exceptions.
Shareholders should be aware that, according to SEC Release No. 34-29093
dated April 17, 1991, the market for penny stocks has suffered in recent years
from patterns of fraud and abuse. Such patterns include (1) control of the
market for the security by one or a few broker-dealers that are often related to
the promoter or issuer; (2) manipulation of prices through prearranged matching
of purchases and sales and false and misleading press releases; (3) boiler room
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (4) excessive and undisclosed
bid-ask differential and markups by selling broker dealers; and (5) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. The
occurrence of these patterns or practices could increase the volatility of our
share price.
Our management is aware of the abuses that have occurred historically in
the penny stock market.
HOLDERS
As of March 28, 2011, there were approximately 359 shareholders of record
of the Company's Common Stock, 96 shareholders of record of the Company's Series
A Preferred Stock, one shareholder of record of the Company's Series C Preferred
Stock, six shareholders of record of the Company's Series D Preferred Stock, two
shareholders of record of the Company's Series E Preferred Stock and one
shareholder of record of the Company's Series F Preferred Stock.
DIVIDENDS
The Company has not declared any cash dividends with respect to its common
stock or preferred stock during the last two fiscal years and does not intend to
declare dividends in the foreseeable future. There are no material restrictions
limiting or that are likely to limit the Company's ability to pay dividends on
its outstanding securities.
RECENT ISSUANCE OF UNREGISTERED SECURITIES
On January 10, 2011, the Company issued 50,000 shares of Series D Preferred
Stock to Allied Consultants, Inc. 401 (k) Plan Trust for $1 per share with a
total cash payment of $50,000.
During 2010, the Company issued the following common stock without
registration under the Securities Act of 1933, as amended, that have not been
previously included in a Quarterly Report on Form 10-Q or in a Current Report on
Form 8-K:
11
Number of Aggregate Nature of
Date of Issue Shares Issued Sales Price Transaction
------------- ------------- ----------- -----------
10/26/2010 84,533,333 $12,680 Conversion of Series D
Preferred Stock
11/17/2010 130,098,246 $18,538 Conversion of Debt
11/19/2010 2,320,966 $ 337 Conversion of Debt
11/19/2010 2,348,483 $ 326 Conversion of Debt
11/19/2010 7,687,719 $ 1,095 Conversion of Debt
11/23/2010 115,684,615 $15,000 Conversion of Series D
Preferred Stock
The Company did not utilize or engage a principal underwriter in connection
with any of the above securities transactions. The above securities were only
offered and sold to "accredited investors" as that term is defined in Rule 501
of Regulation D, promulgated under the Securities Act of 1933, as amended.
Management believes the above shares of common stock were issued pursuant to the
exemption from registration under Section 4(2) of the Securities Act of 1933, as
amended.
ISSUER PURCHASES OF EQUITY SECURITIES
None.
ITEM 6. SELECTED FINANCIAL DATA.
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
CAUTIONARY FORWARD - LOOKING STATEMENT
The following discussion should be read in conjunction with our financial
statements and related notes.
Certain matters discussed herein may contain forward-looking statements
that are subject to risks and uncertainties. Such risks and uncertainties
include, but are not limited to, the following:
* the volatile and competitive nature of our industry,
* the uncertainties surrounding the rapidly evolving markets in which we
compete,
* the uncertainties surrounding technological change of the industry,
* our dependence on our intellectual property rights,
* the success of marketing efforts by third parties,
* the changing demands of customers and
* the arrangements with present and future customers and third parties.
Should one or more of these risks or uncertainties materialize or should
any of the underlying assumptions prove incorrect, actual results of current and
future operations may vary materially from those anticipated. See also the
disclosures under "Cautionary Statement" following the Table of Contents in this
Annual Report.
GENERAL
Prior to December 1, 2004, the Company was known as Ten Stix, Inc. and
changed its name to MotorSports Emporium, Inc. on December 1, 2004 under the
laws of the State of Nevada to engage in the motor sports industry targeting
enthusiasts participating in die cast collecting, automobile restoration,
purchase of high-performance accessories, motor sports related collectibles,
driver's apparel, race venues and product licensing. On July 12, 2007, the
Company reported in a Definitive Schedule 14C that the Company was going to
change its name to International Building Technologies Group, Inc. to better
reflect its change of business from motor sports related to building and
12
construction of lightweight panels. On July 17, 2007 the Company amended its
articles of incorporation to change its name to International Building
Technologies Group, Inc. effective on August 6, 2007. According to Statement of
Financial Accounting Standards No. 7, "Accounting and Reporting by Development
Stage Enterprises," the Company has reentered the development stage. The Company
devotes most of its efforts to establishing a new business, raising capital,
establishing sources of supply, acquiring property, plant, equipment, and other
operating assets. The Company's shares of common stock are quoted on the OTC
Bulletin Board under the symbol "INBG.OB."
Our principal executive offices are located at 17800 Castleton Street,
Suite 638, City of Industry, CA 91748. Our telephone number is (626) 581-8500
and our facsimile number is (626) 626-7603. More information regarding our
products and the Company is available on our website at www.ibtgi.com.
EXECUTIVE OVERVIEW
The Company is in the business of manufacturing, marketing and providing
equipment and materials to the building and construction industries. The Company
is dedicated to providing unique and sustainable construction methods that can
be used in developing and developed countries around the world.
The Company is a developer and provider of a superior panel based building
technology. Our panel technology is superior to many traditional building
methods, offers greater strength and resistance to winds and hurricanes, as well
as providing a sustainable building solution that does not utilize timber,
provides high insulation values and is resistant to bugs, mold and rot.
Our panel technology allows for the rapid, cost effective construction of
residential, commercial, and high-rise buildings utilizing materials that are
superior in strength and appearance, economical and eco-friendly. The Company
provides customers with architectural design, panel supply, installation
supervision, engineering, training and technical support.
Drawing on decades of experience in the construction industry in China and
other countries in the Far East, the Company is seeking to develop new business
in China, as well as establish a manufacturing facility for its equipment and
materials. We plan to manufacture equipment for our own projects, as well as
exporting equipment and materials to customers throughout the world.
The Company has also been working with investors to establish a Company
operated panel production factory in China's Sichuan Province. This plan has
been received with great interest by the Sichuan Construction Bureau, the
government authority in governing major construction projects in rebuilding the
earthquake region in Sichuan Province.
MATERIAL RECENT DEVELOPMENTS
RE-ENTERING DEVELOPMENT STAGE
On April 1, 2007, the Company re-entered the development stage. The
Company has changed the focus of its business to building and constructing
lightweight panels. The Company has devoted most of its efforts to establishing
this new business, raising capital, establishing sources of supply, acquiring
property, plant, equipment, and other operating assets.
RESULTS OF OPERATIONS - THE YEAR ENDED DECEMBER 31, 2010 COMPARED TO THE YEAR
ENDED DECEMBER 31, 2009
Since discontinuing the prior business and re-entering the development
stage as of April 1, 2007 the Company's results of operations has changed. There
are no revenues during the current development stage as we are in the process of
starting our manufacturing process.
For the year ended December 31, 2010, Operating Expenses for current
operations totaled $503,480 is more than the year ended December 31, 2009's
Operating Expenses of $480,513. The increase of $22,967 in Operating Expenses
13
between years ended 2010 and 2009 was mostly attributed to the increase in
salary and travel expenses.
One of the significant changes in our results of operations is interest
Expense which was $87,302 for the year ended December 31, 2010 and for the year
ended December 31, 2009, Interest Expense was $1,402,005. The $1,314,703 drop in
Interest Expense was due to the change in beneficial conversion feature of the
notes. There is also a significant change in the fair value of derivative. As of
December 31, 2010, change in fair value of derivative resulting in an increase
from $32,133 to $1,303,727. This increase in the fair value of derivative is
resulted from the liability of derivative that was less than that at December
31, 2009. The change in the fair value of derivative is resulted from the common
stock equivalents of the Company on all convertible debentures and preferred
stock exceeded the total common stock available for issuance by approximately by
26,373,626,374 shares. The Company's Chief Executive Officer, Kenneth Yeung,
hold 3,000,000 shares of Series C Preferred Stock that are convertible into
26,373,626,374 common shares of the Company. Unless and until there is enough
authorized common stock available to cover all common stock equivalents, Mr.
Yeung will not convert any of his preferred shares. Furthermore, the stock is
only convertible upon management's discretion. Management currently does not
intend on converting such stock. Also, warrant options are not included in
common stock equivalents since the exercise price of $0.25 for the warrant
exceeds the fair value of common stock of $0.0004 per share on December 31,
2010. The remaining common stock equivalent of 2,030,886,444 shares has been
accounted for as a derivative liability. The fair value of the derivative of
$802,102 was determined by utilizing the Black-Scholes valuation model.
LIQUIDITY AND CAPITAL RESOURCES
Our future success and viability is primarily dependent upon our ability to
increase operating cash flows and develop new business opportunities.
During the next 12 months, the Company's foreseeable cash requirements will
relate to continual development of the operations of its business, maintaining
its good standing and making the requisite filings with the Securities and
Exchange Commission, and the payment of expenses associated with reviewing or
investigating any potential business ventures.
Additionally, we may experience a cash shortfall and be required to raise
additional capital. In the year ended December 31, 2010 we relied on funds from
the investor deposit and the issuance of preferred stock. Management may raise
additional capital through future public or private offerings of our stock or
through loans from private investors, although there can be no assurance that we
will be able to obtain such financing. Our failure to do so could have a
material and adverse affect upon us and our shareholders.
The Company has entered into negotiation with a private owned company in
China for a possible merger and joint venture and will announce the terms and
condition of such merger or joint venture if the transaction proceeds and when
there is a signed LOI, MOU or a binding agreement.
The chart below summarizes our debt (see Note 4 - Notes Payable & Debt
Discounts of the Consolidated Financial Statements - Notes Payable and
Beneficial Conversions):
Terms Amount
----- ------
SHORT TERM NOTES PAYABLE TO SHAREHOLDERS:
12% Interest; principal of $6,597; convertible to common stock
based on 75% of average price; due on 9/3/2009, net of
unamortized discount related to the debt discount of $0 $ 6,597
12% Interest; principal of $293; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 293
12% Interest; principal of $11,000; convertible to common stock
based on 75% of average price; due on 10/9/2009, net of
unamortized discount related to the debt discount of $0 11,000
14
12% Interest; principal of $31,925; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 31,925
12% Interest; principal of $10,269; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 10,269
12% Interest; principal of $12,500; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 12,500
12% Interest; principal of $15,000; convertible to common stock
based on 75% of average price; due on 8/1/2009, net of
unamortized discount related to the debt discount of $0 15,000
12% Interest; principal of $17; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 17
12% Interest; principal of $5; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 5
12% Interest; principal of $231; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 231
12% Interest; principal of $9,458; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 9,458
12% Interest; principal of $37,133; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 37,133
12% Interest; principal of $5,000; convertible to common stock
based on 75% of average price; due on 10/28/2009, net of
unamortized discount related to the debt discount of $0 5,000
12% Interest; principal of $10,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $3,271 10,000
12% Interest; principal of $13,000; convertible to common stock
based on 75% of average price; due on 8/1/2009, net of
unamortized discount related to the debt discount of $0 13,000
12% Interest; principal of $7,209; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 7,209
12% Interest; principal of $23,847; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 23,847
12% Interest; principal of $20,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 20,000
12% Interest; principal of $25,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 25,000
12% Interest; principal of $70,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 70,000
12% Interest; principal of $36,867; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 36,867
15
12% Interest; principal of $73,975; convertible to common stock
based on 75% of average price; due on 7/1/2009, net of
unamortized discount related to the debt discount of $0 73,975
12% Interest; principal of $1,112; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 1,112
12% Interest; principal of $10,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 10,000
12% Interest; principal of $15,000; convertible to common stock
based on 75% of average price; due on 10/29/2009, net of
unamortized discount related to the debt discount of $0 15,000
12% Interest; principal of $50,240; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 50,242
--------
TOTAL SHORT TERM NOTES PAYABLE TO SHAREHOLDERS $495,679
========
SHORT TERM NOTES PAYABLE:
12% Interest; principal of $50,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 50,000
12% Interest; principal of $50,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 50,000
12% Interest; principal of $15,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 15,000
12% Interest; principal of $10,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 10,000
12% Interest; principal of $20,500; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 20,500
--------
TOTAL SHORT TERM NOTES PAYABLE $145,500
========
YEAR ENDED DECEMBER 31, 2010
As of December 31, 2010, the Company's current assets were $2,616 and its
current liabilities were $2,381,687, resulting in a working capital deficit of
$2,377,071. As of December 31, 2010, current assets were comprised of (i) $1,605
in cash; (ii) $1,011 in other current assets.
