U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2000
[ ] TRANSITION REPORT PURSUANT SECTION 13 OF 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to __________________
Commission file number 0-29260
TIMEBEAT.COM ENTERPRISES INC.
(Exact name of small business issuer as specified in its charter)
PROVIDENCE OF YUKON NOT APPLICABLE
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
580 HORNBY STREET, SUITE 200, VANCOUVER, BRITISH COLUMBIA CANADA V6C 3B6
(Address of principal executive offices)
(604) 689-4771
(Issuer's telephone number)
AGC AMERICAS GOLD CORP.
(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes No X
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the last practicable date:
16,217,202 SHARES OF COMMON STOCK, NO PAR VALUE, AS OF
JUNE 30, 2000
Transitional Small Business Disclosure Format (check one); Yes No X
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TIMEBEAT.COM ENTERPRISES, INC.
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flow
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operation
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART III - SIGNATURES
2
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TIMEBEAT.COM ENTERPRISES INC.
CONSOLIDATED BALANCE SHEETS
(In Canadian Dollars)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
2000 2000
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 749,214 $ 861,299
Accounts receivable 144,832 181,643
Inventory 122,553 121,906
------------- -------------
Total current assets 1,016,599 1,164,848
Restricted term deposit 205,000 205,000
Deferred exploration costs 4,964,452 4,947,942
Equipment, net 36,242 33,473
------------- -------------
Total assets $ 6,222,293 $ 6,351,263
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 297,958 $ 285,797
Commitments and contingencies
Stockholders' equity:
Common stock, no par value, 100,000,000 shares
authorized, 16,217,202 and 16,217,202 shares
issued and outstanding at June 30, 2000 and
March 31, 2000, respectively 13,510,163 13,510,163
Accumulated deficit (7,585,828) (7,444,697)
------------- -------------
Total stockholders' equity 5,924,335 6,065,466
------------- -------------
Total liabilities and stockholders' equity $ 6,222,293 $ 6,351,263
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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TIMEBEAT.COM ENTERPRISES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Canadian Dollars)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
2000 1999
-------------- --------------
<S> <C> <C>
Net sales $ 13,632 $ -0-
Cost of goods sold 10,283 -0-
------------- -------------
Gross profit 3,349 -0-
------------- -------------
General and administrative expenses
Advertising 27,283 8,001
Amortization 2,715 666
Audit and accounting 2,500 3,000
Consulting 29,543 10,303
Foreign exchange (gain) loss (23,363) 10,250
Interest and bank charges 113 388
Investor Relations 22,500 15,050
Legal 1,486 5,506
Management fees 12,000 25,820
Office, secretarial and administration 4,010 5,359
Rent 12,324 5,512
Salaries and wages 32,926 -0-
Shareholder information 8,664 3,717
Telephone, fax and utilities 11,080 5,303
Transfer agent and regulatory fees 1,633 1,630
Travel -0- 2,901
------------- -------------
Total general and administrative 145,414 103,406
------------- -------------
Loss before other items (142,065) (103,406)
Other items
Interest income 934 597
------------- -------------
Net loss $ (141,131) $ (102,809)
============= =============
Net loss per share, basic and diluted $ (0.01) $ (0.01)
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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TIMEBEAT.COM ENTERPRISES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Canadian dollars)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
2000 1999
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (141,131) $ (102,809)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 2,715 666
Cash provided by changes in working capital items 48,325 25,040
------------- -------------
Net cash used in operating activities (90,091) (77,103)
------------- -------------
CASH PROVIDED BY FINANCING ACTIVITIES:
Proceeds on issuance of common shares -0- 878,495
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures on mineral properties (16,510) (11,009)
Acquisition of capital assets (5,484) (1,874)
-------------- --------------
Net cash used in investing activities (21,994) (12,883)
-------------- -------------
Net (decrease) increase in cash and cash equivalents (112,085) 788,509
CASH AND CASH EQUIVALENTS:
Beginning of period 861,299 52,648
------------- -------------
End of period $ 749,214 $ 841,157
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
TIMEBEAT.COM ENTERPRISES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNAUDITED INTERIM FINANCIAL INFORMATION. The accompanying unaudited consolidated
financial statements have been prepared by Timebeat.com Enterprises Inc. (the
"Company") pursuant to the rules and regulations of the Securities and Exchange
Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, and disclosures necessary for a fair presentation of these
financial statements have been included. These financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-KSB for the year ended March 31, 2000.
