FORM 10-SB/A
SECOND AMENDMENT TO
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS
ISSUERS PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
WHATSONLINE.COM, INC.
---------------------
(Exact name of registrant as specified in its charter)
NEVADA 98-0170247
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15 Wertheim Court, Suite 311, Richmond Hill, Ontario L4B 3H7
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (905) 709-8240
--------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
to be so registered which each class is to
be registered
NONE
Securities to be registered pursuant to Section 12(g) of the Act:
100,000,000 Shares of Common Stock, par value $.00001
<PAGE>
TABLE OF CONTENTS
Page
COVER PAGE 1
TABLE OF CONTENTS 2
PART I 3
DESCRIPTION OF BUSINESS 3
DESCRIPTION OF PROPERTY 13
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES 14
REMUNERATION OF DIRECTORS AND OFFICERS 16
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN SECURITYHOLDERS 16
INTEREST OF MANAGEMENT AND OTHERS IN
CERTAIN TRANSACTIONS 17
SECURITIES BEING OFFERED 17
PART II 18
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS 18
LEGAL PROCEEDINGS 19
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 19
RECENT SALES OF UNREGISTERED SECURITIES 19
INDEMNIFICATION OF DIRECTORS AND OFFICERS 20
PART F/S 20
FINANCIAL STATEMENTS 20
PART III 20
INDEX TO EXHIBITS 20
SIGNATURES 21
<PAGE>
PART I
The issuer has elected to follow Form 10-SB, Disclosure Alternative 2.
ITEM 6. DESCRIPTION OF BUSINESS
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WhatsOnline.Com, Inc., formerly known as American Alliance Corporation,
(The Company) is a developmental stage company. The Company was incorporated
under the laws of the State of Utah, on July 14, 1983 under the name of Far West
Gold, Inc., with an authorized capital of 50,000,000 shares of common stock with
a par value of $.001 per share.
On July 14, 1983, the Company, in connection with a Rule 504, Regulation D
offering issued 5,141,000 shares of common stock for cash at $.003 per share or
$15,000. During October 1984, the Company issued 13,009,000 shares of common
stock at $.01 per share or $130,090, less expenses of the offering of $27,547,
for net proceeds of $102,543. The Company was not operational for the years 1990
to 1995 and received no revenues during this time, although the year ended
December 31, 1990, the Company received a capitol contribution of $4,364 to pay
expenses, and for the year ended December 31, 1991, the Company received a
capitol contribution of $100 to pay expenses for the Company. For the year ended
December 31, 1995, the Company issued 20,000,000 shares of common stock at $.001
per share to satisfy current liabilities in the amount of $20,000.
On April 15, 1996, the Company effected a reverse split of 500:1, with
par value remaining at $.001. On April 16, 1996, the Company issued 4,000,000
shares of common stock at $.0005 per share for services or $2000 to Mr. Harmel
S. Rayat, a director of the Company. On May 9, 1996, in connection with a Rule
504, Regulation D offering, the Company issued 4,000,000 shares of common stock
at $0.05 per share for cash in the amount of $200,000. On May 9, 1996, the
stockholders authorized a name change to Far West Resources, Inc. and authorized
an increase in the number of shares that Company has authority to issue to
105,000,000, of which 100,000,000 shares shall be at $.001 par value common
stock, and 5,000,000 shares shall be $.10 par value preferred stock.
On June 30, 1997, the stockholders authorized a name change to American
Alliance Corporation, authorized a change in the state of registration from Utah
to Nevada, authorized an increase in common share par value from $.001 to
$.00001 and preferred share par value from $.10 to $.0001, and authorized to
adopt the 1997 Stock Option Plan and reserve 1,250,000 shares for issuance
thereunder. On June 30, 1997, in connection with a Rule 504, Regulation D
offering, the Company issued 2,000,000 shares of common stock for cash of
$45,000 and $255,000 for services at $0.15 per share or a total of $300,000. On
September 22, 1997, the Company merged the Utah Corporation, Far West Resources,
Inc., into American Alliance Corporation, a Nevada Corporation, with the Nevada
Corporation being the surviving corporation. On October 14, 1997, the Company
issued 1,000,000 shares of common stock in a Rule 504, Regulation D offering
memorandum at $.50 per share or $500,000. On December 9, 1997, the Company
issued 450,000 shares of common stock in a Rule 505, Regulation D offering
memorandum at $2.00 per share or $900,000, along with 450,000 share purchase
warrants to purchase common shares at $2.00 per share until December 9, 2001.
<PAGE>
On January 9, 1998, the Company organized American Alliance, Inc., its
wholly owned subsidiary, under the laws of the State of Nevada with an
authorized capital of 1000 common shares, with a par value of $.001, and with
one share issued to American Alliance Corporation. On June 22, 1998, the
stockholders authorized to adopt the 1998 Stock Option Plan and reserve
1,750,000 shares for issuance thereunder. On July 27, 1998, the Company
appointed Mr. Britt Weaver as President and Chief Executive Officer, replacing
Mr. Harmel S. Rayat who remains the Company's Chairman. Mr. Weaver also replaced
Mr. Kundan S. Rayat as a Director, who retired from the Board. On September 15,
1998, the Company paid $29,000 for 100% of the shares of Rowland Carmichael &
Associates, Inc., an Arizona based broker dealer, for the development of an
online brokerage service. Subsequent to the acquisition of Rowland Carmichael,
the Company decided not to enter into the business of Internet brokerage
services. The Company's ongoing industry research indicated that an
ever-increasing amount of capital would have to be expended for advertising and
marketing in order to attract and retain customers in the Internet brokerage
business. The Company also determined that a greater-than-expected number of
competitors coming into the online brokerage business would make it difficult
for the Company to compete. It was management's opinion that the Company did not
have the financial resources to incur the ongoing losses and working capital
required to compete effectively against competitors that are and were much
better funded. On December 1, 1998, Mr. Kesar S. Dhaliwal joined the Board of
Directors as President and Chief Executive Office in the place of Mr. Britt
Weaver.
In January, 1999, the Company entered into the field of targeted
Internet streaming with the launch of its portal www.eviewonline.com. The
Company's objective is to make available aggregated audio and video content on a
worldwide basis, with particular emphasis on entertainment, news, sports,
fashion and business. This will consist of a central location for online users
looking for one website from which they can access a variety of streaming audio
and video content. The Company will also provide companies with the ability to
stream various corporate events, such as annual general meetings and new product
launches. The phrase "aggregated audio and video content" means the cumulative
collection of a wide variety of audio and video streamed content at one
location. The Company is able to source and aggregate content primarily through
researching and gathering public domain information, for which there is no cost
associated other than the cost of the Company's staff to collect the
information.
Streaming media technology has enhanced the graphical capabilities of
the Internet. Prior to streaming technology, users could not play audio or video
clips until they had been downloaded in their entirety, resulting in significant
waiting times. Traditionally, web servers have functioned by transmitting
information requests as quickly as possible, disconnecting, and then serving
other requests. Web browsers receive this information and assemble it on the
computer screen for viewing. This type of transmission works well for static
graphics and text; however, it is very problematic for moving images and sound
from video, animation and music because the files are very large and cannot be
transmitted in a reasonable time frame. The download time for these large files,
even a short video clip, is, for most users, unbearable. With streaming media
technology, data is transmitted to the user as the media is viewed, in a
continuous connection. This continuous stream is similar to watching television
or listening to the radio, where the images or audio is received just before you
see the image or hear the sounds. The advantage of streaming media technology
over
<PAGE>
television and radio, however, is that the user may view or listen to the clip
at any time, rather than when the radio or television station chooses to air it.
In April, 1999, the Company acquired the domain name
www.whatsonline.com in exchange for a consideration of $50,000 and merged the
contents of eviewonline.com into whatsonline.com. A trademark application has
been filed for whatsonline with the United States Patent and Trademark Office.
Visitors to eviewonline.com currently are automatically directed to
whatsonline.com. At present, the Company plans to keep eviewonline.com active as
a possible location for future endeavours.
The Company has not yet brought in any revenues directly from its
streaming portal. During the next nine months, the Company plans to enhance the
features of its website, including making the site more user-friendly, adding
the availability of music downloads, and generally improving available coverage
of sports, news and entertainment content. Consequently, the Company expects to
incur further development expenses of approximately $30,000 per month, which
will be covered by the Company's present cash reserves. The Company's future
revenue source will be from the sale of advertising on its web site, the sale of
streamed corporate events such as shareholders' meetings and new product
launches using outsourced streaming infrastructure.
