U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
URBANA.CA, INC.
(Name of Small Business Issuer in its Charter)
Nevada 454110 88-0393257
(State or jurisdiction of (Primary Standard Industrial I.R.S. Employer
incorporation or Classification Code Number) Identification No.)
organization
750 West Pender Street, Suite 804, Vancouver, British Columbia V6C 2T8
(Address and telephone number of Registrant's principal executive
offices and principal place of business)
Brian F. Faulkner, Esq., 3900 Birch Street, Suite 113, Newport Beach, Ca
(949) 975-0544
(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public: As soon as practicable
after this registration statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box.
CALCULATION OF REGISTRATION FEE
Title of Amount to be Proposed Proposed Amount of
Securities Registered Maximum Aggregate Registration
to be Offering Offering Fee
Registered Price Per Price
Share (1)
Common Stock 46,563,029 $0.6875 $32,012,082 $8,451.19
The company hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the company
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
(1) Pursuant to Rule 416, such additional amounts to prevent dilution from
stock splits or similar transactions.
(2) Calculated in accordance with Rule 457(c): The average of the bid
and ask price as of August 15, 2000.
PROSPECTUS
URBANA.CA, INC.
6,563,029 Shares
Common Stock *
Urbana.ca, Inc., a Nevada corporation, is hereby offering shares of
common stock on a delayed basis under a shelf registration under Rule
415 pursuant to the terms of this prospectus. A total of 46,563,029
shares of common stock are to be registered, as follows (maximum
amounts): (a) 2,921,939 shares for selling shareholders; (b) 423,994
shares to be issued by the company upon exercise of purchase warrants to
be issued upon the exercise of special warrants; (c) 84,798 shares to
be issued upon the exercise of agent's compensation options to be issued
upon the exercise of agent's special warrants; (d) 42,399 shares to be
issued by the company upon exercise of agent's purchase warrant to be
issued upon the exercise of agent's compensation options; (e) 2,059,933
shares to be issued by the company under units to be issued upon loan
conversions; (f) 1,029,966 shares to be issued by the company upon the
exercise of purchase warrants under units to be issued upon loan
conversions; (g) 25,000,000 shares for sales to the public for cash; (h)
12,000,000 shares for possible future acquisitions by the company of
other companies and/or assets; and (i) 3,000,000 shares for consulting
services for the company. Cash sales of the shares will be used as
working capital for the company.
The shares offered hereby are highly speculative and involve a high
degree of risk to public investors and should be purchased only by
persons who can afford to lose their entire investment (See "Risk
Factors" on page 5).
These securities have not been approved or disapproved by the U.S.
Securities and Exchange Commission or any state securities commission
nor has the U.S. Securities and Exchange Commission or any state
securities commission passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Price to Public Underwriting Proceeds to
Discounts and Issuer (3)
Commissions (2)
Per Share $ (1) $0 $ (1)
Total Maximum $ (1) $0 $ (1)
Information contained herein is subject to completion or amendment. The
registration statement relating to the securities has been filed with
the U.S. Securities and Exchange Commission. The securities may not be
sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any state in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
Subject to Completion, Dated: ______________, 2000
* Pursuant to SEC Rule 416, there will be a change in the amount of
securities being issued to prevent dilution resulting from stock splits,
stock dividends, or similar transaction.
(1) The price per share, the maximum amount to be raised under this offering
and the proceeds to the company will be dependent on the market price at
the times that drawdowns are taken under a common stock purchase
agreement.
(2) No commissions will be paid in connection with the sale of the
shares on this delayed basis.
(3) The Proceeds to the company is before the payment of certain
expenses in connection with this offering. See "Use of
Proceeds."
TABLE OF CONTENTS
PROSPECTUS SUMMARY 5
RISK FACTORS 7
USE OF PROCEEDS 17
DETERMINATION OF OFFERING PRICE 18
SELLING SHAREHOLDERS 18
PLAN OF DISTRIBUTION 21
LEGAL PROCEEDINGS 30
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS 30
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 32
DESCRIPTION OF SECURITIES 34
INTEREST OF NAMED EXPERTS AND COUNSEL 35
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES 35
ORGANIZATION WITHIN LAST FIVE YEARS 40
DESCRIPTION OF BUSINESS 40
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 54
DESCRIPTION OF PROPERTY 57
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 57
MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 58
EXECUTIVE COMPENSATION 60
FINANCIAL STATEMENTS 61
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 89
AVAILABLE INFORMATION 89
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by detailed
information appearing elsewhere in this prospectus. Each prospective
investor is urged to read this prospectus in its entirety.
