Form 10-QSB
U.S. Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
[X] Quarterly report pursuant Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2000.
[_] Transition report pursuant Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _______________ to _______________
Commission file number: 0-23687
Stockgroup.com Holdings, Inc.
(Exact name of small business issuer as specified in its charter)
Colorado 84-1379282
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
SUITE 500 - 750 W PENDER STREET
VANCOUVER BRITISH COLUMBIA CANADA V6C 2T7 A2
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (604) 331-0995
Former address: Suite 1000 789 W Pender Street, Vancouver,
British Columbia, Canada V6C 1H2
(Former name or address, if changed since last report)
Check whether the issuer
(1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes: _X_ No: ___
Applicable only to issuers involved in bankruptcy
proceedings during the preceding five years
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court. Yes ___ No ___
Applicable only to corporate issuers
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 8,195,000
Transitional Small Business Disclosure Format (check one); Yes: ___ No:_X_
<PAGE>
Stockgroup.com Holdings, Inc.
FORM 10-QSB
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Consolidated Balance Sheets 3
Consolidated Statement of Loss and Deficit 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. OTHER INFORMATION
Item 5. Other Events 11
Item 6. Exhibits and Reports on Form 8K 12
SIGNATURE PAGE 13
FINANCIAL DATA SCHEDULE 14
2
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Item 1. FINANCIAL STATEMENTS
Stockgroup.com Holdings, Inc.
CONSOLIDATED BALANCE SHEET
As at March 31, 2000
(UNAUDITED - Expressed in U.S. Dollars)
Unaudited Audited
March 31, December 31,
2000 1999
----------- -----------
(Unaudited) (Audited)
ASSETS
CURRENT
Cash and cash equivalents $ 609,208 $ 1,658,822
Accounts receivable, net 1,136,177 855,170
Due from shareholder 32,216 31,973
Prepaid expenses 185,062 887,223
----------- -----------
TOTAL CURRENT ASSETS $ 1,962,663 $ 3,433,188
Property and equipment, net $ 537,175 $ 440,368
Investments and advances 500,000 --
----------- -----------
$ 2,999,838 $ 3,873,556
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Bank indebtedness $ 141,784 $ 21,004
Accounts payable 620,262 732,392
Accrued payroll liabilities 29,298 126,566
Deferred revenue 765,174 230,545
----------- -----------
TOTAL CURRENT LIABILITIES $ 1,556,518 $ 1,110,507
----------- -----------
TOTAL LIABILITIES $ 1,556,518 $ 1,110,507
----------- -----------
SHAREHOLDERS' EQUITY
COMMON STOCK, No Par Value
Authorized shares - 75,000,000
Issued and Outstanding shares - 8,195,000 $ 6,761,483 6,761,483
PREFERRED STOCK, non-voting, no par value
Authorized shares - 5,000,000
Issued and outstanding - nil -- --
ADDITIONAL PAID-IN CAPITAL 297,563 261,277
ACCUMULATED DEFICIT $(5,615,726) $(4,259,711)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 1,443,320 2,763,049
----------- -----------
$ 2,999,838 $ 3,873,556
=========== ===========
The Accompanying Notes Are An Integral Part
Of These Unaudited Financial Statements.
3
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Stockgroup.com Holdings, Inc.