The Company has also entered into a Joint Venture Agreement with
Hollinger Digital, Inc. Under the terms of the Joint Venture Agreement, the
Company will provide aggregated media streaming content on a co-branded basis to
Hollinger Digital's www.ukmax.com, a British Internet portal. Online users
seeking media streaming content will be able to hyperlink from the front page of
www.ukmax.com directly to the Company's streaming portal located at
www.whatsonline.com. Similar direct links will be made available from other
pages with www.ukmax.com, specifically relating to sports, entertainment, news,
fashion, travel, health and weather and other topics. The Company will benefit
from potential new traffic brought in from Hollinger Digital's portal site and
shall retain forty percent of the net revenues generated from advertising,
marketing, subscription, or other sources relating to the
ukmax.com/whatsonline.com co-branded joint venture. This revenue stream is not
expected to begin until the fiscal year 2000.
On May 4, 1999, the Board of Directors held a meeting at which it was
resolved to commence a forward split of the Company's common stock on a
two-to-one basis. This split will become effective on or about May 14, 1999. On
May 5, 1999, the Directors elected to change the Company's name to
"WhatsOnline.Com, Inc." This name change took place on May 20, 1999.
The Company is a development stage company, as defined in Financial
Accounting Standards Board No. 7. The Company is devoting substantially all of
its present efforts in securing and establishing its business, and although its
planned operations have commenced there have been no significant revenues
derived therefrom. Using media streaming technologies and infrastructures
already developed by companies such as Microsoft, Real Networks, InterVu and
others, the Company plans initially to market and brand itself as a media
streaming portal and an online listing guide to online users seeking an enriched
multimedia audio/video web experience.
<PAGE>
An online listing guide is simply a compilation of upcoming events that can be
viewed or listened to through the Internet. Much like a television guide
provides dates and times of upcoming programs, an online listing guide provides
the same programming information for online events. By focusing on sales and
marketing, and either outsourcing or co-branding most technology and capital
intensive aspects, the Company's objective is to place emphasis on generating
revenues from advertising, sponsorships, pay per view broadcasts of business
events such as shareholder meetings and new product launches, fees from streamed
content, and e-commerce.
With the availability of broadband Internet access accelerating, along
with the proliferation of software enabling multimedia viewing of online
content, more and more online users will come to expect a TV like web
experience, which in turn can be used to draw more traffic. To date, only a
small percentage of mostly large corporations have streamed their products or
services over the Internet. While a significant marketplace is available for the
Company's services, the Company believes that there will be significant
competition from numerous parties, both in the near and long term. Competition
exists from such companies as Broadcast.com, InterVu, Payperview.com, and
others. The Company intends to compete by aggressively branding itself as a
streaming portal, with wide ranging and international content, focus on sales
and marketing of its services, and enter markets where the Company can leverage
off its first mover advantage. This will be done by making available as wide a
range of content as possible, with particular emphasis upon news, entertainment,
sports and music. By having a broad base of content, the Company hopes to gain
increasing popularity and build its streaming portal traffic through repeat
visitors. This will position the Company as a "premier" streaming portal.
The Company believes the number of visitors to its site can be
increased by adding content from a number of European and Asian countries. By
offering content from countries located in South America, Africa and the Middle
East, the Company hopes that its "brand" can be further enhanced by being one of
the first companies to make streaming media content available on a single
website. Over the next nine months, the Company plans to add and make available
sports, news, fashion, finance and entertainment streaming content from a number
of European countries. The Company expects to open a small sales office in
London, England, in the second quarter of the year 2000, by which time the
Company expects streaming infrastructure from companies such as Real Networks
and InterVu to be more advanced. The office will be established in order to
stream corporate events such as shareholders' meetings and new product launches
using outsourced streaming infrastructure.
The Company is solely reliant upon a number of technology leaders to
continue to develop software and technological infrastructures. As the
competition continues, demand and usage among online viewers will increase. As
streaming media continues to evolve into a necessary component of the Internet
experience, more and more companies are entering the market. This improves the
quality and reliability of the software and the ease of use and makes the user's
existing network components more compatible. The main competitors in the
development and distribution of streaming media solutions include RealNetworks,
Microsoft Corporation, Apple Computers, Inc., Cisco Systems, Inc./Precept
Software, Picture Tel/Starlight Networks and Oracle Corporation.
While competition is expected to intensify in the future, the high growth
of the Internet itself is expected to expand the size of the marketplace in
order to allow for many competitors. The
<PAGE>
Computer Industry Almanac reported that there were more than 147 million
world-wide users of the Internet at the end of 1998, compared to just 61 million
at the end of 1996, with approximately 50% of the total being in the US. With
the number of Internet users around the world constantly growing, the Computer
Industry Almanac projects that worldwide users will reach 320 million by the end
of year 2000, and surpass 720 million by 2005.
Fueling greater interest in the Internet is the continued improvement
and development of software, hardware and technological infrastructure that has
allowed the Internet to develop from a medium that delivered slow downloading
web pages with marginal graphics and text only content to one that now delivers
near broadcast quality audio and video content, both live and archived. In fact,
the Internet has dramatically shifted traditional radio and TV habits. In the
second half of 1998, 13 percent of Americans listened to the radio over the
Internet, compared to just 6 percent of the US population that had tuned in
online in July 1998. Technological improvements have actually resulted in less
TV viewing time in households with Internet access according to a recent report
by the Yankee Group, a leading Internet market research group, entitled "TVs,
PCs and Beyond: Convergence or Confusion" (CyberAtlas, http://www.internet.com,
February 16, 1999). The Yankee Group study found that households with PCs and
Internet access were more likely to be Cable and DBS subscribers, with the extra
time taken up by the Internet affecting broadcasters, who typically rely on
advertising as opposed to subscription fees for revenue.
Management's Discussion and Analysis and Plan of Operations
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The Company's wholly owned subsidiary, Rowland Carmichael & Associates, Inc.,
reported $66,426 in revenues during fiscal 1998 prior to its acquisition by the
Company. Otherwise, the Company has not had any revenues from operations in each
of the last two fiscal years, nor during the most recent six month period ended
June 30, 1999. Further, the Company expects minimal, if any, revenues during the
six month period between July 1, 1999 and December 31, 1999. The Company's
operations are currently centered around the further development of its web site
and the collection of a large base of media streaming content for its media
streaming portal. The development work currently taking place is centered around
making the site more user-friendly, adding e-commerce capabilities. A
transaction server will allow for the sale of goods such as videos and music CDs
and the addition of MP3 downloads, which allow for songs to be replayed at near-
CD quality on computers or on small MP3 players. (MP3 is a type of high-quality
sound file.) At present, the Company is expending approximately $30,000 per
month in the further development of its site and the collection of streamed
content. The Company currently employs 4 individuals full time at its head
office, as well as one part-time bookkeeper, and expects to add another 4
individuals in the next 30 to 60 days. These new employees are expected to add
an additional $20,000 per month to the Company's monthly cost of operations. As
of June 30, 1999, the Company had $765,045 in cash and $5,441 in outstanding
payables. This cash reserve is sufficient to cover the operating expenses of the
Company for the next 12 months. The Company does not expect to purchase any
additional computer hardware or make any significant equipment purchases in the
next 12 months.
<PAGE>
Results of Operations
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The Company's wholly owned subsidiary, Rowland Carmichael & Associates,
Inc., reported $66,426 in revenues during fiscal 1998 prior to its acquisition
by the Company. Otherwise, the Company has not had any revenues from operations
in each of the last two fiscal years, nor for the three month period ending
March 31, 1999 and the six months period ended June 30, 1999.
For the three month period ending March 31, 1999, the Company's general and
administrative operating expenses totaled $304,880, an increase of 3019% from
the same three month period ending March 31, 1998, when the Company's general
and administrative operating expenses totaled $9,774. The Company experienced a
$0.01 per share loss for quarter ended March 31, 1999, versus a $0.001 per share
loss for the ended March 31, 1998. This increase is primarily attributable to
continued development costs associated with the Company's web site and to
increased payroll. Interest income was $11,285 and $19,626 for the three month
period ending March 31, 1999 and 1998, respectively. Interest earned in the
future will be dependent upon Company funding cycles and prevailing interest
rates. As of March 31, 1999, the Company's cash balance was $878,113, compared
to $1,225,276 as at December 31, 1998. The Company has financed its operations
primarily through its cash on hand resulting in a decrease of $347,163, or 28%
during the period between January 1, 1999 and March 31, 1999. During the three
month period ended March 31, 1999, the Company received $9,000.00 from the
exercise of 18,000 stock options, versus no stock option exercise proceeds
during the same three month period in 1998.
