U.S. 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
DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________
COMMISSION FILE NUMBER: 000-24723
URBANA.CA, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0393257
(State or jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
750 West Pender Street, Suite 804, Vancouver
British Columbia V6C 2T8
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (604) 682-8445
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 Par Value
Indicate by check mark 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 preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) been subject to such filing
requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of 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 Registrant has no revenues for the fiscal year ended on
December 31, 1999. The aggregate market value of the voting
stock held by non-affiliates of the Registrant as of March 24,
2000: Common Stock, par value $0.001 per share -- $91,387,197.
As of March 24, 2000, the Registrant had 22,038,283 shares of
common stock issued and outstanding.
TABLE OF CONTENTS
PART I PAGE
ITEM 1. BUSINESS 3
ITEM 2. PROPERTIES 13
ITEM 3. LEGAL PROCEEDINGS 13
ITEM 4. SUBMISSION TO MATTERS TO VOTE
OF SECURITY HOLDERS 13
PART II
ITEMitem 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS 13
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 15
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 19
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 19
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT 19
ITEM 10. EXECUTIVE COMPENSATION 22
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 22
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 24
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES,
AND REPORTS ON FORM 8-K 25
SIGNATURES 26
PART I.
ITEM 1. BUSINESS.
(a) Business Development.
Urbana.ca, Inc. ("Registrant") was originally organized in the
State of Delaware in February 1993 under the name of PLR, Inc.
In November 1997, the Registrant changed its name to Integrated
Carbonics Corp. and moved its domicile to the State of Nevada.
On July 23, 1999, Integrated Carbonics Corp. changed its name to
Urbana.ca, Inc. The Registrant has entered into three Letters of
Intent during 1999 to acquire one British Columbia corporation
(Urbana.ca Enterprises Corporation) and two Ontario corporations
(Enersphere.com, Inc. and E-Bill Direct, Inc.) (collectively,
"Acquired Entities"). In addition, the Registrant established a
wholly owned subsidiary, U.R.B.A. Holdings Inc. (formerly known
as ICC Integrated Carbonics (Canada) Corp.) to facilitate the
transfer of shares pursuant to section 85 of the Income Tax Act
(Canada) to the shareholders of the Acquired Entities.
In 1997, the Registrant entered into agreements with Da-Jung
Resources Corp. to acquire certain of Da-Jung's assets in the
People's Republic of China. These assets have been abandoned due
to the inability to raise project financing and, as such, have
been written off the investment in its Chinese Joint Ventures.
In January, 2000, the Registrant formally completed the
acquisition of each of the Acquired Entities after entering into
Share Exchange and Share Purchase agreements with each company
wherein the shareholders of each Acquired Entity received
Exchangeable Non-Voting shares in the capital of URBA Holdings
Inc. that are exchangeable on a one-for-one basis to restricted
common shares in the capital of the Registrant. The aggregate
consideration paid for the Acquired Entities was 10,450,000
common shares of the Registrant (after conversion) plus $84,828
CDN in cash payments to Enersphere.com, Inc. All consideration
is paid in full.
In January, 2000, the Registrant entered into an Exclusivity
Agreement with Eagle Wireless International, Inc. of League City,
Texas. Within the terms of this Agreement, Eagle has agreed to
manufacture and sell Set-Top Boxes to the Registrant and granted
exclusive right to the Registrant to sell Eagle Manufactured STBs
in Canada in return for certain volume p/urchases by the
Registrant over a 24 month period. The Registrant also entered
into a License Agreement with USA Video of Mystic, Connecticut
wherein certain compression technology developed by USA Video
will be embedded in STBs manufactured by Eagle and sold by the
Registrant.
In March 2000, the Registrant undertook the merger of the three
Acquired Entities into Urbana Enterprises Corp., an Ontario
registered corporation wholly owned by the Registrant. The
resulting corporate structure has the Registrant, which operates
as a financing and holding Registrant for its two wholly owned
subsidiaries: (a) URBA Holdings Inc. a non-operating subsidiary
which facilitated the acquisition of the subsidiaries; and (b)
Urbana Enterprises Corp., an Ontario registered corporation which
is the operating, wholly owned subsidiary company established to
execute the business plan of the Registrant.
(b) Business of the Registrant.
General.
The Registrant is an e-commerce, transaction and
content company that creates Intranet and Internet-based systems
in conjunction with local area governments and high profile
corporations. The Registrant will provide local communities with
community based entertainment and information services widely
used in all facets of everyday life and deliver these services
through a customized set-top-box. Internet success is predicated
on rich content delivery and delivery mechanisms reaching a 100%
target market on a one-to-one basis. The Registrant's aim is to
achieve that success by delivering rich content through a set-
top-box medium.
Current Status.
The Registrant is currently in the third month of a
four month pilot project known as the Guelph LocaNet. The purpose
of the pilot is to distribute 125 Set-Top Boxes to various local
community target markets such as schools, local government, local
corporations and individual users. The pilot is monitored for
technical proficiency and to gain market intelligence.
In January, 2000, the Registrant entered into an
Exclusivity Agreement with Eagle Wireless International Corp. of
League City, Texas wherein Eagle agreed to manufacture and sell
set-top-boxes to the Registrant and granted exclusive right to
the Registrant to sell Eagle Set-Top Boxes in Canada.
In March, 2000, the Registrant entered into a Letter of
Intent to purchase 100% of the issued and outstanding shares of
J.D. Donahue & Associates, a private Maryland based company that
is the principal provider of financial payment systems, systems
application development and financial payment hardware/software
and systems integration programs to state and federal governments
in the U.S. The consideration paid will be a combination of cash
and shares of common stock in the capital of the Registrant. The
final terms and consideration will be formalized following the
completion of due diligence and financing. The Registrant has 6
months from the close of financing to complete the acquisition.
The Registrant has three revenue producing divisions:
1. LocalNet
2. Electronic Billing
3. Set-Top-Boxes
LocalNet.
The Registrant's LocalNet systems technology utilizes
set-top-boxes as the medium to deliver various Internet and
Intranet based community services to consumers. The LocalNet
framework operates with community leaders and high profile
corporations to create community based intranet systems that
untilize the Internet provide residents with current community
activities, movies and other entertainment based content as well
as such value added services like enhanced TV, monitored smoke
detectors, automatic meter reading, health and community
services. The heart of the LocalNet business model is the set-top
box. In simplistic terms, the set-top box is an electronic device
that connects the Internet to a consumers television through a
connection provided by an Internet Service Provider ("ISP").
(1) The Vision of LocalNet.
Until now, the World-Wide Web has been primarily a way
of bringing together distant people and far-flung resources.
Wired or unwired, people live, work, spend and use the resources
overwhelmingly located right in their neighborhoods - and their
information and communications needs reflect that local bias. The
Registrant and LocalNet focus on those in the community not
utilizing the Web due to lack of content and those without
internet access. The vision of LocalNet is that regardless or
what type of medium for access is provided to this segment of the
community, this segment will not initiate access without focused
content.
LocalNet is not distant, its local schools, local
doctors, local entertainment, local grocery stores, local police,
local government, local sports and fitness, local kid's events,
local artists, local parks, local parents looking for local
babysitters, local patrons reviewing local restaurants and local
businesses going online for local customers.
Five years from now, local Web will be widespread, and
it will be the dominant gateway to the electronic world.
Powerful local content plus expanded access creates a virtuous
circle: Better access generates more viewers which provides
additional revenue for more and better content.
(2) Strategy.
The business model and marketing strategy will be a
leveraged expansion of the Guelph Local Online Project which is
currently in the final beta-test stage in Guelph, Ontario,
Canada.
About 50% of any community have computers in their
homes and about 50% of this population subscribe to Internet
services resulting in a 25%-30% internet penetration rate. This
has severely restrained the Internet's usefulness in a geographic
area, limiting the ability for residents to use the internet as a
local medium for communication and limiting the ability for local
advertisers to benefit from advertising on the internet. While
local retail and commercial vendors see value in promoting
themselves locally, most have seen little value in promoting
their businesses on the internet because of low access rate at
the local level.
The Registrant has developed a unique method of
providing a low cost portal connection (LocalNet) for every
resident in a geographic area. The strategy calls for local
communities to provide a self-sustaining local internet service
where all residents are provided a low cost set-top box funded
with revenue recouped through local and national advertisers.
Residents will be provided with a home gateway which provides
basic internet services such as communicating via e-mail and
viewing of a community channel. These two services will provide
all residents of the community with the ability to communicate
with one another and with local service providers within the
community. As described above, more access leads to more local
internet services. For example, teachers could now send homework
assignments home via e-mail, residents could register for
programs via the community channel and local merchants could
reach their customers via the internet. The supporting
advertisement could take the form of banner ads on e-mail and
community channel pages with the ability to click on the banner
ads to go to the advertisers web page. The Registrant and its
consortium of sponsors receives revenue from the ads which pays
for the home gateways.
Once in the home, the set-top box provides much more
functionality than just internet service. It becomes a community
gateway with the ability to become a true smart home manager.
For example, through the internet connection, the Registrant can
offer new services such as direct to fire department and utility
monitoring. These services are provided at a nominal fee which
further defrays the cost of the set-top box.
(3) Growth Strategy
Based on the success of the Guelph project, the
Registrant will leverage its expertise as facilitator and project
manager to gain competitive advantage. The critical elements of
compelling content, access/penetration to local markets and new
value added services will attract strategic partners both locally
and internationally. Fiscal 2000 is highlighted by 2 internally
funded LocalNet sites and 4 licensed sites in Canada and the U.S.
Electronic Billing.
(1) Background.
The Electronic Bill Presentment ("EBP") industry is
poised to capitalize on the new digital age by driving paper and
processing costs from $1.50 per bill to $0.40 - $0.50 per bill.
According to a recent report by Killen & Associates, a market
research firm, U.S. utilities could save $1.2 billion in billing
costs by using electronic bill presentment and payment.
(2) Product.
The Registrant's product offering is the digital
processing and electronic transmission of high-volume data via e-
mail with embedded digital marketing tools offered to a myriad of
end user customers. The E-bill Direct process converts a standard
print image file to a proprietary format and integrates various
levels of security and unique digital marketing tools that
include sound, graphics and animation that can be custom designed
to meet client needs.
(3) Strategy.
The Registrant's approach to bill presentment is
unique. Most organizations are luring customers to their websites
to pay bills. The approach is time consuming for the recipient to
locate the website and the billing information. The Registrant
does not believe that customers will continuously search for
billing information from a multitude of creditors. Other
organizations send e-mail to advise clients that their bill is
ready for review. Urbana will send the bill as e-mail and
eliminate the unnecessary steps.