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2000
(UNAUDITED - Expressed in U.S. Dollars)
Unaudited Unaudited
Three Months Three Months
Ended March Ended March
31, 2000 31, 1999
------------ ------------
(unaudited) (unaudited)
REVENUE
Revenues $ 1,241,207 $ 179,194
Cost of revenues 397,066 60,392
----------- -----------
Gross profit $ 844,141 $ 118,802
EXPENSES
Sales and marketing $ 1,182,636 $ 55,708
Product development 161,639 30,955
General and administrative 873,424 669,532
----------- -----------
$ 2,217,699 $ 756,195
----------- -----------
INCOME (LOSS) FROM OPERATIONS $(1,373,558) $ (637,393)
Interest income 16,989 0
Other income (expense) 554 232
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES $(1,356,015) $ (637,161)
Income tax provision (recovery) -- --
----------- -----------
NET INCOME (LOSS) $(1,356,015) $ (637,161)
=========== ===========
Basic and diluted earnings (loss)
Per share (0.17) (0.15)
=========== ===========
Weighted average shares used in the
calculation of basic and
diluted net loss per share 8,195,000 4,265,769
=========== ===========
4
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Stockgroup.com Holdings, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2000
(UNAUDITED - Expressed in U.S. Dollars)
Unaudited Unaudited
Three Months Three Months
Ended March Ended March
31, 2000 31, 1999
------------ ------------
(unaudited) (unaudited)
OPERATING ACTIVITIES
Net Income (Loss) $(1,356,015) $ (637,161)
Add (deduct) non-cash items
Depreciation and amortization 28,804 6,723
Provision for doubtful accounts (113) --
Common stock issued for services -- 450,000
Compensation expense on stock options 36,286 39,320
----------- -----------
(1,291,038) (141,118)
Net changes in non-cash working capital
Accounts receivable (280,893) (14,222)
Due from shareholder (243) (10,990)
Prepaid expenses 702,161 (7,359)
Accounts payable (112,130) 131,851
Accrued liabilities (97,268) (15,837)
Income taxes payable -- --
Deferred revenue 534,629 2,261
----------- -----------
CASH PROVIDED BY (USED) IN OPERATING ACTIVITIES $ (544,782) $ (55,414)
----------- -----------
FINANCING ACTIVITIES
Net proceeds from issuance of common stock -- 402,451
(Repayments) proceeds on bank indebtedness 120,780 (60,553)
(Repayments) proceeds on long-term debt -- (8,260)
(Repayments to) advances from shareholders -- (12,069)
Due to (from) related company -- --
----------- -----------
CASH PROVIDED BY (USED) IN FINANCING ACTIVITIES $ 120,780 $ 321,569
----------- -----------
INVESTING ACTIVITIES
Purchase of property and equipment (125,612) (69,466)
Investments (500,000) --
Net cash acquired in reverse acquisition -- 3,272
----------- -----------
CASH PROVIDED BY (USED) IN INVESTING ACTIVITIES $ (625,612) $ (66,194)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,049,614) 199,961
Cash and cash equivalents, beginning of period 1,658,822 --
----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 609,208 $ 199,961
=========== ===========
5
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Stockgroup.com Holdings, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2000
(UNAUDITED)
1. NATURE OF BUSINESS
Stockgroup.com Holdings, Inc. ("Stockgroup.com") is a leading provider of
Internet financial news and information services focusing on the North American
small-cap and micro-cap markets. Stockgroup.com also provides Internet
advertising and Website design and maintenance services to publicly traded
companies. Stockgroup.com is incorporated under the laws of Colorado and is
publicly traded on the NASD OTC Bulletin Board.
2. BASIS OF PRESENTATION AND COMPARATIVE AMOUNTS
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission ("SEC"). Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. However, the Company believes that the
disclosures are adequate to make the information presented not misleading. These
condensed consolidated financial statements should be read in conjunction with
the financial statements and the notes thereto included in the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1999.
The unaudited condensed consolidated financial statements included herein
reflect all adjustments (which include only normal, recurring adjustments) which
are, in the opinion of management, necessary to state fairly the results for the
three month period ended March 31, 2000. The results for the three month period
ended March 31, 2000 are not necessarily indicative of the results expected for
the full fiscal year.
These consolidated financial statements are presented in U.S. dollars and are
prepared in accordance with accounting principles generally accepted in the
United States ("U.S. GAAP"). Prior to year end 1999, the Company reported its
financial results using Canadian GAAP and Canadian Dollars. The Company changed
its reporting to U.S. GAAP. In this report comparative figures have been
retroactively restated to conform to the U.S. GAAP presentation. The comparative
figures have been recast into U.S. dollars in accordance with FASB Statement No.
52, Foreign Currency Translation.