For the six month period ending June 30, 1999, the Company's general and
administrative operating expenses totaled $437,341, an increase of 761% from the
same six month period ending June 30, 1998, when the Company's general and
administrative operating expenses totaled $50,785. The Company experienced a
$0.02 oer share loss for the six month period ended June 30, 1999, versus a
$0.001 per share loss for the same six month period in 1998. This increase is
primarily attributable to continued development costs associated with the
Company's website and to increased payroll. Interest income was $20,969 and $39,
176 for hte six month period ending June 30, 1999 and 1998, respectively.
Interest earned in the future will be dependant upon Company funding cycles and
prevailing interest rates. As of June 30, 1999, the Company's cash balance was
$765,045, compared to $1,225,276 as at December 31, 1998. The Company has
financed its operations primarily through its cash on hand, resulting in
decrease of $460,231, or 38%, in cash on hand during the six month period
January 1, 1999 and June 30, 1999. During the six month period ended June 30,
1999, the Company received $40,000.00 from the exercise of 80,000 stock options,
versus no stock option exercise proceeds during the same six month period in
1998.
ITEM 7. DESCRIPTION OF PROPERTY
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The Company maintains its head office at 15 Wertheim Court, Suite 311,
Richmond Hill, Ontario, L4B 3H7. These premises are 2180 sq. ft. and are leased
for C$3203.79 per month. The Company's lease expires on February 2, 2001,
however, the Company has an option to renew for another five year term.
ITEM 8. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
- ------- -------------------------------------------------------
The following information sets forth the names of the officers and
directors of the Company, their present positions with the Company and
biographical information.
HARMEL S. RAYAT (Age 38) Chairman, Director. Mr. Rayat has been in the venture
capital industry since 1981 and since January 1993 has been the president of
Hartford Capital Corporation, a company which specializes in providing early
stage funding and investment banking services to emerging growth corporations.
From January 1989 through December 1992 Mr. Rayat was the President and CEO of
K.S. Rayat & Company, an investment banking and venture capital company, where
he was responsible for research, due diligence and investment strategy in early
stage, start-up venture capital investments. Mr. Rayat has been a director and
President of the Company since March 1996.
KESAR S. DHALIWAL (Age 37) President and Chief Executive Officer, Director. Mr.
Dhaliwal has international business management experience in North America, Asia
and Europe. Between 1993 and just prior to joining WhatsOnline.Com, Inc. in
December 1998, Mr. Dhaliwal led two technology companies which developed and
marketed real time Internet based information technology platforms to financial
services institutions. From 1986 through 1993, Mr. Dhaliwal was the Chief
Strategic Officer and Investment Officer for a large multi-national Singapore
based
<PAGE>
conglomerate. His duties included expanding the company's diverse operations
into shipping, construction, hospitality and entertainment. From 1984 through
1986, Mr. Dhaliwal was president of an international hospitality company, where
he developed and executed the company's expansion strategy from North America to
Europe and Asia.
JASBINDER CHOHAN. (Age 36) Secretary /Treasurer, Director. Ms. Chohan has
extensive sales, marketing and accounting experience with established, as well
as start up corporations. Since January 1995, Ms. Chohan has been an account
manager at an international packaging company. Between March 1991 and January
1995, Ms. Chohan handled all aspects of general accounting, administration, and
employee relations at an growing advertising concern and for a holding company
involved in recycling.
GURSH S. KUNDAN. (Age 32) Vice President, Business Development. Mr. Kundan has
held senior positions with several financial service and technology
organizations. From 1996 to 1998, Mr. Kundan was a senior vice president of a
start up technology company where he was responsible for developing the
technology for, and managing a service bureau operation which administered nine
billion dollars of financial service assets for several financial planning
firms. During his tenure, he also developed and implemented the firm's business
plan and marketing strategy which lead to an increase in revenue. Between 1991
and 1996, Mr. Kundan worked for several financial institutions developing
strategic initiatives to increase market share and profitability through
marketing programs and process improvement projects. From 1989 to 1991, Mr.
Kundan worked for a large information systems company and was responsible for
several initiatives, including development of distribution channels, product
marketing strategies and marketing research studies. Mr. Kundan holds a Bachelor
of Business Administration Degree from Simon Fraser University, with a focus on
marketing strategy, management information systems and operations.
ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS
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The following table sets forth certain information as to the Company's five
highest paid executive officers and directors for the fiscal years ended
December 31, 1997 and 1998. No other compensation was paid or will be paid to
any such officers other than the cash compensation set forth below.
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Other Restricted
All Other Annual Stock Options/ LTIP Other
Name &Title Year Salary Bonus Comp Award(s) SARs (#) payouts Comp
- --------------- ---- ------- ----- ---- -------- -------- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Harmel S. Rayat 1998 $ - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
Chairman, 1997 $ - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
Director 1996 $ 3,000 - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
Britt Weaver 1998 $ 64,167 - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
Former President 1997 $ - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
& CEO 1996 $ - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
Kesar S. Dhaliwal 1998 $ - 0 - - 0 - - 0 - - 0 - 2,400,000 - 0 - - 0 -
President & CEO 1997 $ - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
1996 $ - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
Jasbinder Chohan 1998 $ - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
Director, Secretary 1997 $ - 0 - - 0 - - 0 - - 0 - 60,000 - 0 - - 0 -
Treasurer 1996 $ - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
Britt Weaver 1998 $ - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
Former President 1997 $ - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
& CEO 1996 $ - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
</TABLE>
In fiscal 1997, the aggregate amount of compensation paid to all
executive officers and directors as a group for services in all capacities was
nil. In fiscal 1998, the aggregate amount of compensation paid to all executive
officers and directors as a group for services in all capacities was
approximately $64,167.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
<TABLE>
<CAPTION>
Number of Securities Percent of Total Options/
Underlying Options/ SARs Granted To Employee
Name SARs Granted (#) In Fiscal Year Exercise or Base Price Expiration
- ---- ---------------- -------------- ---------------------- ----------
<S> <C> <C> <C> <C>
Kesar S. Dhaliwal 2,400,000 100% $2.00 Dec 1, 2008
President & CEO
Director
</TABLE>
The following table shows certain information about unexercised options at
year-end 1998 with respect to named executive officers and directors:
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
Common Shares Value of Unexercised
Underlying Unexercised In-The-Money
Options on 12/31/98 On 12/31/98
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Harmel S. Rayat 0 0 0 0
Kesar S. Dhaliwal 0 2,400,000 0 $18,600,000
Jasbinder Chohan 0 60,000 0 $525,000
</TABLE>
ITEM 10. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
- -------- ------------------------------------------------------------
The following table sets forth, as of July 14, 1999, the beneficial
ownership of the Company's Common Stock by each person known by the Company to
beneficially own more than 5% of the Company's Common Stock outstanding as of
such date and by the officers and directors of the Company as a group. Except as
otherwise indicated, all shares are owned directly.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name and address of Amount and Nature Percent
Title of Class of beneficial owner of beneficial ownership of class
- -------------- ------------------- ----------------------- --------
<S> <C> <C> <C>
Common Harmel S. Rayat 8,000,000 (1) 34.6%
216 - 1628 West 1st Ave
Vancouver, B.C., V6J 1G1
Common Kesar S. Dhaliwal 2,400,000 (2) 10.4%
Suite 311 - 15 Wertheim Court
Richmond Hill, Ontario, L4B 3H7
Common Jasbinder Chohan 60,000 (3) 0.26%
216 - 1628 West 1st Ave
Vancouver, B.C., V6J 1G1
Common Gursh S. Kundan 0 n/a
Suite 311 - 15 Wertheim Court
Richmond Hill, Ontario, L4B 3H7
Common Officers and Directors 10,460,000 45.26%
As A Group (4 persons)
</TABLE>
<PAGE>
(1) Common Shares.
(2) Stock options, of which 2,000,000 vest in 5 equal installments each
December 1st, beginning 1999. The balance of 400,000 options vest once the
Company attains $5,000,000 in annual sales.
(3) Stock options, of which 40,000 are already vested, with the balance of
20,000 to vest November 5th, 1999.
ITEM 11. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
- -------- ---------------------------------------------------------
From time to time, the Company has provided Internet related services
at fair market value for MedCare Technologies Inc., a company listed on the
NASDAQ Small Cap. Mr. Harmel S. Rayat, a Director and Chairman of the Company,
is also a Director and Chairman of MedCare Technologies.
