SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended July 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-29067
MarketU Inc.
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(Name of Small Business Issuer in its charter)
Nevada 98-0173359
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(State of incorporation) (IRS Employer
Identification No.)
33163-2nd Avenue
Mission, British Columbia, Canada V2V 6T8
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(Address of Principal Executive Office) Zip Code
Registrant's telephone number, including Area Code: (604)-820-7282
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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.
X
YES NO
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
The Company's revenues during the seven months ended July 31, 2000 were
$379,344.
The aggregate market value of the voting stock held by non-affiliates of the
Company, (2,360,367 shares) based upon the average bid and asked prices of the
Company's common stock November 10, 2000 was approximately $663,263 (average bid
to ask on November 10, 2000 was $0.281).
Documents incorporated by reference: None
As of November 10, 2000 the Company had 12,759,154 issued and outstanding shares
of common stock (comprised of 8,188,154 shares of common stock from the list of
registered shareholders maintained by the transfer agent, plus 71,000 shares of
common stock authorized by the Company but not issued by the transfer agent,
plus 4,500,000 shares of Series A Preferred stock (exchangeable into 4,500,000
shares of common stock)).
<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS
North American Resort & Golf, Inc. (the "Company") was incorporated in
Nevada in June 1997. The Company was formed to market golf courses and their
surrounding developments. However, the Company was unable to raise capital and
as a result abandoned its original business plan.
On April 28, 2000 the Company acquired all of the issued and outstanding
shares of Home Finders Realty Ltd and Most Referred Real Estate Agents, Inc.
(collectively doing business as Home Finders Realty) in exchange for (i)
4,500,000 shares of the Company's Series A Preferred stock and (ii) 4,500,000
preferred shares in a wholly owned subsidiary of the Company which was formed
for the sole purpose of facilitating the acquisition of Home Finders Realty.
William and Carole Coughlin owned 100% of the issued and outstanding shares of
Home Finders Realty Ltd. and Most Referred Real Estate Agents Inc., prior to
April 28, 2000.
The preferred shares of the Company and the Company's subsidiary may be
exchanged for 4,500,000 shares of the Company's common stock, at the holder's
option. Each share of the Company's Series A Preferred stock is entitled to one
vote on all matters submitted to a vote of the Company's shareholders. The
Series A Preferred shares are not entitled to any dividends or any distributions
upon the liquidation of the Company.
The business of the Company is now that which is being conducted by Home
Finders Realty and any reference to the Company is, unless otherwise indicated,
also a reference to Home Finders Realty.
On June 27, 2000 the Company's shareholders approved a resolution to
change the name of the Company to MarketU Inc.
The Company provides a service which allows a homebuyer or seller
("Customer") wanting to purchase or sell a property or residence in another
city, to locate a realtor to assist in the real estate transaction. The
Company's services are primarily designed for a residential Customer who is
relocating to another area and needs realtor assistance with buying a residence
in the new area and/or selling their current home. In most cases, the potential
Customer is not familiar with realtors in the city where the Customer plans to
relocate. The Company's referral services are available through the Company's
AMRR.COM or CMRR.COM websites, or by phoning a 1-800-414-5655 hotline.
The Company generates revenue through referral fees and from the sale of
memberships. Referral fees are earned when a Customer buys or sells a house
through a member realtor. Memberships are available to licensed realtors who
have been nominated by their peers, based on a reputation in their community for
providing a high level of customer service.
The Company has divided the United States and Canada into 2,600 service
areas. Each area normally has a population base of at least 100,000 people. The
Company's goal is to have three members in each area with a population base
exceeding 100,000.
<PAGE>
In order to be eligible for membership, a licensed realtor must be
nominated by at least three other realtors who are active in the region.
The Company begins its search for members in each area by telephoning
realtors who service the area and asking these realtors to nominate other
realtors who have a reputation for integrity and a high level of customer
service. When contacted by the Company, a realtor is asked to provide the names
of at least 3 other realtors with such a reputation. Once a realtor has been
nominated by at least three other realtors, the particular realtor is contacted
by a Company representative concerning membership. If a realtor accepts the
membership, either full or associate, they are placed in the Company's website
directory and given the award and designation of "Most Referred Realtor".
The Company offers full and associate memberships. The average membership
currently costs $349.00 per year. With a full membership the realtor's name,
company logo, picture, biographical information, and awards are displayed on the
Company's website. A full member agrees to pay the Company referral fees equal
to 25% of any gross commissions earned by the member from the sale of a
residence by or to a person referred by the Company.
An associate member does not pay an annual fee but agrees to pay the
Company a referral fee equal to 30% of any gross commission earned by the
associate member from the sale of a residence by or to a person referred by the
Company. Although the name of an associate member is listed on the Company's
website, the Company does not display photographs, biographical information, or
awards of associate members.
Full members agree to pay the Company 5% of all gross commissions earned
by the member from Customers which are referred by another realtor in the
Company's program.
Associate members agree to pay the Company 10% of all gross commissions
earned by the member from Customers or sellers which are referred by another
realtor in the Company's program.
Full members sign an agreement with the Company which provides that the
member will uphold the professionalism and integrity that goes along with being
a Most Referred Realtor.
Since initiating its program in 1997, the Company has noticed that the
number of full members has fluctuated from year to year. The Company's ability
to obtain and increase members is dependent upon the effectiveness of its
marketing programs. To date, no single member has represented a material portion
of the Company's revenues.
Replacement of members is accomplished through review of survey results or
re-surveying of service areas where required.
A Customer wanting to use the Company's services logs onto the Company's
website and enters the name of the city where they expect to purchase or sell a
property. If a Customer is interested in contacting a member realtor, the
Customer completes an online form, which is emailed to the Company. The Company
contacts the Customer and qualifies them with respect to seriousness,
timeliness, and ability. Once this process has been completed and documented in
<PAGE>
the Company's lead management software, it contacts the realtor member in the
Customer's requested area and confirms the realtor's acceptance of the referral
via facsimile contract. The member then signs a second agreement with the
Company which provides that the realtor receiving the referral agrees to pay the
specified fee in regards to the subject Customer.
After the referral, the Company maintains contact with the realtor
periodically to determine if the Customer has purchased or sold a residence.
This periodic contact is made until the Company confirms the purchase or sale of
a residence through the member realtor or to confirm that a transaction will not
take place. In the case of a referral from a member realtor to another member
realtor, the Company maintains contact with both realtors on a periodic basis.
Between August 1, 1999 and July 31, 2000 the Company earned approximately
$235,000 in referral fees from approximately 280 residential real estate
closings.
The Company currently markets its services exclusively on the internet.
The Company maintains in excess of 20,000 search engine listings which currently
result in approximately 150,000 visits per month to the Company's website.
Competition. The Company competes with a number of internet-based realtor
locator services, including Realtor.com(R) and Realestate.com. The Company also
competes with national real estate brokerage networks such as Cendant, Better
Homes and Gardens, Century 21, Re/Max, and Coldwell Banker, all of which have
referral capabilities for Customers wanting to purchase a residence in a
different area. Although most of the Company's competitors have greater name
recognition, financial resources, and marketing resources than the Company, the
Company believes that its program offers the following advantages over other
realtor locator services:
1. The Company's realtors are nominated by their peers for having
professionalism and integrity regardless of real estate company affiliation.
2. The Company services 2,600 geographical areas, with a minimum
population of 100,000 people, across North America by maintaining real estate
agent relationships in those areas.
Government Regulation. The Company's subsidiary, Most Referred Real Estate
Agents Inc., is federally registered in Canada and is a licensed real estate
broker in British Columbia, Canada, which legally allows Most Referred to
receive real estate commissions from anywhere in Canada. Although Most Referred
Real Estate Agents Inc. or the Company is not licensed in the United States, the
Company is of the opinion, based upon its discussions with numerous realty
boards in Canada and the United States, that the payment of referral fees by
U.S. real estate agents or realtors is permitted by all applicable laws and
regulations. Although in some states the Company is required to comply with
certain regulations relating to the payment of referral fees, the Company does
not believe that present or future compliance with these regulations will have a
material adverse impact on the Company's operations. However, there can be no
assurance that the Company will be able to comply with any future regulations
which may be adopted by state or provincial authorities or that compliance with
any future regulations will make it uneconomical for the Company to operate in a
<PAGE>
particular state or province. It is also apparent to the Company that such
regulations would have a similar impact on the Company's competition and other
real estate brokerage companies which may refer customers from state to state or
from the United States of America to Canada and vice versa.
Employees
As of November 10, 2000 the Company employed 20 people on a full-time
basis. Several of these employees are licensed realtors or have real estate
experience.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's executive offices are located at 33161 - 2nd Avenue,
Mission, B.C., Canada and the Company leases this space at a cost of $510 per
month. The lease on this space expires in November 2000. The Company's operating
facility is located at 33163 - 2nd Avenue, Mission, B.C., Canada and consists of
1,850 square feet which are leased at a rate of $1,365 per month pursuant to a
lease which expires November 30, 2000. The Company's new facility as of December
1, 2000 will be located at Suite 1A , 20145 Stewart Crescent, Maple Ridge, B.C.,
Canada. The Company is leasing this 5,800 square feet of operations and
executive offices for a period of three years at a rate of $2,300 per month.