Results for the three months ended June 30, 2000 are not necessarily indicative
of the results that may be expected for any future quarter or for the year
ending March 31, 2001.
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities 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.
NET LOSS PER SHARE. Net loss per share is computed using the weighted average
number of common shares outstanding. Shares associated with stock options and
warrants are not included because they are antidilutive.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
CURRENCY AND EXCHANGE RATES
Unless otherwise indicated, all dollar amounts in this report are in Canadian
dollars. The following table sets forth (i) the rates of exchange for one
Canadian dollar ("Cdn") expressed in one U.S. dollar at the end of each calendar
year; (ii) the average exchange rates in effect on the last day of each month
during each calendar year; and (iii) the high and low exchange rates during each
calendar year.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Rate At End Of Period: 0.6925 0.6504 0.7239 0.7300 0.7323
Average Rate Of Period: 0.6730 0.6740 0.7318 0.7332 0.7285
High Rate of Period: 0.6925 0.7105 0.7472 0.7524 0.7532
Low Rate of Period: 0.6535 0.6340 0.7155 0.7219 0.7009
</TABLE>
Exchange rates are based upon the noon buying rate in New York City for cable
transfers in foreign currencies as certified for custom purposes by the U.S.
Federal Reserve Bank of New York. The noon exchange rate on October 20, 2000,
reported by the U.S. Federal Reserve Bank of New York was $0.6614 (US$1.00 =
Cdn$1.5119).
DIFFERENCES BETWEEN CANADIAN GAAP AND U.S. GAAP
Our financial statements were prepared in accordance with Canadian generally
accepted accounting principles ("Canadian GAAP"). Under Canadian GAAP, shares
issued with escrow restrictions are recorded at the issue price and are not
revalued upon release from escrow. Under U.S. GAAP, escrow shares are considered
to be contingently issuable. These shares are excluded from the weighted average
shares calculation and the difference between the fair value of the shares at
the time of their release from escrow and the shares' original issue price is
accounted for as a compensation expense at the time the shares are released from
escrow.
Under Canadian GAAP all exploration expenses related to mineral properties and
areas of geological interest are deferred until the properties to which they
relate are placed into production sold or abandoned. Under U.S. GAAP these
exploration costs are not capitalized but expensed as incurred.
CAUTION
The following discussion contains trend information and other forward-looking
statements that involve a number of risks and uncertainties. Our actual future
results could differ materially from our historical results of operations and
those discussed in the forward-looking statements. All period references are for
the respective three-month periods ending June 30, 2000 and 1999.
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OVERVIEW
We were incorporated in the Province of British Columbia, Canada on May 23,
1986. In September 1999, we re-incorporated in the Yukon Territory, Canada, and
changed our name from AGC Americas Gold Corp. to Timebeat.com Enterprises, Inc.
We have two separate business divisions: (1) we are a mineral exploration
company exploring for gold and silver worldwide; and (2) we own and operate
Internet Web sites which primarily cater to people who have an interest in fine
watches, jewelry, high-end gift and other luxury items.
We are an exploration stage company in the business of acquiring, exploring, and
if warranted, developing mineral properties primarily located in British
Columbia, Canada. We have acquired and subsequently abandoned several mineral
properties in pursuit of our business. Our current mineral properties are not in
production and, consequently, we have no current operating income or cash flow
from these properties. We defer all exploration costs relating to our properties
and areas of geological interest until the properties are placed in production,
sold or abandoned. In 1999, due to the price of minerals, we chose to examine
other business possibilities.