As of December 31, 2010, current liabilities were comprised of (i) $802,102
in derivative liability; (ii) $495,679 in notes payable to stockholders and
$145,500 in notes payable; (ii) $356,024 in accounts payable and accrued
expenses and $362,382 of other amounts due to shareholders.
As of December 31, 2010, the Company's total assets were $4,616 and its
total liabilities were $2,381,687, with a net stockholder's deficit of
$2,377,071.
For the year ended December 31, 2010, net cash flows used in operating
activities were $289,041 compared to net cash flows used in operating activities
of $192,918, before the net cash used in and provided by discontinued
operations, for the year ended December 31, 2009. The increase of $96,123 during
year ended December 31, 2010 were primarily due to the change in fair value of
derivative liability and interest expense associated with beneficial conversion
feature.
For the year ended December 31, 2010 and December 31, 2009, net cash flows
used in investing activities were $0 and $80,750 respectively.
16
For the year ended December 31, 2010, net cash flows provided by financing
activities was $281,000 compared to net cash flows provided by financing
activities of $123,501 for the year ended December 31, 2009. Cash inflow for in
2010 consisted of the investor deposit of $220,000 and sale of preferred stock
while cash inflows in 2009 consisted of the sale of preferred stock.
Our financial statements have been prepared assuming that we will continue
as a going concern and, accordingly, do not include adjustments relating to the
recoverability and realization of assets and classifications of liabilities that
might be necessary should we be unable to continue our operations.
As of the date of this Annual Report, the Company has generated no revenues
from operations since it entered the development stage on April 1, 2007.
Therefore, the Company's auditors have expressed substantial doubt about the
Company's ability to continue as a going concern. Management believes that it
can maintain its status as a going concern based on its ability to raise funds
pursuant to future public and private offerings and to obtain advances and
minimize operating expenses by not duplicating or incurring needless expenses.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Annual Report, the Company does not have any
off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on the Company's financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors. The
term "off-balance sheet arrangement" generally means any transaction, agreement
or other contractual arrangement to which an entity unconsolidated with the
Company is a party, under which the Company has (i) any obligation arising under
a guarantee, contract, derivative instrument or variable interest; or (ii) a
retained or contingent interest in assets transferred to such entity or similar
arrangement that serves as credit, liquidity or market risk support for such
assets.
FUTURE COMMITMENTS
As of the date of this Annual Report, the Company does not have any
material commitments nor does management anticipate any further material
commitments within the next twelve months.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Our financial statements and supplementary data may be found beginning at
page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We conducted an evaluation under the supervision and with the participation
of our management, including Kenneth Yeung, our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures. The term "disclosure controls and
procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
and Exchange Act of 1934, as amended ("Exchange Act"), means controls and other
procedures of a company that are designed to ensure that information required to
be disclosed by the company in the reports it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures also include, without limitation, controls
17
and procedures designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the company's management, including its
principal executive and principal financial officers, or persons performing
similar functions, as appropriate, to allow timely decisions regarding required
disclosure. Based on this evaluation, our Chief Executive Officer and Chief
Financial Officer concluded as of December 31, 2010, that our disclosure
controls and procedures have been improved and were effective as of December 31,
2010.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act. Our internal control over financial reporting
is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. Our
internal control over financial reporting includes those policies and procedures
that:
1. pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of our
assets;
2. provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with U.S. GAAP, and that our receipts and expenditures are being made
only in accordance with the authorization of our management and
directors; and
3. provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of our assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over
financial reporting as of December 31, 2010. In making this assessment,
management used the framework set forth in the report entitled Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission, or COSO. The COSO framework summarizes
each of the components of a company's internal control system, including (i) the
control environment, (ii) risk assessment, (iii) control activities, (iv)
information and communication, and (v) monitoring. This annual report does not
include an attestation report of our registered public accounting firm regarding
internal control over financial reporting. Management's report was not subject
to attestation by our registered public accounting firm pursuant to temporary
rules of the Securities and Exchange Commission that permits us to provide only
management's report in this annual report.
IDENTIFIED MATERIAL WEAKNESSES AND SIGNIFICANT DEFICIENCIES
A material weakness is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that a material
misstatement of the financial statements will not be prevented or detected.
Management identified the following internal control deficiency which we had
assessed as a material weakness as of Dec. 31, 2009 and 2008 during its
assessment of our internal control over financial reporting as follows:
1. We did not have adequate segregation of duties over certain areas of
our financial reporting process.
The internal control deficiency identified above will only be completely
corrected if the company expands and has the capacity to adequately segregate
the duties to mitigate risk in financial reporting. Expansion will depend mostly
on the ability of management to begin operations and generate enough income to
warrant growth in personnel.
18
We did not have effective comprehensive entity-level internal controls
specific to the structure of our board of directors and organization of critical
committees. Due to our expected expansion, as disclosed in this Form 10-K,
without correcting this significant deficiency and ensuring that our board of
directors has the proper oversight and committees are properly established, the
control environment in subsequent years may not be effective.
We had engaged a regionally-recognized independent consulting firm assisted
management with its assessment of the effectiveness of our internal control over
financial reporting, including scope determination, planning, staffing,
documentation, testing, remediation and retesting and overall program management
of the assessment project. In conclusion, our Chief Executive Officer and Chief
Financial Officer surmised that the Company has improved the effective internal
control over financial reporting as of December 31, 2009.
MANAGEMENT'S REMEDIATION INITIATIVES
We are in the further process of evaluating our material and significant
deficiencies. We have already begun to remediate many of the deficiencies.
However, others will require additional people, including adding to our board of
directors, which will take longer to remediate.
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
1. Identify and retain one or two new directors for our board of
directors including a member who is appropriately credentialed as a
financial expert with a goal of having sufficient independent board of
directors oversight;
2. Ensure all entity level controls are applied at all levels of the
organization and are scalable for acquisition or merge targets;
3. Establish comprehensive formal general accounting policies and
procedures and require directors or employees to sign off such
policies and procedures as documentation of their understanding of and
compliance with company policies;
4. Make all directors or employees subject to our Code of Ethics
(including those employees in acquisition targets) and require all
employees and directors to sign our Code of Ethics on an annual basis
and retain the related documentation; and,
5. Implement better segregation of duties given the size of our company.
We believe that the above five initiatives have been at least partially, if
not fully, implemented by the December 31, 2010.
CONCLUSION
The above identified improvement, material weaknesses and deficiency did
not result in material audit adjustments to our 2009 financial statements.
However, it is reasonably possible that, if not re-mediated, one or more of the
identified material weaknesses noted above could result in a material
misstatement in our reported financial statements that might result in a
material misstatement in a future annual or interim period.
In light of the identified material weaknesses, management, performed (1)
significant additional substantive review of those areas described above, and
(2) performed additional analyses, including but not limited to a detailed
balance sheet and statement of operations analytical review that compared
changes from the prior period's financial statements and analyzed all
significant differences. These procedures were completed so management could
gain assurance that the financial statements and schedules included in this Form
10-K fairly present in all material respects the Company's financial position,
results of operations and cash flows for the periods presented.
19
The changes noted above, are the only changes during our most recently
completed fiscal quarter that have materially affected or are reasonably likely
to materially affect, our internal control over financial reporting, as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
This Annual Report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this Annual Report.
ITEM 9B. OTHER INFORMATION.
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Our executive officers are elected by the board of directors and serve at
the discretion of the board, subject to employment and/or consulting agreements
described in Item 11, below. All of the current directors serve until the next
annual shareholders' meeting or until their successors have been duly elected
and qualified. The following table sets forth certain information regarding our
current directors and executive officers:
IDENTITY OF DIRECTORS AND EXECUTIVE OFFICERS AS OF MARCH 28, 2011
Name Director Since Age Position
---- -------------- --- --------
Kenneth Yeung* April 13, 2007 55 President, Chief Executive Officer, Chief
Financial Officer, Treasurer and Director
Peter Chin** May 21, 2007 63 Secretary and Director
----------
* On March 14, 2007, Mr. Yeung was elected to the office of President of the
Company. On April 16, 2007, Mr. Yeung was elected to the additional offices
of Chief Financial Officer and Treasurer.
** On May 21, 2007, Mr. Chin was elected to the office of Corporate Secretary.
*** All Company officers serve at the pleasure of the Board of Directors. All
current members of the Board of Directors will serve as such until the next
annual meeting of stockholders or until their successors are duly elected.
DIRECTORS
We believe that our board of directors should be composed of individuals
with sophistication and experience in many substantive areas that impact our
business. We believe that experience, qualifications or skills in the following
areas are important: (i) organizational leadership and vision; (ii) strategic,
financial and operational planning; (iii) corporate restructuring and
performance enhancement; (iv) corporate finance; and (v) experience as a board
member of other corporations. These areas are in addition to the personal
qualifications described in this section. We believe that our current board
members possess the professional and personal qualifications necessary for board
service. The principal occupation and business experience, for at least the past
five years, of our current directors are as follows:
KENNETH YEUNG. Mr. Yeung is currently the Chief Executive Officer of ia&d
Consultants, Inc., a Los Angeles based consulting firm engaged in planning,
architectural design, engineering and business consulting. As the CEO of ia&d
consultants, Inc., Mr. Yeung leads that company by developing business and
providing services such as planning, architectural design and engineering to its
clients worldwide and particularly in China. His company has completed numerous
projects including commercial and residential developments, hotels and resorts,
schools and recreational facility development. Currently, Mr. Yeung's company
has offices in three major cities in China. Mr. Yeung received a Bachelor of
Arts and Sciences from the University of Hawaii. From the mid-1990s, Mr. Yeung
20
has held senior executive positions with companies engaged in civil engineering,
building material manufacturing, planning, architecture and design.
PETER CHIN. Mr. Chin was born in Shanghai, China and raised in Hong Kong.
Mr. Chin studied abroad in both Sydney, Australia and the United States. Mr.
Chin has over 20 years of experience in the financial markets, focusing on
corporate finance, while advising companies in China and the United States. Mr.
Chin served on the board of directors of Golden Arrow Group of Companies, USA, a
hotel and land management company in China. Additionally, Mr. Chin also serves
as Chief Executive Officer and Director of Disability Access Corporation.
Disability Access Corporation's wholly-owned subsidiary, Disability Access
Consultants, Inc., creates a system to facilitate and expedite the processes
related to inspections based on the regulatory standards for the American with
Disabilities Act. Mr. Chin consults with various publicly traded and private
held companies on executive and financial decisions.
DIRECTORSHIPS
No Director of the Company or person nominated or chosen to become a
Director holds any other directorship in any company with a class of securities
registered pursuant to Section 12 of the 1934 Act or subject to the requirements
of Section 15(d) of such Act or any other company registered as an investment
company under the Investment Company Act of 1940. Currently, Peter Chin, our
Secretary and Director, also serves as Chief Executive Officer and Director of
Disability Access Corporation ("DBYC.PK").
SIGNIFICANT EMPLOYEES
No other significant employees exist.
FAMILY RELATIONSHIPS
There are no family relationships between any officer, director or person
who will be nominated to serve on our Board of Directors.
COMPENSATION OF DIRECTORS
During 2010, we issued 50,000 shares of Series D Preferred Stock to
Director Peter Chin as compensation. During 2009, we issued 50,000 shares of
Series D Preferred to Director Peter Chin as compensation. During 2008, we did
not compensate our Directors for serving on our Board of Directors.