3. CALCULATION OF EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed based on the weighted average number
of common shares outstanding during each year. Diluted earnings (loss) per share
is computed based on the weighted average number of common shares outstanding
during each year, plus the dilutive potential of options outstanding during the
year, in accordance with FASB Statement No. 128, Earnings Per Share.
The following table sets forth the computation of earnings (loss) per share:
For the Three For the Three
Months Ended Months Ended
March 31, 2000 March 31, 1999
$ $
Net income (loss) for the quarter (1,356,013) (637,161)
Weighted average number of common shares
used in computation 8,195,000 4,265,769
Basic and diluted earnings (loss) per share (0.17) (0.15)
<PAGE>
For the quarter ended March 31, 2000, all of the Company's common shares
issuable upon the exercise of stock options were excluded from the determination
of diluted earnings (loss) per share as their effect would be anti-dilutive.
4. COMPREHENSIVE INCOME
The Company follows FASB Statement No. 130, Reporting Comprehensive Income,
which establishes standards for reporting and displaying comprehensive income
and its components in the consolidated financial statements. For the quarters
ended March 31, 2000 and March 31, 1999, the Company did not have any components
of comprehensive income.
5. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, which establishes new standards for
recording derivatives in interim and annual financial statements. This statement
requires recording all derivative instruments as assets or liabilities, measured
at fair value. Statement No. 133, as amended by FASB Statement No. 137, is
effective for fiscal years beginning after June 15, 2000. Management has not
determined the impact, if any, that the adoption of the new statement will have
on the consolidated results of operations or financial position of the Company.
6. SEGMENTED INFORMATION
The Company operates in one industry segment and derives its revenue from the
following services:
For the Three For the Three
Months Ended Months Ended
March 31, 2000 March 31, 1999
$ $
Advertising and media services $ 174,539 $ 79,717
Website design and development 169,415 49,500
Website maintenance and marketing 394,122 49,977
Enterprise Financial Website development 503,131 --
----------- -----------
$ 1,241,207 $ 179,194
=========== ===========
During the first quarter 2000, the Company had two customers from whom revenue
received by the Company represented 41% of total revenue. No other customers
represented greater than 10% of revenue.
6
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7. SUBSEQUENT EVENT
Financing Arrangement
On April 3, 2000, Stockgroup.com entered into a Convertible Note Purchase
Agreement pursuant to which it obtained $3 million in a financing led by
Deephaven Capital Management LLC, a subsidiary of Knight/Trimark. Amro
International S.A., managed by Rhino Advisors was an additional lender in the
funding. Jesup and Lamont Securities Corporation served as the placement agent
for the transaction.
The funding included $3 million of 8% Convertible Notes (the "Notes"), and
5-year Callable Warrants (the "Warrants"). The Notes mature on March 31, 2002
and are convertible into Stockgroup.com common shares only after July 31, 2000.
The Notes may only be converted if Stockgroup.com does not make payment on a
Noteholder's prepayment request, or if Stockgroup.com seeks to prepay the Notes.
The initial conversion price (the "Initial Conversion Price") for the Notes is
$3.72, and the exercise price (the "Exercise Price") of the Warrants is $3.30.
The Initial Conversion Price and the Exercise Price are subject to adjustment
upon the happening of certain events, such as the payment of a stock dividend,
or the issuance of warrants at a below market price or at a price below the
conversion price. Prepayments on the Notes are subject to a tiered prepayment
schedule that increases as the number of days between the closing date and the
prepayment date increases, being 105%, 110%, and 115% of principal from days
1-60, 61-120, and after 120 days, respectively. Interest accrues on the Notes at
the rate of 8% per annum, and is payable on each conversion date and at
maturity. Interest may be paid in the form of cash or registered stock, at
Stockgroup.com's option. The lenders have the right to put back to
Stockgroup.com up to 25% of the unconverted amount of the Notes during any 30
day period after July 31, 2000. Upon the lenders' exercise of such right,
Stockgroup.com has the option of prepaying the portion of the Notes sought to be
converted, such prepayment to be in accordance with the tiered prepayment
schedule set forth above. If Stockgroup.com does not make such a prepayment
within 10 days after its receipt of a "put" notice, the conversion rate of the
Notes changes to the lesser of (a) the Initial Conversion Price, and (b) 88% of
the 5 lowest closing prices of Stockgroup.com's common shares during the 30
trading days prior to the date of conversion.