The Registrant has the ability to offer our clients an
outsourcing alternative to electronic bill presentment in that we
will transmit their customer monthly data utilizing our server
platform. The structure of the EPB market is predicated on
electronic delivery by pulling customers to web-centric sites.
Urbana's animated graphics with sound, voice and motion provide
an effective and unique advertising tool to attract customers to
purchase or link to a specific website.
Historically, Internet advertising has been governed by
banner and static advertising. "Banner advertising is akin to
cave drawings," states Ted Boyd, chairman of the Internet
Advertising Bureau. To date, rich, powerful advertising content
has been restricted due to the adoption of high speed (high band-
width) Internet access. Allowing ads to incorporate audio, video
and other applications will allow the next development of
advertising to exceed the current 2% response rate generated from
banner ads.
The Registrant has the ability to integrate this rich,
powerful, animated advertising now. Our compression techniques
allow for statements and digital advertising to be transmitted in
tolerable download times to customers without wide band-width
transmission. The Registrant's billing capacity has the ability
to send up to one-half million e-mail transmissions per day thereby
creating a just-in-time current statement. As a result, just-in-
time delivery eliminates call center customer queries about why
recent accounting activity is missed. This reduction in call
center activity equates to substantial dollar savings.
(4) Markets.
Management has identified 3 primary markets where
client operating costs will be cut and traditional cost centers
will become revenue producing entities. The three markets
(loyalty programs, brokerage and utilities) are unique by nature
but have identical inherent problems in the dissemination of date
to clients.
The various loyalty/affinity card type programs
initiated by major petroleum, retail and transportation
(airline/car rental) typically issue monthly or quarterly
statements reflecting account activity and a bonus point balance
summary. Most household (Canada and the U.S.) carry multiple
cards reflecting loyalty and usage. As an example, "Airmiles"
alone has a customer base of 6 million equating to 24 million
statements sent annually.
The brokerage industry not only mails monthly
statements showing account activity and balances in the various
equity markets, but it also sends daily settlement buy/sell slips
by mail. The combined total transactions of the TSE, NYSE and
NASDAQ, including mutual funds, approximates 2.4 billion
transactions. This equates to potential savings of $2 billion by
eliminating the paper process of mailing statements and trade
confirmations.
(5) Major Competition.
Canada Post: In pilot since 1999 with expected service offering
in 2000;
E-Route: Consortium of large Canadian players including some
major banks with expected roll-out in 2000;
Xenos Group: Canadian software company offering electronic
presentment of documents;
Paytrust: a U.S. based company with a web-based service offering
consumer bill delivery;
Others: Paysense, Edocs, Checkfree, Transpoint, Whitehill.
(6) Competitive Advantage.
The Registrant has three competitive advantages:
Management has years of multimedia, animation and advertising
experience combined with electronic processing expertise;
The Registrant currently has a capacity to transmit 20,000 units
per hour;
The Set-Top Box can be used to reach the 75% of the potential
market that currently do not have internet service in their
homes.
Set-Top Boxes.
(1) Description.
The Set-Top Box ("STB") is a consumer electronics
device that connects any television to the Internet via a
standard analog phone line. Once connected, the end user of the
STB can easily access the Internet and can enjoy most of the
applications the Internet has to offer such as e-mail, e-
commerce, web surfing, video on demand, video conferencing and
on-line banking.
Urbana's approach to the STB market is to offer
consumers a STB, with a standard internet browser, and
applications pre-loaded from the server at the ISP. Adding,
updating or changing applications are done through the Registrant
or channel partner's networks, meaning the user does not need to
install new software in the STB every time a feature is added,
enhanced or changed.
The Registrant is currently distributing a STB in its
pilot markets that is manufactured by Acer Corporation in Taiwan
(Acer NT 150); however, the Registrant has discovered that the
Liberate Operating System ("OS") used by Acer is overly
proprietary to meet the feature growth requirements of the
Registrant. The Registrant therefore, has decided to deploy the
next generation of STB utilizing the Linux OS.
(2) Product and Manufacturing.
The Registrant STB is what is believed to be a unique
combination of hardware and software that creates a simplier user
interface for our end users, yet has powerful capabilities. The
Registrant has chosen Eagle Wireless (AMEX: EAG) as its
manufacturing and engineering partner because of Eagle's ability
to produce a unique feature set with an OS independent hardware
platform that can accommodate all the popular OSs and readily
accept new software for different applications.
All products the Registrant currently sells are either
purchased from Acer or from Eagle Wireless. Going forward, the
marketing push will be on the Urbana Set-Top Box manufactured by
Eagle Wireless. Eagle Wireless currently uses three separately
owned manufacturing facilities. Their primary manufacturer and
manufacturer of the Registrant STB is SCI Corp. which is one of
the world's largest consumer electronics manufacturers and is
located in Singapore.
(3) Product Features.
The Registrant STB now in production has the following features:
Linux OS
Fully compliant 4.0 Internet Browser
Off-line e-mail/e-mail editor (optional depending on vertical
market
Java Media Player for music and video
Enhanced TV tuner
USB, PCI, serial and parallel ports for expansion and accessories
Built-in RF modulator for connection to any TV, with audio and
video in and out jacks
Ethernet Input
Wireless keyboard and remote control
"Flash" Read Only Memory for remote STB software updates while in
service
Smartcard reader and writer for programming, loyalty and
financial applications
(4) Market Summary and Target Market.
A STB user can be anyone with a television set and a
desire to go on-line to interact. The consumer target market
consists of a brad cross-section - from young families to empty
nesters to senior citizens. Demographics indicate that
convenience is of great importance to these market segments. They
have moderate to average disposable incomes and currently own a
TV and VCR. They may have a satellite receiver and a computer.
These users are looking for true value in their purchases and are
not inclined to maneuver through the mass of information on the
WWW to find exactly what they need.
The Registrant's target markets are:
Baby Boomers - 89 million people born between 1946 and 1964
Empty Nesters - top1/4 of the Baby Boomers and beyond
Generation X group (born 1966 with young children)
The fundamental market components are:
99% of households in North America have 1 TV set;
75% have 2 or more TV sets;
Cable/Satellite TV broadcast is available to 75% of U.S.
households
Worldwide units sales of STB were US$0.8MM in 1999 compared to
US$0.3MM in 1996;
Sales are expected to reach US$8.0MM in 2002 - and are expected
to dominate the marketplace by 10:1 according to "Cite
eStats/Datamonitor
Currently there are approximately 75 million Internet
users in North America and that total is expected to climb to 95
million over the next year. According to "Data Source", the end
of 1999 will see 61 million of these Internet users forming the
Registrant's target market. This presents an incredible "viewing"
audience that is using the Internet on an average of 1.8 hours
per day. Currently only the Grammy Awards and Super Bowl attract
audiences of this size.
(5) Industry Analysis and Trends.
"Datamonitor" predicts that interactive TV will reach
67 million homes in the U.S. and Europe by 2003 - a big jump from
the 1998 level of 10.3 million. User options for connectivity
are not limited to fibre-optic or coaxial cable but include
satellite broadcast as well.
Currently, competition is limited to a few big
electronics manufacturers that have so far been unable to combine
their product with a fully integrated and localized user package.
For example, Microsoft's WEBTV paints all consumers of their
service with a wide brush of viewer options.
Established STB distributors have high overheads
created by current facilities, sales staff, inventory and
shrinkage. To operate profitably requires typical retail markups
on manufacturer's pricing - even for big box merchants.
Launching an e-commerce website to leverage their existing brand
equity does not impact the cost structure and markup requirements
of established retailers.
Advanced TV STBs can connect to the Internet in another
way. In Europe, satellite standards are beginning to compete with
cable specifications signaling a possible trend in North America.
Some US companies such as DirecTV already offer satellite-based
Internet connections, but these technologies are proprietary.
The trend is toward having the standards process apply to
satellite broadcasts and cable services. Whatever the method of
connectivity, it has been predicted that this form of Internet
access will rapidly provide such competition that the traditional
Internet Service Providers will experience a dramatic reduction
in growth rate.
A change in lifestyle toward home-based business and
"cocooning", is one of the key contributors to the recent
explosion of Internet connectivity with a strong emphasis placed
on ease of use and content value. While it is difficult to
predict exactly what the future hold for Internet surfers, it is
safe to say the speed at which the mass public integrates
Internet use into their overall lifestyle will grow
exponentially. These users will expect the service providers and
businesses with which they interact daily to keep up with the
times.
(6) Warranty, Technical Support and Service Policies.
The Registrant's technical support team communicates
directly to customer technicians who, in turn, provide support to
end-users. All end-user information is held at the "customer"
level. The customer technicians are factory trained and
supplemented with follow-up training and information.
The Registrant's technical support is provided by
application engineers hired on contract. They work with the
customer during the sales cycle to learn their needs. A toll free
number has been provided to all Registrant customers to ensure a
single point for communications. All technical and reference
materials are on-line in a secure website for customer access.
(7) Competition.
The competition in the STB market consists of
approximately 87 manufacturers who are actively marketing a
number of STBs, and of these, approximately 12 are considered as
being direct competitors with the Registrant.
(8) Direct Competitors.
WebTV
Sony
Philips
Thompson
DirectPC
EchoStar (partnered with WebTV)
Acer/Liberate
Neon
NetGem
WebSurfer
Paradise
AOL TV (marketed through K-Mart and Wal-Mart
NetTV
Boca Research
(9) Indirect Competitors.
The major cable networks are deploying two-way interactive
services utilizing the Internet (eg. AT&T, Rogers Cable and Cox
Communications)
National Internet Service Providers or the major portals. (eg.
AOL)
The Registrant will rely on its flexibility as a small
company, the use of the Linux OS and constant monitoring and
upgrading to meet customer driven requirements to remain
competitive.
(10) Operations and Fulfillment.
Operations and fulfillment are managed in-house,
although, most of the physical work is contracted out. This
approach reduces costs related to overhead and employee payroll,
provides access to state-of-the-art technologies and gives the
Registrant resources to be successful in the market while
incurring minimal costs.
(11) Engineering and Design.
The Registrant's engineering and design teams are
limited to application engineering and high-level specification
technical writers. The Registrant is a sales and marketing
company and has, therefore, outsourced its product engineering
and manufacturing to Eagle Wireless. The Registrant's strengths
are in consumer and commercial product, and solution engineering,
wireless technologies and manufacturing.