This space is considered to be suitable for the Company's current needs.
ITEM 3. LEGAL PROCEEDINGS.
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The Company is not engaged in any litigation, and the officers and
directors presently know of no threatened or pending litigation in which it is
contemplated that the Company will be made a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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Not Applicable
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
As of November 10, 2000, there were approximately 51 record owners of the
Company's common stock. The Company's common stock is traded on the National
Association of Securities Dealers OTC Bulletin Board under the symbol "MKTU".
Set forth below are the range of high and low bid quotations for the periods
indicated as reported by the NASD. The market quotations reflect interdealer
prices, without retail mark-up, mark-down or commissions and may not necessarily
represent actual transactions. The Company's common stock began trading on May
5, 1998.
<PAGE>
Quarter Ending High Low
07/31/98 $1.31 $1.06
10/31/98 $1.19 $0.75
01/31/99 $0.90 $0.84
04/30/99 $1.12 $1.12
07/31/99 $0.34 $0.34
10/30/99 $0.15 $0.15
01/31/00 $1.25 $0.59
04/30/00 $1.13 $1.00
07/31/00 $0.38 $0.38
The average bid to ask price of the Company's stock on November 10, 2000
was $0.281.
Holders of common stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available and, in the
event of liquidation, to share pro rata in any distribution of the Company's
assets after payment of liabilities. The Board of Directors is not obligated to
declare a dividend. The Company has not paid any dividends on its common stock
and the Company does not have any current plans to pay any common stock
dividends.
The provisions in the Company's Articles of Incorporation relating to the
Company's unissued preferred stock would allow the Company's directors to issue
preferred stock with rights to multiple votes per share and dividends rights
which would have priority over any dividends paid with respect to the Company's
common stock. The issuance of preferred stock with such rights may make more
difficult the removal of management even if such removal would be considered
beneficial to shareholders generally, and will have the effect of limiting
shareholder participation in certain transactions such as mergers or tender
offers if such transactions are not favored by incumbent management.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
On April 28, 2000, the Company acquired all of the issued and outstanding
shares of Home Finders Realty Ltd. and Most Referred Real Estate Agents Inc.
(collectively referred to as "Home Finders Realty"). The Company completed this
transaction by issuing 4,500,000 voting Series A Preferred shares, and by a
wholly owned subsidiary issuing 4,500,000 preferred shares, to the shareholders
of Home Finders Realty. Upon completion of this transaction the former
shareholders of Home Finders Realty held approximately 47.4% of the voting
shares of the Company. The Home Finders Realty shareholders also had options to
acquire from existing Company shareholders approximately 11% of the existing
common shares. Collectively, the former shareholders of Home Finders Realty
controlled approximately 58.4% of the voting shares of the Company.
<PAGE>
The steps utilized to complete this transaction were as follows:
(i) The Company incorporated 604587 British Columbia Ltd. ("604587") to
facilitate the transaction. 604587's sole purpose was to facilitate the
transaction and has no operations. The Company owns 100% of the voting
common shares of 604587.
(ii) 604587 issued 4,500,000 non-voting preferred shares to the former
shareholders of Home Finders Realty in exchange for all of the issued and
outstanding common shares of Home Finders Realty.
(iii) The Company issued 4,500,000 voting Series A preferred shares to the
former shareholders of Home Finders Realty.
(iv) The preferred shareholders of 604587 can cause, at their option, the
Company to convert one preferred share in 604587 and one Series A
preferred share of the Company into one common share of the Company. This
is summarized in aggregate as follows:
(v)
Series A Preferred Preferred Shares Shares of the Company's Common
Shares of the Company of 604587 Stock Issuable Upon Exchange
--------------------- ---------------- ------------------------------
4,500,000 4,500,000 4,500,000
========= ========= =========
This business combination has been accounted for as a recapitalization of
Home Finders Realty for consideration equal to the net monetary assets of the
Company.
Prior to the acquisition of Home Finders Realty, the Company had conducted
only limited operations, had assets of approximately $149,000 and approximately
$66,000 in liabilities. The business of the Company is now that which was being
conducted by Home Finders Realty. For financial reporting purposes the
acquisition of Home Finders Realty was treated as a recapitalization. See Note
2(a) to the July 31, 2000 financial statements. As such, Home Finders Realty's
historical financial statements are now reported as the Company's comparative
financial statements. The results of operations prior to April 28, 2000 are
limited to the operating results of Home Finders Realty. The results of
operations subsequent to April 27, 2000 are the consolidated operating results
of the Company and Home Finders Realty.
The financial data presented below should be read in conjunction with the
more detailed financial statements and related notes which are included
elsewhere in this report.
July 31, 2000
Current Assets $49,710
Total Assets 182,608
Current liabilities 232,632
Total liabilities 310,907
Working Capital (Deficit) (182,922)
Stockholders' (Deficit) (124,299)
<PAGE>
Year Ended Seven Months Ended
December 31, 1999 July 31, 2000
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Revenues $572,855 $379,344
Cost of sales 227,846 133,733
General and administrative
expenses 320,694 305,856
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Net Income (Loss) 24,315 (60,245)
Seven Months Ending July 31, 2000
Revenues for the seven-month period ending July 31, 2000, were $379,344 which
approximates $650,000 on an annualized basis. This is an increase of
approximately 13.5% over year ended December 31, 1999, due primarily to
increased referral revenues which is ahead of management expectations.
Gross margin of $245,611 (annualized - $421,000) continues to increase as costs
of providing the services are reduced. Direct operating costs are expected to be
reduced further in future years.
General and administrative expenses have increased to $524,000 on an annualized
basis. This represents an increase of 63.5% over the year ended December 31,
1999. Primary reasons for the increase in general and administrative costs are
related to an increase in information technology expenditures, professional fees
related to the recapitalization and other transactions and an increase in
remuneration to senior management and directors.
Working capital deficiency at July 31, 2000 was $182,922 versus $194,382 at
December 31, 1999. Subsequent to the year end the Company received $470,000 in
private placement funds which eliminated the working capital deficiency (see
Changes in Management and Share Ownership in Item 9).
Year Ending December 31, 1999
Revenues for the year ended December 31, 1999 were $572,855, a 38.5% increase
over the year ended December 31, 1998. The increase is primarily due to a 418%
increase in referral fees from $30,785 in 1998 to $128,919 in 1999. During 1998,
the company focused on establishing it's initial membership base. Referrals to
the baseline membership in 1999 increased significantly resulting in the
increase in referral revenues in 1999. 1999 membership fees also increased 9% as
the company continued to expand it's membership program.
Direct costs decreased in 1999 by approximately 23% as the costs associated with
the development of the initial membership list declined and referral revenue
increased. Costs needed to generate memberships are much higher than those
associated with referral fees.
1999 realized net income of $24,315 which was the first profit earned by the
Company since inception.
<PAGE>
Liquidity and Sources of Capital
During the seven months ended July 31, 2000 the Company's operations
provided $78,002 in cash and the Company spent approximately $41,829 on the
purchase of property and equipment. The Company also repaid net $30,542 in
obligations under promissory notes. As indicated above, subsequent to July 31,
2000, the Company issued 3,204,787 common shares for cash consideration of
approximately $470,000.
Notwithstanding this issuance, additional capital will be needed to expand
the Company's operations. The Company expects to obtain additional capital
through the private sale of the Company's securities or from borrowings from
private lenders and/or financial institutions. There can be no assurance that
the Company will be successful in obtaining any additional capital which may be
needed.
During the twelve months ending July 31, 2001, the Company's anticipated
net cash flow needs are as follows:
General and administrative expenses $192,000
Marketing expenses 2,000,000
Software development 50,000
Debt and liability reduction 258,000
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$2,500,000
ITEM 7. FINANCIAL STATEMENTS
See the financial statements attached to this report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
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Effective October 19, 2000 the Company retained KPMG LLP ("KPMG") to act
as its auditors. In this regard KPMG replaced Morgan & Company which audited the
Company's financial statements for the fiscal years ended July 31, 1999 and
1998. The reports of Morgan & Company for these fiscal years did not contain an
adverse opinion, or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles. During the Company's two
most recent fiscal years and subsequent interim periods, there were no
disagreements with Morgan & Company on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedures, which
disagreements, if not resolved to the satisfaction of Morgan & Company would
have caused Morgan & Company to make reference to such disagreements in its
reports.
The Company has authorized Morgan & Company to discuss any matter relating
to the Company's operations with KPMG.
The change in auditors was recommended and approved by the Company's board
of directors. The Company does not have an audit committee.
<PAGE>
During the two most recent fiscal years and subsequent interim period
ending July 31, 2000 the Company did not consult with KPMG regarding the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements, or any matter that was the subject of a
disagreement or what is defined as a reportable event by the Securities and
Exchange Commission.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The Company's officers and directors are as follows:
Name Age Position
Kenneth Galpin 41 President and a Director
William Coughlin 47 Product Development Officer and a Director
Scott Munro 32 Treasurer and Principal Financial Officer
George Shahnazarian 43 Secretary
Each director holds office until his successor is duly elected by the
stockholders. Executive officers serve at the pleasure of the Board of
Directors.