ITEM 12. SECURITIES BEING OFFERED
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Common Stock
- ------------
The Company has 100,000,000 common shares authorized with $0.00001 par
value. Holders of the Common Stock are entitled to one vote for each share held
by them of record on the books of the Company in all matters to be voted on by
the stockholders. Holders of Common Stock are entitled to receive such dividends
as may be declared from time to time by the Board of Directors out of funds
legally available, and in the event of liquidation, dissolution or winding up of
the Company, to share ratably in all assets remaining after payment of
liabilities. Declaration of dividends on Common Stock is subject to the
discretion of the Board of Directors and will depend upon a number of factors,
including the future earnings, capital requirements and financial condition of
the Company. The Company has not declared dividends on its Common Stock in the
past and the management currently anticipates that retained earnings, if any, in
the future will be applied to the expansion and development of the Company
rather than the payment of dividends.
The holders of Common Stock have no preemptive or conversion rights and
are not subject to further calls or assessments by the Company. There are no
redemption or sinking fund provisions applicable to the Common Stock. The Common
Stock currently outstanding is, and the Common Stock offered by the Company
hereby will, when issued, be validly issued, fully paid and nonassessable.
Stock Options
- -------------
The Company has 1,250,000 shares reserved under its 1997 Stock Option
Plan for issuance at $1.00 per share until November 5th, 2007. The optionees and
numbers of shares optioned are as follows:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Ranjit Bhogal* 400,000
Terry Johnston** 300,000
Bhupinder Mann*** 300,000
Herdev S. Rayat 110,000
Jasvir S. Rayat 110,000
Jasbinder Chohan 30,000
</TABLE>
* As at April 19, 1999, 30,000 options have been exercised. ** As at April 19,
1999, 5,000 options have been exercised. *** As at April 19, 1999, 5,000 options
have been exercised.
The Company has 1,750,000 shares reserved under its 1998 Stock Option
Plan. As at April 15, 1999, 1,200,000 shares out of the 1,750,000 shares had
been granted at$2.00 per share until November 5th, 2007. The optionees and
numbers of shares optioned are as follows:
<TABLE>
<CAPTION>
<S> <C>
Kesar S. Dhaliwal* 1,200,000
</TABLE>
* 1,000,000 options vest in 5 equal installments each December 1st, beginning
1999. The balance of 200,000 options vest once the Company attains $5,000,000 in
annual sales.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
- ------- --------------------------------------------------------
EQUITY AND OTHER STOCKHOLDER MATTERS
- ------------------------------------
The shares of the Company's stock are traded on the OTC Bulletin Board under the
symbol WHAT and the following have been the High and Low prices for the times
indicated:
<TABLE>
<CAPTION>
High Low
<S> <C> <C>
April - June 1999 $ 5.50 $ 2.00
January - March 1999 $ 5.13 $ 1.88
October - December 1998 $ 3.25 $ 2.44
July - September 1998 $ 3.38 $ 0.88
April - June 1998 $ 2.82 $ 1.06
January - March 1998 $ 1.63 $ 1.19
October - December 1997 $ 1.19 $ 0.28
July - September 1997 $ 0.25 $ 0.25
April - June 1997 $ 0.19 $ 0.10
January - March 1997 $ 0.50 $ 0.32
</TABLE>
There are 450,000 share purchase warrants exercisable at $2.00 per
share until December 9th, 2001. Other than stock options currently outstanding,
there are no other convertible securities.
<PAGE>
As of April 19, 1999 there were 309 registered shareholders of the
Company. There are no dividend restrictions on the Company. Market makers who
have posted bids or offers during the period April 1996 to April 1999 are as
follows: William V. Frankel & Co. Incorporated, Hill Thompson Magid & Co Inc.,
Knight Securities, Inc., Paragon Capital Corporation and Sharpe Capital, Inc.
There have been no cash dividends declared on the Company's common
stock for the past two years.
ITEM 2. LEGAL PROCEEDINGS
- ------- -----------------
There are no legal proceedings pending or threatened against the
Corporation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- ------- ---------------------------------------------
There have been no disagreements with the Company's independent
accountants on accounting and financial matters within the three year period
ended December 31, 1998, or in any period subsequent to that date.
The Company's bylaws indemnify its officers and directors "to the
fullest extent permitted or authorized by current or future legislation or
judicial or administrative decision against all fines, liabilities, costs and
expenses, including attorneys' fees, arising out of his or her status as a
director, officer, agent, employee or representative."
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
- ------- ---------------------------------------
On July 14, 1983, the Company, in connection with a 504 D offering
issued 5,141,000 shares of common stock for cash at $.003 per share or $15,000.
During October 1984, the Company issued 13,009,000 shares of common stock at
$.01 per share or $130,090, less expenses of the offering of $27,547, for a net
cash of $102,543. For the year ended December 31, 1995, the Company issued
20,000,000 shares of common stock at $.001 per share to satisfy current
liabilities in the amount of $20,000.
On April 15, 1996, the Company effected a reverse split of 500:1, with
par value remaining at $.001. On April 16, 1996, the Company issued 4,000,000
shares of common stock at $.0005 per share for services or $2000 to Mr. Harmel
S. Rayat, a director of the Company. On May 9, 1996, in connection with a 504 D
offering, the Company issued 4,000,000 shares of common stock at $0.05 per share
for cash in the amount of $200,000.
On June 30, 1997, in connection with a 504 D offering, the Company
issued 2,000,000 shares of common stock for cash of $45,000 and $255,000 for
services at $0.15 per share or a total of $300,000. On October 14, 1997, the
Company issued 1,000,000 shares of common stock in a 504 D offering memorandum
at $.50 per share or $500,000. On December 9, 1997, the Company issued 450,000
shares of common stock in a 505 D offering memorandum at $2.00 per share or
<PAGE>
$900,000, along with 450,000 share purchase warrants to purchase common shares
at $2.00 per share until December 9, 2001.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- ------- -----------------------------------------
The officers and directors of the Company are indemnified as provided
under the Nevada Revised Statutes and pursuant to the Bylaws of the Company.
This indemnification, as described in Article VII, Section 1 of the Bylaws,
includes "current and future legislation or judicial or administrative decision
against all fines, liabilities, costs and expenses, including attorneys' fees."
PART F/S
FINANCIAL STATEMENTS
C O N T E N T S
Independent Auditor's Report. . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Balance Sheet at December 31, 1998 and 1997. . . . . . . . . 2
Consolidated Statement of Operations For the Years Ended
December 31, 1998 and 1997, and From Inception (July 14, 1983)
To December 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statement of Stockholders' Equity From Inception
(July 14, 1983) To December 31, 1998 . . . . . . . . . . . . . . . 4-6
Consolidated Statement of Cash Flows For the Years Ended
December 31, 1998 and 1997, and From Inception (July 14, 1983)
To December 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . 7-8
Notes to the Consolidated Financial Statements . . . . . . . . . . . . 9-14
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
WhatsOnline.Com, Inc.
(formerly American Alliance Corporation)
Richmond Hill, Ontario, Canada
We have audited the consolidated balance sheet of WhatsOnline.Com, Inc.
(formerly American Alliance Corporation) (A Development Stage Company), (the
Company), and subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years then ended and for the period from Inception (July 14, 1983) to
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit of the financial statements provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of WhatsOnline.Com,
Inc. (formerly American Alliance Corporation) as of December 31, 1998 and 1997,
and the consolidated results of their operations and their consolidated cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
As discussed in Note 1, the Company has been in the development stage since its
inception on July 14, 1983, and although planned principal operations have
commenced, there have been no significant revenues derived therefrom.
Clancy and Co., P.L.L.C.