Patents, Copyrights and Trade Secrets
The Set-Top-Boxes manufactured for Urbana Enterprises
Corp. by Eagle Wireless incorporate "shelf" components and
technologies that are custom configured to the Registrant's
specifications. This configuration will provide the consumer with
a unique set of entertainment, education, internet and utility
monitoring features.
All components have multiple manufacturers and
suppliers that Eagle may use as sources of supply, therefore,
Eagle and the Registrant are not reliant on single-source, third
party suppliers. This leaves the Registrant with minimal risk
associated with parts and component supply.
The Registrant, Eagle Wireless and USA Video
Technologies of Mystic, Connecticut have entered into a License
Agreement in January 2000 in which USA Video has licensed the use
of its proprietary Wavelet technology to the Registrant to be
embedded into all STB's manufactured for the Registrant by Eagle
Wireless. This helps to ensure the Registrant's right and know-
how to provide its customers with Streaming Video features.
Employee Growth and Development
The Registrant currently employs 24 people, including
senior management. The current make-up is as follows along with
an accounting of the positions to be filled within the next year:
Senior Management: 7
Positions to be filled: 3
(Immediate positions to be filled: Chief Financial Officer, VP,
Sales and VP, Marketing)
Administration: 3
Positions to be filled: 3
Marketing and Sales: 6
Positions to be filled: 6
(c) Competition.
There are inherent difficulties for any new company seeking to
enter an established field. The Registrant may experience
substantial competition in its efforts to locate and attract
customers for its services. Many competitors in the Registrant's
field have greater experience, resources, and managerial
capabilities than the Registrant and may be in a better position
than the Registrant to attract such customers. There are a
number of larger companies which will directly compete with the
Registrant. Such competition could have a material adverse
effect on the Registrant' profitability or viability.
ITEM 2. PROPERTIES.
The Registrant has entered into a 30 month lease of a
10,000 sq. ft. freestanding office facility located at 22
Haddington Street, Cambridge, Ontario Canada N1R-1P9. The
offices will be occupied by all management, operations,
administrative and technical staff of both the Registrant and
Urbana Enterprises Corp. The rental rate is $3,500 CDN * per
month, which the Registrant has paid in advance for the entire
term of the lease ($105,000 CDN). The term of the lease expires
on July 31, 2002. The Registrant is also paying $700 CDN per
month at Suite 804-750 West Pender Street, Vancouver, BC Canada
V6C-2T8 on a month-to-month basis in return for packaged office
space and administrative services provided to the Registrant
only.
As of March 28, 2000, the exchange rate for the Canadian Dollar
was $0.6845 U.S.
ITEM 3. LEGAL PROCEEDINGS.
The Registrant is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Registrant has been threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
PART II.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
(a) Market Information.
The Registrant's common stock is traded in the Over-the-Counter
Bulletin Board (symbol URBA) and the range of closing bid prices
shown below is as reported by this market. The quotations shown
reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ending on December 31, 1999
High Low
First Quarter 0.51 0.37
Second Quarter 0.62 0.32
Third Quarter 0.87 0.10
Fourth Quarter 1.50 0.37
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended December 31, 1998
High Low
First Quarter * 2.37 1.37
Second Quarter 4.87 1.06
Third Quarter 1.00 0.50
Fourth Quarter 0.75 0.25
* The shares only traded for 22 days during this quarter.
(b) Holders of Common Equity.
As of March 24, 2000, there were 43 shareholders of record of the
Registrant's common stock.
(c) Dividends.
The Registrant has not declared or paid a cash dividend to
stockholders since it became a "C" corporation. The Board of
Directors presently intends to retain any earnings to finance
Registrant operations and does not expect to authorize cash
dividends in the foreseeable future. Any payment of cash
dividends in the future will depend upon the Registrant's
earnings, capital requirements and other factors.
(d) Equity Securities Sold Without Registration.
The Registrant settled debts of $86,268 to Hound Pound Equities
Inc., a private company of which an officer is a relative of a
director of the Registrant, and a director of Urbana Enterprises,
by the issuance of 215,665 restricted shares of common stock at a
price of $0.40 per share.
The Registrant settled its amount payable to Da-Jung Resources, a
major shareholder in the Registrant, on acquisition of its
interest in a graphite processing joint venture by the issuance
of 325,000 restricted shares of common stock at a price of $0.40
per share.
The Registrant settled certain of its trade accounts payable by
the issuance of 510,303 restricted shares of common stock at a
price of $0.40 per share
No commissions or fees were paid in connection with these
sales. All of the above sales were undertaken pursuant to the
limited offering exemption from registration under the Securities
Act of 1933 as provided in Rule 506 under Regulation D as
promulgated by the U.S. Securities and Exchange Commission, and
offers and sales were made only to "accredited investors." These
offerings met the requirements of Rule 506 in that: (a) there are
no more than or the issuer reasonably believes that there are no
more than 35 purchasers of securities from the issuer in any
offering under this section; and (b) each purchaser who is not an
accredited investor is a "sophisticated investor," that is, the
investor either alone or with his purchaser representative(s) has
such knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of the
prospective investment, or the issuer reasonably believes
immediately prior to making any sale that such purchaser comes
within this description.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the
financial statements of the Registrant and notes thereto
contained elsewhere in this report.
Results of Operations.
During the last quarter of the fiscal year 1999, the Registrant
continued with its program to develop the firm into an operating
company. For the 12 months ended December 31, 1999, the
Registrant had a net loss of $568,750 or $0.06 cents per share.
This loss compares with a loss of $667,601 or $0.07 cents per
share for the corresponding 12- month period ended December 31,
1998.
During the year, the Registrant continued to seek financing for
its joint ventures in China. In this regard, the Registrant
engaged consultants to assist the Registrant concerning
structuring development plans, financing strategies, shareholder
communications, and creating awareness with the brokerage
community by electronic means. While continuing with efforts to
obtain financing for the Registrant's China graphite projects,
management implemented a diversification strategy to reduce the
risk of being unable to raise the necessary funding. As the
Registrant was unable to raise the funding, the joint ventures
were abandoned and the Registrant has written off its investment
resulting in a loss of $253,408.
During the year, a wholly owned subsidiary company, U.R.B.A.
Holdings Corp. ("URBA") (formerly known as ICC Integrated
Carbonics (Canada) Corp.), was incorporated in the province of
British Columbia for the purpose of facilitating acquisitions in
Canada. During the year the Registrant entered into agreements
to acquire through URBA, all of the outstanding shares of three
companies in Canada. The acquisitions were completed subsequent
to the year-end. URBA acquired Urbana.ca Enterprises Corp.
("Urbana Enterprises"), (formerly HomeNet100.com Enterprises,
Inc.), E-Bill Direct Inc. ("E-Bill"), and Enersphere.com, Inc
.("Enersphere").
Urbana Enterprises.
Urbana Enterprises was incorporated November 18, 1998 in the
Province of British Columbia. Losses totaled $193,171 for the
period ended December 31, 1999. Urbana Enterprises is engaged in
the distribution of Linux based Set Top Boxes used as an
alternative method of delivering Internet content.
URBA issued 3,000,000 non-voting exchangeable shares in
connection with this acquisition. The holders of these shares
have been granted votes in the Registrant on a basis of one vote
for each exchangeable share of URBA held. The holder of these
shares at any time may require URBA to repurchase the shares at
the then current market value of the shares. At its option URBA
may satisfy this obligation in cash or in Registrant shares. Any
exchangeable share not exchanged within 25 years is to be
cancelled
The agreements required the Registrant to issue shares to ensure
URBA has sufficient shares of the Registrant to satisfy its
repurchase obligations. The Registrant has as a result issued
3,000,000 shares and placed them in trust with a trustee. In
connection with the acquisition, the two principals of Urbana
Enterprises signed five-year management contracts with the
Registrant. In addition, the Registrant has agreed to grant a
total of 400,000 stock options to these individuals.
The business combination will be accounted for using the
purchase method of accounting. The 3,000,000 shares issued on
acquisition have been valued at $0.30 per share for a purchase
price of $900,000. Goodwill will be amortized on a straight-line
basis over 5 years.
E-Bill.
E-Bill was incorporated May 27, 1999 in the Province of
Ontario. Losses totaled $16,214 for the period ended December
31, 1999. E-Bill is engaged in designing, developing and
providing electronic presentment and payment services to the
business community.
URBA issued 2,950,000 non-voting exchangeable shares in
connection with this acquisition. The holders of these shares
have been granted votes in the Registrant on a basis of one vote
for each exchangeable share of URBA held. The holder of these
shares at any time may require URBA to repurchase the shares at
the then current market value of the shares. At its option URBA
may satisfy this obligation in cash or in Registrant shares. Any
exchangeable share not exchanged within 25 years is to be
cancelled.
The agreements required the Registrant to issue shares to
ensure URBA has sufficient shares of the Registrant to satisfy
its repurchase obligations. The Registrant has as a result
issued 2,950,000 shares and placed them in trust with a trustee.
In connection with the acquisition the two principals of E-Bill
signed three-year management contracts with the Registrant. In
addition, the Registrant has agreed to grant a total of 200,000
stock options to these individuals.
The business combination will be accounted for using the
purchase method of accounting. The 2,950,000 shares issued on
the acquisition have been valued at $0.27 per share for a
purchase price of $796,500. Goodwill will be amortized on a
straight-line basis over 5 years.
Enersphere.
Enersphere was incorporated September 28, 1999 in the
Province of Ontario. Losses totaled $114,917 for the period
ended December 31, 1999. Enersphere is a content company that
utilizes Set Top Boxes as their medium to deliver Internet and
intranet based services to customers.
URBA paid $84,828 cash and issued 4,500,000 non-voting
exchangeable shares in connection with this acquisition. The
holders of these shares have been granted votes in the Registrant
on a basis of one vote for each exchangeable share of URBA held.
The holder of these shares at any time may require URBA to
repurchase the shares at the then current market value of the
shares. At its option URBA may satisfy this obligation in cash
or in Registrant shares. Any exchangeable share not exchanged
within 25 years is to be cancelled.
The agreements required the Registrant to issue shares to
ensure URBA has sufficient shares of the Registrant to satisfy
its repurchase obligations. The Registrant has as a result
issued 4,500,000 shares and placed them in trust with a trustee.
In connection with the acquisition the two principals of
Enersphere signed two-year management contracts with the
Registrant. In addition, the Registrant has agreed to grant a
total of 200,000 stock options to these individuals.