The following sets forth certain information concerning the past and
present principal occupations of the Company's officers and directors.
Kenneth Galpin has been the Company's President and a director since
September 2000. Prior to his association with the Company Mr. Galpin was
president of Beacom Online Systems Inc. from February 1998 to present. Mr.
Galpin was also vice president of MacDonald Capital from March 1995 to December
1996.
William Coughlin was the Company's President between April 28, 2000 and
September 2000. Mr. Coughlin has been an director of the Company since April 28,
2000. Mr. Coughlin has been the Company's Product Development Officer since
September 2000. Mr. Coughlin has been the President of Home Finders Realty since
October 1998. Between 1982 and 1998 Mr. Coughlin was a realtor with Re/Max
Little Oak Realty Ltd. in Abbotsford, British Columbia.
Scott Munro has been an officer of the Company since April 28, 2000. Prior
to joining the Company Mr. Munro was controller for Home Finders Realty Ltd. Mr.
Munro was general manager of a coating company from January of 1998 to January
1999. He also managed a fitness chain from October 1995 to March 1997. Prior to
this Mr. Munro was controller for a national helicopter company from April 1992
to September 1995.
George Shahnazarian has been the Company's Secretary since September 2000.
Prior to his association with the Company, Mr. Shahnazarian was C.F.O. and part
owner of M.G.A. Connectors in Maple Ridge, B.C. from 1985 to present.
<PAGE>
Changes in Management and Share Ownership
Christine Cerisse was appointed as the President and a director of the
Company in December 1999. On April 28, 2000, and following the acquisition of
Home Finders Realty:
o Ms. Cerisse resigned as the Company's president but remained a director of
the Company.
o William Coughlin was appointed the Company's President and as a Director.
o Scott Munro was appointed the Company's Principal Financial Officer.
o Robert Dent and James Sanford were appointed Directors of the Company.
In September 2000:
o William Coughlin resigned as President and was appointed the Company's
Product Development Officer.
o Kenneth Galpin was appointed the Company's President and as a director.
o George Shahnazarin was appointed the Secretary of the Company.
o Christine Cerisse, Robert Dent and James Sanford resigned as directors of
the Company.
On September 21, 2000, Khachik Toomian acquired 2,000,000 shares of the
Company's common stock from Christine Cerisse for $150,000 in cash.
On September 21, 2000, 612559 B.C. Ltd. (see Item 11 - Security Ownership
Of Certain Beneficial Owners And Management) acquired 250,000 shares of the
Company's common stock from Christine Cerisse for $50,000. 612559 B.C. Ltd.
agreed to purchase 500,000 additional shares of the Company's common stock owned
by Ms. Cerisse for $150,000 on or before April 21, 2001. As part of its
agreement with Ms. Cerisse, 612559 B.C. Ltd. has the right to vote these 500,000
shares and is deemed to be the beneficial owners of these shares.
Also on September 21, 2000, 612559 B.C. Ltd. acquired the voting rights to
3,500,000 shares of the Company's Series A Preferred stock which are owned by
William and Carole Coughlin. Each Series A Preferred share is entitled to one
vote. 612559 B.C. Ltd. also acquired from Mr. and Mrs. Coughlin an option to
acquire the 3,500,000 Series A Preferred shares (as well as 3,500,000 preferred
shares of a wholly owned subsidiary of the Company) at a price that ranges from
$0.65 to $0.85 per share. The option expires on April 30, 2002. Kenneth Galpin,
George Shahnazarian and Ken Landis are the sole directors and officers of 612559
B.C. Ltd.
On October 19, 2000, Mr. Toomian and 612559 B.C. Ltd. purchased 2,000,000
and 1,133,787 units respectively of the Company for $0.15 per unit, for net
proceeds to the Company of approximately $470,000. Each unit consists of one
share of the Company's common stock and one-half warrant. Every two-1/2 warrants
will entitle the holder to purchase one additional share of the Company's common
stock at a price of $0.25 per unit if exercised during the first twelve months
following the sale of the units and $0.30 per unit during the succeeding twelve
months.
<PAGE>
Ken Galpin and George Shahnazarian are both directors and officers of
612559 B.C. Ltd. Mr. Galpin and Mr. Shahnazarian are also a director and
officers of the Company, and Mr. Toomian is a business associate of Mr.
Shahnazarian. Mr. Toomian, together with Mr. Shahnazarian and Mr. Galpin, on
behalf of 612559 have an understanding (but not a written agreement) that they
will vote, at shareholders meetings, for the same directors of MarketU and any
matters proposed at the shareholders meetings, to accomplish the same business
ends.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth in summary form the compensation received
by (i) the Chief Executive Officer of the Company and (ii) by each other
executive officer of the Company who received in excess of $100,000 during the
fiscal years ending July 31, 1999 and July 31, 2000. Amounts in the table
include compensation received from Home Finders Realty, which was acquired by
the Company in April 2000.
Other Re-
Annual stricted
Compen- Stock Options
Name and Fiscal Salary Bonus sation Awards Granted
Principal Position Year (1) (2) (3) (4) (5)
------------------ ------ ------ ----- ------ ------- -------
William Coughlin, 2000 $36,700 $0 $0 0 0
Chief Executive Officer 1999 $28,700 $0 $13,300 0 0
prior to September 21,
2000
(1) The dollar value of base salary (cash and non-cash) received.
(2) The dollar value of bonus (cash and non-cash) received.
(3) Any other annual compensation not properly categorized as salary or bonus,
including perquisites and other personal benefits, securities or property.
Amounts in the table represent dividends paid by Home Finders Realty to Mr.
Coughlin.
(4) During the year ending July 31, 2000, the value of the shares of the
Company's common stock issued as compensation for services.
(5) The shares of Common Stock to be received upon the exercise of all stock
options granted during the fiscal years shown in the table.
The following shows the amounts which the Company expects to pay its
officers during the year ending July 31, 2001 and the time which the Company's
executive officers plan to devote to the Company's business. The Company has an
employment agreement with Scott Munro which is up for renewal on June 1, 2001,
and an employment agreement with William Coughlin which is up for renewal on
September 17, 2001. The Company does not have employment agreements with any
other of its officers. The Company's officer Ken Galpin is compensated through
management fees paid to 612559 B.C. Ltd.
<PAGE>
Proposed Time to be Devoted
Name Compensation To Company's Business
Kenneth Galpin $4,000 per month 100%
William Coughlin $6,667 per month 100%
Scott Munro $2,667 per month 100%
George Shahnazarian $0 per month 25%
Options Granted During Fiscal Year Ending July 31, 2000
The following tables set forth information concerning the options granted,
during the twelve months ended July 31, 2000, to the Company's officers and
directors, and the value of all unexercised options (regardless of when granted)
held by these persons as of July 31, 2000. Robert Dent, James Sanford and
Christine Cerisse are former officers and/or directors of the Company. See Item
9 of this report for information concerning the changes in the Company's
management.
% of Total
Options
Granted
to Employees Exercise
Date Options Officers Price Per Expiration
Name of Grant Granted (#) & Directors Share Date
----------- -------- ----------- ----------- --------- -----------
Scott Munro 6/02/00 50,000 4.3% $0.43 8/01/03
Robert Dent 3/01/00 100,000(1) 8.5% $1.00 3/01/01
James Sanford 3/01/00 100,000(1) 8.5% $1.00 3/01/01
James Sanford 6/02/00 50,000(2) 4.3% $0.43 8/01/03
Christine
Cerisse 12/06/99 400,000(1) 34.1% $0.25 12/06/01
Christine
Cerisse 3/01/00 100,000 8.5% $1.00 3/01/01
(1) These options were cancelled effective September 21, 2000.
(2) 40,000 of these options were cancelled effective September 21, 2000.
Option Exercises and Option Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
July 31, 2000 July 31, 2000
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (1) Realized (2) Unexercisable (3) Unexercisable (4)
----------------------------- ------------ ----------------- -----------------
Scott Munro -- -- 50,000/-- --/--
Robert Dent -- -- 100,000/--(5) --/--
James Sanford -- -- 100,000/--(5) --/--
<PAGE>
James Sanford -- -- 50,000/--(6) --/--
Christine Cerisse -- -- 400,000/--(5) $48,000/--
Christine Cerisse -- -- 100,000/-- --/--
(1) The number of shares received upon exercise of any options.
(2) With respect to options exercised the dollar value of the difference
between the option exercise price and the market value of the option shares
purchased on the date of the exercise of the options.
(3) The total number of unexercised options held as of July 31, 2000, separated
between those options that were exercisable and those options that were not
exercisable.
(4) For all unexercised options held as of July 31, 2000, the excess of $0.37,
which was the market value of the stock underlying those options as of July
31, 2000, and the exercise price of the option
(5) These options were cancelled effective September 21, 2000.
(6) 40,000 of these options were cancelled effective September 21, 2000.