In March 1999, we entered the Internet and e-commerce business. We are in the
development stage in our Internet e-commerce division. In November 1999, we
launched our first Web site, www.timebeat.com. This is an e-commerce Web site
that markets and sells watches, jewelry, high- end gift items and other luxury
items. In December 1999, in order to increase content and awareness of
www.timebeat.com, we acquired our second Web site, www.watchzone.net. This is an
informational Web site which allows consumers the ability to gather and exchange
information in chat forums and from existing publications, news and press
releases, manufacturer's literature, and product demonstrations and evaluations.
We have only generated minimal revenues since our inception in 1986. As of June
30, 2000, we have an accumulated deficit of $7,585,828. We have suffered
significant losses from operations, require additional financing, and need to
continue our exploration activities and the development of our Internet
e-commerce businesses. Ultimately we need to generate sufficient revenues and
successfully attain profitable operations. Our present business operations do
not generate sufficient revenues to cover our expenses. We cannot provide
assurance that our business operations will be able to do so.
RESULTS OF OPERATIONS
We incurred a net loss of $141,131 for the three months ended June 30, 2000, as
compared to a net loss of $102,809 for the three months ended June 30, 1999. Our
revenues were $13,632 for the three months ended June 30, 2000 as compared to no
revenues the three months ended June 30, 1999. The revenues were generated from
sales in our Internet operations, and are net of sales or promotional discounts.
Revenue from the sale of fine gold jewelry and watches is recognized when the
goods are shipped and received. The cost of goods sold related to these revenues
was $10,283, leaving a gross margin of $3,349. The cost of goods sold consisted
primarily of the cost of the products, and included such items as inbound and
outbound shipping costs. Cost of goods sold is comprised exclusively of the
acquisition cost of the merchandise sold inclusive of any import duties. Our
inventory is valued at the lower of cost and net realizable value.
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Our general and administrative expenses were $145,414 for the quarter ended June
30, 2000, as compared to $103,406 for the quarter ended June 30, 1999. The
increase in expenses were generally attributable the development and operation
of our Web sites and include advertising ($27,283 as compared to $8,001),
consulting fees ($29,543 as compared to $10,303), and salaries and wages
($32,926 as compared to $0). We expense administrative expenditures in the year
incurred.
ANTICIPATED TRENDS
We anticipate that the current level of sales will increase during our fiscal
year ending March 2001. The expected sales increase is attributable to the
increased exposure Due to our limited operating history and the seasonality of
our sales, we are unable to estimate future sales or trends at this time with
any reasonable degree of certainty.
LIQUIDITY
During the quarter ended June 30, 2000, we used cash of $90,091 for our
operating activities, as compared to $77,103 during 1999 quarter. The increase
in the amount of cash used was attributable primarily to the loss for the 2000
quarter. While cash of $878,495 was provided by proceeds from the issuance of
common shares in the 1999 period, no cash was provided by financing activities
during the 2000 quarter. We used cash for investing activities of $21,994 in
2000 and $12,883 in 1999, consisting primarily of expenditures on mineral
properties.
At June 30, 2000, we had working capital of $718,641, as compared to $879,051 at
March 31, 2000. The decrease in working capital was caused by continued losses.
FINANCIAL CONDITION
Our total assets decreased slightly from $6,351,263 at March 31, 2000 to
$6,222,293 at June 30, 2000. The decrease was attributable to primarily to the
decrease in cash used in operations. Correspondingly, our stockholders' equity
decrease due to accumulated deficit which increased by the amount of our loss
for the three months ended June 30, 2000.
CAPITAL ASSETS
Our capital assets are recorded at cost and are amortized over their estimated
useful lives. We use a declining balance method per annum as follows: office
equipment 30%, computer equipment 30%, and computer software 30%. For the three
months ended June 30, 2000, our total cost of assets was $47,369, with total net
book value of $36,242.
PLAN OF OPERATION
MINERAL EXPLORATION. Due to the current price of gold, we anticipate that only a
minimal amount of work will be conducted on our properties during the next
twelve months. We have no foreseeable plans for our properties other than to
maintain the leases and to carry out reclamation work. We estimate the cost of
reclamation to be approximately $100,000. We do not anticipate that we will
9
<PAGE>
purchase any significant equipment for exploration activities during this time
period. We anticipate retaining the services of contractors and other third
parties to assist us in our exploration activities. These contractors and other
third parties generally use their own equipment and labor and, therefore, we do
not anticipate hiring any employees for exploration activities during the next
twelve months.