The Warrants permit the holders to acquire up to 181,818 common shares.
Stockgroup.com has agreed to file a registration statement covering these
shares, and the shares underlying the Notes. The Warrants may be called by
Stockgroup.com, at a purchase price of $.01 per underlying share, if
Stockgroup.com's common shares trade at the level of 175% of the Warrant
exercise price of $3.30 for any 20 consecutive trading days after the effective
date of the registration statement, provided that the holders have the right to
exercise the warrants within 30 days after their receipt of such a call.
The placement agent in the transaction received a fee of $120,000 and Warrants
to purchase 90,909 common shares on the same terms as the Warrants issued to the
lenders.
Funds from this loan arrangement will be used for ongoing working capital
purposes.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2000
During the first quarter, the Company generated revenues of $1,241,207 which
represents a 593% increase over the $179,194 generated in the quarter ended
March 31, 1999. The growth in revenues was primarily due to major Website
development projects in Singapore and Texas, higher sales of Internet marketing
services to corporations, and increased advertising sales. The Company also
significantly increased its sales force from 5 in quarter one 1999 to 15 in
quarter one 2000. Growth in sales staff was spread across all offices.
<PAGE>
The Company incurred a net loss of USD$(1,356,015) for quarter ended March 31,
2000. This compared with a net loss of USD$(637,161) for the first quarter of
1999. These losses are a function of implementation of the Company's strategic
plans and had been anticipated.
Sales and marketing expenses increased from $55,708 in the first quarter of 1999
to $1,182,636 in the same period in 2000. The factors which contributed to this
increase are increased advertising purchases and an increase in sales staff.
Advertising purchases were for the purpose of establishing brand in the
marketplace and are expected to have long term residual effects. The size of the
staff, particularly in sales, increased significantly quarter over quarter in
line with our strategic plans to position the company for future growth. The
additional cost of this staff is reflected in the increased expense numbers.
General and administrative expenses increased from $669,532 in quarter one 1999
to $873,424 over the first quarter of 2000. Items accounting for a majority of
the increases in general and administrative included legal expenses, higher
office rent expenses due to an expansion of our branch network, increased
staffing costs, costs related to temporary data entry staff used for site
development, and travel.
CORPORATE DEVELOPMENTS DURING THE PERIOD
Expansion into Asia
On January 18th Stockgroup.com began its global expansion by entering into an
arrangement with two Singapore publicly listed companies to build an enterprise
financial site for Asia Exchange Information Service Ptd Ltd. (AsiaXIS).
Vice President Sales hired
On January 31st Tim Bush, a seasoned sales and marketing management
professional, joined the Company as Vice President of Sales. Bush comes to
Stockgroup.com from Ingram Micro Inc., one of the world's largest wholesale
providers of technology products and services, where he was the Regional Sales
Director. During his time at Ingram Micro Inc., Mr. Bush's team averaged over
30% sales growth with sales in excess of Cdn$400 million.
Syndication strategy launched
During the quarter, Stockgroup.com began the implementation of its syndication
strategy, signing agreements with web content distributors. The major
syndication agreements established this quarter include I-Syndicate, which
reaches over 600,000 web users, and audiobasket.com, which disseminates the
Stockgroup.com audio content.
7
<PAGE>
CORPORATE OVERVIEW AND BACKGROUND
Stockgroup.com has offices in New York, San Francisco, Toronto, Calgary and
maintains its corporate headquarters in Vancouver. Focusing on news and
information for small cap and micro cap* investors, Stockgroup.com has created
an Internet investor information Community which brings together small cap
investors and companies and provides information on small cap market
developments. In October 1999 Stockgroup.com launched its next generation
Internet Community, www.smallcapcenter.com, which acts as a portal for investors
researching, analyzing, and discussing small cap stocks and markets.