Long Term Incentive Plans - Awards in Last Fiscal Year
None.
Employee Pension, Profit Sharing or Other Retirement Plans
The Company does not have an active defined benefit, pension plan, profit
sharing or other retirement plan, although the Company may adopt one or more of
such plans in the future.
Compensation of Directors
Standard Arrangements. At present the Company does not pay its directors
for attending meetings of the Board of Directors, although the Company expects
to adopt a director compensation policy in the future. The Company has no
standard arrangement pursuant to which directors of the Company are compensated
for any services provided as a director or for committee participation or
special assignments.
Other Arrangements. Except as disclosed elsewhere in this report, no
director of the Company received any form of compensation from the Company
during the year ended July 31, 2000.
Stock Option and Bonus Plans
The Company's Incentive Stock Option Plan, Non-Qualified Stock Option Plan
and Stock Bonus Plan are collectively referred to in this report as the "Plans".
<PAGE>
Incentive Stock Option Plan.
---------------------------
The Incentive Stock Option Plan authorizes the issuance of options to
purchase shares of the Company's common stock. Only officers, directors and
employees of the Company may be granted options pursuant to the Incentive Stock
Option Plan.
In order to qualify for incentive stock option treatment under the
Internal Revenue Code, the following requirements must be complied with:
1. Options granted pursuant to the Plan must be exercised no later than:
(a) The expiration of thirty (30) days after the date on which an
option holder's employment by the Company is terminated.
(b) The expiration of one year after the date on which an option
holder's employment by the Company is terminated, if such
termination is due to the Employee's disability or death.
2. In the event of an option holder's death while in the employ of the
Company, his legatees or distributees may exercise (prior to the option's
expiration) the option as to any of the shares not previously exercised.
3. The total fair market value of the shares of common stock (determined
at the time of the grant of the option) for which any employee may be granted
options which are first exercisable in any calendar year may not exceed
$100,000.
4. Options may not be exercised until one year following the date of
grant. Options granted to an employee then owning more than 10% of the common
stock of the Company may not be exercisable after five years from the date of
grant.
5. The purchase price per share of common stock purchasable under an
option is determined by the Company's Board of Directors but cannot be less than
the fair market value of the Common Stock on the date of the grant of the option
(or 110% of the fair market value in the case of a person owning the Company's
stock which represents more than 10% of the total combined voting power of all
classes of stock).
Non-Qualified Stock Option Plan.
-------------------------------
The Non-Qualified Stock Option Plan authorizes the issuance of options to
purchase shares of the Company's common stock to the Company's employees,
directors, officers, consultants and advisors, provided however that bona fide
services must be rendered by consultants or advisors and such services must not
be in connection with the offer or sale of securities in a capital-raising
transaction. The option exercise price and expiration date are determined by the
Company's Board of Directors.
<PAGE>
Stock Bonus Plan.
----------------
The Company's Stock Bonus Plan authorizes the issuance of shares of common
stock to the Company's employees, directors, officers, consultants and advisors
provided, however, that bona fide services must be rendered by consultants or
advisors and such services must not be in connection with the offer or sale of
securities in a capital-raising transaction.
Other Information Regarding the Plans.
-------------------------------------
The Plans are administered by the Company's Board of Directors. The Board
of Directors has the authority to interpret the provisions of the Plans and
supervise the administration of the Plans. In addition, the Board of Directors
is empowered to select those persons to whom shares or options are to be
granted, to determine the number of shares subject to each grant of a stock
bonus or an option and to determine when, and upon what conditions, shares or
options granted under the Plans will vest or otherwise be subject to forfeiture
and cancellation.
In the discretion of the Board of Directors, any option granted pursuant
to the Plans may include installment exercise terms such that the option becomes
fully exercisable in a series of cumulating portions. The Board of Directors may
also accelerate the date upon which any option (or any part of any options) is
first exercisable. Any shares issued pursuant to the Stock Bonus Plan and any
options granted pursuant to the Incentive Stock Option Plan or the Non-Qualified
Stock Option Plan will be forfeited if the "vesting" schedule established by the
Board of Directors at the time of the grant is not met. For this purpose,
vesting means the period during which the employee must remain an employee of
the Company or the period of time a non-employee must provide services to the
Company. At the time an employee ceases working for the Company (or at the time
a non-employee ceases to perform services for the Company), any shares or
options not fully vested will be forfeited and cancelled. In the discretion of
the Board of Directors payment for the shares of Common Stock underlying options
may be paid through the delivery of shares of the Company's Common Stock having
an aggregate fair market value equal to the option price, provided such shares
have been owned by the option holder for at least one year prior to such
exercise. A combination of cash and shares of Common Stock may also be permitted
at the discretion of the Board of Directors.
Options are generally non-transferable except upon the death of the option
holder. Shares issued pursuant to the Stock Bonus Plan will generally not be
transferable until the person receiving the shares satisfies the vesting
requirements imposed by the Board of Directors when the shares were issued.
The Board of Directors of the Company may at any time, and from time to
time, amend, terminate, or suspend one or more of the Plans in any manner it
deems appropriate, provided that such amendment, termination or suspension
cannot adversely affect rights or obligations with respect to shares or options
previously granted.
The Plans are not qualified under Section 401(a) of the Internal Revenue
Code, nor are they subject to any provisions of the Employee Retirement Income
Security Act of 1974.
<PAGE>
Summary. The following sets forth certain information as of November 10, 2000
concerning the stock options and stock bonuses granted by the Company pursuant
to the Plans, and options granted outside of the Plans. Each option represents
the right to purchase one share of the Company's common stock.
Total Shares Remaining
Shares Reserved for Shares Options/
Reserved Outstanding Issued As Shares
Type of Option Under Plans Options Stock Bonus Under
-------------- ----------- ----------- ----------- --------
Plans
-----
Incentive Stock Option Plan 500,000 50,000 N/A 450,000
Non-Qualified Stock Option
Plan 1,500,000 347,000 N/A 763,000
Stock Bonus Plan 500,000 N/A 71,000 429,000
Options outside of plans N/A 230,000 N/A N/A
In August 2000, Scott Munro and James Sanford were issued 15,000 and
56,000 shares, respectively, of common stock from the Company's Stock Bonus Plan
for services rendered.
The following tables lists all options and warrants granted by the Company
as of November 10, 2000, including those that were not granted pursuant to the
Company's Incentive or Non-Qualified Stock Option Plans.
Shares Issuable Upon Option Expiration Date
Name Exercise of Options Exercise Price of Option
---- -------------------- -------------- ---------------
Scott Munro 50,000 $0.43 08/01/03
Christine Cerisse * 100,000 $1.00 03/01/01
James Sanford * 10,000 $0.43 08/01/03
Company employees, former
employees and consultants 337,000 $0.43 08/01/03
Other option holders 130,000 $0.43 08/01/03
Warrantholders 2,134,060 $0.25 to $1.50 2/10/01 to 10/18/02
---------
2,761,060
* Former officer and/or director. See Item 9 of this report for information
concerning changes in the Company's management.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
-------------------------------------------------------------------------
The following table sets forth, as of November 10, 2000 information with
respect to the only persons owning beneficially 5% or more of the Company's
common stock and the number and percentage of outstanding shares owned by each
director and officer and by the Company's officers and directors as a group.
Unless otherwise indicated, each owner has sole voting and investment power over
his or her shares of common stock.
Percentage
Name and Address Shaers Owned Ownership (3)
---------------- ------------- -------------
Kenneth Galpin (1)
33163-2nd Avenue
Mission, British Columbia
Canada
William Coughlin 500,000 (1) (2) 3.9%
33163-2nd Avenue
Mission, British Columbia
Canada
Carole Coughlin 500,000 (1) (2) 3.9%
11202 Stave Lake Road
Mission, British Columbia
Canada
Scott Munro 15,000 0.1%
33163-2nd Avenue
Mission, British Columbia
Canada
George Shahnazarian (1)
33163-2nd Avenue
Mission, British Columbia
Canada
Christine Cerisse 0 (1) --
#1111-1367 Alberni St.
Vancouver, British Columbia
Canada
Khachik Toomian 4,000,000 31.4%
902 Glendale Avenue
Glendale, CA 91205
<PAGE>
612559 B.C. Ltd. 5,383,787 (1) 42.2%
11476 Kingston Street
Maple Ridge, British Columbia
Canada V2X 0Y5
All officers and directors
as group (4 persons) 6,398,787 50.2%
(1) On September 21, 2000, 612559 B.C. Ltd. acquired 250,000 shares of the
Company's common stock from Christine Cerisse for $50,000. 612559 B.C. Ltd.
agreed to purchase 500,000 additional shares of the Company's common stock
owned by Ms. Cerisse for $150,000 on or before April 21, 2001. As part of
its agreement with Ms. Cerisse, 612559 B.C. Ltd. has the right to vote
these 500,000 shares.