The Company.
(a) Background.
The company was originally organized in the State of Delaware in
February 1993 under the name of PLR, Inc. In November 1997, the company
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 company has one subsidiary, U.R.B.A. Holdings Inc., a private
British Columbia corporation, in which it owns all of the issued and
outstanding voting shares. U.R.B.A. Holdings Inc. in turn owns all of
the issued and outstanding shares of Urbana Enterprises Corp., a private
company amalgamated in Ontario.
Urbana Enterprises Corp. resulted from the merger of three subsidiaries
of U.R.B.A. Holdings Inc., Urbana.ca Enterprises Corp. (a British
Columbia private corporation), Enersphere.com Inc. (an Ontario private
corporation) and E-Bill Direct, Inc. (an Ontario private corporation) on
March 10, 2000. Urbana Enterprises Corp. is the operating subsidiary of
the company.
The company's head office is at 22 Haddington Street, Cambridge,
Ontario, N1R 3B9, and the address of its registered office in Canada is
Suite 700, 625 Howe Street, Vancouver, British Columbia, V6C 2T6. The
address of its registered office in Nevada is Suite 4, 711 South Carson
Street, Carson City, Nevada, 89701.
(b) Business.
The company 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 company 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
maximum target market on a one-to-one basis. The company's aim is to
achieve that success by delivering rich content through a set-top-box
medium.
The Offering.
Shares of common stock of the company will be sold on a delayed basis
under a shelf registration under Rule 415. A total of 46,563,029 shares
of common stock are to be registered, as follows (maximum amounts):
2,921,939 shares for selling shareholders.
423,994 shares to be issued by the company upon exercise of purchase
warrants to be issued upon the exercise of special warrants.
84,798 shares to be issued upon the exercise of agent's compensation
options to be issued upon the exercise of agent's special warrants.
42,399 shares to be issued by the company upon exercise of agent's
purchase warrant to be issued upon the exercise of agent's compensation
options.
2,059,933 shares to be issued by the company under units to be issued
upon loan conversions.
1,029,966 shares to be issued by the company upon the exercise of
purchase warrants under units to be issued upon loan conversions.
25,000,000 shares for sales to the public for cash.
12,000,000 shares for possible future acquisitions by the company of
other companies and/or assets.
3,000,000 shares for consulting services for the company.
The cash sale price of the shares will be modified, from time to time,
by amendment to this prospectus, in accordance with changes in the
market price of the company's common stock.
Liquidity of Investment.
Although the shares will be "free trading," there has been only a
limited public market for the shares. Therefore, an investor may not be
able to sell shares when he or she wishes; therefore, an investor may
consider his or her investment to be long-term.
Risk Factors.
An investment in the company involved risks due in part to a limited
previous financial and operating history of the Company, as well as
competition in the industry of the Company. Also, certain potential
conflicts of interest arise due to the relationship of the company to
management and others.
RISK FACTORS
The securities offered hereby are highly speculative in nature and
involve a high degree of risk. They should be purchased only by persons
who can afford to lose their entire investment. Therefore, each
prospective investor should, prior to purchase, consider very carefully
the following risk factors among other things, as well as all other
information set forth in this prospectus.
Early Stage of Development.
The company is at an early stage of development. The company has not
completed the development of any commercial products, and, accordingly,
has no profitable operating history upon which investors may rely. The
company has received limited revenues from operations and expects that
most of its revenues in the foreseeable future will result from further
corporate collaborations, if any. The company's product candidates will
require significant additional investment in research and development
will require substantial resources. There can be no assurance that any
of the Issuer's products will meet applicable regulatory standards,
obtain required regulatory approvals, or be capable of being produced in
commercial quantities at reasonable costs. Products that may result
from the company's research and development programs are not expected to
be commercially available for a number of years, if at all, and it will
be a number of years, if ever, before the company will receive any
significant revenues from commercial sales of such products. There is no
assurance that the company will be able to enter into any corporate
collaborations or that the company will ever achieve profitability.
Limited Revenues, History of Operating Loss and Accumulated Deficit.