The business combination will be accounted for using the
purchase method of accounting. The 4,500,000 shares issued on
the acquisition have been valued at $0.34 per share for a
purchase price of $1,614,828 including the $84,828 cash payment.
Goodwill will be amortized on a straight-line basis over 5 years.
Liquidity and Capital Resources.
During the year, the Registrant continued its status as a
development stage company. The Registrant has no revenue and is
continuing to incur substantial costs in pursuing business
opportunities. The Registrant's continued existence is dependent
on its ability to obtain sufficient financing to meet its
financial needs.
At December 31, 1999 the Registrant had a working capital
deficiency of $195,985. This compares with a working capital
deficiency of $283,305 at December 31, 1998. During the year the
Registrant settled debts of $86,268 to a private company of which
an officer is a relative of a Director of the Registrant by the
issuance of 215,665 restricted shares at $0.40 per share. The
Registrant settled its agreement payable of $130,000 and various
of its trade payables of $127,576 by the issuance of restricted
shares at $0.40 per share for 325,000 shares and 510,303 shares
respectively.
During the year the Registrant received loans totalling $60,000
and further loans of $1,224,162 subsequent to December 31, 1999
for total loans of $1,284,162. These amounts are due March 15,
2000 and bear interest at an annual rate of 8%. If the
Registrant defaults on these loans the lender has the right to
convert the amount of principal borrowed into shares of the
Registrant at $0.50 per share subject to a 15% market price
adjustment.
In January, 2000, the Registrant entered into an Exclusivity
Agreement with Eagle Wireless International Corp. of League City,
Texas wherein Eagle agreed to manufacture and sell Set-Top Boxes
to the Registrant and granted exclusive right to the Registrant
to sell Eagle manufactured Set-Top Boxes in Canada.
Subsequent to December 31, 1999 the Registrant entered into an
agreement with an agent to raise up to U.S. $25,000,000 by a
private placement offering of Special Warrants. The Registrant
will issue up to 5,555,555 Special Warrants at a price of U.S.
$4.50 per Special Warrant pursuant to a best efforts offering by
the Agent. A cash commission of 8% of the capital raised by the
Special Warrants is payable along with Compensation Options equal
to 10% of the units issued. Each Special Warrant will entitle
the holder to receive, for no additional consideration, one
common share of the Registrant and one half of one Common Share
Purchase Warrant. Each whole Common Share Purchase Warrant will
entitle the holder to purchase one common share at a price of
U.S. $10.00 for a period of 24 months from the date of closing of
the offer which would result in a further U.S. $27,777,777 if all
the Common Share Purchase Warrants were exercised. Closing of
the financing is to be April 26, 2000 or such other date as
agreed by the Registrant and the agent.
The Registrant intends to use the proceeds from the financing to
fund operating deficits, research and development, joint venture
agreements, acquisitions and working capital. In connection with
the closing, the Registrant intends on filing a prospectus in
order to qualify the distribution of the common shares, Common
Share Purchase Warrants and the common shares issuable on
exercise of the Common Share Purchase Warrants.
Year 2000 Issue.
The Year 2000 issue arises because many computerized systems
use two digits rather than four to identify a year. Date
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using the year
2000 date is processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to represent
something other than a date. The effects of the Year 2000 issue
may be experienced after January 1, 2000, and if not addressed,
the impact on operations and financial reporting may range from
minor errors to significant system failure which could affect the
Registrant's ability to conduct normal business operations. This
creates potential risk for all companies, even if their own
computer systems are Year 2000 compliant. It is not possible to
be certain that all aspects of the Year 2000 issue affecting the
Registrant, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
The Registrant currently believes that its systems are Year 2000
compliant in all material respects. Although management is not
aware of any material operational issues or costs associated with
preparing its internal systems for the Year 2000, the Registrant
may experience serious unanticipated negative consequences (such
as significant downtime for one or more of its suppliers) or
material costs caused by undetected errors or defects in the
technology used in its internal systems. Furthermore, the
purchasing patterns of consumers may be affected by Year 2000
issues. The Registrant does not currently have any information
about the Year 2000 status of its potential material suppliers.
The Registrant's Year 2000 plans are based on management's best
estimates.
Forward Looking Statements.
The foregoing Management's Discussion and Analysis contains
"forward looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Act of 1934, as amended, and as contemplated under the
Private Securities Litigation Reform Act of 1995, including
statements regarding, among other items, the Registrant's
business strategies, continued growth in the Registrant's
markets, projections, and anticipated trends in the Registrant's
business and the industry in which it operates. The words
"believe," "expect," "anticipate," "intends," "forecast,"
"project," and similar expressions identify forward-looking
statements. These forward-looking statements are based largely
on the Registrant's expectations and are subject to a number of
risks and uncertainties, certain of which are beyond the
Registrant's control. The Registrant cautions that these
statements are further qualified by important factors that could
cause actual results to differ materially from those in the
forward looking statements, including, among others, the
following: reduced or lack of increase in demand for the
Registrant's products, competitive pricing pressures, changes in
the market price of ingredients used in the Registrant's products
and the level of expenses incurred in the Registrant's
operations. In light of these risks and uncertainties, there can
be no assurance that the forward-looking information contained
herein will in fact transpire or prove to be accurate. The
Registrant disclaims any intent or obligation to update "forward
looking statements".
ITEM 7. FINANCIAL STATEMENTS.
Financial statements as of and for the year ended December
31, 1999, and for the year ended December 31, 1998 are presented
in a separate section of this report following Part IV.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not Applicable
PART III.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS AND COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT.
(a) Officers and Directors.
Jason Cassis, Chief Executive Officer/Director.
Mr. Cassis, age 32, is a leader with a strong sense of "the big
picture" that drives him to be a strong motivator, coordinator
and visionary. From 1997 to 1999 he was an external marketing
consultant and senior training consultant with GA Kayser and Sons
in Buffalo, NY. where he coordinated his management team's effort
in the marketing launch of numerous start-up programs that
required strong management, motivation and public speaking
skills. Prior to 1997, Mr. Cassis was the owner of Voila Salon
and Spa, Inc. in Waterloo, Ontario. Mr. Cassis will be directly
responsible for the financing, imaging and marketing of the
Registrant, and will have a hands-on roll in the development and
marketing of the products and services offered by Urbana
Enterprises Corp.
David M. Groves, President/Director.
Mr. Groves, age 50, brings over 20 years of senior management
experience (CEO & COO positions) with particular expertise in
emerging technologies and markets including e-commerce, internet
marketing, wireless communications, electronic billing systems
and a variety of internet business models. He was the President
and CEO of Image Data International Corporation from 1991-1997
and went on to serve as Senior Vice President at Omega Digital
Data Inc. until June 1998 and started E-Bill Direct, Inc. shortly
thereafter. Along with his strong technical and administrative
background, Mr. Groves brings considerable experience in the
financial areas of acquisitions, divestitures, public offerings
and private placements and he will be counted on to contribute in
a leadership capacity in all these areas. He currently serves as
CEO of Urbana Enterprises Corp.
Robert S. Tyson, Vice President/Secretary/Director.
Mr. Tyson, age 40, is an experienced administrator of 12
years specializing in the development of emerging public
companies having held senior management positions or management
consulting positions with emerging companies in the manufacturing
and high-tech sectors. From 1991 to 1996 Mr. Tyson was president
of Watson Bell Communications, Inc. and its predecessor company,
Silent Communications Inc. Watson Bell was a public company
trading on the Vancouver Stock Exchange that developed a hand-
held telecommunications device. Mr. Tyson has spent the past 4
years as a consultant with MCA Equities Ltd., a Vancouver based
business consulting firm and has served as an officer and
director of this firm since 1997. Mr. Tyson is responsible for
the corporate affairs of the Registrant, including all issues to
do with corporate governance and assisting with finance,
administrative, contract and corporate communications issues.
Greg Alexanian, Vice President/Chief Operating Officer/Director.
Mr. Alexanian, age 34, has developed a strong operations
background from his 15 years experience performing a similar role
as a major shareholder in a chain of 16 home carpet and
accessories retailers, Alexanian Carpet. As COO of Urbana
Enterprises Corp., he will be responsible for vendor and
distributor relations and ensure that the Registrant delivers
product to its customers in a reliable and timely manner.
Rick Whittaker, Vice President, Business Development/Director.
Mr. Whittaker, age 41, has extensive experience in the area
of wireless monitoring and collection of public utility
consumption data for billing purposes. From 1992-1998, he was the
Vice President of Sales and a co-founder of Nexsys Commtech
International Inc. where he was the project manager responsible
for the successful development of a $3 million wireless meter
reading project and its pilot testing with 3 Canadian and 1
American utility. He was also the president and co-founder of
Enersphere in 1998. Mr. Whittaker is directly responsible for the
development and expansion of the Registrant's LocalNet project.
Robert Hoegler, Director.
Mr. Hoegler, age 55, currently serves as a director of MCA
Equities Ltd, a Vancouver, Canada based consulting firm that
provides financing and corporate development services to clients
in Canada and the U.S. He has held this position for the past 10
years. In addition, he has worked as an investment and investor
relations consultant to both private and public companies across
North America for the past 15 years. He is also a director of
Eiger Technology Inc. a Toronto Stock Exchange listed high-tech
company.
Mario Aiello, Director.
Mr. Aiello, age 50, has more than 15 years experience as an
advisor and consultant in the corporate and financial markets. In
a consulting capacity, he has successfully developed financial
and administrative programs for clients in a variety of market
segments ranging from high-tech to natural resources. He has been
directly responsible for financing many of these companies and
for securing share-listing status for more than 30 of them, both
on Canadian and U.S. exchanges. Mr. Aiello has been President and
Director of MCA Equities Ltd. for the past 15 years.
(b) Key Employees.
Henry Tyler, Vice President, Electronic Bill Presentment.
Mr. Tyler, age 54, has more than 20 years experience with
leading Canadian companies having mastered skills in analysis,
design, development, tactical & strategic planning, project
management, administration and sales. Mr. Tyler sold and managed
the development and delivery of multi-million dollar E-commerce
business solutions to companies such as American Express, IBM and
four of Canada's five chartered banks. From 1996-1998, he was
Vice President, Sales for Omega Digital Data, Inc. where he was
responsible for the sale and delivery of the first hand-held
wireless LAN terminal solutions to the Bank of Nova Scotia. He
became a partner and Vice President of E-Bill Direct, Inc. in
1999. Mr. Tyler will be responsible to oversee and review all
technical and product development issues as well as sales of the
Registrant's Electronic Bill Presentment products and solutions.