Also on September 21, 2000, 612559 B.C. Ltd. acquired the voting rights to
3,500,000 shares of the Company's Series A Preferred stock which are owned
by William and Carole Coughlin. Each Series A Preferred share is entitled
to one vote. 612559 B.C. Ltd. also acquired from Mr. and Mrs. Coughlin an
option to acquire the 3,500,000 Series A Preferred shares (as well as
3,500,000 preferred shares of a wholly owned subsidiary of the Company) at
a price that ranges from $0.65 to $0.85 per share. The option expires on
April 30, 2002. Kenneth Galpin, George Shahnazarian and Ken Landis are the
sole directors and officers of 612559 B.C. Ltd.
The share ownership in the table for 612559 B.C. Ltd. assumes the 3,500,000
preferred shares of the Company and the Company's subsidiary which may be
acquired from William and Carole Coughlin are exchanged for 3,500,000
shares of the Company's common stock.
(2)Represents shares of Company's common stock issuable upon exchange of 500,000
Series A Preferred shares held by this shareholder. William Coughlin may be
considered the beneficial owner of the shares owned by Carole Coughlin.
(3) Assumes that the 4,500,000 shares of Series A Preferred stock have been
exchanged into 4,500,000 shares of common stock but before giving effect
to the issuance of 2,761,060 shares of common stock underlying the
exercise of outstanding warrants and options.
The number of the Company's outstanding shares and the shares held by the
Company's officers, directors and those persons owning more than 5% of the
Company's common stock do not reflect shares issuable upon the exercise of
options granted, and warrants issued, by the Company to the following persons:
Shares Issuable Upon Option/Warrant Expiration Date
Name Exercise of Option/Warrant Exercise Price of Option/Warrant
Kenneth Galpin -- -- --
Scott Munro 50,000 $0.43 08/01/03
George Shahnazarian -- -- --
<PAGE>
Shares Issuable Upon Option/Warrant Expiration Date
Name Exercise of Option/Warrant Exercise Price of Option/Warrant
Khachik Toomian 1,000,000 $0.25/year 1 10/18/02
$0.30/year 2
612559 B.C. Ltd. 566,893 $0.25/year 1 10/18/02
$0.30/year 2
The percentage ownership for each shareholder in the foregoing table has
been computed without including any shares issuable upon the exercise of any
options.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On April 28, 2000 the Company acquired all of the issued and outstanding
shares of Home Finders Realty Ltd and Most Referred Real Estate Agents, Inc.
(collectively doing business as Home Finders Realty) in exchange for (i)
4,500,000 shares of the Company's Series A Preferred stock and (ii) 4,500,000
preferred shares in a wholly owned subsidiary of the Company which was formed
for the sole purpose of facilitating the acquisition of Home Finders Realty.
The preferred shares of the Company and the Company's subsidiary may be
exchanged for 4,500,000 shares of the Company's common stock, at the holder's
option. Each share of the Company's Series A Preferred stock is entitled to one
vote on all matters submitted to a vote of the Company's shareholders. The
Series A Preferred shares are not entitled to any dividends or any distributions
upon the liquidation of the Company.
The following table shows the shares of the Company's common stock which
Mr. Coughlin and Ms. Coughlin are entitled to receive upon conversion of the
preferred shares.
Shares of Company's
Series A Preferred Shares Common Stock Issuable
Preferred Shares of Subsidiary Upon Exchange
William Coughlin 2,250,000 2,250,000 2,250,000
Carole Coughlin 2,250,000 2,250,000 2,250,000
On September 21, 2000, Khachik Toomian acquired 2,000,000 shares of the
Company's common stock from Christine Cerisse, a former officer and director of
the Company, for $153,000 in cash.
On September 21, 2000, 612559 B.C. Ltd. acquired 250,000 shares of the
Company's common stock from Christine Cerisse for $50,000. 612559 B.C. Ltd.
agreed to purchase 500,000 additional shares of the Company's common stock owned
by Ms. Cerisse for $150,000 on or before April 21, 2001. As part of its
agreement with Ms. Cerisse, 612559 B.C. Ltd. has the right to vote these 500,000
shares.
<PAGE>
Also on September 21, 2000, 612559 B.C. Ltd. acquired the voting rights to
3,500,000 shares of the Company's Series A Preferred stock which are owned by
William and Carole Coughlin. Each Series A Preferred share is entitled to one
vote. 612559 B.C. Ltd. also acquired from Mr. and Mrs. Coughlin an option to
acquire the 3,500,000 Series A Preferred shares (as well as 3,500,000 preferred
shares of a wholly owned subsidiary of the Company) at a price that ranges from
$0.65 to $0.85 per share. The option expires on April 30, 2002. Kenneth Galpin,
George Shahnazarian and Ken Landis are the sole directors and officers of 612559
B.C. Ltd.
On October 19, 2000, Mr. Toomian and 612559 B.C. Ltd. acquired 2,000,000
and 1,133,787 units respectively of the Company for $0.15 per unit. Each unit
consists of one share of the Company's common stock and one-half warrant. Every
two-1/2 warrants will entitle the holder to purchase one additional share of the
Company's common stock at a price of $0.25 per unit if exercised during the
first twelve months following the sale of the units and $0.30 per unit during
the succeeding twelve months.
Ken Galpin and George Shahnazarian are both directors and officers of
612559 B.C. Ltd. Mr. Galpin and Mr. Shahnazarian are also a director and
officers of the Company, and Mr. Toomian is a business associate of Mr.
Shahnazarian. Mr. Toomian, together with Mr. Shahnazarian and Mr. Galpin, on
behalf of 612559 have an understanding (but not a written agreement) that they
will vote, at shareholders meetings, for the same directors of MarketU and any
matters proposed at the shareholders meetings, to accomplish the same business
ends.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit
Number Exhibit Name Page Number
------ ------------ -----------
3.1 Articles of Incorporation and Bylaws *
3.2 Amendment to Articles of Incorporation _____
4 Instruments Defining the Rights of Security
Holders See Exhibit No. 3.1
9 Voting Trust Agreement None
10 Material Contracts None
11 Statement re: Computation of Per Share Earnings None
21 Subsidiaries ____
24 Power of Attorney None
27 Financial Data Schedules _____
<PAGE>
Exhibit
Number Exhibit Name Page Number
------ ------------ -----------
99 Additional Exhibits None
* Incorporated by reference to Exhibit 3 to the Company's Registration
Statement on Form 10-SB
During the quarter ending July 31, 2000 the Company filed the following
reports on Form 8-K.
o 8-K report filed on May 12, 2000 which disclosed the acquisition Home
Finders Realty Ltd. and Most Referred Real Estate Agents Inc.
o Amended 8-K report filed on August 10, 2000 which contained the audited
financial statements of Home Finders Realty Ltd. and Most Referred Real
Estate Agents Inc.
o 8-K report filed on October 27, 2000 which disclosed the change of the
Company's auditors.
<PAGE>
Consolidated Financial Statements of
MarketU Inc.
(Formerly North American Resort and Golf, Inc.)
(Expressed in U.S. Dollars)
Year ended July 31, 2000
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
MarketU Inc.
We have audited the consolidated balance sheets of MarketU Inc. (formerly North
American Resort and Golf, Inc.) as of July 31, 2000 and December 31, 1999, and
the related consolidated statements of operations, stockholders' deficiency and
comprehensive income (loss) and cash flows for the seven months ended July 31,
2000, and the years ended December 31, 1999 and 1998. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 audits provide a
reasonable basis for our opinion.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of MarketU Inc. as at July 31, 2000
and December 31, 1999 and the results of its operations and its cash flows for
the seven months ended July 31, 2000, and the years ended December 31, 1999 and
1998 in conformity with accounting principles generally accepted in the United
States of America.
KPMG LLP
Chartered Accountants
Abbotsford, Canada
November 14, 2000
<PAGE>
MarketU Inc.
(Formerly North American Resort and Golf, Inc.)
Consolidated Balance Sheets
(Expressed in U.S. Dollars)
July 31, 2000 and December 31, 1999
July 31, December 31,
2000 1999
-------- -----------
Assets
Current assets:
Cash $ 3,034 $ 9,631
Accounts receivable 6,821 1,846
Prepaid expenses 29,045 36,600
Security deposit 10,810 3,671
------ --------
49,710 51,748
Due from shareholder (Note 3) 69,241 --
Deferred recapitalization costs
(Note 4) -- 55,429
Fixed assets (Note 5) 30,094 34,698
Web site development (Note 6) 33,563 13,220
----------- -------------
$ 182,608 $ 155,095
========== ============
Liabilities and Stockholders' Deficiency
Current liabilities:
Accounts payable and accrued
liabilities $ 95,143 $ 61,734
Unearned revenue 137,489 176,000
Due to shareholder -- 8,396
------------- ---------
232,632 246,130
Promissory notes payable (Note 7) 24,887 55,429
Payable to related party (Note 8) 49,388 51,171
Stockholders' deficiency (Note 11):
Common stock 404 339
Additional paid in capital 48,685 -
Series A preferred stock 83,468 -
Deficit (261,725) (201,480)
Accumulative other comprehensive
income:
Cumulative exchange adjustment 4,869 3,506
---------- ----------
(124,299) (197,635)
Subsequent events (Note 13)
$ 182,608 $ 155,095
See accompanying notes to consolidated financial statements.