There are no arrangements or understandings between any of the directors or
executive officers, or any other person or person pursuant to which they were
selected as directors and/or officers.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
During the past ten years, no present director, executive officer or person
nominated to become a director or an executive officer of the Company:
1. had a petition under the federal bankruptcy laws or any state
insolvency law filed by or against, or a receiver, fiscal agent or
similar officer appointed by a court for the business or property of
such person, or any partnership in which he was a general partner at
or within two years before the time of such filing, or any corporation
or business association of which he was an executive officer at or
within two years before the time of such filing;
2. was convicted in a criminal proceeding or subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
3. was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from or
otherwise limiting his involvement in any of the following activities:
21
(i) Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
Commodity Futures Trading Commission, or an associated person of
any of the foregoing, or as an investment adviser, underwriter,
broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and
loan association or insurance company, or engaging in or
continuing any conduct or practice in connection with such
activity;
(ii) Engaging in any type of business practice; or
(iii)Engaging in any activity in connection with the purchase or sale
of any security or commodity or in connection with any violation
of federal or state securities laws or federal commodities laws;
or
4. was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of an federal or state authority
barring, suspending or otherwise limiting for more than 60 days the
right of such person to engage in any activity described in paragraph
(3) (i), above, or to be associated with persons engaged in any such
activity; or
5. was found by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, and for which the judgment has not been reversed,
suspended or vacated.
AUDIT COMMITTEE FINANCIAL EXPERT AND IDENTIFICATION OF AUDIT COMMITTEE
Our board of directors acts as our audit committee. No member of our board
of directors is an "audit committee financial expert," as that term is defined
in Item 401(e) of Regulation S-K promulgated under the Securities Act of 1933,
as amended. Our board of directors concluded that the benefits of retaining an
individual who qualifies as an "audit committee financial expert" would be
outweighed by the costs of retaining such a person.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own more than ten percent of the
Company's Common Stock, to file initial reports of beneficial ownership on Form
3, changes in beneficial ownership on Form 4 and an annual statement of
beneficial ownership on Form 5, with the SEC. Such executive officers, directors
and greater than ten percent shareholders are required by SEC rules to furnish
the Company with copies of all such forms that they have filed.
Based on our review of the copies of such forms filed with the SEC
electronically, received by the Company and representations from certain
reporting persons, the Company believes that during the fiscal year ended
December 31, 2010, all the officers, directors and more than 10% beneficial
owners have complied with the above described filing requirements.
CODE OF ETHICS
The Company has adopted a Code of Ethics applicable to its employees and
officers, including its principal executive officer, principal financial
officer, principal accounting officer or controller and any other persons
performing similar functions. The Code of Ethics will be provided free of charge
by the Company to interested parties upon request. Requests should be made in
writing and directed to the Company at the following address: 17800 Castleton
Street, Suite 638, City of Industry, California 91748. A copy of the Code of
Ethics was attached as Exhibit 14 to the Company's Annual Report on Form 10-KSB
for the Fiscal Year Ended December 31, 2007.
22
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth the aggregate compensation paid by the
Company to the above named executive officers and directors of the Company for
services rendered during the periods indicated:
SUMMARY COMPENSATION TABLE
Non-Equity Nonqualified
Name and Incentive Deferred
Principal Stock Option Plan Compensation All Other
Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Totals($)
-------- ---- --------- -------- --------- --------- --------------- ----------- --------------- ---------
Kenneth 2010 $240,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 6,676(1) $247,676
Yeung, 2009 $100,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 6,584(2) $106,584
President 2008 $100,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 3,096(3) $103,096
and CEO
Peter Chin, 2010 $ 0 $ 0 $50,000(4) $ 0 $ 0 $ 0 $ 0 $ 50,000
Director 2009 $ 0 $ 0 $50,000(5) $ 0 $ 0 $ 0 $ 0 $ 50,000
2008 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
----------
(1) During the fiscal year ended December 31, 2010, Mr. Kenneth Yeung received
a cash salary of $40,000, with an additional $200,000 in salary accrued by
the Company, and a car allowance of $6,676 (pursuant to his employment
agreement with the Company)
(2) During the fiscal year ended December 31, 2009, Mr. Kenneth Yeung received
cash salary of $100,000 and a car allowance of $6,584 (pursuant to his
employment agreement with the Company).
(3) During the fiscal year ended December 31, 2008, Mr. Kenneth Yeung received
cash salary of $100,000 and a car allowance of $3,096 (pursuant to his
employment agreement with the Company).
(4) During 2010, the Company issued 50,000 shares of Series D Preferred Stock
to Mr. Peter Chin as compensation for serving as Corporate Secretary and
Director of the Company during 2010. The shares ere valued at $1.00 per
share for an aggregate consideration of $50,000.
(5) During 2009, the Company issued 50,000 shares of Series D Preferred Stock
to Mr. Peter Chin as compensation for serving as Corporate Secretary and
Director of the Company during 2008 and 2009. The shares ere valued at
$1.00 per share for an aggregate consideration of $50,000.
EMPLOYMENT CONTRACTS
On February 1, 2010, the Company entered into a three year Employment
Agreement with Mr. Yeung to become effective on May 1, 2010, that provides for
the following base compensation to Mr. Yeung:
May-December 2010 $20,000 per month
January-December 2011 $22,500 per month
January-December 2012 $25,000 per month
January-April 2013 $27,500 per month
In addition to the above base compensation, Mr. Yeung is entitled to the
following compensation benefits:
23
* Participation in the Company's Stock Option Plan;
* An undesignated monthly automobile allowance;
* Participation in group life, hospitalization or disability insurance
programs, health programs, pension plan similar benefit plan or other
"fringe benefits" of the Company; and
* An annual incentive bonus in an amount not less than 1.8% of the total
collected sales amount from operations of the Company, payable within
30 days after the end of each fiscal year during the term of his new
Employment Agreement; and
* Other incentive bonus in an amount deemed appropriate by the
Compensation Committee of the Company (when constituted), subject to
review every six months.
DIRECTOR COMPENSATION
We do not have formal compensation plan for our directors. During 2010 and
2009, we compensated Director Peter Chin with shares of our Series D Preferred
Stock as described in the above table.
COMPENSATION DISCUSSION AND ANALYSIS
We have prepared the following Compensation Discussion and Analysis to
provide you with information that we believe is necessary to understand our
executive compensation policies and decisions as they relate to the compensation
of our named executive officers.
We have only two members on our board of directors and do not currently
have a compensation committee. However, we intend to expand our board of
directors in the near future by appointing or electing at least two new
directors who will be deemed to be independent directors. The presence of
independent directors on our board of directors will allow us to form and
constitute a compensation committee of our board of directors.
The primary objectives of the compensation committee with respect to
executive compensation will be to (i) attract and retain the best possible
executive talent available to us; (ii) motivate our executive officers to
enhance our growth and profitability and increase shareholder value; and (iii)
reward superior performance and contributions to the achievement of corporate
objectives.
The focus of our executive pay strategy will be to tie short-term and
long-term cash and equity incentives to the achievement of measurable corporate
and individual performance objectives or benchmarks and to align executive
compensation with the creation and enhancement of shareholder value. In order to
achieve these objectives, our compensation committee will be tasked with
developing and maintaining a transparent compensation plan that will tie a
substantial portion of our executives' overall compensation to our sales,
operational efficiencies and profitability.
Our board of directors has not set any performance objectives or benchmarks
for 2010, as it intends for those objectives and benchmarks to be determined by
the compensation committee once it is constituted and then approved by the
board. However, we anticipate that compensation benefits will include
competitive salaries, bonuses (cash and equity based), health insurance and
stock option plans.
Our compensation committee will meet at least quarterly to assess the cost
and effectiveness of each executive benefit and the performance of our executive
officers in light of our revenues, expenses and profits.
OTHER CONTRACTS
None.
OPTION/SAR GRANTS TABLE
There were no stock options/SARS granted under the Company's stock option
plans to executive officers and directors during fiscal 2010 or 2009.
24
AGGREGATE OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
There were no exercises of stock options/SAR by executive officers during
fiscal 2010 or 2009.
LONG-TERM INCENTIVE PLAN AWARDS
There were no long-term incentive plan awards made in the last two fiscal
years.
REPRICING OPTIONS
During the fiscal year ended December 31, 2010, the Company did not reprice
any stock options.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
To our knowledge, the following table sets forth, as of March 28, 2011,
information regarding the ownership of our common stock by:
* Persons who own more than 5% of our common stock
* each of our directors and each of our executive officers; and
* all directors and executive officers as a group.
(a) Security Ownership of Certain Beneficial Owners
The Company has three (3) classes of voting securities outstanding (Common
Stock, Series A Preferred Stock and Series C Preferred Stock). The following
table sets forth security ownership information as of the close of business on
March 28, 2011, for any person or group, known by the Company to own more than
five percent (5%) of the Company's common stock and Series C Preferred Stock. No
table is included for the Company's Series A Preferred Stock due to the fact
that only 96 shares of same are outstanding and such shares represent a DE
MINIMUS number of votes that could be cast on any matter presented for a vote of
stockholders.
Amount and
Nature of
Name and Address Title of Beneficial Percent of
of Beneficial Owner Class Owner Class
------------------- ----- ----- -----
Kenneth Yeung Series C Preferred 3,000,000 100%(1)
17800 Castleton Street, Suite 638
City of Industry, CA 91748
----------
1. The Series C Preferred Stock has voting rights of 3,000 votes per share, so
that Mr. Yeung has the right to vote 9,000,000,000 of the 13,269,947,486
votes that may be cast by Mr. Yeung and the holders of our common stock,
thereby giving Mr. Yeung controlling voting rights in the Company.
(b) Security Ownership of Management
The following table sets forth security ownership information as of the
close of business on March 28, 2011, of all directors and all executive officers
listed in the "Summary Compensation Table" set forth herein, and all directors
and executive officers as a group.
25
Amount and
Nature of
Name and Address Title of Beneficial Percent of
of Beneficial Owner Class Owner Class
------------------- ----- ----- -----
Kenneth Yeung Series C Preferred Stock 3,000,000 100.00%
17800 Castleton Street, Suite 638 Common Stock 0 0%
City of Industry, CA 91748
Peter Chin
17800 Castleton Street, Suite 638 Series D Preferred Stock 50,000 26%
City of Industry, CA 91748 Common Stock 60,570,173 0%
Officers and Directors as a Series C Preferred Stock 3,000,000 100.00%
Group (2 persons) Series D Preferred Stock 50,000 26%
Common Stock 60,570,173 Less than 1%
(c) Securities Authorized for Issuance under Equity Compensation Plans: None.
There are no arrangements or understandings among the entities and
individuals referenced above or their respective associates concerning election
of directors or other any other matters which may require shareholder approval.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE.
During 2010, the Company had no formal or standard compensation arrangement
with members of its Board of Directors. During 2010, and as of the date of this
annual report, the Company's two directors, Kenneth Yeung and Peter Chin, were
and are not independent directors. As discussed under Item 2, above, on February
20, 2009, the Company entered into a sublease agreement with Allied Consultants,
Inc., a company owned by Nelson Yeung, the brother of our President, Kenneth
Yeung. Our board of directors believes the sublease is on terms fair and
favorable to the Company.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has renewed the engagement of HJ & Associates, LLC to serve as
the independent accounting firm responsible for auditing our financial
statements for the fiscal year ended December 31, 2010.
(1) Audit Fees. During the fiscal year ended December 31, 2010, the
aggregate fees billed by the Company's auditors for services rendered for the
audit of our annual financial statements and the review of the financial
statements included in our quarterly reports on Form 10-Q and for services
provided in connection with the statutory and regulatory filings or engagements
for 2010, was $28,500. During the fiscal year ended December 31, 2009, the
aggregate fees billed by the Company's auditors, for services rendered for the
audit of our annual financial statements and the review of the financial
statements included in our quarterly reports on Form 10-Q and for services
provided in connection with the statutory and regulatory filings or engagements
for 2009, was $42,100.
(2) Audit-Related Fees. During fiscal years ended December 31, 2010 and
2009, our auditors did not receive any fees for any audit-related services other
than as set forth in paragraph (1) above.
(3) Tax Fees. During the years ended December 31, 2010 and 2009, our
Auditors billed us $3,000 and $4,300, for tax services, respectively.