The company has had no sales revenue to date. Although the company has
been involved with e-commerce since 1999, it has been engaged only in
research and development. The company has incurred significant
operating losses, including a net loss of $568,750 in Fiscal 1999. At
June 30, 2000, the company had an accumulated deficit of $2,985,599.
Notwithstanding the company's objective to accelerate the period in
which a return on investment would typically be recognized with
traditional technology companies, for some projects it may be a number
of years, if ever, before the company will receive any significant
revenues from commercial sales of products. The future growth and
profitability of the company will be principally dependent upon its
ability to successfully complete development of, obtain regulatory
approvals for, and market or license its proposed products.
Accordingly, the company's prospects must be considered in light of the
risks, expenses and difficulties frequently encountered in connection
with the establishment of a new business in a highly competitive
industry, characterized by new product introductions. The company
anticipates that it will incur substantial operating expenses in
connection with the research, development, testing and approval of its
proposed products and expects these expenses to result in continuing and
significant losses until such time as the company is able to achieve
adequate revenue levels. There can be no assurance that the company
will be able to significantly increase revenues or achieve profitable
operations. Failure to obtain additional capital, if needed, would have
a material adverse effect on the company's operations.
Uncertainties of Additional Funding Required.
The company has sufficient funds to undertake its currently planned
research and development activities through fiscal 2000. However, the
company will require substantial funds in order to conduct its future
activities. The company intends to seek these funds through equity
financing, collaborative arrangements with corporate sponsors, or from
other sources. The company may also require additional funds in order
to acquire technology or products that complement the company's efforts.
Financing may not be available or on terms acceptable to the company.
Additional equity financings could result in significant dilution to
existing shareholders. If sufficient capital is not available, or
available at prohibitive cost, the company may be required to delay,
reduce the scope of, eliminate or divest one or more of its discovery,
research or development programs, any of which could have a material
adverse effect on the company's business, financial condition and
results of operations.
On June 15, 2000, the company entered into an agreement with
Ladenburg Thalmann & Co., Inc. for the purpose of this firm to act as
the company's exclusive placement agent (later revised to non-exclusive)
and financial advisor in connection with a best efforts raising of up to
$3,500,000. Under the terms of this agreement, the company agrees to
pay Ladenburg a cash fee of 6% of the funds raised and to issued to this
firm a warrant to purchase common stock equal to 6% of the funds so
raised. To date no funds have been secured for the company under this
agreement. There is no guarantee that funds will be available under
this agreement in the future for use by the company.
No Assurance of Regulatory Approval - Potential Delays.
In order for a product developed by the company or its collaborators to
be marketed and sold in a particular country, it must receive all
relevant regulatory approvals or clearances. The regulatory process,
which includes extensive studies and trials of each product in order to
establish its efficacy, is uncertain, can take many years and requires
the expenditure of substantial resources. Data obtained from a trial
and activities are susceptible to varying interpretations which could
delay, limit or prevent regulatory approval or clearance. In addition,
delays or rejections may be encountered based upon changes in regulatory
policy during the period of product development and/or the period of
review of any application for regulatory approval or clearance for a
product. Delays in obtaining regulatory approvals or clearances would
adversely affect the marketing of any products developed by the company
or its collaborators, impose significant additional costs on the company
and its collaborators, diminish any competitive advantages that the
company or its collaborators may attain and adversely affect the
company's ability to receive royalties and generate revenues and
profits. There can be no assurance that, even after such time and
expenditures, any required regulatory approvals or clearances will be
obtained for any products developed by or in collaboration with the
company.
Any regulatory approval or clearances granted may entail limitations on
the indicated uses for which the new product may be marketed that could
limit the potential market for such product. In addition, product
approvals or clearances, once granted, may be withdrawn if problems
occur after initial marketing. Furthermore, manufacturers of approved
products are subject to pervasive review, including compliance with
detailed regulation governing good manufacturing practices. Failure to
comply with applicable regulatory requirements can result in actions
such as warning letters, fines, injunctions, civil penalties, recall or
seizure of products, total or partial suspension of production and
refusal of the government to renew marketing applications or criminal
prosecution.