<PAGE>
MarketU Inc.
(Formerly North American Resort and Golf, Inc.)
Consolidated Statements of Operations
(Expressed in U.S. Dollars)
-----------------------------------------------------------------------------
Seven months Year Year
ended ended ended
July 31 December 31 December 31
2000 1999 1998
-----------------------------------------------------------------------------
Revenue:
Referral fees and membership dues $375,320 $ 572,654 $413,647
Miscellaneous revenue 4,024 201 -
--------------------------------------------------------------------------
379,344 572,855 413,647
Direct costs:
Commission 49,833 93,768 62,796
Courier 1,293 3,355 5,912
Credit card 5,597 8,499 8,213
Office and miscellaneous - 151 7,693
Telephone 19,563 37,763 73,987
Wages and benefits 28,905 52,561 128,354
Web site maintenance and
development 28,542 31,749 8,780
-----------------------------------------------------------------------------
133,733 227,846 295,735
-----------------------------------------------------------------------------
Gross margin 245,611 345,009 117,912
General and administrative expenses:
Advertising and promotion 8,354 12,842 19,580
Amortization 5,784 20,880 2,434
Automobile 2,061 3,089 1,419
Bank charges and interest 3,817 4,725 2,799
Computer services 12,152 9,142 5,984
Insurance and licensing 1,649 2,730 706
Investor relations and
marketing 21,723 28,943 -
Membership and dues 139 4,738 2,157
Office rent 13,515 16,499 4,873
Office supplies 5,171 12,027 16,712
Professional fees 38,073 17,835 1,005
Maintenance and utilities 3,054 7,985 5,897
Management fees 38,863 - 31,773
Stock transfer and filings 615 - -
Telephone 1,730 4,156 1,192
Travel 2,972 8,174 5,337
Wages and benefits 146,184 166,929 116,834
-----------------------------------------------------------------------------
305,856 320,694 218,702
-----------------------------------------------------------------------------
Net income (loss) for the period $ (60,245) $ 24,315 $ (100,790)
-----------------------------------------------------------------------------
Net income (loss) per common share:
- basic $ (0.01) $ 0.01 $ (0.04)
- diluted $ (0.01) $ 0.01 $ (0.04)
Weighted average common shares
outstanding, basic and diluted
(Note 2(g)) 4,856,062 2,714,795 2,695,068
-----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
<PAGE>
MarketU Inc.
(Formerly North American Resort and Golf, Inc.)
Consolidated Statements of Stockholders' Deficiency and Comprehensive Income
(Loss)
(Expressed in U.S. Dollars)
Seven months ended July 31, 2000 and years ended December 31, 1999 and December
31, 1998
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulated
Additional Series A other compre-
Common Stock paid-in Preferred Stock hensive Accumulated
Shares Amount capital Shares Amount income (loss) deficit Total
-----------------------------------------------------------------------------------------------------------
Balance, December 31, 100 $70 $ - - $ - $1,926 $(111,148) $(109,152)
1997
Issuance of common
stock for cash 200 133 - - - - - 133
Comprehensive loss:
Translation adjustment - - - - - (57) - (57)
Loss for the period - - - - - - (100,790) (100,790)
------------------------------------------------------------------------------------------------------------
(100,847)
------------------------------------------------------------------------------------------------------------
Balance, December 31, 300 203 - - - 1,869 (211,938) (209,866)
1998
Issuance of common
stock for cash 200 136 - - - - - 136
Dividends paid by
Home Finders Realty
prior to
recapitalization - - - - - - (13,857) (13,857)
Comprehensive income:
Translation adjustment - - - - - 1,637 - 1,637
Income for the period - - - - - - 24,315 24,315
-------------------------------------------------------------------------------------------------------
25,952
-----------------------------------------------------------------------------------------------------------
Balance, December 31, 500 339 - - - 3,506 (201,480) (197,635)
1999
Shares deemed to be
issued on
recapitalization
transaction (Note
2(a)) 4,988,867 - - 4,500,000 83,468 - - 83,468
Common stock issued
for cash, May 5, 2000
at $0.75 per share,
net of issuance costs
of $ nil 65,000 65 48,685 - - - - 48,750
Comprehensive loss:
Translation - - - - - 1,363 - 1,363
adjustment
Loss for the - - - - - - (60,245) (60,245)
period
-------------------------------------------------------------------------------------------------------
- - - - - 1,363 (60,245) (58,882)
-------------------------------------------------------------------------------------------------------
Balance, July 31,
2000 5,054,367 $ 404 $48,685 4,500,000 $83,468 $ 4,869 $(261,725) $(124,299)
-----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
MarketU Inc.
(Formerly North American Resort and Golf, Inc.)
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
------------------------------------------------------------------------------
Seven Year Year
months ended ended
ended December 31 December 31
July 31 1999 1998
2000
------------------------------------------------------------------------------
Cash flows from operating activities:
Income (loss) for the period $(60,245) $24,315 $(100,790)
Items not involving cash:
Amortization 5,784 20,880 2,434
Deferred recapitalization costs 36,987 - -
Amortization of web site
development costs 19,264 15,502 2,283
Changes in operating asset
and liabilities:
Accounts receivable 36,795 (1,846) -
Prepaid expenses 7,555 10,288 (20,200)
Accounts payable and 70,761 23,830 10,451
accrued liabilities
Unearned revenue (38,899) (51,525) 103,061
-----------------------------------------------------------------------------
Net cash provided by (used
by) operating activities 78,002 41,444 (2,761)
Cash flows from investing activities:
Deferred recapitalization costs - (55,429) -
Purchase of fixed assets (1,180) (26,817) (9,547)
Web site development (39,607) (26,440) (4,565)
Cash acquired on
recapitalization 6,097 - -
Security deposits (7,139) (3,671) -
-------------------------------------------------------------------------------
Net cash used in investing activities (41,829) (112,357) (14,112)
Cash flows from financing activities:
Net proceeds from issuances
of and subscriptions for common stock 48,750 136 133
Advances from related party - 51,171 -
Repayment of advances to related party (1,783) - -
Advances from shareholder - - 27,367
Advances to shareholder (59,195) (38,856) -
Repayment of promissory notes (46,346) - -
Proceeds from promissory notes 15,804 55,249 -
----------------------------------------------------------------------------
Net cash provided by (used
in) financing activities (42,770) 67,700 27,500
-------------------------------------------------------------------------------
Increase (decrease) in cash (6,597) (3,213) 10,627
Cash, beginning of period 9,631 12,844 2,217
-------------------------------------------------------------------------------
Cash, end of period $ 3,034 $ 9,631 $ 12,844
-------------------------------------------------------------------------------
Supplementary disclosure:
Non-cash transactions:
Stock issued on
recapitalization, net of
cash acquired (Note 2(a)) $77,371 $ - $ -
Dividends credited to
shareholder loan by
subsidiary prior to the
reverse take over $ - $ 13,857 $ -
Interest paid $ 2,425 $ - $ -
Taxes paid $ - $ - $ -
-------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
<PAGE>
MarketU Inc.
(Formerly North American Resort and Golf, Inc.)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Seven months ended July 31, 2000 and year ended December 31, 1999
--------------------------------------------------------------------------------
1. General operations:
North American Resorts & Golf, Inc. ( "NARG") was incorporated under the laws
of the State of Nevada on June 4, 1997. On April 28, 2000, NARG acquired two
Canadian subsidiaries in a series of transactions that have been accounted
for as a recapitalization of the Canadian subsidiaries (Note 2(a)). For
purposes of these consolidated financial statements the reporting entity is
defined as the Company. On June 27, 2000 the Company changed its name to
MarketU Inc. Prior to the recapitalization, NARG was a development stage
company as it was devoting substantially all efforts to the identification
and development of new business opportunities.
Since the transactions on April 28, 2000, the Company's primary business
activity is to provide a service which allows real estate professionals and
the general public to find customer service oriented realtors in North
American cities through the Company's web sites AMRR.com and CMRR.com.
2. Significant accounting policies:
(a) Basis of presentation:
On April 28, 2000, NARG acquired all of the issued and outstanding shares
of Home Finders Realty Inc. and Most Referred Real Estate Agents Inc.
(collectively referred to as "Home Finders Realty"). Home Finders Realty
was incorporated in British Columbia, Canada on April 1, 1981. Most
Referred Real Estate Agents Inc. was incorporated under the Canada
Business Corporations Act on August 5, 1997. This transaction was
completed by issuing 4,500,000 voting Series A Preferred shares to the
shareholders of Home Finders Realty. Upon completion of this transaction
the former shareholders of Home Finders Realty held approximately 47.4% of
the voting shares of the Company. The Home Finders Realty shareholders
also had options to acquire from existing Company shareholders
approximately 11% of the existing common shares. Collectively the former
shareholders of Home Finders Realty directly and indirectly controlled
approximately 58.4% of the voting shares of the Company.
The steps utilized to complete this transaction were as follows:
(i) NARG incorporated 604587 British Columbia Ltd. ("604587"), as a
wholly-owned subsidiary, to facilitate the transaction. 604587's sole
purpose was to facilitate the transaction and has no operations.