In addition, smallcapcenter.com provides extensive information on North American
publicly traded companies and showcases unbiased original financial news content
on small cap companies and markets. These news features are produced throughout
the trading day by Stockgroup.com's staff of professional financial journalists
and editors and this News Service is a significant draw for the investor viewers
who use smallcapcenter.com. Smallcapcenter.com is a comprehensive resource for
investors and provides detailed profiles of companies, industry news, stock
quotes and charts, daily market reports, news releases and other investment
research tools.
Stockgroup.com also specializes in providing public companies with Internet
marketing solutions and has developed a strong position as a niche marketer of
specialty investor relations oriented products. Smallcapcenter.com also
disseminates information about Stockgroup.com's corporate clients but does not
make any recommendations or provide special news coverage related to these
clients.
- ----------------
*('Small Cap' companies are defined as those which have a market capitalization
of US$750 million or less and `Micro Cap' companies are defined as those with a
market cap of US$50 million or less. Hereinafter in this document, Small Cap and
Micro Cap will be referred to collectively as 'Small Cap'.
- ----------------
Our investment information on-line Internet Community has viewers in the United
States, Canada and abroad. The Community model is based on the creation and
fostering of an Internet site which provides members with a range of services
and content which are targeted toward a certain area of interest. Community
sites are generally designed to provide users with a stimulating interactive
experience which encourages them to return to the Community on a frequent basis.
The essence of the Community model is to provide an on-line home which wins the
loyalty of viewer members. Content is usually based around themes of interest
such as News, Business, Investing, Career Information, Travel, Medical & Life
Issues, Technology, Sports & Entertainment, etc. Generally, a Community's
revenues rely on the sale of advertising, e-mail commerce arrangements and the
sale of membership subscriptions for premium content or other special services.
Our www.smallcapcenter.com Community is multi-tiered and includes both general
interest and industry-specific areas including: Computers/Telcomm; Consumer
Goods; Energy; Finance/Real Estate; Food & Beverage; Healthcare; Internet;
Manufacturing; Natural Resources; Services; and Transportation. We believe that
we have become a primary provider of timely, accurate investment information to
micro and small cap investors.
<PAGE>
We are also a provider of website design and Internet financial products and
marketing services for small and micro cap companies, a market segment that
traditionally has not had the same market profile as larger public companies.
Some of the specialty products we produce include private label quotes and
charts, database tools for building relationships with shareholders, "traffic"
reports which allow a company's management to assess the impact of website use
by its viewers, and design services and maintenance contracts.
Our industry is characterized by rapid technological change, new product
development and evolving industry standards. Inherent in our business are
various risks and uncertainties, including a limited operating history, a new
and unproven business model and the limited history of commerce on the Internet.
Our success may depend in part upon the emergence of the Internet as a
communications medium, prospective product development efforts and the
acceptance of our products and services by the marketplace. As part of our
strategic development plans, we invest significant resources in research and
development of new products and services.
As of March 31, 2000 we had 85 employees, of which 79 were full time.
DESCRIPTION OF BUSINESS MODEL
The Company's business model is based on serving two complementary target
markets.
Target Market One - Small Cap Investors Seeking Reliable Information
Investors have difficulty obtaining timely, accurate investment information on
Small Cap companies due to a lack of objective news sources. Most media
organizations, investment firms and brokerage houses tend to focus a significant
majority of their attention on larger public companies. As a result, Small Cap
investors have not had access to the level of non-biased third party information
or traditional sources of company research reports they desire. This lack of
information is coupled with the increasing shift of investors from traditional
retail brokerages to discount and on-line alternatives. This shift has created
an increased interest in personal investment research on the part of individual
investors. However, investor interest in the Small Cap sectors has not been
accompanied by an increased coverage of the small and micro cap sectors by
traditional media, traditional brokerage firms or alternative on-line and
discount investment service providers. As a result, investors have turned to
other resources on the Internet as a method of obtaining the timely financial
information needed to make small cap investment decisions.