Our current and future exploration activities, if any, are subject to various
federal, state and local environmental laws and regulations. These laws and
regulations govern the protection of the environment, prospecting, exploration,
development, production, taxes, labor standards, occupational health, mine
safety, toxic substances and other matters. We expect to be able to comply with
these laws and do not believe that compliance will have a material adverse
effect on our competitive position. We intend to obtain all licenses and permits
required by all applicable regulatory agencies in connection with our
exploration and reclamation activities. We intend to maintain standards of
compliance consistent with contemporary industry practice.
INTERNET WEB SITES. During the fiscal year ended 2000, we enter into a number of
agreements and alliances which had a positive impact on our Web sites' traffic.
To date, however, they have not yet impacted sales. We believe this may be due
in part to the seasonal nature of luxury items and because www.watchzone.net,
which generated most of the traffic, is not an e-commerce site.
For the next twelve months, we intend to focus our resources and efforts on
increasing sales and traffic on our Internet Web sites. We will continue our
effort to provide superior service, extended product warranties, establish a
high placement with the various search engines, create brand awareness with the
intent to leverage that awareness by launching additional Web sites, and to
expand into other areas which may offer a higher gross profit margin potential.
In an effort to increase sales in the short-term, we intend to complete our
unique auction service to differentiate our Web site from other luxury Web sites
which sell comparable items. We also believe that an auction service will appeal
to our existing the customers. In the long-term, we will focus on establishing
additional strategic alliances and continuing our marketing and advertising to
accelerate the adoption of our brand name and services. We do not expect to
purchase any significant equipment during the next twelve months, nor do we
expect to hire a significant number of employees during that time period.
ADDITIONAL FUNDING
As of June 30, 2000, we had a working capital surplus of $718,641. Although we
anticipate a minimal amount of work on our exploration properties during the
next twelve months, exploration and reclamation are capital intensive. The cost
to complete our objectives relating to the Web sites and our ongoing operation
costs are also extensive. For these reasons, we believe we have sufficient
working capital for the next nine (9) months.
As a result, we will need external financing implement our plan of operations.
Sources of external financing may include bank borrowings and joint ventures,
but will most likely be accomplished through future debt and equity offerings.
We cannot assure that financing will be available to us on acceptable terms, or
at all. Our failure to obtain additional financing when needed could result in
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delay or the indefinite postponement of one or both of our business divisions,
and the possible loss of your entire investment in us.
FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-QSB, our Annual Report on
Form 10-KSB for our fiscal year ended March 31, 2000, our Annual Report to
Shareholders, as well as statements made by us in periodic press releases, oral
statements made by our officials to analysts and shareholders in the course of
presentations about ourselves, constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties, and
other factors that may cause the actual results, performance or achievements of
us to be materially different from any future results, performance or
achievements expressed or implied by the forward looking statements. Such
factors include, among other things, (1) general economic and business
conditions; (2) interest rate changes; (3) the relative stability of the debt
and equity markets; (4) competition; (5) the availability and cost of the
products used in our Web sites; (6) demographic changes; (7) government
regulations particularly those related to Internet commerce; (8) required
accounting changes; (9) equipment failures, power outages, or other events that
may interrupt Internet communications; (10) disputes or claims regarding our
proprietary rights to our software and intellectual property; and (11) other
factors over which we have little or no control.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
<TABLE>
<CAPTION>
REGULATION CONSECUTIVE
S-B NUMBER EXHIBIT PAGE NUMBER
<S> <C> <C>
3.1 Certificate of Name Change and Ordinary and Special Resolution. n/a(1)
3.2 Certificate of Incorporation and Memorandum. n/a(1)
4.1 VSE acceptance dated January 3, 1996 of Private Placement announced n/a(1)
October 25, 1994.
4.2 VSE acceptance dated January 9, 1996 of Private Placement announced n/a(1)
November 5, 1995 and November 23, 1996.
4.3 VSE acceptance dated June 6, 1997 of Private Placement announced n/a(1)
February 2, 1997.