(ii) 604587 issued 4,500,000 non-voting preferred shares and NARG issued
4,500,000 voting Series A preferred shares, to the former shareholders of
Home Finders Realty in exchange for all of the issued and outstanding
common shares of Home Finders Realty.
<PAGE>
2. Significant accounting policies (continued):
(a) Basis of presentation (continued):
The preferred shareholders of 604587 and the Company can cause, at
their option, the Company to convert one preferred share in 604587 and
one Series A preferred share of the Company into one common share of
the Company. This is summarized as follows:
Shares of
the
Company's
Series A Preferred shares common stock
preferred shares of 604587 issuable
upon exchange
4,500,000 4,500,000 4,500,000
========= ========= =========
This business combination has been accounted for as a recapitalization of
NARG by Home Finders Realty.
Application of recapitalization accounting results in the following:
(i)The consolidated financial statements are issued under the name of the
Company, but are considered a continuation of the combined financial
statements of Home Finders Realty. Accordingly, the comparative
financial information is based on Home Finders Realty's fiscal years
ended December 31, 1999 and 1998.
(ii) The stockholder's deficit is presented as a continuation of Home Finders
Realty.
(iii) The acquisition was accounted for as a recapitalization of Home
Finders Realty, effectively representing an issue of shares by Home
Finders Realty for the net monetary assets of NARG.
The net monetary assets acquired are as follows:
----------------------------------------------------------
Cash $ 6,097
Other working capital, net 77,371
----------------------------------------------------------
Value assigned to Series A preferred shares
issued $83,468
----------------------------------------------------------
Acquisition related costs of $36,987 were incurred on this
recapitalization and have been recorded in professional fees and other
expenses.
The historical financial statements reflect the financial position of
Home Finders Realty from the date of its incorporation, consolidated
with those of NARG from April 28, 2000. The assets and liabilities of
Home Finders Realty are recorded at their historical costs without
adjustment for the recapitalization transaction.
<PAGE>
2. Significant accounting policies (continued):
(a) Basis of presentation (continued):
The following is a continuity of the legal share capital of NARG up to
the date of recapitalization:
----------------------------------------------------------
Number of
shares
----------------------------------------------------------
Balance, December 31, 1997 4,523,200
Issued for cash on April 3, 1998 20,200
Issued for cash on exercise of options on 8,800
April 3, 1998
----------------------------------------------------------
Balance, December 31, 1998 4,552,200
Issued for cash on December 15, 1999 200,000
----------------------------------------------------------
Balance, December 31, 1999 4,752,200
Issued for cash on March 17, 2000 237,167
----------------------------------------------------------
Balance at April 28, 2000 4,989,367
Less: Home Finders Realty shares (500)
outstanding at April 28, 2000
----------------------------------------------------------
Shares deemed to be issued on 4,988,867
recapitalization
----------------------------------------------------------
(b) Consolidation:
The consolidated financial statements include the accounts of the Company
and all of its directly and indirectly owned subsidiaries as follows:
Most Referred Real Estate Agents Inc.
Home Finders Realty Ltd.
604587 British Columbia Ltd.
All significant intercompany balances and transactions have been
eliminated in the consolidated financial statements.
(c) Use of estimates:
The preparation of consolidated financial statements in accordance with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the recorded amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the
dates of the consolidated financial statements and reported revenues and
expenses for the reporting period. Actual results may significantly differ
from those estimates.
<PAGE>
2. Significant accounting policies (continued):
(d) Foreign currency translation:
The Company's reporting and functional currency is the U.S. dollar. The
operations of the Company's subsidiaries are located in Mission, Canada
and their functional currency is the Canadian dollar. The operations have
been translated into U.S. dollars using the current rate method whereby
the assets and liabilities are translated at the rates of exchange in
effect at the balance sheet date and revenue and expenses are translated
at the average rates of exchange during the year.
Adjustments from the translation of the subsidiaries financial information
are included in comprehensive income (loss) and as a separate component of
stockholders' deficiency.
(e) Fixed assets:
Fixed assets are recorded at cost. Amortization has been provided on the
declining balance basis using the following rates:
Office equipment 20%
Automotive equipment 30%
Computer hardware 30%
Computer software 100%
(f) Income taxes:
The Company follows the asset and liability method of accounting for
income taxes. Under this method, current taxes are recognized for the
estimated income taxes payable for the current period.
Deferred income taxes are provided based on the estimated future tax
effects of timing differences between financial statement carrying amounts
of assets and liabilities and their respective tax basis as well as the
benefit of losses available to be carried forward to future years for tax
purposes.
(f) Income taxes (continued):
Deferred tax assets and liabilities are measured using enacted tax rates
that are expected to apply to taxable income in the years in which those
timing differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized
in operations in the period that includes the substantive enactment date.
A valuation allowance is recorded for deferred tax assets when it is more
likely than not that such future tax assets will not be realized.
(g) Net loss per share:
Basic net loss per share is computed using the weighted average number of
common shares outstanding during the period. Diluted loss per share is
computed using the weighted average number of common and potentially
dilutive common stock outstanding during the period. As the Company has a
net loss in the seven month period ending July 31 and the year ended
December 31, 1998, basic and diluted net loss per share are the same. Net
loss per share for December 1999 and 1998 are calculated on the basis of
Home Finders Realty's effective weighted average number of diluted shares
of the Company calculated on an assumed post conversion basis.
<PAGE>
2. Significant accounting policies (continued):
(h) Web site development:
Web site development, including customizing database software, development
of HTML web page templates and installation of servers as well as
significant upgrades and enhancements, are capitalized. Amortization of
these costs is provided for over two years on a straight-line basis and is
recorded as part of web site maintenance and development.
(i) Stock-based compensation:
The Company accounts for its employee stock-based compensation arrangement
in accordance with provisions of Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense under fixed plans is
recorded on the date of grant only if the market value of the underlying
stock at the date of grant exceeds the exercise price. The Company
recognizes compensation expense for stock options, common stock and other
equity instruments issued to non-employees for services received based
upon the fair value of the equity instruments issued.
SFAS No. 123, Accounting for Stock Based Compensation, requires entities
that continue to apply the provisions of APB Opinion No. 25 for
transactions with employees to provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants as if the
fair-value-based method defined in SFAS No. 123 had been applied to these
transactions.
(i) Stock-based compensation (continued):
Pro forma loss and pro forma loss per share are disclosed in Note 11(b).
(j) Revenue recognition:
The Company earns revenues from the sale of annual non-refundable realtor
memberships and through referral fees resulting when a person buys or
sells a house through a member realtor referred by the Company. Membership
fees are recognized over the membership period from the commencement of
the membership term. Referral fees are recorded when earned and received
from the members.
3. Due from shareholder:
The amount due from shareholder is without interest, has no specified terms
of repayment and is unsecured. The shareholder is also a director of the
Company.
4. Deferred recapitalization costs:
During the year ended December 31, 1999, Home Finders Realty incurred $55,429
in costs related to the proposed transaction with NARG. On April 28, 2000,
the Company completed this transaction at which time $36,987 in costs were
expensed with the balance of $18,442 charged back to the former shareholders
of Home Finders Realty for their portion of the costs.
<PAGE>
5. Fixed assets:
Fixed assets consist of the following:
----------------------------------------------------------------
July 31 December 31
2000 1999
----------------------------------------------------------------
Cost:
Automotive $ 7,172 $7,172
Computer equipment 16,278 15,979
Computer software 25,813 24,912
Office equipment 10,787 9,863
------------------------------------------------------------
60,050 57,926
------------------------------------------------------------
Accumulated amortization:
Automotive 3,341 2,388
Computer equipment 5,064 3,229
Computer software 11,246 7,748
Office equipment 10,305 9,863
------------------------------------------------------------
29,956 23,228
------------------------------------------------------------
Net book value $30,094 $34,698
----------------------------------------------------------------
6. Web site development:
----------------------------------------------------------------
July 31 December 31
2000 1999
----------------------------------------------------------------
Cost $70,612 $31,005
Less accumulated amortization 37,049 17,785
----------------------------------------------------------------
Net book value $33,563 $13,220
----------------------------------------------------------------
7. Promissory notes payable:
----------------------------------------------------------------
July 31 December 31
2000 1999
----------------------------------------------------------------
Note payable, with interest at 10%
(reduced to 8.5% if fully repaid by
December 2, 2000), no fixed terms of $9,083 $55,429
repayment; secured - see below
Note payable, with interest at 10% per
annum (reduced to 8.5% if fully repaid
by December 2, 2000), no fixed terms of 15,804 -
repayment; secured - see below
----------------------------------------------------------------
$24,887 $55,429
----------------------------------------------------------------
The above promissory notes are secured by a general security agreement over
all of the assets of the Company's subsidiary, Home Finders Realty Ltd.
<PAGE>
8. Payable to related party:
----------------------------------------------------------------
July 31 December 31
2000 1999
----------------------------------------------------------------
Due to AMRR.com Inc. ("AMRR"), without
interest or specified terms of repayment $49,388 $51,171
----------------------------------------------------------------
A director of the Company is the sole director of AMRR.