The company is also subject to numerous federal, state and local laws,
regulations and recommendations relating to safe working conditions,
manufacturing practices, research and development activities. The
company is unable to predict the extent of government regulations which
might have an adverse effect on the discovery, development, production
and marketing of the company's products. Also, there can be no
assurance that the company will not be required to incur significant
costs to comply with current or future laws or regulations or that the
company will not be adversely affected by the cost of such compliance.
Acceptance And Effectiveness Of Internet Electronic Commerce.
The company's success in establishing an e-commerce business web
site will be dependent on consumer acceptance of e-retailing and an
increase in the use of the Internet for e-commerce. If the markets for
e-commerce do not develop or develop more slowly than the company
expects, its e-commerce business may be harmed. If Internet usage does
not grow, the company may not be able to increase revenues from Internet
advertising and sponsorships which also may harm both our retail and e-
commerce business. Internet use by consumers is in an early stage of
development, and market acceptance of the Internet as a medium for
content, advertising and e-commerce is uncertain. A number of factors
may inhibit the growth of Internet usage, including inadequate network
infrastructure, security concerns, inconsistent quality of service, and
limited availability of cost-effective, high-speed access. If these or
any other factors cause use of the Internet to slow or decline, our
results of operations could be adversely affected.
Competition In Internet Commerce.
Increased competition from e-commerce could result in reduced
margins or loss of market share, any of which could harm both our retail
and e-commerce businesses. Competition is likely to increase
significantly as new companies enter the market and current competitors
expand their services. Many of the company's present and potential
competitors are likely to enjoy substantial competitive advantages,
including larger numbers of users, more fully-developed e-commerce
opportunities, larger technical, production and editorial staffs, and
substantially greater financial, marketing, technical and other
resources. If the company does not compete effectively or if it
experiences any pricing pressures, reduced margins or loss of market
share resulting from increased competition, the company's business could
be adversely affected.
Unreliability Of Internet Infrastructure.
If the Internet continues to experience increased numbers of
users, frequency of use or increased bandwidth requirements, the
Internet infrastructure may not be able to support these increased
demands or perform reliably. The Internet has experienced a variety of
outages and other delays as a result of damage to portions of its
infrastructure, and could face additional outages and delays in the
future. These outages and delays could reduce the level of Internet
usage and traffic on the company website. In addition, the Internet
could lose its viability due to delays in the development or adoption of
new standards and protocols to handle increased levels of activity. If
the Internet infrastructure is not adequately developed or maintained,
use of the company website may be reduced. Even if the Internet
infrastructure is adequately developed, and maintained, the company may
incur substantial expenditures in order to adapt its services and
products to changing Internet technologies. Such additional expenses
could severely harm the company's financial results.
Transactional Security Concerns.
A significant barrier to Internet e-commerce is the secure
transmission of confidential information over public networks. Any
breach in our security could cause interruptions in the operation of our
website and have an adverse effect on the company's business.
Patents, Permits and Licenses.
The company considers patent protection and proprietary technology to be
materially significant to its business. The company relies on certain
patents and pending applications relating to various aspects of its
potential products and technology. These patents and patent
applications are either owned by or exclusively licensed to the company.
There can be no assurance that the company will be able to obtain and
retain all necessary patents, licenses and permits that may be required
to carry out the research and development, manufacturing, testing,
obtaining regulatory approvals and marketing of commercial products.
There can also be no assurance that others will not independently
develop similar technologies, duplicate any technology developed by the
company, the company's technology will not infringe upon patents or
other rights owned by others, that any of the company's patents will not
be challenged, invalidated or circumvented, or that the rights granted
thereunder will provide competitive advantages to the company.
Litigation, which could result in substantial cost to the company, may
be necessary to enforce the company's rights provided by its patents or
to determine the scope and validity of others' proprietary rights.
There have been no patent infringement claims filed by or against the
company, and the company is not aware of any potential claims.
No Assurance Regarding Licensing of Proprietary Technology Owned by
Others.
The manufacture and sale of any products developed by the company will
involve the use of processes, products, or information, the rights to
certain of which are owned by others. Although the company has obtained
licenses or rights with regard to the use of certain of such processes,
products, and information, there can be no assurance that such licenses
or rights will not be terminated or expire during critical periods, that
the company will be able to obtain licenses or other rights which may be
important to it, or, if obtained, that such licenses will be obtained on
favorable terms. Some of these licenses provide for limited periods of
exclusivity that may be extended only with the consent of the licensor.