(4) All Other Fees. None.
26
(5) Audit Committee's Pre-Approval Policies and Procedures.
Effective May 6, 2003, the Securities and Exchange Commission adopted rules
that require that before Principal Accountants are engaged by us to render any
auditing or permitted non-audit related service, the engagement be:
* approved by our audit committee (which consists of our entire board of
directors); or
* entered into pursuant to pre-approval policies and procedures
established by the board of directors, provided the policies and
procedures are detailed as to the particular service, the board of
directors is informed of each service, and such policies and
procedures do not include delegation of the board of directors'
responsibilities to management.
The board of directors pre-approves all services provided by our
independent auditors. All of the above services and fees were reviewed and
approved by the board of directors either before or after the respective
services were rendered.
The board of directors has considered the nature and amount of fees billed
by our principal accountants and believes that the provision of services for
activities unrelated to the audit is compatible with maintaining our principal
accountants' independence.
During the 2010 and 2009 fiscal years, the Company used the following
pre-approval procedures related to the selection of our independent auditors and
the services they provide: unanimous consent of all directors via a board
resolution.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) (1) Financial Statements
Financial statements for International Building Technologies Group,
Inc. listed in the Index to Financial Statements and Supplementary
Data on page F-1 are filed as part of this Annual Report.
(a) (2) Financial Statement Schedule
Financial Statement Schedule for International Building Technologies
Group, Inc. listed in the Index to financial Statements and
Supplementary Data on page F-1 are filed as part of this Annual
Report.
(a) (3) See the "Index to Exhibits" set forth below.
(b) See Exhibit Index below for exhibits required by Item 601 of
Regulation S-K
27
EXHIBIT INDEX
List of Exhibits attached or incorporated by reference pursuant to Item 601
of Regulation S-K
Exhibit Description
------- -----------
2(i)* Agreement and Plan of Merger (Appendix D of the Company's Definitive
Proxy Statement on Form DEF 14A filed with the Commission on June 25,
2004).
3(i)(1)* Restated Articles of Incorporation filed with the Secretary of State
of Colorado on August 10, 2004 (Appendix A of the Company's
Definitive Proxy Statement on Form DEF 14A filed with the Commission
on June 25, 2004).
3(i)(2)* Articles of Incorporation of Ten Stix, Inc. filed with the Secretary
of State of Nevada on May 28, 2004(Appendix F of the Company's
Definitive Proxy Statement on Form DEF 14A filed with the Commission
on June 25, 2004).
3(i)(3)* Certificate of Amendment to Articles of Incorporation of Ten Stix,
Inc. filed with the Secretary of State of Nevada on December 1, 2004
(Exhibit 3.1 to the Company's Current Report on Form 8-K filed with
the Commission on December 6, 2004).
3(i)(4)* Certificate of Amendment to the Articles of Incorporation of the
Company filed with the Secretary of State of Nevada on October 12,
2006(Exhibit 3(1) to the Company's Quarterly report on Form 10-QSB
filed with the Commission on November 14, 2006).
3(i)(5)* Certificate of Amendment to the Articles of Incorporation of the
Company filed with the Secretary of State of Nevada on July 17,
2007(Exhibit 3 (i)(5) to the Company's form 10-KSB Annual Report for
the Fiscal Year Ended December 31, 2007, filed with the Commission on
April 3, 2008).
3(i)(6)* Certificate of Amendment to the Articles of Incorporation of the
Company filed with the Secretary of State of Nevada on May 22, 2008,
changing par value of common stock to $.00001 (Exhibit 3.1 to the
Company's Quarterly Report for the Period Ended June 30, 2008, filed
with the Commission on August 13, 2008).
3(i)(7)* Certificate of Amendment to Articles of Incorporation to change the
total authorized shares and conversion terms of the Company's Series
E Preferred Stock filed with the Secretary of State of Nevada on July
28, 2008(Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q
for the Period Ended June 30, 2008, filed with the Commission on
August 13, 2008).
3(i)(8)* Certificate of Amendment to Articles of Incorporation to change the
total authorized capital stock of the Company filed with the
Secretary of State of Nevada on August 11, 2008(Exhibit 4.3 to the
Company's Quarterly Report on Form 10-Q for the Period Ended June 30,
2008, filed with the Commission on August 13, 2008).
3(i)(9)* Certificate of Amendment to Articles of Incorporation to change the
total authorized capital stock of the Company, filed with the
Secretary of State of Nevada on October 13, 2009 (Exhibit 3(i)(9) to
the Company's Quarterly Report on Form 10-Q for the Period Ended
September 30, 2009, filed with the Commission on November 16, 2009).
28
3(i)(10)* Certificate of Amendment to Articles of Incorporation to change the
total authorized capital stock of the Company, filed with the
Secretary of State of Nevada and effective October 25, 2010 (Exhibit
3(i)(10) to the Company's Current Report on Form 8-K filed with the
Commission on October 26, 2010).
3(ii)* By-laws of the Company (Exhibit 3. II to the Company's Registration
Statement on Form 10-SB filed with the Commission on February 8,
2001).
4(i)* Certificate of Designation of Series A Preferred Stock of Ten Stix,
Inc. (Appendix G of the Company's Definitive Proxy Statement on Form
DEF 14A filed with the Commission on June 25, 2004).
4(ii)* Certificate of Designation of Series C Preferred Stock of the Company
(Exhibit 99.1 to the Company's Current report on Form 8-K filed with
the Commission on September 14, 2006).
4(iii)* Certificate of Amendment to Certificate of Designation of Series B
Preferred Stock of the Company filed with the Secretary of State of
Nevada on May 30, 2007(Exhibit 4(iii) to the Company's Annual Report
on Form 10-KSB for the Fiscal Year Ended December 31, 2007, filed
with the Commission on April 3, 2008).
4(iv)* Certificate of Amendment to Certificate of Designation of Series C
Preferred Stock of Company filed with the Secretary of State of
Nevada on May 30, 2007(Exhibit 4(iv) to the Company's Annual Report
on Form 10-KSB for the Fiscal Year Ended December 31, 2007, filed
with the Commission on April 3, 2008).
4(v)* Certificate of Amendment to Certificate of Designation of Series D
Preferred Stock of the Company filed with the Secretary of State of
Nevada on December 10, 2007(Exhibit 4(v) to the Company's Annual
Report on Form 10-KSB for the Fiscal Year Ended December 31, 2007,
filed with the Commission on April 3, 2008).
4(vi)* Certificate of Designation of Series E Preferred Stock of the Company
filed with the Secretary of State of Nevada on December 10,
2007(Exhibit 4(vi) to the Company's Annual Report on Form 10-KSB for
the Fiscal Year Ended December 31, 2007, filed with the Commission on
April 3, 2008).
4(vii)* Certificate of Designation of Series F Preferred Stock of the Company
filed with the Secretary of State of Nevada on April 23, 2008
(Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the
Period Ended June 30, 2008, filed with the Commission on August 13,
2008).
4(viii)* Amendment to Certificate of Designation After Issuance of Class or
Series to change the total authorized shares and conversion terms of
the Company's Series E Preferred Stock filed with the Secretary of
State of Nevada on August 28, 2008(Exhibit 4.4 to the Company's
Quarterly Report on Form 10-Q for the Period Ended June 30, 2008,
filed with the Commission on August 13, 2008).
29
10.1* Stock Sale and Purchase Agreement dated March 14, 2007, by, between
David Keaveney, Kenneth Yeung and the Company(Exhibit 10.1 to the
Company's Current Report on Form 8-K filed with the Commission on
March 27, 2007).
10.2* Asset Sale and Purchase Agreement dated July 8, 2007, by and between
International Building Technologies Co., Ltd. and Suining Yinfa
Construction & Engineering Co., Ltd.(Exhibit 10.1 to the Company's
Current Report on Form 8-K filed with the Commission on July 23,
2007).
10.3* Amendment to Asset Sale and Purchase Agreement by and between the
Company and Suining Yinfa Construction and Engineering, Ltd.,
executed on December 5, 2007(Exhibit 10.2 to the Company's Current
Report on Form 8-K, filed with the Commission on April 29, 2008).
10.4* Rescission to the Asset Sale and Purchase Agreement by and between
the Company and Suining Yinfa Construction and Engineering, Ltd.,
executed on April 23, 2008(Exhibit 10.1 to the Company's Current
Report on Form 8-K, filed with the Commission on April 29, 2008).
10.5* Twelve Month Convertible Note Amendment dated March 14, 2007(Exhibit
10.2 to the Company's Current Report on Form 8-K filed with the
Commission on March 27, 2007).
10.6* Employment Agreement between the Company and Kenneth Yeung dated May
21, 2007, effective May 1, 2007(Exhibit 10.8 to the Company's Annual
Report on Form 10-KSB for the Fiscal Year Ended December 31, 2007,
filed with the Commission on April 3, 2008).
10.7* Employment Agreement between the Company and Kenneth Yeung dated
February 1, 2010, effective May 1, 2010.
10.8* Stock Sale and Purchase Agreement by and between the Company and
Wuhan Intepower Co., Ltd., executed on April 17, 2008(Exhibit 10.1 to
the Company's Current Report on Form 8-K, filed with the Commission
on April 21, 2008).
10.9* Compensation Agreement between the Company and Peter Chin dated
September 30, 2009.
14* Code of Ethics (Exhibit 14 to the Company's Annual Report on Form
10-KSB for the Fiscal Year Ended December 31, 2007, filed with the
Commission on April 3, 2008).
21** Subsidiaries of the Company
31.1** Certification of Principal Executive Officer Pursuant to 18 U.S.C.
Section 1350
31.2** Certification of Principal Financial Officer Pursuant to 18 U.S.C.
Section 1350
32.1** 906 Certification of Principal Executive Officer 906 Certification of
Principal Financial Officer
30
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
International Building Technologies Group, Inc.
Dated: March 30, 2011 /s/ Kenneth Yeung
-----------------------------------------
By: Kenneth Yeung
Its: President and Chief Executive Officer
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Dated: March 30, 2011 /s/ Kenneth Yeung
-----------------------------------------
By: Kenneth Yeung
Its: President, Chief Executive Officer, and
Director (Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
Dated: March 30, 2011 /s/ Peter Chin
-----------------------------------------
By: Peter Chin
Its: Corporate Secretary and Director
31
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
International Building Technologies Group, Inc.