John Cullen, Chief Technology Officer.
Mr. Cullen, age 39, has been developing and managing R&D and
technical sales programs for the past 11 years. These projects
include developing communications and information technology
solutions for the utilities markets. Mr. Cullen has held
executive management positions with various successful start-ups
including Telular Canada Inc. and Control Advancements Inc. from
1989 to 1998. He then became a partner in Enersphere in 1998. Mr.
Cullen is responsible for the research, product design and
quality control of new product offerings as well as providing
technical sales support.
The Registrant does not have standing audit, nominating or
compensation committees of the Board of Directors, or
committees performing similar functions. During the last fiscal
year, the Board of Directors met on two occasions.
(b) Compliance with Section 16(a) of the Exchange Act.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Registrant's directors, certain officers and persons holding 10%
or more of the Registrant's common stock to file reports
regarding their ownership and regarding their acquisitions and
dispositions of the Registrant's common stock with the Securities
and Exchange Commission. The Registrant is unaware that any
required reports were not timely filed.
ITEM 10. EXECUTIVE COMPENSATION.
(a) All directors, officers and key employees have been
retained under Management Contracts with the exception of Mr.
Hoegler and Mr. Aiello. None of the individual's total
compensation including special allowances or bonuses exceeds
$70,000 CDN per year, which such compensation commenced on
January 1, 1999. All officers and directors will be reimbursed
for expenses incurred on behalf of the Registrant including
director expenses pertaining to attendance at meetings. It is
anticipated that additional management will be hired as the
Registrant develops and revenue is generated. The salaries paid
to new employees will be consistent with the salaries of others
in similar positions in the industry.
(b) During the year the Registrant cancelled its previous
stock option plan along with all outstanding stock options
previously granted to directors, officers, and employees of the
Registrant. A new stock option plan was adopted during the year
and received shareholders' approval. To date, no options have
been granted under this plan.
(c) There are no annuity, pension or retirement benefits
proposed to be paid to officers, directors, or employees of the
corporation in the event of retirement at normal retirement date
pursuant to any presently existing plan provided or contributed
to by the corporation or any of its subsidiaries.
(d) No remuneration is proposed to be paid in the future
directly or indirectly by the corporation to any officer or
director under any plan which is presently existing.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth information regarding the
beneficial ownership of shares of the Registrant's common stock
as of March 24, 2000 (22,038,283 issued and outstanding) by (i)
all stockholders known to the Registrant to be beneficial owners
of more than 5% of the outstanding common stock; and (ii) all
directors and executive officers of the Registrant as a group:
Title of Name and Address of Amount of Percent
Class Beneficial Owner Beneficial of Class
Ownership (1)
Common
Stock Da-Jung Resources Corp. 5,016,650 22.76%
P.O. Box 71
Road Town
British Virgin Islands
Common
Stock David Groves 1,817,500 8.25%
211 Water Street North
Cambridge, Ontario, N1R 3B9
Common
Stock Henry Tyler 1,725,000 7.83%
211 Water Street North
Cambridge, Ontario, N1R 3B9
Common
Stock Richard Wittaker 1,575,000 7.15%
211 Water Street North
Cambridge, Ontario, N1R 3B9
Common
Stock John Cullen 1,125,000 5.10%
98 Willow Street
Waterloo, Ontario N2J 1W2
Common
Stock Doris Cullen 1,125,000 5.10%
98 Willow Street
Waterloo, Ontario N2J 1W2
Common
Stock Jason Cassis 1,102,500 5.00%
211 Water Street North
Cambridge, Ontario, N1R 3B9
Common
Stock Greg Alexanian 1,102,500 5.00%
211 Water Street North
Cambridge, Ontario, N1R 3B9
Common
Stock Robert Hoegler 20,000 0.09%
750 West Pender Street
Suite 804
Vancouver, British Columbia
V6C 2T8
Common
Stock Robert S. Tyson 0 0.00%
750 West Pender Street
Suite 804
Vancouver, British Columbia
V6C 2T8
Common
Stock Mario Aiello 0 0.00%
750 West Pender Street
Suite 804
Vancouver, British Columbia
V6C 2T8
Common
Stock Shares of all directors and 6,292,500 28.55%
executive officers as a
group (7 persons)
(1) Except as noted in footnote 2 below, each person has sole
voting power and sole dispositive power as to all of the shares
shown as beneficially owned by them
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Other than as set forth below, there are no relationships,
transactions, or proposed transactions to which the registrant
was or is to be a party, in which any of the named persons set
forth previously had or is to have a direct or indirect material
interest.
By virtue of the acquisition of the three Acquired Entities
(Urbana.ca Enterprises Corp., Enersphere.com, Inc. and E-Bill
Direct, Inc.), and the fact that all directors and officers,
except Robert Tyson, are shareholders of one of the Acquired
Entities, said directors and officer beneficially own a
cumulative total of 10,450,000 shares in the capital of the
Registrant. As such, these individuals are in a position to elect
members of the board of directors, set their own compensation and
approve affiliated transactions. Although the Registrant's
principals intend to act fairly and in full compliance with their
fiduciary obligations, there can be no assurance that the
Registrant will not, as a result of the conflict of interest
described above, possibly enter into arrangements under terms
less favorable than it could have obtained had it been dealing
with other persons.
Certain of the officers and directors of the Registrant are
engaged in other businesses, either individually or through
partnerships and corporations in which they have an interest,
hold an office, or serve on a board of directors. As a result,
certain conflicts of interest may arise between the Registrant
and its officers and directors. The Registrant will attempt to
resolve such conflicts of interest in favor of the Registrant.
The officers and directors of the Registrant are accountable to
it and its shareholders as fiduciaries, which requires that such
officers and directors exercise good faith and integrity in
handling the Registrant's affairs. A shareholder may be able to
institute legal action on behalf of the Registrant or on behalf
of itself and other similarly situated shareholders to recover
damages or for other relief in cases of the resolution of
conflicts is in any manner prejudicial to the Registrant.
PART IV.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) Index to Financial Statements and Schedules Page
Report of Independent Accountants 27
Balance Sheets of the Registrant as
of December 31, 1999 and December 31, 1998 28
Statements of Operations for the year ended
December 31, 1999 and the year ended December 31, 1998 29
Statements of Shareholders' Equity for the year
ended December 31, 1999 and the year ended December 31, 1998 30
Statements of Cash Flows for the year ended
December 31, 1999 and the year ended December 31, 1998 31
Notes to Financial Statements 32
(b) Reports on Form 8-K. Other than as set forth below, there
were no reports on Form 8-K filed during the last quarter of the
fiscal year covered by this report. A report on Form 8-K was
filed on November 22, 1999 reflecting the following:
(1) The replacement, effective on July 21, 1999, of Mario Aiello
as President of the Registrant by Jason Cassis, a member of the
Board of Directors; Mr. Aiello remained a member of the Board of
Directors. On this date, Gregory Alexanian was appointed to the
Board of Directors to serve until the next annual meeting of the
shareholders.
(2) Effective on August 13, 1999, the name of the Registrant was
changed to "Urbana.ca, Inc." Also effective on this date, the
new trading symbol for the Registrant on the Over the Counter
Bulletin Board was "URBA."
(c) Exhibits included or incorporated by reference herein: See
Exhibit Index
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Urbana.ca, Inc.
Dated: March 29, 2000 By: /s/ Jason Cassis
Jason Cassis, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities and on the date indicated:
Signature Title Date
/s/ Jason Cassis Chief Executive Officer/Director March 29, 2000
Jason Cassis
/s/ David M. Groves President/Director March 29, 2000
David M. Groves
/s/ Greg Alexanian Vice President/Chief Operating March 29, 2000
Officer/Director
/s/ Robert S. Tyson Vice President/Secretary/ March 29, 2000
Robert S. Tyson Director
/s/ Rick Whittaker Vice President, Business March 29, 2000
Rick Whittaker Development/Director
/s/ Robert Hoegler Director March 29, 2000
Robert Hoegler
/s/ Mario Aiello Director March 29, 2000
Mario Aiello
AUDITORS' REPORT
To the Board of Directors of Urbana.ca, Inc.
We have audited the consolidated balance sheet of Urbana.ca, Inc.
(a development stage company) as at December 31, 1999 and the
consolidated statements of operations, changes in stockholders'
equity and cash flows for the year then ended. 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 generally accepted
auditing standards. Those standards require that we plan and
perform an audit to obtain reasonable assurance 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.
In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as at December 31, 1999 and the results of its operations
and the changes in stockholders' equity and cash flows for the
year then ended in accordance with generally accepted accounting
principles in the United States.
The Company's financial statements as at December 31, 1998 and
for the year then ended were audited by other auditors who
expressed an opinion without reservation on those statements in
their report dated March 17, 1999.
LaBonte & Co.
Chartered Accountants
February 23, 2000, except as to Note 11 which is as of March 13, 2000
Vancouver, B.C.
COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-UNITED STATES
REPORTING DIFFERENCES
In the United States, reporting standards for auditors' would
require the addition of an explanatory paragraph following the
opinion paragraph when the financial statements are affected by a
significant uncertainty such as referred to in Note 1 regarding
the Company's ability to continue as a going concern. Our report
to the directors dated February 23, 2000 is expressed in
accordance with Canadian reporting standards which do not permit
a reference to such uncertainties in the auditors' report when
the uncertainties are adequately disclosed in the financial
statements.
LaBonte & Co.
Chartered Accountants
February 23, 2000
Vancouver, B.C.
URBANA.CA, INC.
(Formerly Integrated Carbonics Corp.)
(A development Stage Company)
CONSOLIDATED BALANCE SHEETS
December 31 December 31
ASSETS
CURRENT ASSETS
Cash $ 535 $ 713
Prepaid expenses 7,667 2,342
8,202 3,055
DUE FROM RELATED PARTIES (Note 7) 64,037 -
FURNITURE AND EQUIPMENT, net of
Depreciation - 4,784
INVESTMENT IN GRAPHITE PROCESSING
JOINT VENTURE (Note 3) - 253,408
$ 72,239 $ 261,247
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
Liabilities $ 144,187 $ 156,360
Agreement payable (Note 4) - 130,000
Loans payable (Note 6) 60,000 -
204,187 286,360
COMMITMENTS AND CONTINGENCIES
(Notes 1 and 10)
STOCKHOLDERS' EQUITY (DEFICIT)
Capital stock (Note 6)
Authorized
Common stock, $0.0001 par value,
70,000,000 shares
Preferred stock, $0.001 par value,
10,000,000 shares
Issued and outstanding
11,082,318 (1998 - 9,856,350)
shares of common stock 11,082 9,856
Additional paid-in capital 1,132,549 673,590
Deficit accumulated during
development stage (1,277,309) (708,559)
Accumulated other comprehensive
Income 1,730 -
(131,948) (25,113)
72,239 261,247
Approved on behalf of the Board:
/s/ Jason Cassis
/s/ Robert Tyson
Jason Cassis - Director
Robert Tyson - Director
The accompanying notes are an integral part of these consolidated
financial statements
URBANA.CA, INC.