Phoenix, Arizona 85016
April 15, 1999, except as to Note 7,
which is as of May 20, 1999
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $ 1,225,276 $ 1,447,925
Property and Equipment, Net (Note 3) 7,937 0
Other Assets
Organization Costs 649 0
--- -
Total Assets $ 1,233,862 $ 1,447,925
========= =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities $ 17,814 $ 0
Stockholders' Equity
Preferred Stock: Authorized
$0.0001 Par Value, 5,000,000
Shares; Issued and Outstanding,
NONE 0 0
Common Stock: Authorized
$0.00001 Par Value, 100,000,000
Shares; Issued and Outstanding,
11,526,202 115 115
Additional Paid In Capital 2,043,892 2,043,892
Loss Accumulated During the Development Stage (827,959) (596,082)
--------- ---------
Total Stockholders' Equity 1,216,048 1,447,925
---------- ---------
Total Liabilities and Stockholders' Equity $ 1,233,862 $ 1,447,925
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, AND
FROM INCEPTION (JULY 14, 1983) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
From
Inception
(July 14,
Year Ended Year Ended 1983) to
December 31, December 31, December 31,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Revenues $ 66,426 $ 0 $ 66,426
Operating Expenses
General and Administrative 355,022 263,268 962,731
Asset Write-Down (Note 1) 14,338 0 14,338
------- - --------
Total Operating Expenses 369,360 263,268 977,069
------- ------- -------
Operating Loss (302,934) (263,268) (910,643)
Other Income
Interest Income 71,057 7,481 82,684
------ ----- ------
Net Loss Available to Common Stockholders $ (231,877) $ (255,787) $ (827,959)
========= ======= =========
Loss Per Weighted Average Share of
Common Stock $ (0.01) $ (0.03) $ (0.04)
===== ====== ======
Weighted Average Number of Common
Shares Outstanding 23,052,404 9,530,568 23,052,404
========== ========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FROM INCEPTION (JULY 14, 1983) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
Loss
Accumulated
Additional During the
Preferred Stock Common Stock Paid In Development
Shares Amount Shares Amount Capital Stage
------ ------ ------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
Common Stock Issued For Cash at
$0.003 Per Share, August 26, 1983 0 $ 0 5,141,000 $ 5,141 $ 9,859 $ 0
Net Loss From Inception (July 14, 1983)
Through December 31, 1983 (2,888)
------- ------ --------- ----------- ------------ -------
Balance, December 31, 1983 0 0 5,141,000 5,141 9,859 (2,888)
Common Stock Issued - Public Offering at
$0.01 Per Share, October 1984 13,009,000 13,009 117,081
Cost of Offering (27,547)
Net Loss, Year Ended December 31, 1984 (15,327)
------- ----- ---------- ------ ------ -------
Balance, December 31, 1984 0 0 18,150,000 18,150 99,393 (18,215)
Capital Contribution, 1990 4,364
Net Loss, Year Ended December 31, 1985
Through 1990 (103,692)
------- ----- ---------- ------ ------ -------
Balance, December 31, 1990 0 0 18,150,000 18,150 103,757 (121,907)
Capital Contribution, 1991 100
Net Loss, Year Ended December 31, 1991 (100)
------- ----- ---------- ------ ------ -------
Balance, December 31, 1991 0 0 18,150,000 18,150 103,857 (122,007)
Net Loss, Year Ended December 31, 1992 (141)
------- ----- ---------- ------ ------ -------
Balance, December 31, 1992 0 0 18,150,000 18,150 103,857 (122,148)
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FROM INCEPTION (JULY 14, 1983) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
Loss
Accumulated
Additional During the
Preferred Stock Common Stock Paid In Development
Shares Amount Shares Amount Capital Stage
------ ------ ------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
Net Loss, Year Ended December 31,1993 (204)
------- ----- ---------- ------ ------ -------
Balance, December 31, 1993 0 0 18,150,000 18,150 103,857 (122,352)
Net Loss, Year Ended December 31, 1994 (100)
------- ----- ---------- ------ ------ -------
Balance, December 31, 1994 0 0 18,150,000 18,150 103,857 (122,452)
Common Stock Issued To Satisfy Current
Liabilities at $0.001 Per Share,
December 31, 1995 20,000,000 20,000
Net Loss, Year Ended December 31, 1995 (22,215)
------- ----- ---------- ------ ------ -------
Balance, December 31, 1995 0 0 38,150,000 38,150 103,857 (144,667)
500:1 Reverse Stock Split, April 15, 1996 (38,073,798) (38,074) 38,074
Common Stock Issued In Exchange For
Services at $0.005 Per Share, April
16,1996 4,000,000 4,000 (2,000)
Common Stock Issued For Cash at $0.05
Per Share, May 9, 1996 4,000,000 4,000 196,000
Net Loss, Year Ended December 31, 1996 (195,628)
------- ----- ---------- ------ ------ -------
Balance, December 31, 1996 0 0 8,076,202 8,076 335,931 (340,295)
Common Stock Issued For Cash and
Services at $0.15 Per Share, June 30,
1997 2,000,000 2,000 298,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FROM INCEPTION (JULY 14, 1983) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
Loss
Accumulated
Additional During the
Preferred Stock Common Stock Paid In Development
Shares Amount Shares Amount Capital Stage
------ ------ ------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
Adjustment For Change in Par Value From
$0.001 to $0.00001 (9,975) 9,975
Common Stock Issued For Cash at $0.50
Per Share, October 24, 1997 1,000,000 10 499,990
Common Stock Issued For Cash at $0.20
Per Share, December 19, 1997 450,000 4 899,996
Net Loss, Year Ended December 31, 1997 (255,787)
------- ----- ---------- ------ ------ -------
Balance, December 31, 1997 0 0 11,526,202 115 2,043,892 (596,082)
Net Loss, Year Ended December 31, 1998 (231,877)
------- ----- ---------- ------ ------ -------
Balance, December 31, 1998 0 $ 0 11,526,202 $ 115 $ 2,043,892 $ (827,959)
= ====== ========== =========== ============ ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, AND
FROM INCEPTION (JULY 14, 1983) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
From
Inception
(July 14,
Year Ended Year Ended 1983) to
December 31, December 31, December 31,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net Loss $ (231,877) $ (255,787) $
(827,959)
Adjustments to Reconcile Net Loss to Net
Cash Used In Operating Activities
Investment in Subsidiary 11,274 0 11,274
Depreciation and Amortization 1,984 0 1,984
Common Stock Issued for Services 0 255,000 257,000
Common Stock Issued to Satisfy Current
Liabilities 0 0 20,000
Asset Write-Down 14,338 0 14,338
Changes in Assets and Liabilities
(Increase) Decrease in Organization Costs (649) 0 (649)
Increase (Decrease) in Accrued Liabilities 17,814 0 17,814
------ ------------ ---------
Total Adjustments 44,761 255,000 321,761
------ ------- --------
Net Cash Used In Operating Activities (187,116) (787) (506,198)
Cash Flows From Investing Activities
Purchase of Property and Equipment (9,921) 0 (9,921)
Investment, Cash Paid For Acquisition (29,000) 0 (29,000)
------- ------------ ------
Net Cash Flows Used In Investing Activities (38,921) 0 (38,921)
Cash Flows From Financing Activities
Proceeds From the Issuance of Common Stock 0 1,445,000 1,790,090
Cost of Public Offering 0 0 (27,547)
Cash Acquired in Connection with
Acquisition of Subsidiary 3,388 0 3,388
Capital Contributions 0 0 4,464
- ------------ ------------
Net Cash Provided By Financing Activities 3,388 1,445,000 1,770,395
----- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, AND
FROM INCEPTION (JULY 14, 1983) TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
From
Inception
(July 14,
Year Ended Year Ended 1983) to
December 31, December 31, December 31,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Increase (Decrease) in Cash and Cash (222,649) 1,444,213 1,225,276
Equivalents
Cash and Cash Equivalents, Beginning of Year 1,447,925 3,712 0
--------- ----------- ---------
Cash and Cash Equivalents, End of Year $ 1,225,276 $ 1,447,925 $ 1,225,276
========= ========= =========
Supplemental Disclosure of Cash Flow
Information:
Cash paid for:
Interest $ 0 $ 0 $ 0
======== =========== ===========
Income taxes $ 0 $ 0 $ 0
======== =========== ===========
Noncash Investing and Financing Activities:
Issuance of Common Stock for Services $ 0 $ 255,000 $ 257,000
========= ======= =======
Common Stock Issued to Satisfy Current $ 0 $ 0 $ 20,000
======== =========== ========
Liabilities
Acquisition of 100% of Subsidiary in
Exchange For Cash
Details of Acquisition:
Fair Value of Assets $ 15,688
Liabilities Assumed 1,026
Book Value of Company 14,662
Cash Paid For Acquisition 29,000
Goodwill Acquired 14,338
Cash Acquired 3,388
Total Acquisition $ 17,726
======
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - ORGANIZATION
- ---------------------
WhatsOnline.Com, Inc. (formerly American Alliance Corporation) (The
Company) was incorporated under the laws of the State of Utah, on July 14,
1983 under the name Far West Gold, Inc., with an authorized capital of
50,000,000 shares of common stock with a par value of one mil ($.001) per
share. The Company changed its name to Far West Resources, Inc. on May 14,
1996. On September 22, 1997, the Company changed its name and state of
incorporation from Far West Resources, Inc., a Utah Corporation, to
American Alliance Corporation, a Nevada Corporation, with the Nevada
Corporation being the surviving corporation.