We have audited the accompanying consolidated balance sheets of International
Building Technologies Group, Inc. and subsidiaries (A Development Stage Company)
as of December 31, 2010 and 2009, and the related consolidated statements of
operations, stockholders' deficit, and cash flows for the years then ended and
since re-entering the development stage on April 1, 2007 through December 31,
2010. 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 audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of International
Building Technologies Group, Inc. and subsidiaries as of December 31, 2010 and
2009, and the results of their operations and their cash flows for the years
then ended and since re-entering the development stage on April 1, 2007 through
December 31, 2010 in conformity with U.S. generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company has suffered recurring losses and
has experienced negative cash flows from operations, which raises substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to those matters are also described in Note 3 to the
consolidated financial statements. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ HJ Associates & Consultants, LLPu
-----------------------------------------------
HJ Associates & Consultants, LLP
Salt Lake City, Utah
March 30, 2011
F-1
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2010 2009
------- -------
ASSETS
Cash $ 1,605 $12,514
Other current assets 1,011 1,011
------- -------
Total current assets 2,616 13,525
------- -------
Other assets 2,000 2,000
------- -------
Total assets $ 4,616 $15,525
======= =======
See accompanying notes to consolidated financial statements
F-2
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
December 31, December 31,
2010 2009
------------ ------------
LIABILITIES & STOCKHOLDERS' DEFICIT
LIABILITIES
Accounts payable and accrued expenses $ 193,822 $ 204,437
Accrued expenses - related parties and shareholders 362,382 207,321
Accrued interest 62,183 33,808
Accrued interest - related parties and shareholders 100,019 67,352
Derivative liability 802,102 2,105,829
Investor deposit 220,000 --
Notes payable 145,500 145,175
Notes payable to shareholders 495,679 668,411
------------ ------------
Total current liabilities 2,381,687 3,432,633
------------ ------------
STOCKHOLDERS' DEFICIT
Preferred A stock, $250 par value, 10,000 shares authorized;
96 shares issued and outstanding 24,000 24,000
Preferred C stock, $.001 par value, 3,000,000 shares authorized;
3,000,000 and 2,000,000 shares issued and outstanding 3,000 2,000
Preferred D stock, $.001 par value, 10,000,000 shares authorized;
145,000 and 172,680 shares issued and outstanding 195 208
Preferred E stock, $.001 par value, 50,000,000 shares authorized;
30,800 shares issued and outstanding 25 25
Preferred F stock, $.001 par value, 3,000,000 shares authorized;
20,000 shares issued and outstanding 20 20
Common stock; $.00001 par value, 5,950,000,000 shares authorized;
4,269,947,486 and 2,307,177,093 issued and outstanding 42,700 23,072
Additional paid-in capital 10,170,883 9,882,383
Accumulated deficit - Prior to reentering development stage (5,534,336) (5,534,336)
Accumulated deficit - From inception of reentering development stage on 4/1/2007 (7,080,130) (7,813,920)
Other comprehensive loss (3,428) (560)
Noncontrolling interest -- --
------------ ------------
Total stockholders' deficit (2,377,071) (3,417,108)
------------ ------------
Total liabilities and stockholders' deficit $ 4,616 $ 15,525
============ ============
See accompanying notes to consolidated financial statements
F-3
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
Cumulative Since
Year Ended December 31, Reentering
--------------------------------- Development Stage
2010 2009 4/1/2007 - 12/31/2010
----------- ----------- ---------------------
Revenue $ -- $ -- $ --
Operating expenses:
General and administrative 503,480 480,513 2,251,950
Goodwill impairment -- -- 1,303,277
Depreciation and amortization -- -- 3,658
----------- ----------- -----------
Total operating expenses 503,480 480,513 3,558,885
----------- ----------- -----------
Operating loss (503,480) (480,513) (3,558,885)
----------- ----------- -----------
Other income (expense):
Interest income -- -- 374
Interest expense (87,302) (1,402,005) (2,585,625)
Loss on settlement -- -- (23,500)
Loss on investment -- (80,750) (115,750)
Gain/(Loss) on extinguishment of debt 20,800 -- 32,097
Gain on disposal of assets -- -- 2,565
Change in fair value of derivative liability 1,303,727 32,133 (802,102)
Minority interest in net loss of subsidiary -- -- 15,000
Other income (expense) 45 -- 3,855
----------- ----------- -----------
Total other income (expense) 1,237,270 (1,450,622) (3,473,086)
----------- ----------- -----------
Income/(Loss) from continuing operations $ 733,790 $(1,931,135) $(7,031,971)
----------- ----------- -----------
See accompanying notes to consolidated financial statements
F-4
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(CONTINUED)
Cumulative Since
Year Ended December 31, Reentering
----------------------------------- Development Stage
2010 2009 4/1/2007 - 12/31/2010
-------------- -------------- ---------------------
Income/(Loss) from continuing operations $ 733,790 $ (1,931,135) $ (7,031,971)
-------------- -------------- --------------
Discontinued operations:
Income (loss) from operations of discontinued business -- -- (20,063)
Income (loss) on disposal of assets -- -- 61,058
-------------- -------------- --------------
Income (loss) on discontinued operations -- -- 40,995
-------------- -------------- --------------
Net Income/(loss) 733,790 (1,931,135) (6,990,976)
Preferred dividend -- -- (89,154)
-------------- -------------- --------------
Net Income/(loss) attributable to common shareholders 733,790 (1,931,135) (7,080,130)
-------------- -------------- --------------
Other comprehensive income
Foreign currency translation (2,868) (386) (3,428)
-------------- -------------- --------------
Comprehensive income/(loss) $ 730,922 $ (1,931,521) $ (7,083,558)
============== ============== ==============
Net income/(loss) per common share - basic and diluted
Continuing operations $ 0.00 $ (0.00)
============== ==============
Discontinued operations $ -- $ --
============== ==============
Net Income (loss) per common share $ 0.00 $ (0.00)
============== ==============
Weighted average common shares outstanding:
Basic 3,290,056,275 1,490,914,770
============== ==============
Diluted 5,950,000,000 --
============== ==============
See accompanying notes to consolidated financial statements
F-5
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
Preferred Stock A Preferred Stock C Preferred Stock D
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
BALANCE, DECEMBER 31, 2008 96 $24,000 1,000,000 $1,000 35,000 $ 35
2009
Common stock issued for repayment of debt
Preferred stock for services 50,000 50
Sale of stock for cash 1,000,000 1,000 122,500 123
Beneficial conversion feature
Other comprhensive loss
Net loss
------- ------- --------- ------ -------- -------
BALANCE, DECEMBER 31, 2009 96 $24,000 2,000,000 $2,000 207,500 $ 208
======= ======= ========= ====== ======== =======
2010
Common stock issued for repayment of debt
Common stock converted from preferred stock
Preferred stock for services 50,000 50
Preferred stock converted to common stock (122,500) (123)
Sale of stock for cash 1,000,000 1,000 60,000 60
Beneficial conversion feature
Other comprhensive loss
Net income
------- ------- --------- ------ -------- -------
BALANCE, DECEMBER 31, 2010 96 $24,000 3,000,000 $3,000 195,000 $ 195
======= ======= ========= ====== ======== =======
Preferred Stock E Preferred Stock F Common Stock
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
BALANCE, DECEMBER 31, 2008 30,800 $ 25 20,000 $ 20 747,853,494 $ 7,478
2009
Common stock issued for repayment of debt 1,559,323,599 15,594
Preferred stock for services
Sale of stock for cash
Beneficial conversion feature
Other comprhensive loss
Net loss
------ ------- ------ ------- ------------- -------
BALANCE, DECEMBER 31, 2009 30,800 $ 25 20,000 $ 20 2,307,177,093 $23,072
====== ======= ====== ======= ============= =======
2010
Common stock issued for repayment of debt 1,275,651,897 12,757
Common stock converted from preferred stock 687,118,496 6,871
Preferred stock for services
Preferred stock converted to common stock
Sale of stock for cash
Beneficial conversion feature
Other comprhensive loss
Net income
------ ------- ------ ------- ------------- -------
BALANCE, DECEMBER 31, 2010 30,800 $ 25 20,000 $ 20 4,269,947,486 $42,700
====== ======= ====== ======= ============= =======
Accumulated
Accumulated Deficit After
Deficit Prior Reentering
to Reentering Development Other
Paid-In Development Stage Comprehensive
Capital Stage on 4/1/2007 Loss Total
------- ----- ----------- ---- -----
BALANCE, DECEMBER 31, 2008 $ 8,556,173 $(5,534,336) $(5,882,785) $ (174) $(2,828,564)
2009
Common stock issued for repayment of debt 188,716 204,310
Preferred stock for services 49,950 50,000
Sale of stock for cash 122,377 123,500
Beneficial conversion feature 965,167 965,167
Other comprhensive loss (386) (386)
Net loss (1,931,135) (1,931,135)
----------- ----------- ----------- ------- -----------
BALANCE, DECEMBER 31, 2009 $ 9,882,383 $(5,534,336) $(7,813,920) $ (560) $(3,417,108)
=========== =========== =========== ======= ===========
2010
Common stock issued for repayment of debt 185,359 198,116
Common stock converted from preferred stock 115,629 122,500
Preferred stock for services 109,890 50,000
Preferred stock converted to common stock (122,378) (122,501)
Sale of stock for cash 59,640 61,000
Beneficial conversion feature --
Other comprhensive loss (2,868) (2,868)
Net income 733,790 733,790
----------- ----------- ----------- ------- -----------
BALANCE, DECEMBER 31, 2010 $10,170,883 $(5,534,336) $(7,080,130) $(3,428) $(2,377,071)
=========== =========== =========== ======= ===========
See accompanying footnotes to the consolidated financial statements
F-6
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cumulative Since
Year Ended December 31, Reentering
----------------------------- Development Stage
2010 2009 4/1/2007 - 12/31/2010
----------- ----------- ---------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income/(loss) from continuing operations $ 733,790 $(1,931,135) $(7,080,129)
Adjustments to reconcile net income (loss) to net
cash used by operating activities:
Depreciation -- -- 3,658
Impairment of goodwill -- -- 1,303,277
Amortization of debt discounts -- -- 128,933
Loss/(Gain) on extinguishment of debt -- -- (70,843)
Loss on Investments -- 80,750 115,750
Interest expense associated with beneficial conversion feature 2,788 1,312,770 2,165,375
Change in fair value of derivative liability (1,303,727) (32,133) 802,102
Director stock based compensation 50,000 50,000 150,000
Common stock issued for services -- -- 394,519
Common stock issued for settlement -- -- 13,500
Gain on disposal of equipment -- -- (2,565)
Minority interest in net loss of subsidiary -- -- (15,000)
Change in assets and liabilities:
Prepaid expenses and other assets -- 1,863 529
Accounts payable and accrued expenses 228,108 324,967 867,826
----------- ----------- -----------
Net cash used in continuing operations (289,041) (192,918) (1,223,068)
Net income (loss) from discontinued operations -- -- 40,995
Net cash provided by (used in) discontinued operations -- -- (83,796)
----------- ----------- -----------
Net cash used in operating activities (289,041) (192,918) (1,265,869)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposit on investment -- 80,750 (80,750)
----------- ----------- -----------
Net cash used in continuing operations -- 80,750 (80,750)
----------- ----------- -----------
Net cash provided by in investing activities $ -- $ 80,750 $ (80,750)
----------- ----------- -----------
See accompanying notes to consolidated financial statements
F-7
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
Cumulative Since
Year Ended December 31, Reentering
----------------------------- Development Stage
2010 2009 4/1/2007 - 12/31/2010
----------- ----------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party notes payable -- -- 80,000
Proceeds from notes payable -- -- 628,876
Proceeds from investor deposit, net 220,000 -- 220,000
Repayments of notes payable -- -- (34,448)
Proceeds from issuance of preferred stock 61,000 123,501 205,301
Proceeds from issuance of common stock -- -- 180,464
Proceeds from issuance of common stock for asset purchase -- -- 6,206
Proceeds from exercise of stock options -- -- 4,375
----------- ----------- -----------
Net cash provided by financing activities 281,000 123,501 1,290,774
----------- ----------- -----------
Effect of exchange rate changes on cash (2,868) (386) (3,428)
----------- ----------- -----------
Cash:
Increase (decrease) in cash (10,909) 10,947 (59,273)
CASH, beginning of period 12,514 1,567 60,878
----------- ----------- -----------
CASH, end of period $ 1,605 $ 12,514 $ 1,605
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES:
Tax paid $ -- $ 1,600 $ 4,800
=========== =========== ===========
Cash paid for interest $ 235 $ 108 $ 1,501
=========== =========== ===========
NON-CASH DISCONTINUED OPERATION ACTIVITIES:
Employee stock based compensation $ -- $ -- $ 30,698
Issuance of common stock for debt $ -- $ -- $ 389,360
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Issuance of note for accrued expenses $ -- $ -- $ 201,026
Issuance of common stock by conversion of preferred stock D $ 122,500 $ -- $ 243,490
Issuance of common stock for payment of debt $ 198,125 $ 204,310 $ 947,506
Issuance of common stock for settlement $ -- $ -- $ 13,500
Cancelation of Rosetop project and related Preferred E Stock $ -- $ -- $ (315,000)
Issuance of common stock for Purchase of Company $ -- $ -- $ 1,300,000
See accompanying notes to consolidated financial statements
F-8
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
Note 1: Organization, Basis of Presentation and Significant Accounting Policies
Organization
International Building Technologies Group, Inc. (OTCBB: INBG) (the "Company")
has four total subsidiaries, one active subsidiary and three dormant
subsidiaries.