Target Market Two - Small Cap Companies Seeking Better Exposure to Investors
As described above, Small Cap companies do not receive the same coverage as
large public companies. Over the last few years, the Internet has become a
cost-effective solution to enhance their profile, but many Small Cap companies
have lacked the skills and knowledge to take full advantage of this opportunity.
This had led to the outsourcing of Internet related services. Requirements of
Small Cap companies are broad and range from the design, development and
maintenance of investor relations oriented Websites to the creation of effective
on-line advertising campaigns. Stockgroup.com has become a significant provider
of these types of services.
Stockgroup.com does not act as a public relations or investor relations firm but
rather provides a suite of products and services.
<PAGE>
The smallcapcenter.com Internet Investment Information Community
To meet the needs of its two complementary target markets, Stockgroup.com has
created www.smallcapcenter.com, an Internet information Community which provides
a wide range of services to investors interested in Small Cap companies and
markets. A significant feature which differentiates smallcapcenter.com from
other financial Websites is its on-line news reporting. Stockgroup.com employs a
staff of professional journalists who produce breaking stories throughout the
trading day on topics of interest to Small Cap investors. A major goal of our
business model is to develop and expand this news service into a world class
news organization with bureaus and contributors throughout North America.
By satisfying its viewers' investment information needs, Stockgroup.com seeks to
become the dominant single source of Small Cap information on the Internet.
STOCKGROUP.COM'S SOURCES OF REVENUE
Historically, Stockgroup.com has had three sources of revenue: (i) advertising
and media services;(ii) Website design and development; and (iii) Website
maintenance and marketing services. Additionally, Stockgroup.com has recently
commenced initiatives based on the sale of its technology platform and services
to other corporations who offer financial Websites on the Internet.
Advertising and Media Services
Stockgroup.com derives revenue from corporate advertisers who see benefit in
presenting their products and services to smallcapcenter.com's Internet
audience. Many advertisers seek and are willing to pay premium rates to
advertise on smallcapcenter.com due to its highly specific demographics. The
investor demographic profile, which consists of well educated, technically
savvy, mid to high-income level earners and higher risk investors is very
attractive to numerous advertisers. Corporate advertisers have included such
companies as IBM, Microsoft, VISA, Solomon Smith Barney, Datek Securities,
Standard & Poors, CIBC, Bank of America, Charles Schwab, Intel, Ameritrade,
Quicken, The Toronto Stock Exchange, and Discover Brokerage. In addition,
Stockgroup.com provides advertising management services, essentially acting as
an on-line advertising agency providing advertisement design and placement
services for its clients. Stockgroup.com also places ads, as a function of
client budgets, on other web sites it believes will provide the client with the
greatest exposure to the investment community.
Website Design and Development
The Company offers specialized Website design services and other web services
such as private label quotes and charts, database tools for building
relationships with shareholders and management "traffic" reports to track
investor usage of Websites and inquiries. In addition, unlike other web hosting
and design companies, Stockgroup.com develops web sites with the investment
community in mind. Stockgroup.com has developed considerable expertise in the
creation of Investor Relations oriented Websites and has a strong competitive
position in this market niche.
Stockgroup.com offers packages which can be tailored to include some or all of
its services and graphic design levels, depending on the needs and budget of
each client.
Website Maintenance and Marketing Services
As a means of providing small cap companies with greater exposure,
Stockgroup.com offers a maintenance service which keeps clients' Websites
current and fresh. As part of this service we also link clients' sites to
Stockgroup.com's proprietary information Community and offer `rental' access to
Stockgroup.com's proprietary Email listing of over 37,000 investors.
<PAGE>
Sale of Technology Platform and Services
Stockgroup.com is also now expanding its focus through sales of its expertise in
the development of enterprise financial Website platforms. One of these
initiatives involves a contract for the creation of AsiaXIS, a firm based in
Singapore dedicated to providing Internet financial information on the Southeast
Asian economic markets.