On July 14, 1983, the Company, in connection with a 504D offering, issued
5,141,000 shares of common stock for cash at $.003 per share, or $15,000.
During October, 1984, the Company issued 13,009,000 shares of common stock
at $.01 per share or $130,090, less expenses of the offering of $27,547,
for net cash of $102,543.
For the year ended December 31, 1990, the Company received a capital
contribution of $4,364 to pay expenses of the Company.
For the year ended December 31, 1991, the Company received a capital
contribution of $100 to pay expenses of the Company.
For the year ended December 31, 1995, the Company issued 20,000,000 shares
of common stock at $0.001 per share to satisfy current liabilities in the
amount of $20,000.
On April 15, 1996, the Board of Directors authorized a reverse split of
500:1, that was approved by the stockholders on May 9, 1996.
On April 16, 1996, the Company issued 4,000,000 shares of common stock at
$0.0005 per share for services, or $2,000.
On May 9, 1996, the Company issued 4,000,000 shares of common stock at
$0.05 per share for cash in the amount of $200,000.
On May 9, 1996, the stockholders authorized an increase in the number of
shares that the Company has authority to issue to 105,000,000, of which
100,000,000 shares are $.001 par value common stock and 5,000,000
shares are $.10 par value preferred stock.
On June 30, 1997, the Company issued 2,000,000 shares of common stock for
cash of $45,000 and $255,000 for services at $0.15 per share, or $300,000.
On September 22, 1997, the Company changed its name and state of
incorporation from Far West Resources, Inc., a Utah Corporation, to
American Alliance Corporation, a
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - ORGANIZATION (CONTINUED)
- ---------------------------------
Nevada Corporation, with the Nevada Corporation being the surviving
corporation, and authorized a decrease in the par value of capital stock.
Preferred stock par value was adjusted from $.001 to $.0001 and common
stock par value was adjusted from $.10 to $.00001.
On October 24, 1997, the Company issued 1,000,000 shares of common stock in
a 505 D offering memorandum at $0.50 per share, or $500,000.
On December 19, 1997, the Company issued 450,000 shares of common stock in
a 504 D offering memorandum at $2.00 per share, or $900,000.
On January 9, 1998, the Company organized American Alliance, Inc., its
wholly owned subsidiary, under the laws of the State of Nevada with an
authorized capital of 1,000 common shares with a par value of $0.001 per
share, and with one share issued to American Alliance Corporation.
On September 15, 1998, the Company acquired 100% of the outstanding
common stock of Rowland, Carmichael and Associates, Inc., an Arizona-based
broker dealer, for $29,000, for the development of an online brokerage
service. The book value of the assets acquired was $14,662 less cash
acquired of $3,388, for a net acquisition of $11,274. Excess of market
value over book value of assets acquired, or goodwill, was $14,338.
Subsequent to the acquisition, the Company decided not to enter into the
business of Internet brokerage services due to the capital infusion
required for advertising and marketing in order to attract and retain
customers due to increased competition in this industry. Due to the
Company's change in business direction, goodwill was determined to be
permanently impaired and was written off, and is included in operations, in
accordance with Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of."
The Company is a development stage company, as defined in Financial
Accounting Standards Board No. 7. The Company is devoting substantially all
of its present efforts in securing and establishing a new business, and
although its planned principal operations have commenced there have been no
significant revenues derived therefrom.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------
A. Cash and Cash Equivalents
----------------------------
The Company considers all highly liquid instruments with a maturity of
three months or less when acquired to be cash and cash equivalents.
B. Basis of Financial Statement Presentation
--------------------------------------------
The Company's financial statements are prepared using the accrual method of
accounting.
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- ----------------------------------------------------
C. Concentration of Credit Risk
-------------------------------
The Company maintains U.S. dollar cash balances in Canadian banks that are
not insured.
D. Principles of Consolidation
------------------------------
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries, American Alliance, Inc. and Rowland,
Carmichael, & Associates, Inc. All material intercompany transactions have
been eliminated in consolidation.
E. Property and Equipment
-------------------------
Property and Equipment are recorded at cost, less accumulated depreciation.
Depreciation is computed using the straight line method over the estimated
useful life of the assets, which is five years. Repairs and maintenance are
charged to operations as incurred.
F. Revenue Recognition
----------------------
Revenues are recognized at time of performance of services.
G. Earnings or Loss Per Share
-----------------------------
Basic earnings or loss per share has been computed based on the weighted
average number of common shares outstanding and common share equivalents at
the date of the financial statements. All earnings or loss per share
amounts in the financial statements are basic earnings or loss per share,
as defined by ("SFAS") No. 128, "Earnings Per Share." Diluted earnings or
loss per share does not differ materially from basic earnings or loss per
share for all periods presented. The number of shares used in computing
earnings or loss per share at December 31, 1998 and 1997 was 23,052,404 and
9,530,368, respectively.
H. Income Taxes
---------------
The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting for Income Taxes," by which deferred tax liabilities and assets
are determined based on the difference between the financial statement and
tax bases of assets and liabilities, using enacted tax rates in effect for
the year in which the differences are expected to reverse. See Note 4.
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- ----------------------------------------------------
I. Use of Estimates
-------------------
Management uses estimates and assumptions in preparing financial statements
in accordance with generally accepted accounting principles. Those
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses. Actual results could vary from the
estimates that were assumed in preparing the financial statements.
J. Business Segment Information
-------------------------------
The Company implemented SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," on January 1, 1998. The Company
operates in one industry. The Company is an aggregator and presentation
portal for targeted Internet streaming media content. The Company offers a
large, comprehensive selection of Internet programming, including sports,
news, business and finance, health and medicine, technology politics, and
religion. Among other content, the Company will broadcast live pay-per-view
seminars and entertainment, trade shows, conferences, and training events
on worldwide basis. There were no material amounts of sales or transfers
among geographic areas or major customers within the United States.
K. Pending Accounting Pronouncements
------------------------------------
It is anticipated that current pending accounting pronouncements will not
have an adverse impact on the financial statements of the Company.
NOTE 3 - PROPERTY AND EQUIPMENT
- -------------------------------
Property and equipment consists of computer equipment at December 31, 1998.
Depreciation expense charged to operations during 1998 was $1,984.
NOTE 4 - INCOME TAXES
- ---------------------
There is no current or deferred tax expense for the years ended December
31, 1998 and 1997, due to the Company's loss position. The benefits of
timing differences have not been previously recorded.
The deferred tax consequences of temporary differences in reporting items
for financial statement and income tax purposes are recognized, as
appropriate. Realization of the future tax benefits related to the deferred
tax assets is dependent on many factors, including the Company's ability to
generate taxable income within the net operating loss carryforward period.
Management has considered these factors in reaching its conclusion as to
the valuation allowance for financial reporting purposes. The income tax
effect of
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 4 - INCOME TAXES (CONTINUED)
- ---------------------------------
temporary differences comprising the deferred tax assets and deferred tax
liabilities is a result of the following:
<TABLE>
<CAPTION>
Deferred Taxes 1998 1997
-------------- ---- ----
<S> <C> <C>
NOL Carryforwards $ 355,102 $ 208,629
Valuation Allowance (355,102) (208,629)
------- -------
Net Deferred Tax Assets $ 0 $ 0
============ ============
</TABLE>
A reconciliation between the statutory federal income tax rate and the
effective rate of income tax expense for each of the years during the
period ended December 31 follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Statutory Federal Income Tax Rate (35.0%) (35.0%)
Increase in Valuation Allowance 35.0% 35.0%
----- -----
Effective Income Tax Rate 0.0% 0.0%
====== ======
</TABLE>
The Company has available net operating loss carryforwards of $827,959 and
$596,082 at December 31, 1998 and 1997, for tax purposes to offset future
taxable income. The net operating loss carryforwards expire principally
beginning in the year 2013.
NOTE 5 - STOCK OPTIONS
- ----------------------
The Company has two stock option plans that provide for the granting of
stock options to officers and key employees. The objectives of these plans
include attracting and retaining the best personnel, providing for
additional performance incentives, and promoting the success of the Company
by providing employees the opportunity to acquire common stock. Options
outstanding under the Company's two stock option plans have been granted at
prices which are either equal to or above the market value of the stock on
the date of grant and expire November 5, 2007 after the grant date.