Active Subsidiaries:
* International Building Technologies Co., Ltd. ("IBT Hong Kong") - a
Hong Kong Corporation with equity interest of 100%
Dormant Subsidiaries:
* Scottsdale Diecast, Inc. - a Nevada Corporation with equity interest
of 100%
* Quadriga Motorsports, Inc. - a Nevada Corporation with equity interest
of 100%
* International Building Technologies, Inc. ("IBT") - a Nevada
Corporation with equity interest of 80%
Currently the Company or its subsidiary is focusing its attention on several
viable businesses that could be well suited to possibly merge into the company.
The Company has signed a letter of intent (LOI) with a Chinese company and
entered into the process of merge. The Company believes it is in a position of
strength and is going to explore every opportunity to bring value assets,
revenue and profit back to its stockholders and investors.
The Company has engaged a Chinese law firm to conduct the due diligent, as well
an audit firm to conduct the audit as required for the merge. Result and
progress of such Due Diligent and audit will be announced once they are
completed.
The Company had offices in Alameda, CA, and Shanghai, China in 2007. In
December, 2008, the Company closed the office in Shanghai, China. In January,
2009, the Company closed the office in Alameda, CA and moved to City of
Industry, CA.
Basis of Financial Statement Presentation
The accompanying consolidated financial statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. The information furnished in the consolidated financial statements
includes normal recurring adjustments and reflects all adjustments, which, in
the opinion of management, are necessary for a fair presentation of such
financial statements.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its subsidiaries. All intercompany accounts and transactions have
been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 reporting period. Actual results could differ from those estimates
and assumptions.
F-9
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
Reclassification
Certain reclassifications, which have no effect on net income (loss), have been
made in the prior period financial statements to conform to the current
presentation.
Intangible Assets
The license agreement was abandoned in accordance with FASB Accounting
Codification Standards 360-10-20 (previous guidance Statement of Accounting No.
144, "Accounting for the Impairment or Disposal of Long Lived Assets") and
consequently the remaining value of the asset was fully amortized as of December
31, 2010 and 2009.
Impairment of Long-Lived Assets
The Company evaluates its long-lived assets in accordance with FASB Accounting
Codification Standards 360-10-20 by measuring the carrying amounts of assets
against the estimated undiscounted future cash flows associated with them. At
the time the carrying value of such assets exceeds the fair value of such
assets, impairment is recognized.
Incomes Taxes
The Company accounts for income taxes under the liability method of accounting
for income taxes in accordance with the provisions of FASB Accounting
Codification Standards 740 - "Income Taxes" (previous guidance Statements of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," ("FAS
109") and related interpretations and guidance including FASB Interpretation No.
48, "Accounting for Uncertainty in Income Taxes-an interpretation of FASB
Statement No. 109" ("FIN 48")). Deferred income taxes are provided using the
liability method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss and tax credit carry-forwards and
deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of assets
and liabilities and their tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of the changes
in tax laws and rates of the date of enactment.
When tax returns are filed, it is highly certain that some positions taken would
be sustained upon examination by the taxing authorities, while others are
subject to uncertainty about the merits of the position taken or the amount of
the position that would be ultimately sustained. The benefit of a tax position
is recognized in the financial statements in the period during which, based on
all available evidence, management believes it is more likely than not that the
position will be sustained upon examination, including the resolution of appeals
or litigation processes, if any. Tax positions taken are not offset or
aggregated with other positions. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest amount of
tax benefit that is more than 50 percent likely of being realized upon
settlement with the applicable taxing authority. The portion of the benefits
associated with tax positions taken that exceeds the amount measured as
described above is reflected as a liability for unrecognized tax benefits in the
accompanying balance sheet along with any associated interest and penalties that
would be payable to the taxing authorities upon examination.
Interest and penalties associated with unrecognized tax benefits are classified
as additional income taxes in the statement of income.
F-10
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
Translation of Non-U.S. Currency Amounts
Assets and liabilities of non-U.S. subsidiaries that operate in a local currency
environment are translated to U.S. dollars at year-end exchange rates. Income
and expense items are translated at weighted-average rates of exchange
prevailing during the year. Translation adjustments are recorded in Other
Comprehensive Income not affecting retained earnings within Stockholders'
equity.
Inventories, plant, rental machines and other property-net, and other
non-monetary assets and liabilities of non-U.S. subsidiaries and branches that
operate in U.S. dollars, or whose economic environment is highly inflationary,
are translated at approximate exchange rates prevailing when the company
acquired the assets or liabilities. All other assets and liabilities are
translated at year-end exchange rates. Cost of sales and depreciation are
translated at historical exchange rates. All other income and expense items are
translated at the weighted-average rates of exchange prevailing during the year.
Current and historical exchange rates are not indicative of what future exchange
rates will be and should not be construed as such.
Relevant exchange rates used in the preparation of the financial statements of
the subsidiary are as follows for years ended December 31, 2010 and 2009
(denoted in Hong Kong dollars per one U.S. dollar):
2010 2009
------- -------
Current exchange rate at December 31, HKD 7.78320 7.75510
Weighted average exchange rate 7.76952 7.75218
Fair Value of Financial Instruments
The carrying amounts of cash, accounts payable, and accrued expenses approximate
fair value because of the short maturity of these items.
Loss per Common Share
Basic net loss per share is computed by dividing net loss by the weighted
average number of shares of common stock outstanding during the period. Diluted
net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock and common stock equivalents outstanding during
the period. As the Company resulted in net income for the year ended December
31, 2010, common stock equivalents were included from diluted net income per
share. However, as the Company incurred net loss for the year ended December 31,
2009, common stock equivalents were excluded from diluted net loss per share as
their effect would be anti-dilutive.
Stock-Based Compensation
FASB Accounting Codification Standards (ACS) Topic 825, "Compensation - Stock
Compensation" (previous guidance Statement of Accounting Standards SFAS No.
123R, "Share-Based Payment") requires all share-based payments to employees,
including grants of employee stock options to be recognized as compensation
expense in the financial statements based on their fair values. That expense is
recognized over the period during which an employee is required to provide
services in exchange for the award, known as the requisite service period
(usually the vesting period). During years ended December 31, 2010 and 2009, the
Company did not recognize any of compensation expense associated with
stock-based compensation. Under FASB ACS Topic 825, the expense recognition for
variable awards is the same under the intrinsic value and the fair value
methods.
F-11
Recent Accounting Pronouncements
In February 2010, the FASB issued guidance to remove the requirement for an
entity that files financial statements with the SEC to disclose a date through
which subsequent events have been evaluated. The adoption of this guidance
during our current fiscal quarter did not have any impact on our Consolidated
Financial Statements.
On July 1, 2009, Financial Accounting Standards Board ("FASB") Accounting
Standards Codification(TM) ("ASC") became the sole source of authoritative
Generally Accepted Accounting Principles ("GAAP") literature recognized by the
Financial Accounting Standards Board for financial statements issued for interim
and annual periods ending after September 15, 2009. Rules and interpretive
releases of the Security Exchange Commission ("SEC") under authority of federal
securities laws are also sources of authoritative GAAP for SEC registrants.
Except for applicable SEC rules and regulations and a limited number of
grandfathered standards, all other sources of GAAP for nongovernmental entities
were superseded by the issuance of ASC. ASC did not change GAAP, but rather
combined the sources of GAAP and the framework for selecting among those sources
into a single source. Accordingly, the adoption of ASC had no impact on the
financial results of the Company.
In June 2009, the FASB issued FAS 168, "The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles,"
which now resided with ASC 105, "Generally Accepted Accounting Principles." ASC
105 will become the source of authoritative U.S. generally accepted accounting
principles (GAAP) recognized by the FASB to be applied by nongovernmental
entities. Rules and interpretive releases of the Securities and Exchange
Commission (SEC) under authority of federal securities laws are also sources of
authoritative GAAP for SEC registrants. On the effective date of this Statement,
the Codification will supersede all then-existing non-SEC accounting and
reporting standards. All other non-grandfathered non-SEC accounting literature
not included in the Codification will become non-authoritative. This statement
is effective for financial statements issued for interim and annual periods
ending after September 15, 2009.The Company expects the adoption of ASC 105 to
have an impact on the Company's results of operations, financial condition or
cash flows.
In June 2009, the FASB issued FAS 167, "Amendments to FASB Interpretation No.
46(R)," which now resides with ASC 810, "Consolidation." ASC 810 is intended to
(1) address the effects on certain provisions of FASB Interpretation No. 46
(revised December 2003), Consolidation of Variable Interest Entities, as a
result of the elimination of the qualifying special-purpose entity concept in
ASC 860, and (2) constituent concerns about the application of certain key
provisions of Interpretation 46(R), including those in which the accounting and
disclosures under the Interpretation do not always provided timely and useful
information about an enterprise's involvement in a variable interest entity.
This statement must be applied as of the beginning of each reporting entity's
first annual reporting period that begins after November 15, 2009. The Company
expects the adoption of ASC 810 to have an impact on the Company's results of
operations, financial condition or cash flows.
In June 2009, the FASB issued FAS 140/166, "Accounting for Transfers of
Financial Assets," an amendment of FAS 140, which now resides with ASC 860,
"Transfers and Servicing." ASC 860 is intended to improve the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial statements about a transfer of
financial assets: the effects of a transfer on its financial position, financial
performance , and cash flows: and a transferor's continuing involvement, if any,
in transferred financial assets. This statement must be applied as of the
beginning of each reporting entity's first annual reporting period that begins
after November 15, 2009. The Company expects the adoption of ASC 860 to have an
impact on the Company's results of operations, financial condition or cash
flows.
In May 2009, the FASB issued FAS 165, "Subsequent Events," which now resides
with ASC 855, "Subsequent Events." This pronouncement establishes standards for
accounting for and disclosing subsequent events (events which occur after the
F-12
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
balance sheet date but before financial statements are issued or are available
to be issued). ASC 855 requires and entity to disclose the date subsequent
events were evaluated and whether that evaluation took place on the date
financial statements were issued or were available to be issued. It is effective
for interim and annual periods ending after June 15, 2009. The adoption of ASC
855 did not have a material impact on the Company's financial condition or
results of operation.
Note 2: Material Events
Amendment of the conversion rates of the convertible promissory notes
On February 27, 2009, the Company amended the conversion feature of certain
promissory notes. The original conversion features are summarized in Note 4. The
amended conversion feature states that at any time, the Payee may convert all or
part of the remaining principal balance and accrued interest into shares of the
Company's Common Stock based on 75% of the average of the twenty closing prices
in the past 20 trading days immediately preceding such conversion so long as
such conversions shall not exceed 4.99% of the then outstanding common stock of
the Company.
Amendment of the conversion rates of the convertible promissory notes
On July 10, 2009, the Company made the decision to rescind the Stock Sale and
Purchase Agreement that signed with Wuhan Interpower Co. Ltd on April 17, 2008.
The Company believes that the decision was made for the best interest of the
company and the investors. The Company has requested that Wuhan Interpower Co.,
Ltd. immediately refund the US$161,500. According to the correspondence being
exchanged recently, as of July 31, 2009, Wuhan Interpower Co., Ltd. has neither
agreed to fully refund of US$161,500 nor refused to do so, despite our several
requests in writings. The Company is going to seek legal assistance in China to
recover the said amount plus interest.
In November, 2009, Wuhan Interpower Co., Ltd agreed to pay 50%, $80,750, of the
investment deposit back to the Company. In considering the cost involved in
lawsuit or arbitration in China, the Company has accepted this settlement.
Accordingly, the loss on investment increased by $80,750 in the current year and
the investment deposit decreased to $80,750. The return of the deposit was
received in December, 2009.
Amendment on the article of incorporation to increase the authorized shares
The Company had authorized capital stock of 2,000,000,000 shares, including
1,950,000,000 shares of Common Stock and 50,000,000 shares of Preferred Stock.
On August 10, 2009, our Board of Directors and the shareholders holding a
majority of the voting rights in the Company approved an amendment to the
Articles of Incorporation to increase the number of outstanding shares of our
capital stock to 4,000,000,000 including 3,950,000,000 shares of Common Stock
and 50,000,000 shares of Preferred Stock.