(Formerly Integrated Carbonics Corp.)
(A development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended Year ended February 23
December 31 December 31 1993
1999 1998 (inception)
to
December 31
1999
EXPENSES
Consulting $ 218,285 $ - $ 218,285
Depreciation 1,753 4,078 6,139
Engineering costs - 274,170 274,170
Interest expense - 9,549 9,636
Office and general 43,390 195,298 259,884
Professional fees 23,497 49,752 81,099
Transfer agent and
filing fees 9,953 5,556 22,903
Rent 18,464 30,494 53,081
Salaries - 83,704 83,704
Write-off of interest
in mineral property - 15,000 15,000
Write-off of Graphite
processing joint venture
(Note 3) 253,408 - 253,408
NET LOSS FOR THE PERIOD 568,750 667,601 1,277,309
BASIC NET LOSS PER SHARE 0.06 0.07
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 10,299,764 9,168,248
The accompanying notes are an integral part of these consolidated
financial statements
URBANA.CA, INC.
(Formerly Integrated Carbonics Corp.)
(A development stage company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM FEBRUARY 23,1993 (INCEPTION) TO DECEMBER 31,
1999
Deficit
Common Stock Add'l Accumulated Accumu
Paid In During lated
Development other
Number Amount Capital Stage comp Total
income
Common stock
issued for
cash 105,000 105 2,895 - 3,000
Net loss
period ended
December 31
1993 - - - (2,746) - (2,746)
Balance
December 31
1993 105,000 105 2,895 (2,746) - 254
Net loss
year ended
December 31
1994 - - - (61) - (61)
Balance
December 31
1994 105,000 105 2,895 (2,807) - 193
Net loss
year ended
December 31
1995 - - - (61) - (61)
Balance
December 31
1995 105,000 105 2,895 (2,868) - 132
Net loss
year ended
December 31
1996 - - - (861) - (861)
Balance
December 31
1996 105,000 105 2,895 (3,729) - (729)
Issued for
interest in
mineral
property 150,000 150 14,850 - - 15,000
Issued for
Graphite
Processing
Joint Venture
Investment
(Note 3) 6,000,000 6,000 - - - 6,000
Common
stock issued
for cash 540,000 540 53,460 - - 54,000
Net loss
year ended
December 31
1997 - - - (37,229) - (37,229)
Balance
December 31
1997 6,795,000 6,795 71,205 (40,958) - 37,042
Common stock
issued for
cash 3,061,350 3,061 602,385 - - 605,446
Net loss
year ended
December 31
1998 - - (667,601) - (667,601)
Balance
December 31
1998 9,856,350 9,856 673,590 (708,559) - (25,113)
Issued for
consulting
services 535,000 535 172,992 - - 173,527
Shares
Reacquired
on
cancellation
of contract (360,000) (360) (133,362) - - (133,722)
Issued on
Settlement
of debts 1,050,968 1,051 419,329 - - 420,380
Net loss
year ended
December 31
1999 - - - (568,750) - (568,750)
Currency
translation
adjustment - - - - 1,730 1,730
Balance
December 31
1999 11,082,318 11,082 1,132,549 (1,277,309) 1,730 (131,948)
The accompanying notes are an integral part of these consolidated
financial statements
URBANA.CA, INC.
(Formerly Integrated Carbonics Corp.)
(A development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended Year ended February 23
December 31 December 31 1993
1999 1998 (Inception)
to
December 31
1999
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss for the
Period (568,750) (667,601) (1,277,309)
Adjustments to
reconcile net loss to
net cash from operating
activities:
depreciation 1,753 4,078 6,139
imputed interest
on long term debt - 9,000 9,000
organization costs - - (308)
loss on disposal
of furniture and
equipment 2,031 1,589 3,620
write-off of
interest in mineral
property - 15,000 15,000
write-off of
investment in
graphite
processing
joint venture 253,408 - 253,408
net changes in
non-cash working
capital 226,419 108,496 365,992
CASH USED IN
OPERATING ACTIVITIES (85,139) (529,438) (624,458)
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of furniture
and equipment - (11,423) (11,423)
Proceeds from sale of
furniture and
equipment 1,000 972 1,972
Investment in
graphite processing
joint venture - (2,420) (37,463)
Purchase of other
Assets - - (4,500)
CASH FLOWS FROM
(USED IN)
INVESTING
ACTIVITIES 1,000 (12,871) (51,414)
CASH FLOWS FROM
FINANCING
ACTIVITIES
Advances from
related parties 22,231 - 22,231
Payments on
agreement payable - (70,000) (70,000)
Loan advances 60,000 - 60,000
Issuance of common
Stock - 568,446 662,446
CASH FLOWS FROM
FINANCING
ACTIVITIES 82,231 498,446 674,677
EFFECT OF EXCHANGE
RATE CHANGES ON CASH 1,730 - 1,730
(DECREASE) INCREASE
IN CASH (178) (43,863) 535
CASH BEGINNING OF
PERIOD 713 44,576 -
CASH END OF PERIOD 535 713 535
Non-cash activities: Refer to Notes 3, 4, 6 and 7.
The accompanying notes are an integral part of these consolidated
financial statements
URBANA.CA, INC.
(Formerly Integrated Carbonics Corp.)
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
The Company was organized on February 23, 1993 under the laws of
the State of Delaware as PLR, Inc. On October 3, 1997, it
changed its name to Integrated Carbonics Corp. and on October 30,
1997, changed its jurisdiction of incorporation to Nevada. On
April 15, 1999 a wholly-owned subsidiary company, ICC Integrated
Carbonics (Canada) Corp. ("ICC"), was incorporated under the laws
of British Columbia to facilitate acquisitions in Canada. The
Company subsequently changed its name to Urbana.ca, Inc.
The Company signed joint venture agreements in 1998 and 1997 for
the construction and operation of two graphite processing plants
in the People's Republic of China. During the fourth quarter of
1999, due to the inability of the company to raise project
funding, these joint venture interests were abandoned (Refer to
Note 3). Concurrently, the Company entered into agreements to
acquire, through ICC, 100% of the outstanding shares of Urbana.ca
Enterprises Corp. ("Urbana Enterprises"), (formerly
HomeNet100.com Enterprises, Inc.), E-Bill Direct Inc. ("E-Bill"),
and Enersphere.com, Inc. ("Enersphere"). Each of these
acquisitions was completed subsequent to year end. (Refer to Note
11)
The consolidated financial statements have been prepared on the
basis of a going concern which contemplates the realization of
assets and satisfaction of liabilities in the normal course of
business. The Company is a development stage enterprise and as
such has no revenue and is incurring substantial costs in
connection with pursuing business opportunities. At December 31,
1999 the Company has a working capital deficiency of $195,985 and
has losses of $568,750 for the year then ended. The ability of
the Company to continue as a going concern is dependent on its
ability to obtain additional financing and ultimately to attain
profitable operations.
As of December 31, 1999, $60,000 has been raised through loans
to the Company. Subsequent to year end, the Company has received
additional loans totalling approximately $1,224,162. (Refer to
Notes 5 and 11)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation.
These financial statements are expressed in US dollars and have
been prepared in accordance with accounting principles generally
accepted in the United States.
Principles of Consolidation.
The financial statements include the accounts of the Company and
its wholly-owned subsidiary ICC Integrated Carbonics (Canada)
Corp. All significant intercompany balances and transactions are
eliminated on consolidation.
Use of Estimates and Assumptions.
Preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Investment in joint ventures.
The Company records its investment in joint ventures at cost
until such time as the venturers contribute in full their initial
capital contribution at which time they are recorded on the
equity basis. The investment in joint ventures will be written
down when an impairment in value has been determined and will be
written off when abandoned.
Foreign Currency Translation.
The financial statements are presented in United States dollars.
In accordance with Statement of Financial Accounting Standards
No. 52, "Foreign Currency Translation", foreign denominated
monetary assets and liabilities are translated to their United
States dollar equivalents using foreign exchange rates which
prevailed at the balance sheet date. Revenue and expenses are
translated at average rates of exchange during the year. Related
translation adjustments are reported as a separate component of
stockholders' equity, whereas gains or losses resulting from
foreign currency transactions are included in results of
operations.
Net Loss per Common Share.
Basic earnings per share includes no dilution and is computed by
dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period.
Dilutive earnings per share reflects the potential dilution of
securities that could share in the earnings of the Company.
Because the Company does not have any potentially dilutive
securities, the accompanying presentation is only of basic loss
per share.
Stock-based Compensation.
The Company accounts for stock-based compensation using the
intrinsic value based method in accordance with Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees ("APB No.25"). APB No. 25 requires that compensation
cost be recorded for the excess, if any, of the quoted market
price of the common stock over the exercise price at the date the
options are granted. In addition, as required by SFAS No. 123,
the company provides pro-forma disclosure of the impact of
applying the fair value method of SFAS No. 123.
Recent accounting policies.
In June 1998, the FASB issued Statement No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities".
SFAS 133 establishes standards for accounting for derivative
instruments. SFAS 133 is effective for fiscal years beginning
after June 15, 1999. The adoption of SFAS 133 does not have a
material effect on the Company's financial statements.
NOTE 3 - INVESTMENT IN GRAPHITE PROCESSING JOINT VENTURE
Liumao Graphite Mine.
On October 7, 1997, the Company entered into an agreement with
Da-Jung Resource Corp., a company controlled by certain directors
of the Company, to acquire 100% of its rights and obligations
pursuant to an "Agreement on Establishment of a Sino Foreign
Equity Joint Venture" with Jixi Liumao Graphite Mine, of
Heilongjiang Province, the People's Republic of China.
Consideration for this agreement was 6,000,000 restricted shares
of the Company's common stock, plus $200,000 of which $70,000 has
been paid and $130,000 was settled by the issuance of 325,000
restricted shares of common stock.