There can be no assurance that extensions will be granted on any or all
such licenses. This same restriction may be contained in licenses
obtained in the future.
No Assurance of Protection of Proprietary Information.
Certain of the company's know-how and proprietary technology may not be
patentable. To protect its rights, the company requires management
personnel, employees, consultants, advisors and collaborators to enter
into confidentiality agreements. There is no assurance, however, that
these agreements will provide meaningful protection for the company's
trade secrets, know-how or other proprietary information in the event of
any unauthorized use or disclosure.
No Assurance of Market Acceptance.
There can be no assurance that any products successfully developed by
the company or its corporate collaborators, if approved for marketing,
will ever achieve market acceptance. The company's products, if
successfully developed, may compete with a number of traditional
products manufactured and marketed by major e-commerce and technology
companies, as well as new products currently under development by such
companies and others. The degree of market acceptance of any products
developed by the company or its corporate collaborators will depend on a
number of factors, including the establishment and demonstration of the
efficacy of the product candidates, their potential advantage over
alternative methods and reimbursement policies of government and third
party payors. There can be no assurance that the marketplace in general
will accept and utilize any products that may be developed by the
company or its corporate collaborators.
No Assurance of Successful Manufacturing.
The company has no experience manufacturing commercial quantities of
products and does not currently have the resources to manufacture any
products that it may develop. The company presently has no plans for
developing an in-house marketing or manufacturing capability.
Accordingly, the company will be dependent upon securing a contract
manufacturer or other third party to manufacture such products. There
can be no assurance that the terms of any such arrangement would be
favorable enough to permit the products to compete effectively in the
marketplace.
Dependence on Outsourced Manufacturing. tc "Dependence on Outsourced
Manufacturing
The risks of association with Eagle Wireless are related to aspects of
Eagle's operations, finances and suppliers. Although there are clear and
understandable reasons to choose Eagle Wireless as an outsourced
manufacturer and fulfillment center, Urbana will suffer losses if Eagle
fails to perform its obligations to manufacture and ship the set top
boxes. Eagle's financial affairs may also affect the company's ability
to obtain product from Eagle in a timely fashion should Eagle fail to
continue to obtain sufficient financing during a period of incremental
growth. The company maintains a strong relationship with Eagle to
ensure that any issues Eagle may face are dealt with in a timely manner.
Although the company is currently reliant on Eagle, it does not intend
to develop its own manufacturing capability.
Competition.
There are inherent difficulties for any new company seeking to enter an
established field. The company may experience substantial competition in
its efforts to locate and attract customers for its services. Many
competitors in the company's field have greater experience, resources,
and managerial capabilities than the company and may be in a better
position than the company to attract such customers. There are a number
of larger companies which may directly compete with the company. Such
competition could have a material adverse effect on the company'
profitability or viability.
Dependence on and Management of Future Corporate Collaborations.
The success of the company's business strategy is largely dependent on
its ability to enter into collaborations such as research alliances and
licensing arrangements with universities, e-commerce companies and large
technological companies, and to effectively manage the relationships
that may come to exist as a result of this strategy. The company is
currently seeking corporate collaborators, but there can be no assurance
that such efforts will lead to the establishment of any favorable
collaboration. There can be no assurance that any of the company's
future or existing collaborators will commit sufficient resources to the
company's research and development programs or the commercialization of
its products. Also, there can be no assurance that such collaborators
will not pursue existing or other development-stage products or
alternative technologies in preference to those being developed in
collaboration with the company, or that disputes will not arise with
respect to ownership of technology developed under any such
collaborations. Management of the company's collaborative relationships
will require significant time and effort from the company's management
team and effective allocation of the company's resources.
Currency Fluctuations.
The company reports its financial position and results of operations in
U.S. dollars in its annual financial statements. The company's
operations result in exposure to foreign currency fluctuation and such
fluctuations may materially affect the company's financial position and
results of operations. The company does not currently take any steps to
hedge against currency fluctuations.
Influence of Other External Factors.
