UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended October 31, 2000
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of
1934
For the transition period to
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Commission File Number 0-29067
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MARKETU INC.
(Formerly North American Resort & Golf, Inc.)
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(Exact name of small Business Issuer as specified in its charter)
Nevada 98-0173359
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
20145 Stewart Crescent
Maple Ridge, BC V2X 0T6
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(Address of principal executive offices) (Postal or Zip Code)
Issuer's telephone number, including area code: 604-460-7631
Previous address: 33163 - 2nd Avenue, Mission, BC Canada V2V 6T8
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days [ X ] Yes [ ] No
As of December 15, 2000 the Company had 8,263,154 outstanding shares of Common
Stock. This amount excludes 4,500,000 shares of common stock issuable upon the
exchange of 4,500,000 Series A Preferred shares.
<PAGE>
MARKETU INC.
(Formerly North American Resort & Golf, Inc.)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
<PAGE>
MARKETU INC.
INTERIM CONSOLIDATED BALANCE SHEET
(Stated in U.S. Dollars)
October 31, 2000 July 31
(Unaudited) 2000
---------------- -------
ASSETS
Current
Cash $197,820 $3,034
Accounts receivable 10,077 6,821
Security deposit 18,236 10,810
Prepaid expenses 29,021 29,045
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255,154 49,710
Due from shareholder (note 4) 74,813 69,241
Fixed assets 42,081 30,094
Website development 39,355 33,563
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$411,403 $182,608
========== ==========
LIABILITIES
Current
Accounts payable and accrued liabilities $55,528 $95,143
Unearned revenue 117,872 137,489
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173,400 232,632
Promissory notes payable -- 4,887
Due to related party (note 5) 45,271 49,388
STOCKHOLDERS' EQUITY
Capital Stock (note 3)
Authorized:
50,000,000 common shares, par value
$0.001 per share 10,000,000 preferred
shares, par value $0.001 per share
designated as follows:
(a) 4,500,000 Series A preferred shares
with no par value
(b) 5,500,000 unissued and undesignated.
The rights and preferences of these
unissued preferred shares have not
been determined.
Issued and Outstanding:
8,259,154 common shares at October 31, 2000
and 5,054,367 at July 31, 2000 3,065 404
Additional paid in capital 450,079 48,685
4,500,000 Series A preferred shares 83,468 83,468
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536,612 132,557
Accumulative other comprehensive income
Cumulative Translation Adjustment 3,251 4,869
Deficit (347,131) (261,725)
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192,732 (124,299)
$411,403 $182,608
========= =========
See accompanying notes to interim consolidated financial statements
<PAGE>
MARKETU INC.
INTERIM CONSOLIDATED STATEMENT OF LOSS AND DEFICIT
(Unaudited)
(Stated in U.S. Dollars)
THREE MONTHS ENDED
OCTOBER 31
2000 1999
----------------------
Revenue
Referral fees and membership dues $ 148,599 $160,366
Other 507 --
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149,106 160,366
Direct Costs
Commissions 23,035 24,598
Courier 409 800
Credit card 1,982 2,109
Office and miscellaneous -- --
Telephone 6,841 6,413
Wages and benefits 4,853 10,721
Website maintenance and development 20,187 9,618
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57,307 54,259
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91,799 106,107
Expenses
Advertising and promotion 232 977
Amortization 2,207 3,058
Automobile 866 823
Bank charges and interest 2,047 999
Computer services 1,730 1,120
Insurance and licensing 1,322 1,918
Investor relations and marketing 2,208 --
Management fees 23,638 --
Membership and dues -- 366
Office rent 4,185 4,543
Office supplies 1,011 1,774
Professional fees 36,022 188
Maintenance and utilities 988 2,031
Stock based compensation 17,750 --
Telephone 728 659
Travel 6,849 2,043
Wages and benefits 75,422 51,100
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177,205 71,599
Income (Loss) For The Period (85,406) 34,508
Deficit, Beginning Of Period (261,725) (81,734)
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Deficit, End Of Period $(347,131) $(47,226)
========== =========
Net Income (Loss) Per Common Share, basic and diluted
Basic $ (0.02) $ 0.01
Diluted $ (0.02) $ 0.01
============ ===========
Weighted Average Number Of Shares Outstanding,
Basic 5,051,593 2,700,000
diluted 5,051,593 3,300,000
========= =========
See accompanying notes to interim consolidated financial statements
<PAGE>
MARKETU INC.
IINTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
-------------------------------------------------------------------------------
THREE MONTHS ENDED
OCTOBER 31, 2000
2000 1999
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Cash Flows From Operating Activities
Net income (loss) for the period $(85,406) $ 34,508
Add: Non-cash items:
Amortization 2,207 3,058
Amortization of website costs 12,970 3,336
Stock based compensation 17,750 -
Change in non-cash working capital balances related
to operations
Accounts receivable (3,256) (155)
Prepaid expenses 24 (2,309)
Accounts payable and accrued liabilities (41,597) (2,787)
Unearned revenue (19,617) (8,548)
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(116,925) 27,103
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Cash Flows From Investing Activities
Acquisition of fixed assets (14,637) -
Website development (20,086) (6,638)
Security deposits (7,426) -
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(42,149) (6,638)
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Cash Flows From Financing Activities
Common stock issued 388,435 -
Advances to related party (4,117) (337)
Advances to shareholder (5,572) (22,020)
Repayment of promissory notes (24,886) -
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353,860 (22,357)
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Increase (Decrease) In Cash During The Period 194,786 (1,892)
Cash, Beginning Of Period 3,034 4,926
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Cash, End Of Period $197,820 $ 3,034
===============================================================================
See accompanying notes to interim consolidated financial statements
<PAGE>
MARKETU INC.
IINTERIM CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND
COMPREHENSIVE INCOME (LOSS)
OCTOBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ADDITIONAL SERIES A PREFERRED Accumulated
COMMON STOCK PAID IN STOCK Other
CAPITAL Comprehen-sive
income Accumulated
(loss) Deficit Total
Number Number
Of Of
Shares Amount Amount Shares Amount
---------------------------------------------------------------------------------------
Balance, July 31, 1999 500 $ 339 $ -- - $ $ 3,506 $(81,734) $(77,889)
--
Comprehensive income
Translation adjustment - - - - - - (2,234)
(2,234)
Income for the period - - - - - - 34,508 34,508
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32,274
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Balance, October 31, 1999 500 $ 339 $ -- - $ $ 1,272 $(47,226) $(45,615)
--
========================================================================================
Balance, July 31, 2000 5,054,367 404 $48,685 4,500,000 $83,468 $4,869 $(261,725) $(124,299)
Common stock issued for 71,000 71 17,679 - - - - 17,750
compensation
on August 8, 2000 for deemed
issuance price of $0.25 per
share
Common stock issued for cash on 2,589,569 2,590 383,715 - - - - 386,305
October 19, 2000 at $0.15 per
share,
net of issuance costs of
$2,130
Issuance of common stock under 544,218 544 81,089 - - - - 81,633
subscription on October 19,
2000
at $0.15 per share
Less: note receivable for - (544) (81,089) - - - - (81,633)
subscription
Comprehensive loss
Translation adjustment - - - - - (1,618) - (1,618)
Loss for the period - - - - - - (85,406) (85,406)
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(87,024)
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Balance, October 31, 2000 8,259,154 $ 3,065 $ 450,079 4,500,000 $ 83,468 $ 3,251 $ (347,131) $192,732
========================================================================================
</TABLE>
See accompanying notes to interim consolidated financial statements
<PAGE>
MARKETU INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
1. GENERAL OPERATIONS:
MarketU, Inc. (the "Company") was incorporated under the laws of Nevada on
June 4, 1997. On April 28, 2000, the Company acquired two Canadian
corporations in a transaction that was accounted for as a recapitalization of
the Canadian corporations. For purposes of these consolidated financial
statements the historical financial statements of these two Canadian
corporations are the historical financial statements of the Company. Prior to
the recapitalization, the Company was in the development stage company as it
was devoting substantially all of its efforts to the identification and
development of new business opportunities.
Following the acquisition described above, the Company's primary business
activity is providing 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
The interim consolidated financial statements of the Company have been
prepared in accordance with generally accepted accounting principles in the
United States
a) Consolidation:
The interim consolidated financial statements include the accounts of the
Company and its subsidiaries: Most Referred Real Estate Agents Inc., Home
Finders Realty Ltd. (collectively "Home Finders Realty"), and 604587 British
Columbia Ltd. All significant intercompany balances and transactions have been
eliminated in the interim consolidated financial statements.
b) Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
and disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
for the reporting period. Actual results could differ from these
estimates.
c) The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and Item 310 (b) of
Regulation S-B, and, therefore, do not include all information and
footnotes necessary for a complete presentation of financial position,
results of operations, cash flows, and stockholders'
<PAGE>
MARKETU INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.