4.4 Sample Purchase Warrants. n/a(1)
4.5 Sample Purchase Options. n/a(1)
10.1 Letter Agreement dated October 10, 1993 between the Company and n/a(1)
Energex Minerals Ltd. regarding the JD Property (Amendment).
10.2 Agreement dated July 7, 1994 between the Company and Floralynn n/a(1)
Investments Ltd.
10.3 Letter Agreement dated September 30, 1994 between the Company and n/a(1)
Energex Minerals Ltd.
</TABLE>
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<TABLE>
<CAPTION>
REGULATION CONSECUTIVE
S-B NUMBER EXHIBIT PAGE NUMBER
<S> <C> <C>
10.4 Letter Agreement dated April 13, 1995 between the Company and David n/a(1)
Ford.
10.5 Consulting Agreement dated September 15, 1995 between the Company and n/a(1)
Founder's Group Management Ltd.
10.6 Agreement dated January 10, 1996 between the Company and Energex n/a(1)
Minerals Ltd.
10.7 Agreement dated June 14, 1996 between the Company and Energex Minerals n/a(1)
Ltd.
10.8 Agreement dated December 6, 1996 between the Company and Cheni n/a(1)
Resources Inc. and Meota Resources Corp.
10.9 Joint Venture Agreement dated August 1, 1997 between the Company and n/a(1)
Antares Mining and Exploration Corporation.
10.10 Minerals Property Earn-In Agreement dated July 17, 1997
between the n/a(1) Company and Antares Mining and Exploration
Corporation.
10.11 1994 Drilling Results. n/a(1)
10.12 1995 Drilling Results. n/a(1)
10.13 1996 Drilling Results. n/a(1)
10.14 Maps of the Company's Properties. n/a(1)
10.15 Flow-Through Funding and Renunciation Agreement dated May 10, 1996 n/a(1)
between the Company and Henry A. Meyer.
10.16 Flow-Through Funding and Renunciation Agreement dated May 10, 1996 n/a(1)
between the Company and John Peterson.
10.17 Flow-Through Funding and Renunciation Agreement dated May 10, 1996 n/a(1)
between the Company and Kenneth A. Thompson.
10.18 Flow-Through Funding and Renunciation Agreement dated December 21, n/a(1)
1995 between the Company and Sandy Lynn Gammon.
10.19 Flow-Through Funding and Renunciation Agreement dated December 21, n/a(1)
1995 between the Company and Lorraine McWilliams.
10.20 Flow-Through Funding and Renunciation Agreement dated December 21, n/a(1)
1995 between the Company and Thomas Mitchell.
10.21 Flow-Through Funding and Renunciation Agreement dated December 21, n/a(1)
1995 between the Company and Janet Thompson.
10.22 Flow-Through Funding and Renunciation Agreement dated December 21, n/a(1)
1995 between the Company and Olza Tien.
10.23 Stock Option Plan dated August 29, 1999. (2)
10.24 Letter of Intent dated March 5, 1999, between the Company, Watch Central (2)
Corporation and Timebeat.com Inc.
</TABLE>
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<TABLE>
<CAPTION>
REGULATION CONSECUTIVE
S-B NUMBER EXHIBIT PAGE NUMBER
<S> <C> <C>
10.25 Agreement dated December 14, 1999 between the Company, Watchzone.net (2)
Inc., the management of Watchzone.net Inc., and Timebeat.com Inc.
27 Financial Data Schedule 16
</TABLE>
---------------------
(1) Incorporated by reference to our Annual Report on Form 20-F for the fiscal
year ended March 31, 1999, file no. 0-29260.
(2) To be filed by amendment to the Company's Form 10-KSB for the fiscal year
ended March 31, 2000..
(B) REPORTS ON FORM 8-K: None.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TIMEBEAT.COM ENTERPRISES INC.
(Registrant)
Date: October 31, 2000 By: /s/ Thomas L. Crom
-----------------------------------------
Thomas L. Crom, Corporate Secretary
(Principal financial officer)
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Exhibit 27
Financial Data Schedule
<PAGE>