New business venture
On May 25, 2010, the Company signed a non-binding Letter of Intent to merge with
FHH Sino New Energies CO., Ltd., a Chinese company ("FHH Sino") located in
Weihai, Shandong Province of China. FHH Sino is a petroleum storage company that
offers petroleum storage tanks and facilities for rental to the petroleum
importers/exporters in Weihai, a coastal city in Shandong Province of Northern
China. Upon signing the Letter of Intent on May 27, 2010 (effective date), FHH
Sino made a U.S. $230,000 deposit with the Company.
The Company intends to merge with FHH Sino by exchanging the Company's common
stock with FHH Sino's holding or subsidiary company. This merger will give the
F-13
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
Company the opportunity to switch its nature of business into the energy sector,
the ability to generate revenue and profit once the FHH Sino commences its
operation in early 2011, thus benefits our shareholders in the near future.
Note 3: Going Concern
The Company's financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The Company's continuation as a
going concern is dependent upon its ability to generate sufficient cash flow
from operations to meet its obligations on a timely basis and/or obtain
financing as may be required. As of December 31, 2010, the Company has incurred
net income from operations prior to reentering the development stage and has a
stockholders' deficit of $5,534,336. Since the inception of reentering the
development stage on April 1, 2007, the Company has a stockholders' deficit of
$7,080,130 as of December 31, 2010. The Company has a working capital deficit of
$2,377,071 as of December 31, 2010. These factors raise substantial doubt about
the Company's ability to continue as a going concern.
During the next 12 months, the Company's foreseeable cash requirements will
relate to continual development of the operations of its business, maintaining
its good standing and making the requisite filings with the Securities and
Exchange Commission, and the payment of expenses associated with reviewing or
investigating any potential business ventures. The Company may experience a cash
shortfall and be required to raise additional capital. Historically, it has
relied upon internally generated funds and funds from the sale of shares of
stock and loans from its shareholders and private investors to finance its
operations and growth. Management may raise additional capital through future
public or private offerings of the Company's stock or through loans from private
investors, although there can be no assurance that it will be able to obtain
such financing. The Company's failure to do so could have a material and adverse
affect upon it and its shareholders.
The Company has entered into negotiation with a private owned company in China
for a possible merger and joint venture and will announce the terms and
condition of such merger or joint venture if the transaction proceeds and when
there is a signed LOI, MOU or a binding agreement.
In the past year, the Company funded operations through investor's deposit. For
the coming year, the Company plans to continue to fund the Company through debt
and securities sales and issuances, focus on a possible joint venture or merger
until the company generates revenues through the operations of such merged
company or joint venture as stated above.
Note 4: Notes Payable & Debt Discounts
The chart below summarizes the Notes Payable & Debt Discounts of the Company as
of December 31, 2010. The Company is technically in default on its promissory
notes to the persons or entities detailed hereafter, most of which notes matured
on December 31, 2009. The Company is currently working with the note holders to
restructure the terms of such notes and extend the maturity dates. The interest
rate for these loans will be at 12% in 2010 since they were default at the year
end.
F-14
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
Terms Amount
----- ------
SHORT TERM NOTES PAYABLE TO SHAREHOLDERS:
12% Interest; principal of $6,597; convertible to common stock
based on 75% of average price; due on 9/3/2009, net of
unamortized discount related to the debt discount of $0 $ 6,597
12% Interest; principal of $293; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 293
12% Interest; principal of $11,000; convertible to common stock
based on 75% of average price; due on 10/9/2009, net of
unamortized discount related to the debt discount of $0 11,000
12% Interest; principal of $31,925; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 31,925
12% Interest; principal of $10,269; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 10,269
12% Interest; principal of $12,500; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 12,500
12% Interest; principal of $15,000; convertible to common stock
based on 75% of average price; due on 8/1/2009, net of
unamortized discount related to the debt discount of $0 15,000
12% Interest; principal of $17; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 17
12% Interest; principal of $5; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 5
12% Interest; principal of $231; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 231
12% Interest; principal of $9,458; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 9,458
12% Interest; principal of $37,133; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 37,133
12% Interest; principal of $5,000; convertible to common stock
based on 75% of average price; due on 10/28/2009, net of
unamortized discount related to the debt discount of $0 5,000
12% Interest; principal of $10,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $3,271 10,000
12% Interest; principal of $13,000; convertible to common stock
based on 75% of average price; due on 8/1/2009, net of
unamortized discount related to the debt discount of $0 13,000
12% Interest; principal of $7,209; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 7,209
12% Interest; principal of $23,847; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 23,847
F-15
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
12% Interest; principal of $20,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 20,000
12% Interest; principal of $25,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 25,000
12% Interest; principal of $70,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 70,000
12% Interest; principal of $36,867; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 36,867
12% Interest; principal of $73,975; convertible to common stock
based on 75% of average price; due on 7/1/2009, net of
unamortized discount related to the debt discount of $0 73,975
12% Interest; principal of $1,112; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discounted related to the debt discount of $0 1,112
12% Interest; principal of $10,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 10,000
12% Interest; principal of $15,000; convertible to common stock
based on 75% of average price; due on 10/29/2009, net of
unamortized discount related to the debt discount of $0 15,000
12% Interest; principal of $50,240; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 50,242
--------
TOTAL SHORT TERM NOTES PAYABLE TO SHAREHOLDERS $495,679
========
SHORT TERM NOTES PAYABLE:
12% Interest; principal of $50,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 50,000
12% Interest; principal of $50,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 50,000
12% Interest; principal of $15,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 15,000
12% Interest; principal of $10,000; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 10,000
12% Interest; principal of $20,500; convertible to common stock
based on 75% of average price; due on 12/31/2009, net of
unamortized discount related to the debt discount of $0 20,500
--------
TOTAL SHORT TERM NOTES PAYABLE $145,500
========
Note 5: Related Party Transactions
Accrued Expenses
During the year ended December 31, 2010 and December 31, 2009, the accrued wage
and reimbursement to the officer related to traveling overseas was $6,022 and
$41,124 respectively. The payable to the related party was $352,382 and $207,321
at December 31, 2010 and December 31, 2009, respectively.
F-16
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
During the year ended December 31, 2010, the officer advanced $22,500 to the
Company for working capital. At December 31, 2010, there is $15,297 due from
this officer. This non-interest bearing advance is due on demand. The payroll to
the officer was $240,000 for the year ended December 31, 2010. The accrued
payroll was $347,085 at December 31, 2010.
Stock Issuance
During the year ended December 31, 2009, the Company issued 50,000 shares of
preferred stock series D at $1 per share to the director for the director
service fee. See Note 6 - Stockholders' Equity.
During the year ended December 31, 2009, an officer purchased 1,000,000 shares
of preferred stock series C at $0.001 per share. See Note 6 - Stockholders'
Equity.
During the year ended December 31, 2010, the Company issued 50,000 shares of
preferred stock series D at $1 per share to the director for the director
service fee. See Note 6 - Stockholders' Equity.
During the year ended December 31, 2010, an officer purchased 1,000,000 shares
of preferred stock series C at $0.001 per share. See Note 6 - Stockholders'
Equity.
Note 6: Stockholders' Equity
PREFERRED STOCK
Amendments to Series D, E, and F Preferred Stock
On April 20, 2009, amendments were made to the market price for series D, E and
F preferred stock. The market price shall be computed as the arithmetic average
of the 20 closing prices for such security during the last 20 consecutive
trading days immediately preceding such date of determination. All such
determinations to be appropriately adjusted for any stock dividend, stock split
or other similar transaction during such period.
On April 20, 2009, the Company issued 50,000 shares of Series D Preferred Stock
at $50,000 in exchange for cash.
On August 6, 2009, the Company issued 50,000 shares of Series D Preferred Stock
at $50,000 in exchange for cash.
On September 21, 2009, the Company issued 22,500 shares of Series D Preferred
Stock at $22,500 in exchange for cash.
On September 30, 2009, the Company issued 50,000 shares of Series D Preferred
Stock at $50,000 for the director service fee.
On January 13, 2010, First Apex Management Limited converted 12,320 shares of
Preferred D Stock into 88,000,000 shares of Common Stock at a $0.00014
conversion price on November 2, 2009.
On April 23, 2010, CEPA Group Pacific Holdings Ltd. converted 12,320 shares of
Preferred D Stock into 88,000,000 shares of Common Stock at a $0.00014
conversion price as of April 15, 2010.
On June 7, 2010, Jade C. Uno converted 20,000 shares of Preferred D Stock into
105,263,157 shares of Common Stock at a $0.00019 conversion price based upon the
20-day trading average of the Company.
F-17
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
On July 28, 2010, First Apex Management Ltd. exchanged 22,500 shares of
Preferred D Stock valued at $1.00 per share into 90,000,000 shares of Common
Stock at a $0.00025 conversion price.
On July 28, 2010, CEPA Group Pacific Holdings Ltd. exchanged 12,680 shares of
Preferred D Stock valued at $1.00 per share into 50,720,000 shares of Common
Stock at a $0.00025 conversion price.
On August 13, 2010, First Apex Management Ltd. purchased 20,000 shares of
Preferred D Stock valued at $1.00 per share for a total consideration of
$20,000.
On August 13, 2010, CEPA Group Pacific Holdings Ltd. purchased 20,000 shares of
Preferred D Stock valued at $1.00 per share for a total consideration of
$20,000.
On August 13, 2010, Ms. Chen Yunxia purchased 20,000 shares of Preferred D Stock
valued at $1.00 per share for a total consideration of $20,000.
On August 31, 2010, Jade C. Uno exchanged 15,000 shares of Preferred D Stock
valued at $1.00 per share into 65,217,391 shares of Common Stock at a $0.00023
conversion price.
On October 5, 2010, Kenneth Yeung purchased 1,000,000 shares of Preferred C
Stock at $0.001 per share.
On October 26, 2010, First Apex Management Ltd. exchanged 12,680 shares of
Preferred D Stock valued at $1.00 per share into 84,533,333 shares of Common
Stock at a $0.00015 conversion price.
On November 15, 2010, the Company issued 50,000 shares of Series D Preferred
Stock at $50,000 to Peter Chin as director service fee for services rendered
from September 30, 2009 through September 30, 2010.
On November 23, 2010, Peter Chin exchanged 15,000 shares of Preferred D Stock
valued at $1.00 per share into 115,384,615 shares of Common Stock at a $0.00013
conversion price.
COMMON STOCK
During the year ended December 31, 2010, the Company issued a total of
1,962,770,393 shares of common stock valued at $198,116 for repayment of debt
and $122,500 for conversion from Preferred D Stock detailed in the following
chart:
Number of Aggregate
Date of Issue Shares Issued Sales Price Nature of Transaction
------------- ------------- ----------- ---------------------
1/13/2010 88,000,000 $ 12,320 In exchange of Preferred D Stock
1/20/2010 120,000,000 $ 13,080 In exchange for debt repayment
4/23/2010 88,000,000 $ 12,320 In exchange of Preferred D Stock
5/4/2010 130,000,000 $ 12,220 In exchange for debt repayment
5/17/2010 132,490,203 $ 10,930 In exchange for debt repayment
5/28/2010 139,101,464 $ 11,998 In exchange for debt repayment
6/7/2010 105,263,157 $ 20,000 In exchange of Preferred D Stock
6/9/2010 154,000,000 $ 16,786 In exchange for debt repayment
6/22/2010 146,786,064 $ 35,229 In exchange for debt repayment
7/21/2010 90,427,769 $ 22,697 In exchange for debt repayment
7/28/2010 90,000,000 $ 22,500 In exchange of Preferred D Stock
7/28/2010 50,720,000 $ 12,680 In exchange of Preferred D Stock
8/23/2010 151,298,410 $ 38,013 In exchange for debt repayment
8/31/2010 53,832,943 $ 10,642 In exchange for debt repayment
F-18
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
8/31/2010 65,217,391 $ 15,000 In exchange of Preferred D Stock
9/1/2010 15,359,630 $ 3,744 In exchange for debt repayment
10/26/2010 84,533,333 $ 12,680 In exchange of Preferred D Stock
11/17/2010 7,687,719 $ 1,096 In exchange for debt repayment
11/17/2010 2,320,966 $ 337 In exchange for debt repayment
11/17/2010 2,248,483 $ 326 In exchange for debt repayment
11/17/2010 130,098,246 $ 18,539 In exchange for debt repayment
11/23/2010 115,384,615 $ 15,000 In exchange of Preferred D Stock
Total 1,962,770,393 $320,616
On August 10, 2009, the Company's Board of Directors and shareholders holding a
majority of voting rights approved an amendment to the Articles of Incorporation
to increase the number of outstanding shares of the capital stock to
4,000,000,000 including 3,950,000,000 shares of Common Stock and 50,000,000
shares of Preferred Stock.