The status of the Company's stock option plans are summarized below as of
December 31:
<TABLE>
<CAPTION>
Number of Option
Shares Price
<S> <C> <C>
Outstanding at December 31, 1996 0 $0.00
- -----
Options Outstanding at December 31, 1997 0 0.00
Granted Under the 1997 Stock Option Plan 1,250,000 1.00
Granted Under the 1998 Stock Option Plan 1,200,000 2.00
--------- ----
Options Outstanding at December 31, 1998 2,450,000 $1.00-2.00
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 5 - STOCK OPTIONS (CONTINUED)
- ----------------------------------
The Company accounts for stock-based compensation using the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," under which no compensation
cost for stock options is recognized for stock options awards granted at or
above fair market value. Had compensation expense for the Company's
stock-based compensation plans been determined under SFAS No. 123, based on
the fair market value at the grant dates, the Company's pro forma net loss
and pro forma net loss per share would have been reflected as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Net Loss
As reported $ (231,877) $ (255,787)
Pro forma $ (1,521,914) $ (700,606)
Net Loss Per Share
As reported $ (0.02) $ (0.03)
Pro forma $ (0.13) $ (0.07)
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumption used for those options granted in 1998 and 1997, respectively:
dividend yield of 0% and 0%, expected volatility of 76% and 173%, risk-free
interest rates of 5% and 5%, and expected lives of 10 years and 10 years.
NOTE 6 - STOCK WARRANTS
- -----------------------
In connection with the 505 offering dated December 9, 1997, for
450,000 shares at $2.00 per share, the Company also issued 450,000 warrants
to purchase common shares at $2.00 per share until December , 2001. As of
date of these financial statements, all of the warrants are outstanding.
NOTE 7 - SUBSEQUENT EVENTS
- --------------------------
On March 8, 1999, the Company's subsidiary, American Alliance, Inc.,
entered into an agreement to acquire the domain name "WhatsOnLine.com" for
consideration of $50,000. The agreement was completed on March 29, 1999,
with all rights, title and interest in, and to, the domain name, conveying
effective immediately. The Company changed its name to WhatsOnline.Com,
Inc., on May 20, 1999.
On May 4, 1999, the Board of Directors approved a forward split, effective
May 14, 1999, of the Company's common stock on a two-for-one basis, with
the par value remaining the same. All per share and per share information
have been adjusted retroactively to reflect the stock split.
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
CONTENTS
Page
Consolidated Balance Sheet at June 30, 1999 (unaudited)
and December 31, 1998 F-2
Consolidated Statement of Operations for the Six Months Ended
June 30, 1999 and 1998, and for the Period from Inception
(July 14, 1998) to June 30, 1999 (unaudited) F-3
Consolidated Statement of Cash Flows For The Six Months ended
June 30, 1999 and 1998, and for the Period from Inception
(July 14, 1983) to June 30, 1999 F-4
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
INTERIM CONSOLIDATED BALANCE SHEET
JUNE 30, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
1999 1998
---- ----
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $ 765,045 $ 1,225,276
Security Deposits 673 0
--- -
Total Current Assets 765,718 1,225,276
Property and Equipment, Net 28,750 7,937
Other Assets
Intangible Assets 50,000 0
Organization Costs 649 649
--- ---
Total Other Assets 50,649 649
Total Assets $ 845,117 $ 1,233,862
============ ============
LIABILITIES AND STOCKHOLDERS' EQUIITY
Liabilities $ 5,441 $ 17,814
Stockholders' Equity
Preferred Stock: Authorized $0.0001 Par Value,
5,000,000 shares; Issued and Outstanding, NONE 0 0
Common Stock: Authorized $0.00001 Par Value,
100,000,000 shares; Issued and Outstanding,
23,132,404 and 11,526,202 at June 30, 1999
and December 31, 1998, respectively 231 115
Addition Paid In Capital 2,083,776 2,043,892
Loss Accumulated During the Development Stage (1,244,331) (827,959)
---------- --------
Total Stockholders' Equity 839,676 (1,216,048)
------- ----------
Total Liabilities and Stockholder's Equity $ 845,117 $ 1,233,862
============= ============
</TABLE>
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 1999 AND 1998
AND FROM INCEPTION (July 14, 1983) to JUNE 30, 1999 (unaudited)
<TABLE>
<CAPTION>
The Six The Six From
Months Months Inception
Period Ended Period Ended (July 14, 1983)
June 30, 1999 June 30, 1998 to June 30, 1999
------------- ------------- ----------------
<S> <C> <C> <C>
Revenues $ 0 $ 0 $ 66,426
Operating Expenses
General and Administrative $ (437,341) $ (50,785) $ (1,400,072)
Asset Write-Down 0 0 (14,338)
- - ------
Total Operating Expenses (437,341) (50,785) (1,414,410)
-------- ------- ----------
Operating Loss $ (437,341) $ (50,785) (1,347,984)
Other Income
Interest Income 20,969 $ 39,176 103,653
------ ------------- -------
Net Loss Available to Common Stockholders $ (416,372) $ (11,609) $ (1,244,331)
============= ============= ==============
Loss Per Weighted Average Share of Common Stock $ (0.02) $ (0.001) $ (0.05)
============= ============= ==============
Weighted Average Number of Common Shares
Outstanding 23,086,071 11,526,202 23,086,071
========== ========== ==========
</TABLE>
<PAGE>
WHATSONLLINE.COM, INC.
(formerly AMERICAN ALLIANCE CORPORATION)
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
AND FROM INCEPTION (JULY 14, 1983) TO JUNE 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months From Inception
Ended Ended (July 14, 1983)
June 30, 1999 June 30, 1998 to June 30, 1999
------------- ------------- ----------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net Loss $ (416,372) $ (11,609) $ (1,244,331)
Adjustments to Reconcile Net Loss to Net Cash
Used by Operating Activities
Investment in Subsidiary 11,274
Depreciation 0 431 1,984
Common Stock Issued for Services 0 0 257,000
Common Stock Issued to Satisfy Current Liabilities 0 0 20,000
Asset Write-Down 14,338
Changes in Assets and Liabilities
(Increase) Decrease in Security Deposit (673) (2,145) (673)
(Increase) Decrease in Intangible Assets (50,000) 0 (50,000)
(Increase) Decrease in Organization Costs 0 (649) (649)
Increase (Decrease) in Accrued Liabilities (12,373) 0 5,441
-------- --- -----
Total Adjustments (63,046) (2,363) 258,715
------- ------- ------
Net Cash Used In Operating Activities (479,418) (13,972) (985,616)
Cash Flows From Investing Activities
Purchase of Property and Equipment (20,813) (9,921) (30,734)
------- - -------
Investment Cash Paid for Acquisition of Subsidiary 0 0 (29,000)
- - -------
Net Cash Flows Used In Investing Activities (20,813) (9,921) (59,734)
Cash Flows From Financing Activities
Proceed From the Issuance of Common Stock 0 0 1,790,090
Cost of Public Offering 0 0 (27,547)
Cash Acquired in Connection with Acquisition of Subsidiary 3,388
Capital Contributions 0 0 4,464
Proceeds From Stock Options Exercised 40,000 0 40,000
------ - ------
Net Cash Provided By Financing Activities 40,000 0 1,810,395
Increase (Decrease) in Cash and Cash Equivalents (460,231) (23,893) 765,045
Cash and Cash Equivalents at Beginning of Period 1,225,276 1,447,925 0
Cash and Cash Equivalents at End of Period $ 765,045 $ 1,424,032 $ 765,045
============= =============== ================
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest $ 0 $ 0 $ 0
============= =============== ================
Income taxes $ 0 $ 0 $ 0
============= =============== ================
Noncash Investing and Financing Activities:
Issuance of Common Stock for Services $ 0 $ 0 $ 257,000
============= =============== ================
Common Stock Issued to Satisfy Current Liabilities $ 0 $ 0 $ 20,000
============= =============== ================
Acquisition of 100% of Subsidiary in Exchange
For Cash
Details of Acquisition:
Fair Value of Assets $ 15,688
Liabilities Assumed 1,026
-----
Book Value of Company 14,662
Cash Paid for Acquisition 29,000
------
Goodwill Acquired 14,338
Cash Acquired 3,388
-----
Total Acquisition $ 17,726
=============
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. PRESENTATION OF INTERIM INFORMATION
The accompanying unaudited interim consolidated financial statemetns have
been prepared in accordance with Form 10SB and in the opinion of management
of WhatsOnline.Com, Inc. (formerly American Alliance Corporation) (the
Company), include all normal adjustments considered necessary to present
fairly the financial position as of June 30, 1999, and the results of
operations for the six months ended June 30, 1999 and 1998, and cash flows
for the six months ended June 30, 1999 and 1998. These results have been
determined on the basis of generally accepted accounting principles and
practices and applied consistently with those used in the preparation of
the Company's audited consolidated financial statements and notes for the
year ended December 31, 1998.