Readers of these financial statements should read the annual audited
financial statements of the Company filed on Form 10KSB in conjunction
herewith. Operating results for the three months ended October 31, 2000
are not necessarily indicative of the results that can be expected for the
year ending July 31, 2001.
3. CAPITAL STOCK
a) As of October 31, 2000, the Company has outstanding stock options for the
purchase of common shares as follows:
100,000 shares at $1.00 per share to March 1, 2001 527,000 shares at
$0.43 per share to August 1, 2003.
b) As of October 31, 2000 the Company had outstanding warrants for the
purchase of common shares as follows:
Number Exercise Price Expiration Date
Of Shares Year 1 Year 2 Year 1 Year 2
-------------------------------------------------------------------------
200,000 $ 0.50 $ 0.75 December 22, 2000 December 22,2001
50,000 $ 0.75 February 10, 2001
61,500 $ 0.75 March 10, 2001
125,667 $ 1.00 March 17, 2001
65,000 $ 1.25 May 1, 2001
65,000 $ 1.50 May 1, 2001
1,566,893 $ 0.25 $ 0.30 October 18, 2001 October 18, 2002
During the three month period ended October 31, 2000 the following share
transactions occurred:
a) On August 8, 2000 the Company issued 15,000 common shares to an
employee and 56,000 common shares to a former director for
services rendered.
b) On October 19, 2000, the Company sold 3,133,787 units at a price
of US$0.15 per unit to two persons. Each unit consists of one
common share and a one-half non-transferable share purchase
warrant. Each whole warrant entitles the holder to purchase one
additional share at a price of US$0.25 if
<PAGE>
MARKETU INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
exercised prior to October 19, 2001 and at a price of US$0.30 per
share if exercised prior to October 19, 2002. The warrants will
expire on October 18, 2002. The Company received cash proceeds of
$386,305, net of issuance costs, for 2,589,569 shares and a
promissory note in the amount of $81,633 for the remaining 544,218
shares.
4. 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.
5. DUE TO RELATED PARTY
October 31, 2000 July 31, 2000
(Unaudited)
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Due to AMRR.com, Inc. ("AMRR"), without
interest or specified terms of repayment $ 45,271 $49,388
========= ========
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.
6. SUBSEQUENT EVENT
On December 12, 2000, the Company delivered a Share Purchase Agreement,
scheduled to close on January 25, 2001, to the shareholders of a related
company, AMRR.com, Inc. ("AMRR"), to acquire all of the issued and
outstanding shares of AMRR. The Purchase Agreement offers two (2) common
shares in MarketU, Inc. for each issued and outstanding common share of AMRR.
If all shareholders of AMRR accept the Company's offer the Company will issue
513,912 shares of its common stock to the shareholders of AMRR.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations
Change in ownership
On September 25, 2000 MarketU Inc. (the "Company') announced the appointment of
a new director and president as part of a management and ownership change of
control. On that date, an agreement was also announced between 612559 B.C. Ltd.
("612559"), William Coughlin, a director and president of the Company, and
Carole Coughlin, in which 612559 acquired 3,500,000 preferred shares of the
Company from William Coughlin. This transaction closed on September 21, 2000.
The 3,500,000 preferred shares are exchangeable for 3,500,000 common shares of
the Company.
On September 25, 2000 the Company further announced an agreement between 612559,
an associate of 612559 and Christine Cerisse, a former director of the Company,
in which 612559 acquired 2,750,000 common shares of the Company from Christine
Cerisse. Consequently, Christine Cerisse, James Sanford and Robert Dent resigned
as directors of the Company, and William Coughlin resigned as president of the
Company. On September 21, 2000, Ken Galpin was appointed director and president
of the Company, as well as a director of the Company's subsidiaries, 604587
British Columbia Ltd., Most Referred Real Estate Agents Inc. and Home Finders
Realty Ltd. Mr. Galpin was also appointed CEO of Home Finders Realty Ltd. and
Most Referred Real Estate Agents Inc. on September 22, 2000. Mr. Coughlin has
been appointed Product Development Officer of the Company.
612559, a B.C. private company, together with its associates, now has voting
rights to approximately 65% of the issued and outstanding shares of the Company.
Mr. Galpin is also the president and a director of 612559. In conjunction with
the sale of shares by Christine Cerisse to 612559, 400,000 stock options held by
Ms. Cerisse at a price of US$0.25 per share were cancelled.