On October 1, 2010, the Company has increased its authorized shares of Common
Stock to 5,950,000,000 shares.
Note 7: Income Taxes
The Company and its subsidiaries file income tax returns in the U.S. Federal
Jurisdiction, and various states and foreign jurisdictions. No provision for
Hong Kong Profits Tax has been made for the periods presented as the Company and
its subsidiaries operating in Hong Kong have no assessable profits during the
years being reported.
The Company believes sufficient uncertainty exists regarding the realization of
net operating loss carry-forwards and other timing differences for the periods
presented. Accordingly, a valuation allowance has been provided for the entire
amount related thereto. The valuation allowance increased by approximately
$129,450 and $156,644 during the years ended December 31, 2010 and 2009,
respectively.
The income tax provision differs from the amount of income tax determined by
applying the U.S. Federal and State income tax rates of 39% to pretax income for
the years ended December 31, 2010 and 2009 due to the following:
Year Ended December 31,
-------------------------------
2010 2009
---------- ----------
Book income $ 285,060 $ (753,293)
Change in derivative liability (508,454) (12,532)
Stock for services/option expense 19,500 19,500
Related party accrual expenses 73,214 77,512
Amortization of beneficial conversion
feature 1,087 511,980
Other 189 (189)
Valuation Allowance 129,450 156,644
---------- ----------
Total Income tax provision $ -- $ --
========== ==========
At December 31, 2010, the Company had net operating loss carry-forwards of
approximately $3,900,000 that may be offset against future taxable income from
the year 2010 through 2030. No tax benefit has been reported in the December 31,
F-19
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
2010 consolidated financial statements since the potential tax benefit is offset
by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net
operating loss carry-forwards for Federal income tax reporting purposes are
subject to annual limitations. Should a change in ownership occur, net operating
loss carry-forwards may be limited as to use in future years.
Net deferred tax assets consist of the following components as of December 31,
2010 and 2009:
Year Ended December 31,
-----------------------------------
2010 2009
------------ ------------
Deferred tax assets:
NOL carryover $ 1,463,000 $ 1,378,500
Accrued expenses - related party 180,336 107,122
Deferred tax liabilities
Depreciation
------------ ------------
Valuation Allowance (1,643,336) (1,485,622)
------------ ------------
Total Income tax provision $ -- $ --
============ ============
The Company files income tax returns in the United States federal jurisdiction
and certain states in the United States and certain foreign jurisdictions. With
a few exceptions, the company is no longer subject to U. S. federal, state, or
non-U.S. Income tax examination by tax authorities on tax returns filed before
January 31, 2006. The Company recently filed an extension for the U. S. Federal
return for the year ended December 31, 2010. The company has filed its 2009 U.S.
Federal return. These U. S. federal returns are considered open tax years as of
the date of these consolidated financial statements. No tax returns are
currently under examination by any tax authorities.
Note 8: Acquisitions and Investments
Acquisition of Wuhan Wufeng Machinery Manufacturing Company, Ltd.
On April 16, 2008, the Company entered into a definitive agreement to acquire a
92% interest in Wuhan Wufeng Machinery Manufacturing Company, Ltd. ("Machinery
Co.") from Wuhan Intepower Company, Ltd., a China Corporation ("Seller")
pursuant to a Stock Sale and Purchase Agreement. After transferring a 4%
interest to certain management personnel of the Machinery Co. at the close of
the transaction, the Company would have owned a net interest of 88% of the
equity securities of the Machinery Company. The closing of this acquisition was
to occur as soon as the audit of the books and accounts of the Machinery Co. was
completed to the satisfaction of the Company and requisite governmental
approvals are obtained. On June 24, 2008, the Company received requisite
governmental approvals to proceed with this transaction and during the third
quarter, the Company engaged PCAOB approved SEC auditors Albert Wong & Company
to perform the audit of the Machinery Company. As of December 31, 2008, the
Company had paid the 10% cash down payment on the acquisition. The convertible
notes for the balance of the acquisition was to be finalized pending the
completion of the audit.
The Machinery Co. offered several lines of machineries and equipments which can
be retooled to manufacture the panel production machineries that the Company
would endeavor to sell and utilize in several planned projects in China and
other countries. The Machinery Co. currently has state of the art tools,
experienced engineers, capability to design new lines of equipment, as well as
strong customer service and after-sales support.
F-20
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
The purchase consideration to be paid by the Company to the Seller was to have
been approximately U.S. $1,500,000, consisting of cash for 10% of the purchase
consideration, and three (3) Convertible Promissory Notes representing the
balance of the purchase consideration. At the Seller's option the notes were to
be convertible into shares of the Company's common stock at a value equivalent
to the notes.
However, on July 10, 2009, the Company made the decision to rescind the Stock
Sale and Purchase Agreement. The Company believes that the decision was made in
the best interest of the Company and the investors. The Company requested that
Wuhan Interpower Co., Ltd. immediately refund the US$161,500 advanced by the
Company to Wuhan Interpower Co., Ltd.
In November, 2009, Wuhan Interpower Co., Ltd agreed to pay 50%, $80,750, of the
investment deposit back to the Company. In considering the cost involved in
lawsuit or arbitration in China, the Company decided to accept this settlement.
Accordingly, the loss on investment increased by $80,750 in the current period
and the investment deposit decreased to $80,750. Wuhan Interpower Co., Ltd paid
the Company back the deposit of $80,750 in December 2009.
Merger with FHH Sino New Energies Co., Ltd.
On May 25, 2010, the Company signed a non-binding Letter of Intent to merge with
FHH Sino New Energies CO., Ltd., a Chinese company ("FHH Sino") located in
Weihai, Shandong Province of China. FHH Sino is a petroleum storage company that
offers petroleum storage tanks and facilities for rental to the petroleum
importers/exporters in Weihai, a coastal city in Shandong Province of Northern
China. Upon signing the Letter of Intent on May 27, 2010 (effective date), FHH
Sino made a U.S. $230,000 deposit with the Company.
The Company intends to merge with FHH Sino by exchanging the Company's common
stock with FHH Sino's holding or subsidiary company. This merger will give the
Company the opportunity to switch its nature of business into the energy sector,
the ability to generate revenue and profit once the FHH Sino commences its
operation in early 2011, thus benefits our shareholders in the near future.
Note 9: Derivative Liability
As of December 31, 2010, the common stock equivalents of the Company on all
convertible debentures and preferred stock exceeded the total common stock
available for issuance by approximately by 28,404,512,818 shares. The Company's
Chief Executive Officer, Kenneth Yeung, hold 3,000,000 shares of Series C
Preferred Stock that are convertible into 26,373,626,374 common shares of the
Company.
Unless and until there is enough authorized common stock available to cover all
common stock equivalents, Mr. Yeung will not convert any of his preferred
shares. Furthermore, the stock is only convertible upon management's discretion.
Management currently does not intend on converting such stock. Also, warrant
options are not included in common stock equivalents since the exercise price of
$0.25 for the warrant is more than the fair value of common stock of $0.0004 per
share on December 31, 2010. The remaining common stock equivalent of
2,030,886,444 shares has been accounted for as a derivative liability.
Accordingly, the excess common stock equivalents exceeding the total common
stock available for issue is marked to market through earnings at the end of
each reporting period. Utilizing the Black-Scholes valuation model and the
following assumptions: estimated volatility of 479.95%, a contractual life of
approximately a year, a zero dividend rate, 0.29% risk free interest rate,
exercise price of $0.00023957 and the fair value of common stock of $0.0004 per
share as of December 31, 2010, the Company determined the allocated fair value
F-21
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
of the derivative liability. The Company reflected an income of $1,303,727 in
the year ended December 31, 2010 to adjust the derivative liability to $802,102
as of December 31, 2010, representing the initial fair value of excess common
stock equivalents exceeding the total common stock available for issuance.
Year ended Year ended
December 31, December 31,
2010 2009
------------ ------------
Opening balance at January 1, 2010 and $ 2,105,829 $ 2,137,962
January 1, 2009
Change in fair value of derivative liabilities (1,303,727) (32,133)
------------ ------------
Closing balance at September 30, 2010 $ 802,102 $ 2,105,829
============ ============
Total gain included in the statement
of operations for the change in fair
value of derivative liability $ 802,102 $ 32,133
============ ============
Note 10: Commitments and Contingencies
Litigation
As of December 31, 2010 there was no threatened or pending litigation against
the Company.
Note 11: Stock Options and Warrants
Warrants
The Company issued warrants in connection with the promissory notes signed
during the year ended December 31, 2007. Each warrant gives the holder the right
to subscribe to and purchase from the Company one share of the Company's common
stock, par value of $0.001, exercisable at $0.25 per share any time after date
of issuance and is set to expire five years after date of issuance. There were
no warrants granted during years ended December 31, 2010 and 2009.
The fair value of each warrant award is estimated on the date of grant using the
Black-Scholes option valuation model that uses the assumptions noted in the
following table. Expected volatilities are based on volatilities from the
Company's traded common stock. The expected term of the warrants granted is
estimated at the contractual term as noted in the individual option agreements
and represents the period of time that the warrants granted are expected to be
outstanding. The risk-free rate for the periods within the contractual life of
the option is based on the U.S. Treasury bond rate in effect at the time of
grant for bonds with maturity dates at the estimated term of the options.
Year Ended
December 31, 2010
-----------------
Expected volatility 479.975%
Weighted-average volatility 30.16%
Expected dividends $ ---
Expected term (in years) 5
Risk-free rate 0.21% - 0.49%
F-22
INTERNATIONAL BUILDING TECHNOLOGIES GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to the Condensed Financial Statements
December 31, 2010
The following table summarizes the warrants the Company issued as of the years
ended December 31, 2010 and 2009:
Weighted-
Weighted- Average
Average Remaining Aggregate
Warrant Exercise Contractual Intrinsic
Warrants Shares Price Term Value
-------- ------ ----- ---- -----
Outstanding at December 31, 2009 2,104,000 $0.25 5 $128,931
Exercisable at December 31, 2009 2,104,000 $0.25 5 $128,931
Outstanding at December 31, 2010 2,104,000 $0.25 5 $128,931
Exercisable at December 31, 2010 2,104,000 $0.25 5 $128,931
Note 12: Subsequent events
Stock Issuances
The Company issued the following stock subsequent to December 31, 2010 and prior
to the filing of financial statements for the year ended December 31, 2010:
* On January 10, 2011, 50,000 shares of Preferred Series D Stock were
issued to Allied Consultants, Inc. 401(K) Plan Trust for $1 per share
with a total cash payment of $50,000.
Consulting Agreements
Duing the fourth quarter of 2010, the Company entered into the following
consulting agreements:
* On November 15, 2010, the Company has retained Mr. Cheng Kim Man Edwin
as its consultant for services to be provided for six months. The
compensation shall be shares of Preferred Stock Series E equivalent to
US$35,000 distributable at the end of six months on May 15, 2011.
* On November 15, 2010, the Company has retained Mr. Jack Sze as its
consultant for services to be provided for six months. The
compensation shall be shares of Preferred Stock Series E equivalent to
US$50,000 distributable at the end of six months on May 15, 2011.
* On November 15, 2010, the Company has retained Mr. Tang Chong Yin as
its consultant for services to be provided for six months. The
compensation shall be shares of Preferred Stock Series E equivalent to
US$80,000 distributable at the end of six months on May 15, 2011.
* On November 15, 2010, the Company has retained Mr. Barry Grama as its
consultant for services to be provided for six months. The
compensation shall be shares of Preferred Stock Series E equivalent to
US$80,000 distributable at the end of six months on May 15, 2011.
Management has reviewed material subsequent events in accordance with FASB ASC
855 "Subsequent Events". No additional disclosures are required.
F-2