Forward-looking statements
Certain statements contained herein constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). These forward-looking statements can be identified
by the use of predictive, future-tense or forward-looking terminology, such as
"believes," "anticipates," "expects," "estimates," "plans," "may," "intends,"
"will," or similar terms. These statements appear in a number of places in this
report and include statements regarding the intent, belief or current
expectations of the Company, its directors or its officers with respect to,
among other things: (i) trends affecting the Company's financial condition or
results of operations, (ii) the Company's business and growth strategies, (iii)
the Internet and Internet commerce and (iv) the Company's financing plans.
Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results may differ materially from those
projected in the forward-looking statements as a result of various factors set
forth under "Risk Factors" and elsewhere in this report. The preceding
discussion of the financial condition and results of operations of the Company
should be read in conjunction with the financial statements and notes related
thereto included elsewhere in this report.
SHARE PRICE AND VOLUME DATA
The Company's Common Stock has been quoted for trading on the OTC Bulletin Board
since March 17, 1999. The following table sets forth high and low bid prices for
the Common Stock for the three month period ending March 31, 2000. These prices
represent quotations between dealers without adjustment for retail markup,
markdown or commission and may not represent actual transactions.
Quarter Ending: High Low Volume
March 31, 2000 $ 5.031 $ 1.562 2,623,600
On March 31, 2000, the Company had 29 registered shareholders owning 8,195,000
shares.
DIVIDENDS
The Company has not declared any dividends since inception, and has no present
intention or paying any cash dividends on its Common Stock in the foreseeable
future. The payment by the Company of dividends, if any, in the future, rests
with the discretion of its Board of Directors and will depend, among other
things, upon the Company's earnings, its capital requirements and its financial
condition, as well as other relevant factors.
11
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PART II - Other Information
Item 5. Other Events.
On January 18, 2000, the Company entered into a contract in Singapore which
expands the Company's operation into Asia and entails the development of an
enterprise financial site for Asia Exchange Information Service Pte Ltd.
(AsiaXIS). AsiaXIS was formed through a joint partnership of Form Holdings Ltd.
(FORM.SP - Bloomberg), SMB United Limited (SMBU.SP) and Stockgroup.com Holdings
Inc. Both Form Holdings Ltd. and SMB United are publicly traded on the Singapore
Stock Exchange. SMB United Limited has annual sales in excess of Singapore$77
million and net income in excess of Singapore$8.2MM. Form Holdings recently
underwent a restructuring during which George Thia, the former managing director
for Merrill Lynch International Bank Ltd. (SEA), was appointed CEO. Form is now
diversifying into financial information companies. Form and SMB will each
respectively contribute US$565,000 for founding ownership stakes in AsiaXIS of
28.2%. The balance of the founder's equity in AsiaXIS will be held by its
managing directors.
Under the terms of the agreement, Stockgroup.com will receive approximately
US$1,500,000 for development and upgrade of the initial site in Singapore. The
agreement also provides for AsiaXIS to develop 13 additional financial
enterprise sites throughout Asia, Australia and New Zealand. The Company will be
paid a licensing fee for its technology, a development fee for building and
customizing each additional financial enterprise site, ongoing maintenance and
support fees and royalties for each of the markets that AsiaXIS enters. The
Company has also secured access to the content that will be created by AsiaXIS
in its international news development. As part of the contract, Stockgroup.com
has agreed to acquire an equity position of 19.4% in AsiaXIS for US$500,000.
AsiaXIS's first Web site will be dedicated to the coverage of the Stock Exchange
of Singapore. Over the course of the next 18 months, AsiaXIS will expand its
coverage of other major stock markets to include such markets as Hong Kong,
Taipei and Tokyo.
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K - February 15, 2000
Reporting information on Item 5 - Other information
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
STOCKGROUP.COM HOLDINGS, INC.
(Registrant)
Date: May 3, 2000 By: /s/ John H. Dawe, CFA
---------------------------------------------
Vice President Finance, Secretary & Treasurer
13
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