Certain information and footnote disclosures normally included in the
financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
the accompanying unaudited interim consolidated financial statements be
read in conjunction with the financial statements and notes thereto
incorporated by reference in the Company's 1998 audited consolidated
financial statements.
2. FORWARD SPLIT OF COMMON STOCK
On May 4, 1999, the Board of Directors approved a forward split, effective
May 14, 1999, of the Company's common stock on a two-for-one basis, with
the par value remaining the same. All per share and per share information
have been adjusted retroactively to reflect the stock split.
PART III
INDEX TO EXHIBITS
Exhibit 2
2a Merger of American Alliance Utah into American Alliance Nevada*
2b Stock Purchase Agreement with Rowland Carmichael*
Exhibit 3
3a Articles of Incorporation and Amendments*
3b Bylaws*
Exhibit 10
10a Domain Name Acquisition Agreement*
10b Escrow Agreement regarding Domain Name*
10c Joint Venture Agreement with Hollinger Digital
Exhibit 23 Consent of Independent Auditor
Exhibit 27 Financial Data Schedule
Exhibit 99
99a Minutes regarding organization and stock issuance*
99b Minutes regarding offering and loans*
99c Minutes regarding stock to repay debt*
99d Minutes regarding 500:1 reverse split*
99e Minutes regarding acquisition and share issuance*
99f Minutes approving 504 offering*
99g Shareholders' minutes regarding Preferred Stock*
99h Minutes approving 504 offering*
99i Minutes regarding disposition of interest*
99j Shareholders' minutes regarding share increase and options*
<PAGE>
99k Minutes regarding 504 offering*
99l Minutes regarding 1997 option plan*
99m Minutes regarding 505 offering*
99n Minutes regarding annual meeting*
99o Minutes regarding 2:1 forward split*
99p Minutes regarding name change*
99q 1997 Stock Option Plan*
99r 1998 Stock Option Plan*
99s 504 offering dated April 23, 1996*
99t 504 offering dated June 30, 1997*
99u 504 offering dated October 1, 1997*
99v 505 offering dated December 1, 1997*
99w Trademark Application for Domain Name*
* Indicates previously submitted exhibit
SIGNATURES
The issuer has duly caused this offering statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Vancouver,
Province of British Columbia, Canada, on July 21, 1999.
WHATSONLINE.COM, INC.
By /s/ Harmel S. Rayat
-- -------------------
Harmel S. Rayat, Director, Chairman
This offering statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Harmel S. Rayat August 9, 1999
- ------------------- -------------
Harmel S. Rayat, Director Date
/s/ Kesar S. Dhaliwal August 9, 1999
- --------------------- -------------
Kesar S. Dhaliwal, Director Date
/s/ Jasbinder Chohan August 9, 1999
- -------------------- -------------
Jasbinder Chohan, Director Date
<PAGE>
JOINT VENTURE AGREEMENT
This Joint Venture Agreement dated March 18, 1999 is made in two original copies
between
(1) Hollinger Digital, Inc, ("HDI")
and
(2) American Alliance, Inc. ("AMRE")
RECITALS
A. HDI is the operator of "ukmax.com", a United Kingdom directed horizontal
Internet portal, and wishes to offer aggregated media streaming content offered
by AMRE on its website on a co-branded basis.
B. AMRE is the operator of "whatsonline.com", a vertical aggregator of worldwide
online media streaming content, has agreed to provide its content to HDI on a
co-branded basis.
THE PARTIES HEREBY AGREE TO AS FOLLOWS:
1. CO-BRANDED ALLIANCE. On its website, www.ukmax.com, HDI shall provide a
direct hyperlink, by button, banner or other such impression mechanism, to AMRE
from the front page of www.ukmax.com, allowing users seeking media streaming
content to link directly to www.whatsonline.com. HDI also shall provide other
such direct links to AMRE's website from other pages within HDI's website,
specifically relating to sports, entertainment, news, fashion, travel, health
and weather, and any other topics mutually deemed appropriate by HDI and AMRE.
2. AGGREGATE CONTENT. AMRE shall aggregate readily available and deliverable
media streaming content, both audio and video, on a worldwide basis, with
particular emphasis on UK market content and other mutually agreed upon
countries, and make such available to users of www.ukmax.com through a direct
hyperlink provided by HDI.
3. INDEMNITY. Each party shall indemnify the other party and hold the other
party harmless against any liabilities, costs, or damages, including reasonable
attorney's fees, resulting from the indemnifying party's conduct pursuant to
this agreement.
<PAGE>
4. EXCLUSIVE AGREEMENT. For the term of this Joint Venture Agreement, AMRE
agrees to not enter into any similar Joint Venture Agreement with any entity
engaged in a similar business as HDI within the United Kingdom without the prior
written permission of HDI. HDI agrees that permission will not be unreasonably
withheld. HDI further agrees that it shall use best efforts not to place content
on the www.ukmax.com site, which directly competes with content provided by
AMRE.
5. REVENUE SHARING. HDI shall have sole responsibility and management control of
the advertising, marketing, promotion and sales effort related to the
ukmax.com/whatsonline.com co-branded web site components offered at
www.ukmax.com. HDI shall retain 50% of all net revenues generated from
advertising, marketing, subscription, or other sources relating to the
ukmax.com/whatsonline.com co-branded presence at www.ukmax.com and shall forward
50% of all such revenues to AMRE in US Dollars. For this purpose, "net revenues"
shall mean gross reveneus after deduction of a flat 30% sales commission. Such
payments shall be made on a quarterly basis, with payments due within 30 days of
the end of each quarterly period.
6. TERM OF AGREEMENT. This Joint Venture Agreement may be cancelled for any
reason by either party giving 90 days written notice.
7. CANCELLATION. This Joint Venture Agreement may be cancelled for any reason by
either party giving 90 days written notice.
8. PROTECTION OF IDENTITY. Neither party shall willfully make alterations or
allow misrepresentation of any logo(s), copyright material(s), identity(ies),
brand(s) or trademark(s) of the other. Where such umages need to be altered to
accommodate technical design limitations in web site construction, design or
layout, written permission will first be obtained. Such permission not to be
unreasonbly denied by either party. This agreement does not convey any rights in
intellectual property, brands, logos, or copyright, from either party to the
other.
IN WITNESS WHEREOF, the Parties have executed this agreement on the day and
year first indicated above.
AMERICAN ALLIANCE, INC. HOLLINGER DIGITAL, INC.
/s/ Harmel S. Rayat /s/ Phillip Kunsberg
- ------------------- --------------------
Harmel S. Rayat, Director Phillip Kunsberg, Exec. VP General Counsel
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
August 9, 1999
As independent auditors, we hereby consent to the incorporation by
reference in this Form 10SB Statement and amendments thereto of our report,
relating to the consolidated financial statements of WhatsOnline.Com, Inc. for
the years ended December 31, 1997 and 1998 included on Form 10SB and amendments
thereto for the years ended December 31, 1997 and 1998.
/s/ Clancy and Co.
------------------
CLANCY AND CO., P.L.L.C.
Certified Public Accountants
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998 DEC-31-1999
<PERIOD-END> DEC-31-1997 DEC-31-1998 JUN-30-1999
<CASH> 1,447,925 1,225,276 765,045
<SECURITIES> 0 0 0
<RECEIVABLES> 0 0 0
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 1,447,925 1,233,213 765,718
<PP&E> 7,937 0 28,750
<DEPRECIATION> 0 0 0
<TOTAL-ASSETS> 1,447,925 1,233,213 854,117
<CURRENT-LIABILITIES> 0 17,814 5,441
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 115 115 231
<OTHER-SE> 2,043,892 2,043,892 2,083,776
<TOTAL-LIABILITY-AND-EQUITY> 1,447,925 1,233,862 845,117
<SALES> 0 66,426 0
<TOTAL-REVENUES> 0 66,426 0
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> 263,268 369,360 (437,341)
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 7,481 71,057 20,969
<INCOME-PRETAX> (255,787) (231,877) (416,372)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (255,787) (255,787) (416,372)
<EPS-BASIC> (0.03) (0.01) (0.02)
<EPS-DILUTED> (0.03) (0.01) (0.02)
</TABLE>