Revenues and expenses
The first quarter results for fiscal year 2001 reflect a small reduction in
revenues from the prior year quarter due to technical problems during the summer
months. Revenues generally lag sales efforts by approximately three to four
months due to the average time period required to close real estate transactions
and realize the referral fee.
Expenses increased during the first quarter of fiscal year 2001 by $105,606 or
147% in comparison to the previous quarter due to reorganization of the company
with respect to management; reorganization of sales and marketing departments
including hiring additional realtors and support staff to enable the company to
meet increased real estate transaction demand; redesigning of the web sites to
incorporate updated software and graphical enhancements; and costs associated
with public company responsibilities. Specific changes to the first quarter of
2001 include management fees which are up $23,638 from nil for the quarter ended
October 31, 1999 reflecting the change in management of the company.
Professional fees are up from $188 in the 2000 quarter to $36,022 in the 2001
quarter relating to accounting and legal assistance provided to reorganize the
company. Wages and benefits increased from $51,100 for the quarter ended October
31, 1999 to $75,422 for the quarter ended October 31, 2000 as a result of hiring
additional realtors and support staff.
<PAGE>
Stock based compensation
Stock based compensation expense of $17,750 relates to the issuance of bonus
stock to an employee and former director for services provided.
Stock issuances
On October 19, 2000, the Company sold 3,133,787 units at a price of US$0.15 per
unit to two persons. Each unit consists of one common share and a one-half
non-transferable warrant. Each whole warrant entitles the holder to purchase one
additional share at a price of US$0.25 if exercised prior to October 19, 2001
and at a price of US$0.30 if exercised prior to October 19, 2002. The warrants
expire on October 18, 2002.
The Company received cash proceeds of $386,305, net of issuance costs, for
2,589,569 shares and a promissory note in the amount of $81,633 for the
remaining 544,218 shares.
Liquidity and Capital Resources
Net cash used in operations was $116,925 compared to cash provided of $27,103 in
the same period in the prior year. Net cash used in operations was largely a
result of net losses and a reduction in accounts payable and accrued
liabilities. Accounts payable were reduced in the period from funds received
from the private placement noted above. Net cash used in investing activities
was $42,149 for the current quarter as compared to $6,638 in the comparative
quarter. The increase was primarily the cash costs of equipment, web site
development and security deposits to meet expansion and upgrade requirements.
Net cash provided by financing activities was $353,860 compared to a use of cash
in the comparative period of $22,357. $388,435 in cash was generated from the
private placement which was used to replenish working capital and pay down debt.
The Company had working capital of $81,754 as of October 31, 2000 as compared to
a deficiency of $182,922 at July 31, 2000. The company anticipates funding its
working capital requirements with future revenues and through proceeds of future
private placements.
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
From time to time, the Company will make written and oral forward-looking
statements about matters that involve risk and uncertainties that could cause
actual results to differ materially from projected results.
Many of these factors are beyond the Company's ability to control and predict.
Investors are cautioned not to place undue reliance on forward-looking
statements. The Company disclaims any intent or obligation to update its
forward-looking statements, whether as a result of receiving new information,
the occurrence of future events, or otherwise.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
On August 8, 2000 the Company issued 15,000 common shares to an employee
and 56,000 common shares to a former director for services rendered.
On October 19, 2000, the Company sold 3,133,787 units at a price of
US$0.15 per unit to two persons. Each unit consists of one common share
and a one-half non-transferable share purchase warrant. Each whole warrant
entitles the holder to purchase one additional share at a price of US$0.25
if exercised prior to October 19, 2001 and at a price of US$0.30 per share
if exercised prior to October 19, 2002. The warrants expire on October 18,
2002.
The Company received cash proceeds of $386,305, net of issuance costs, for
2,589,569 shares and a promissory note in the amount of $81,633 for the
remaining 544,218 shares.
The proceeds from the sale of the units were used to pay outstanding debt,
including trade accounts payable, and for working capital.
The Company relied upon the exemption provided by Section 4(2) of the
Securities Act of 1933 with respect to the sale of the securities referred
to above. The shares of common stock and the warrants described above are
restricted securities as that term is defined in Rule 144 of the
Securities and Exchange Commission.
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K - October 18, 2000; KPMG LLp appointed as
Company's auditor.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MARKETU INC.
Date: December 20, 2000 By:
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Kenneth Galpin, Director and President
By:
------------------------------------
Scott Munro, Principal Financial Officer