On November 10, 1997, the Company entered into a formal agreement
with the Liumao Graphite Mine to form a joint venture company
named ICC Liumao Graphite Products, Ltd. The purpose of the
joint venture company is to establish value added graphite
processing facilities at the Liumao Mine in China to produce high
purity graphite, expandable graphite, graphite sheet or other
graphite products.
The total investment of the Company in the joint venture company
is stipulated as 80% of anticipated joint venture construction
costs of $28 million, and the Company will obtain an 80% share of
the profits over a thirty year period. Further investment in the
joint venture by the Company is contingent on the completion of
additional financing arrangements. Due to the inability of the
Company to raise project funding, the joint venture has been
abandoned and the Company has written off its investment
resulting in a loss of $253,408.
YiChang.
On September 21, 1998, the Company entered into an interim
agreement with YiChang Heng Da Graphite Group Company Ltd.
("YiChang") to obtain a 55% interest in a proposed joint venture
between YiChang and the Company. Due to the inability of the
Company to raise project funding, the joint venture project was
abandoned without any financial loss to the Company.
NOTE 4 - AGREEMENT PAYABLE
1999 1998
Amount payable to Da-Jung Resource
Corp. on acquisition of its
interest in the graphite processing
joint venture $ - $130,000
During the year this amount has been settled with the issuance of
325,000 shares of common stock of the Company at a price of $0.40
per share.
NOTE 5 - LOANS PAYABLE
During the year the Company received loans totalling $60,000.
These amounts are due March 15, 2000 and bear interest at an
annual rate of 8%. If the Company defaults on these loans, the
lender has the right to convert the amount of principal borrowed
into shares of capital stock of the Company at $0.50 per share
subject to a 15% market price adjustment.
Refer to Note 11.
NOTE 6 - CAPITAL STOCK
The Company has given retroactive effect and restated share
numbers to give effect to the following capital transactions:
On March 15, 1996, the Company changed its authorized common
stock of 15,000 shares with $5.00 par value, to 50,000,000 common
shares with par value $.001 and 10,000,000 preferred shares with
a par value $.001. The Company also approved a forward stock
split on the basis of 3,500:1, increasing the number of
outstanding shares of common stock from 600 shares to 2,100,000
shares.
On January 17, 1997, the Company completed a forward stock split
of 5:1, increasing the number of shares of common stock
outstanding from 2,100,000 shares outstanding to 10,500,000
shares outstanding.
On October 31, 1997, at a special meeting of the Shareholders,
the Shareholders approved a reverse stock split of 1:100 thus
reducing the number of common shares outstanding from 25,500,000
shares to 255,000 shares of common stock.
On October 31, 1997, the Shareholders authorized a Regulation
D Rule 504 offering of a maximum of 2,300,000 units at $.10 per
unit consisting of one common share and one warrant exercisable
at $.33 per share for six months. Pursuant to this financing, the
Company issued 540,000 shares for proceeds of $54,000 during the
year ended December 31, 1997 and 1,760,000 shares for proceeds of
$176,000 during the year ended December 31, 1998. In addition,
during the year ended December 31, 1998, 1,301,350 of the related
share purchase warrants were exercised for proceeds of $429,446
and the remaining share purchase warrants expired.
In January 1999, the Company entered into a one-year corporate
finance advisory agreement, cancellable at any time on 30 days
written notice, and agreed to issue 350,000 restricted shares of
common stock at predetermined dates over the course of the
contract. 175,000 shares were issued at a value of $39,780 and
subsequently the agreement was cancelled.
Also in January 1999, the Company entered into a consulting
agreement and issued 360,000 restricted common shares at a value
of $133,722. No services were provided under this contract and
the parties subsequently agreed to terminate the agreement in
August 1999 and the 360,000 shares were reacquired by the Company
at no cost and returned to treasury.
On May 7, 1999, at the Company's Annual General Meeting, the
shareholders approved an increase in the number of authorized
shares of common stock from 50,000,000 shares to 70,000,000
shares.
During the year the following transactions were completed:
The Company settled debts of $86,268 to a private company of
which an officer is a relative of a director of the Company, and
a director of Urbana Enterprises, by the issuance of 215,665
restricted shares of common stock at a price of $0.40 per share.
As described in Note 4, the Company settled its agreement payable
by the issuance of 325,000 restricted shares of common stock at a
price of $0.40 per share.
The Company settled certain of its trade accounts payable by the
issuance of 510,303 restricted shares of common stock at a price
of $0.40 per share
Refer to Note 11.
NOTE 7 - RELATED PARTY TRANSACTIONS
As of December 31, 1998, accounts payable includes $3,929 due to
certain directors of the Company and companies under their
control. During the year the these parties incurred $43,070 of
expenses on behalf of the Company and the company made net
repayments of $20,109 leaving $26,890 due to these parties at
December 31, 1999.
During the year, net advances were made directly and indirectly
on behalf of the company to Enersphere and Urbana Enterprises,
two companies subsequently acquired by the Company, totalling
$16,266 and $114,661 respectively. (Refer to Note 11)
During the year the Company incurred $40,000 of consulting fees
to a private company controlled by a relative of a director. In
addition, the Company incurred $3,335 of consulting fees to a
private company of which an officer is a relative of a director
of the Company and this private company made advances on behalf
of the Company to Enersphere and Urbana Enterprises totalling
$82,933. During the year $86,268 of these amounts were settled by
the issuance of 215,665 restricted shares of common stock,
leaving $40,000 payable at December 31, 1999 (Refer to Note 11).
All amounts due to and from related parties are unsecured, non-
interest bearing, and have no specific terms of repayment.
NOTE 8 - STOCK-BASED COMPENSATION
During the year, the Company cancelled its previous stock option
plan and all options granted thereon. A new Stock Option Plan was
adopted which will provide options to purchase up to 2,000,000
common shares of the Company for its employees, officers and
directors. The options that will be granted pursuant to the
Stock Option Plan are exercisable at a price of $0.50 which is
equal to the fair value of the common shares at the time of
adoption of the plan
As at December 31, 1999, no stock-based compensation cost has
been recorded for any period and no stock options have been
issued under this plan.
Refer to Note 11.
NOTE 9 - INCOME TAXES
The Company has net operating loss carryforwards which result in
deferred tax assets. The realization of the benefits from these
deferred tax assets appears uncertain due to the Company's
limited operating history and continuing losses. Accordingly, no
benefit has been recorded for deferred tax assets.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Fair Value of Financial Instruments.
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS
No. 107. Disclosures about Fair Value of Financial Instruments.
The estimated fair value amounts have been determined by the
Company, using available market information and appropriate
valuation methodologies. The fair value of financial instruments
classified as current assets or liabilities including cash and
cash equivalents and notes and accounts payable approximate
carrying value due to the short-term maturity of the instruments.
Uncertainty Due to the Year 2000 Issue.
The Year 2000 issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using year 2000 dates is
processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something
other than a date. Although the change in date has occurred, it
is not possible to conclude that all aspects of the Year 2000
issue that may affect the Company, including those related to
customers, suppliers, or other third parties, have been fully
resolved.
NOTE 11 - SUBSEQUENT EVENTS
Loans Payable.
During January and February 2000, the Company received additional
loans of $1,224,162 resulting in a total to date of $1,284,162.
These amounts are due March 15, 2000 and bear interest at an
annual rate of 8%. If the Company defaults on these loans, the
lender has the right to convert the amount of principal borrowed
into shares of capital stock of the Company at $0.50 per share
subject to a 15% market price adjustment.
Capital Stock.
The Company settled $40,000 due to a relative of a director by
the issuance of 100,000 restricted shares of common stock at a
price of $0.40 per share.
The Company settled a total of $99,900 of accounts payable by the
issuance of 333,000 restricted shares of common stock at a price
of $0.30 per share relating to consulting agreements dated July
14, 1999 and July 19, 1999.
The Company settled $9,190 of accounts payable by the issuance of
22,975 restricted shares of common stock at a price of $0.40 per
share.
The Company issued $50,000 restricted shares of common stock, at
a price of $0.40 per share, as a retainer pursuant to a media
relations contract dated December 15, 1999.
Acquisitions.
Subsequent to year end, the Company completed the following
acquisitions:
(1) Urbana Enterprises.
By agreement dated January 4, 2000, the Company's wholly-owned
subsidiary ICC, acquired 100% of the outstanding shares of Urbana
Enterprises, a company engaged in distribution of Linux based set
top boxes which are used as an alternative method of delivering
internet content. Urbana Enterprises was incorporated November
18, 1998 in the province of British Columbia.
In consideration for the acquisition, ICC issued 3,000,000 non-
voting exchangeable shares. The holders of these shares have been
granted votes in the Company on a basis of one vote for each
exchangeable share of ICC held. A holder of an exchangeable share
may, at any time, require ICC to repurchase the exchangeable
share for an amount equal to the then current market value of a
common share of the Company. ICC may satisfy the resulting
obligation in cash or in Company shares at its option. Any
exchangeable share not exchanged within 25 years is to be
cancelled.
Pursuant to the terms of the agreement, the Company issued
3,000,000 common shares in trust to be held under the terms of a
trust agreement executed January 4, 2000 until such time as the
exchangeable shares are exchanged by their holders or all
remaining exchangeable shares are cancelled.
In anticipation of this acquisition, two shareholders of Urbana
Enterprises, each holding a 36.75% interest in Urbana
Enterprises, became directors of the Company effective July 21,
1999 and, subsequent to the acquisition, entered into five year
management contracts for an aggregate of Cdn$120,000 in year 1
and for amounts to be negotiated for years 2 through 5. In
addition, the Company has also agreed to grant a total of 400,000
stock options to these individuals pursuant to the Stock Option
Plan implemented in 1999.
Urbana Enterprises had net losses totalling $193,171 for the
period from May 1, 1999 (inception) to December 31, 1999.
This business combination will be accounted for using the
purchase method of accounting. The purchase price has been
allocated as follows:
Assets acquired at fair value:
Current assets $ 17,716
Capital assets 7,387
Goodwill 1,093,102
1,118,205
Liabilities assumed at fair value:
Accounts payable (87,474)
Due to related parties (130,731)
Purchase price 3,000,000 shares at
$0.30 per share $ 900,000
Goodwill arising on this acquisition will be amortized on a
straight-line basis over 5 years.
(2) E-Bill.
By agreement dated January 10, 2000, the Company's wholly-owned
subsidiary ICC, acquired 100% of the outstanding shares of E-
Bill, a company engaged in designing, developing and providing
electronic presentment and payment services to the business
community. E-Bill was incorporated May 27, 1999 in the province
of Ontario.