The Company leases computer and office equipment with a cost of approximately
$31,000 from AMRR for $1 per year.
9. Income taxes:
The Company has income tax loss carryforwards of approximately $154,000 which
are available to reduce future taxable income. The benefits of the losses has
not been recognized in the financial statements. The losses will expire as
follows:
Canada U.S. Total
2005 $26,000 $ - $26,000
2006 $24,000 $ - $24,000
2007 $44,000 $ - $44,000
2010 $ - $60,000 $60,000
Significant components of the Company's deferred tax assets and liabilities
are shown below. A valuation allowance has been recognized to fully offset
the net future tax assets as realization of such net assets is uncertain.
----------------------------------------------------------------
July 31 December 31
2000 1999
----------------------------------------------------------------
Deferred tax assets:
Operating loss carryforwards $67,000 $22,000
Unearned revenues 59,000 77,000
------------------------------------------------------------
126,000 99,000
Valuation allowance for deferred tax (109,000) (79,000)
assets
----------------------------------------------------------------
Net deferred tax assets 17,000 20,000
Deferred tax liabilities:
Capital assets and web site development (5,000) (4,000)
Prepaid expenses (12,000) (16,000)
------------------------------------------------------------
(17,000) (20,000)
---------------------------------------------------------------
$ - $ -
----------------------------------------------------------------
<PAGE>
10. Financial instruments:
The Company's financial instruments consist of cash, accounts receivable,
security deposit, amount due to (from) shareholder, accounts payable and
accrued liabilities, promissory notes payable and payable to related party.
It is the opinion of management that the maximum credit risk equals their
carrying values.
Fair value:
The carrying values of cash, accounts receivable, security deposit, amount
due from shareholders, accounts payable and accrued liabilities, promissory
notes payable and payable to related party approximate fair value due to the
short-term maturities of these instruments.
It is not practicable to determine the fair value of the amounts due from
shareholders nor amounts due to related parties due to their related party
nature and the absence of a secondary market for such instruments.
Foreign Exchange Risk:
The Company's Canadian subsidiaries, Home Finders Realty Inc. and Most Referred
Real Estate Agents Inc., operate in Canadian dollars. As a result, the amounts
included in the consolidated financial statements relating to these two
subsidiaries will fluctuate with the Canadian foreign exchange rate.
11. Share capital:
(a) Authorized:
50,000,000 Common shares, par value of $0.001 per share
10,000,000 Preferred shares, par value $0.001 per share, designated as
follows:
4,500,000 Series A preferred shares (1999 - nil)
5,500,000 Unissued and undesignated (1999 - 10,000,000)
During the period, the Company created the Series A preferred shares and
allocated 4,500,000 of the Preferred shares to Series A.
Each share of the Company's Series A preferred stock is entitled to one
vote on all matters submitted to a vote of the Company's stockholders. The
Series A preferred shares are not entitled to any dividends or any
distributions upon the liquidation of the Company.
One Series A preferred share of the Company together with one preferred
share of 604587 British Columbia Ltd. may be exchanged for one share of
the Company's common stock. Otherwise, the rights and preferences of the
unissued and undesignated Preferred shares have not been determined.
<PAGE>
11. Share capital (continued):
(b) Options:
The following table sets forth information concerning the options granted
to the Company's officers, directors, employees and others and the
exercise price as of July 31, 2000:
-------------------------------------------------------------
Number
of
Expiry date options Exercise
granted price
-------------------------------------------------------------
Options issued before December 6,
recapitalization 2001 400,000 1 $0.25
transaction:
March 1, 2001 300,000 2 $1.00
-------------------------------------------------------------
Options deemed issued
at April 28, 2000 700,000
Options issued since August 1, 2003 567,000 4 $0.43
April 28, 2000 3
-------------------------------------------------------------
1,267,000
-------------------------------------------------------------
1 All of these options were cancelled subsequent to July 31, 2000.
2 Subsequent to July 31, 2000, 200,000 of these options were cancelled.
3 These options were not exercisable before August 1, 2000.
4 Subsequent to July 31, 2000, 40,000 of these options were cancelled.
At the time of grant the market value of all options did not exceed the
exercise price. No options were exercised during the seven months ending
July 31, 2000.
During the seven months ending July 31, 2000, the following options,
included in the total above, have been issued and remain unexercised as of
July 31, 2000 under the "Incentive Stock Option Plan":
-------------------------------------------------------------
Number
of
Date of grant Expiry date options Exercise
granted price
-------------------------------------------------------------
Incentive Stock Option
Plan:
May 20, 2000 3 August 1, 2003 50,000 $0.43
-------------------------------------------------------------
The fair value of options granted in fiscal was $0.29 per share.
Pro forma income (loss) and income (loss) per share after consideration of
fair market value of share options granted is as follows:
<PAGE>
11. Share capital (continued):
(b) Options (continued):
-------------------------------------------------------------------
Seven months Year ended Year ended
ended July 31, December December
2000 31, 1999 31, 1998
-------------------------------------------------------------------
Net income (loss) as $(60,245) $24,315 $(100,790)
reported
Pro forma compensation (125,310) - -
for stock options
-------------------------------------------------------------------
Pro forma income (loss) $(185,555) $24,315 $(100,790)
-------------------------------------------------------------------
Pro forma net income
(loss) per share, basic $ (0.04) $0.01 $(0.04)
-------------------------------------------------------------------
(c) Warrants:
The following table sets forth information concerning warrants granted:
-------------------------------------------------------------------
Number
of Exercise price
Expiry date options
granted
-------------------------------------------------------------------
Warrants issued before
recapitalization
transaction: December 22, 2001 200,000 $0.51 per share
to December 22,
2000 $0.75 per
share after
December 22,
2000
February 10, 2001 50,000 $0.75 per share
March 10, 2001 61,500 $0.75 per share
March 17, 2001 59,000 $1.00 per share
March 17, 2001 66,667 $1.00 per share
--------------------------------------------------------------------------
Warrants deemed
issued at April 28, 2000 437,167
Warrants issued since
April 28, 2000: May 1, 2001 65,000 $1.25 per share
May 1, 2001 65,000 $1.50 per share
--------------------------------------------------------------------------
567,167
--------------------------------------------------------------------------
12. Stock compensation plans:
(a) Incentive Stock Option Plan:
The incentive stock option plan authorizes the issuance of options to
purchase shares of the Company's common stock. Only officers, directors,
and employees of the Company may be granted options pursuant to the
Incentive Stock Option Plan.
<PAGE>
12. Stock compensation plans (continued):
(a) Incentive Stock Option Plan (continued):
The total fair market value of the shares of common stock (determined at
the time of the grant of the option) for which any employee may be granted
options which are first exercisable in any calendar year may not exceed
$100,000.
Options may not be exercised until one year following the date of grant.
Options granted to an employee then owning more than 10% of the common
stock of the Company may not be exercisable after five years from the date
of grant.
The purchase price per share of common stock, purchasable under an option,
is determined by the Company's Board of Directors but cannot be less than
the fair market value of the common stock on the date of the grant of the
option.
(b) Non-Qualified Stock Option Plan:
The non-qualified stock option plan authorizes the issuance of options to
purchase shares of the Company's common stock to the Company's employees,
directors, officers, consultants or advisors and such services. The option
exercise price and expiration date are determined by the Company's Board
of Directors.
(c) Stock Bonus Plan:
The Company's stock bonus plan authorizes the issuance of shares of common
stock to the Company's employees, directors, officers, consultants and
advisors provided however, that bona fide services must be rendered by
consultants or advisors and such services must not be in connection with
the offer or sale of securities in a capital-raising transaction.
All options outstanding and issued during the period are listed in Note
11(b).
13. Subsequent events:
On October 19, 2000, the Company issued 3,133,787 common shares of the
Company for $0.15 each through a private placement. The money raised by this
issuance of shares was approximately $470,000. In conjunction with this
transaction the Company issued warrants to the purchasers that, upon
exercise, allow them to acquire an additional 1,566,893 shares as follows:
Up to October 18, 2001 $0.25 per share
From October 19, 2001 to October 18,
2002 $0.30 per share
These warrants expire October 18, 2002.
On October 19, 2000, the Company conditionally allotted 1,566,893 common
shares from treasury for these warrants.
14. Segmented information:
Management has determined that the Company operates in one operating segment
which involves the generation of real estate referrals. Substantially all of
the Company's operations, assets and employees are located in Canada;
however, substantially all of the Company's revenues are from customers
located in the United States.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(a) of the Exchange Act, the Registrant
has caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized on the 15th day of November, 2000.
MARKETU INC.
By: /s/ Kenneth Galpin
---------------------------------------
Kenneth Galpin, President
Pursuant to the requirements of the Securities Act of l933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Title Date
/s/ Kenneth Galpin
Kenneth Galpin President and Director November 15, 2000
/s/ Scott Munro
Scott Munro Treasurer and Principal
Financial Officer November 15, 2000
/s/ William Coughlin
William Coughlin Director November 15, 2000