In consideration for the acquisition, ICC issued 2,950,000 non-
voting exchangeable shares. The holders of these shares have been
granted votes in the Company on a basis of one vote for each
exchangeable share of ICC held. A holder of an exchangeable share
may, at any time, require ICC to repurchase the exchangeable
share for an amount equal to the then current market value of a
common share of the Company. ICC may satisfy the resulting
obligation in cash or in Company shares at its option. Any
exchangeable share not exchanged within 25 years is to be
cancelled.
Pursuant to the terms of the agreement, the Company issued
2,950,000 common shares in trust to be held under the terms of a
trust agreement executed January 10, 2000 until such time as the
exchangeable shares are exchanged by their holders or all
remaining exchangeable shares are cancelled.
This business combination will be accounted for using the
purchase method of accounting. The purchase price has been
allocated as follows:
Assets acquired at fair value:
Current assets $ 9
Capital assets 4,646
Goodwill 812,645
817,300
Liabilities assumed at fair value:
Accounts payable (4,021)
Due to related parties (16,779)
Purchase price 2,950,000 shares at
$0.27 per share $ 796,500
Goodwill arising on this acquisition will be amortized on a
straight-line basis over 5 years.
E-Bill had losses totalling $16,214 for the period from May 27,
1999 (inception) to December 31, 1999.
Subsequent to the acquisition, the Company signed three year
management contracts with the two principals of E-Bill in the
aggregate of Cdn$120,000 in year 1, Cdn$160,000 in year 2 and
Cdn$120,000 in year 3. In addition, the Company has also agreed
to grant a total of 200,000 stock options to these individuals
pursuant to the Stock Option Plan implemented in 1999.
(3) Enersphere.
By agreement dated January 9, 2000, the Company's wholly-owned
subsidiary ICC, acquired 100% of the outstanding shares of
Enersphere, a content company that utilizes set-top boxes as
their medium to deliver internet and intranet-based services to
customers. Enersphere was incorporated September 28, 1999 in the
province of Ontario.
In consideration for the acquisition, ICC paid $84,828 and issued
4,500,000 non-voting exchangeable shares. The holders of these
shares have been granted votes in the Company on a basis of one
vote for each exchangeable share of ICC held. A holder of an
exchangeable share may, at any time, require ICC to repurchase
the exchangeable share for an amount equal to the then current
market value of a common share of the Company. ICC may satisfy
the resulting obligation in cash or in Company shares at its
option. Any exchangeable share not exchanged within 25 years is
to be cancelled.
Pursuant to the terms of the agreement, the Company issued
4,500,000 common shares in trust to be held under the terms of a
trust agreement executed January 9, 2000 until such time as the
exchangeable shares are exchanged by their holders or all
remaining exchangeable shares are cancelled.
This business combination will be accounted for using the
purchase method of accounting. The purchase price has been
allocated as follows:
Assets acquired at fair value:
Current assets $ 3,540
Capital assets 10,324
Goodwill 1,729,731
1,743,595
Liabilities assumed at fair value:
Accounts payable (28,995)
Due to related parties (99,772)
Purchase price $84,828 and
4,500,000 shares at $0.34 per share 1,614,828
Goodwill arising on this acquisition will be amortized on a
straight-line basis over 5 years.
Enersphere had net losses totalling $114,917 for the period from
September 28, 1999 (inception) to December 31, 1999.
Subsequent to the acquisition, the Company signed two year
management contracts with the two principals of Enersphere in the
aggregate Cdn$160,000 in year 1 and Cdn$250,000 in year 2. In
addition, the Company has also agreed to grant a total of 200,000
stock options to these individuals pursuant to the Stock Option
Plan implemented in 1999.
Financing Agreement.
Subsequent to December 31, 1999 the Company entered into an
agreement with an Agent to raise up to US$25,000,000 by a private
placement offering of Special Warrants. The Company will issue
up to 5,555,555 Special Warrants at a price of US$4.50 per
Special Warrant pursuant to a best efforts offering by the Agent.
A cash commission of 8% of the capital raised by the Special
Warrants is payable along with Compensation Options equal to 10%
of the units issued. Each Special Warrant will entitle the
holder to receive, for no additional consideration, one common
share of the Company and one half of one Common Share Purchase
Warrant. Each whole Common Share Purchase Warrant will entitle
the holder to purchase one common share at a price of US$10.00
for a period of 24 months from the date of closing of the offer
which would result in further funding of US$27,777,777 if all the
Common Share Purchase Warrants were exercised. Closing of the
financing is to be April 26, 2000 or such other date as agreed by
the Company and the Agent.
Amalgamation.
Effective March 10, 2000, Urbana Enterprises, Enersphere and E-
Bill were amalgamated under the statutory laws of the Province of
Ontario into a new company named Urbana Enterprises Corp.
Name change.
Effective February 22, 2000, ICC changed its name to U.R.B.A.
Holdings Inc.
The following pro-forma consolidated financial information,
consisting of the pro-forma consolidated balance sheet as at
December 31, 1999, has been prepared to illustrate the estimated
effect of ICC's acquisitions of Urbana Enterprises, Enersphere
and E-Bill, as described in note 11, as if they had occurred on
December 31, 1999. The pro-forma consolidated balance sheet
presents the effect on the consolidated balance sheet of the
Company based on the following pro-forma adjustments:
(1) The acquisition of Urbana Enterprises as described in Note 11 and
the allocation of the purchase price thereon.
(2) The acquisition of Enersphere as described in Note 11 and the
allocation of the purchase price thereon.
(3) The acquisition of E-Bill as described in Note 11 and the
allocation of the purchase price thereon.
(4) The reallocation and elimination of certain intercompany
balances.
URBANA.CA,INC.
(Formerly Integrated Carbonics Corp)
(A development stage company)
PRO-FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
Pro-Forma Adjustments
Urbana Pro Forma
Urbana.ca Enter- Enersphere E-Bill Consoli
Inc. prises Urbana.ca
(1) (2) (3) (4)
ASSETS
CURRENT
ASSETS $ 8,202 $ 17,716 $ 3,540 $ 9 $ 29,467
DUE FROM
RELATED
PARTIES 64,037 - - - (64,037) -
FURNITURE
AND
EQUIPMENT
net of
depreciation - 7,387 10,324 4,646 - 22,357
GOODWILL - 1,093,102 1,729,731 812,645 - 3,635,478
$ 72,239 $1,118,205 $1,743,595 $817,300 $(64,037)$3,687,302
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
LIABILITIES $ 204,187 $ 87,474 $ 28,995 $ 4,021 $ -$ 324,677
DUE TO
RELATED
PARTIES - 130,731 184,600 16,779 (64,037) 268,073
STOCKHOLDERS'
EQUITY
(DEFICIT)
Common stock 11,082 - - - - 11,082
Additional
paid-in
capital 1,132,549 - - - - 1,132,549
Exchange
able
shares - 900,000 1,530,000 796,500 - 3,226,500
Deficit
Accumu
lated
during
dev
stage (1,277,309) - - - -(1,277,309)
Accumu
lated
other
comp
income 1,730 - - - 1,730
(131,948) 900,000 1,530,000 796,500 - 3,094,552
72,239 1,118,205 1,743,595 817,300 64,037) 3,687,302
EXHIBIT INDEX
Exhibit Description
No.
2 Articles of Merger of Foreign Corporation into Integrated
Carbonics Corp. (incorporated by reference to Exhibit 2 to the
Registration Statement on Form 10-SB/A filed on December 17,
1998).
3.1 Articles of Incorporation of Integrated Carbonics Corp.
(incorporated by reference to Exhibit 3.1 of the Registration
Statement on Form 10-SB/A filed on December 17, 1998.
3.2 Certificate of Amendment to Articles of Incorporation of
Integrated Carbonics Corp. (incorporated by reference to Exhibit
3.2 of the Form 10-QSB filed on November 15, 1999).
3.3 Bylaws of Integrated Carbonics Corp. (incorporated by
reference to Exhibit 3.2 of the Registration Statement on
Form 10-SB/A filed on December 17, 1999).
4 Integrated Carbonics Corp. 1999 Stock Option Plan
(incorporated by reference to Exhibit 4 to the Form 10-QSB filed
on November 15, 1999).
10.1 September 22, 1997 Agreement between Da-Jung Resource Corp.
and PLR, Inc. (incorporated by reference to Exhibit 10.1 of the
Registration Statement on Form 10-SB/A filed on December 17,
1998).
10.2 October 7, 1997 Agreement between Da-Jung Resource Corp. and
Integrated Carbonics Corp. (incorporated by reference to Exhibit
10.2 of the Registration Statement on Form 10-SB/A filed on
December 17, 1998).
10.3 September 9, 1997 Agreement on Establishment of Sino Equity
Joint Venture, China-Canada Liumao Graphite Products Co. Ltd.
(incorporated by reference to Exhibit 10.3 of the Registration
Statement on Form 10-SB/A filed on December 17, 1998).
10.4 November 10, 1997 Equity Joint Venture Liumao Graphite Mine
and Integrated Carbonics Corp. (incorporated by reference to
Exhibit 10.4 of the Registration Statement on Form 10-SB/A filed
on December 17, 1998).
10.5 August, 1997 Cooperative Joint Venture Agreement between
Heilongjiang Geological and Mining Technology Development Corp.
and Da-Jung Resource Corp. (incorporated by reference to Exhibit
10.5 of the Registration Statement on Form 10-SB/A filed on
December 17, 1998).
21 Subsidiaries of the Registrant (see below).
27 Financial Data Schedule (see below).
SUBSIDIARIES OF THE REGISTRANT
U.R.B.A. Holdings Inc. (formerly known as ICC Integrated
Carbonics (Canada) Corp.)
<TABLE> <S> <C>
<S> <C>
<PAGE>
<ARTICLE>5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE REGISTRANT'S FORM 10-KSB AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER>1
<S>
<C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> DEC-31-1999 DEC-31-1998
<CASH> 535 713
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 8,202 3,055
<PP&E> 0 4,784
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 72,239 261,247
<CURRENT-LIABILITIES> 204,187 286,360
<BONDS> 0 0
0 0
0 0
<COMMON> 11,082 9,856
<OTHER-SE> (131,948) (25,113)
<TOTAL-LIABILITY-AND-EQUITY> 72,239 261,247
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 586,750 658,052
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 9,549
<INCOME-PRETAX> (568,750) (667,601)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (568,750) (667,601)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (568,750) (667,601)
<EPS-BASIC> (.06) (.07)
<EPS-DILUTED> (.06) (.07)
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