The Internet industry in general is a speculative venture necessarily
involving some substantial risk. There is no certainty that the
expenditures to be made by the company will result in a commercially
profitable business. The marketability of its services will be affected
by numerous factors beyond the control of the company. These factors
include market fluctuations, and the general state of the economy
(including the rate of inflation and local economic conditions), which
can affect peoples' discretionary spending. Factors which leave less
money in the hands of potential customers of the company will likely
have an adverse affect on the company. The exact effect of these
factors cannot be accurately predicted, but the combination of these
factors may result in the company not receiving an adequate, or any,
return on invested capital.
Dependence Upon Key Personnel.
The company is dependent upon a relatively small number of key
management personnel and key employees and the loss of any of these key
management personnel and key employees could have an adverse effect on
the company. Competition among e-commerce companies for qualified
employees is intense, and the ability to retain and attract qualified
individuals is critical to the success of the company. In order to
reduce its risk regarding key employees, the company has entered into an
employment agreement with each of its key employees. The company is
also dependent, to some extent, on the guidance of certain members of
its advisory board, none of whom is obligated, or will devote his full-
time efforts, to the business of the company. There can be no assurance
that the company will be able to attract and retain such individuals
currently or in the future on acceptable terms, or at all. In addition,
the company does not maintain "key person" life insurance on any
officer, employee or consultant of the company. The company also has
relationships with scientific collaborators at academic and other
institutions, some of whom conduct research at the company's request or
assist the company in formulating its research and development strategy.
These collaborators are not employees of the company and may have
commitments to, or consulting or advisory contracts with, other entities
that may limit their availability to the company. In addition, these
collaborators may have arrangements with other companies to assist such
other companies in developing technologies that may prove competitive to
those of the company.
In addition, all decisions with respect to the management of the
company will be made exclusively by the officers and directors of the
company. Investors will only have rights associated with minority
ownership interest rights to make decisions which effect the company.
The success of the company, to a large extent, will depend on the
quality of the directors and officers of the company. Accordingly, no
person should invest in the shares unless he is willing to entrust all
aspects of the management of the company to the officers and directors.
Inexperience of Management.
Senior management has limited direct experience in the sale of set top
boxes and the other related businesses of the company. Management will
rely on senior employees, consultants and strategic alliances to assist
with project management. The company has every intention to continue
adding experienced management commensurate with the growth of the
company.
Management of Growth.
The company's future growth, if any, may cause a significant strain on
its management, operational, financial and other resources. The
company's ability to manage its growth effectively will require it to
implement and improve its operational, financial, manufacturing and
management information systems and to expand, train, manage and motivate
its employees. These demands may require the addition of new management
personnel and the development of additional expertise by management.
Any increase in resources devoted to research, product development and
marketing and sales efforts without a corresponding increase in the
company's operational, financial, manufacturing and management
information systems could have a material adverse effect on the
company's business, financial condition, and results of operations.
Control of the Company by Officers and Directors.
The company's officers and directors beneficially own
approximately 39% of the outstanding shares of the company's common
stock. As a result, such persons, acting together, have the ability to
exercise significant influence over all matters requiring stockholder
approval. Accordingly, it could be difficult for the investors
hereunder to effectuate control over the affairs of the company.
Therefore, it should be assumed that the officers, directors, and
principal common shareholders who control the majority of voting rights
will be able, by virtue of their stock holdings, to control the affairs
and policies of the company.
Purchases by Affiliates.
Certain officers, directors, principal shareholders and affiliates may
purchase for investment purposes a portion of the special Warrants
offered hereby. This would increase the percentage of the company's
common stock owned by such persons.
Limitations on Liability, and Indemnification, of Directors and
Officers.
Although neither the articles of incorporation nor the bylaws
of the company provide for indemnification of officer or directors of
the company, the Nevada Revised Statutes provides for permissive
indemnification of officers and directors and the company may provide
indemnification under such provisions. Any limitation on the liability
of any director, or indemnification of directors, officer, or employees,
could result in substantial expenditures being made by the company in
covering any liability of such persons or in indemnifying them.
Potential Conflicts of Interest.
The officers and directors of the company have other interests to which
they devote time, either individually or through partnerships and
corporations in which they have an interest, hold an office, or serve on
boards of directors. As a result, certain conflicts of interest may
exist between the company and its officers and/or directors which may
not be susceptible to resolution. In addition, an employee of the
company's corporate counsel in Canada, Maitland & Company, has a
beneficial interest in or the right to acquire, up to 250,000 common
shares of the company.
In addition, conflicts of interest may arise in the area of corporate
opportunities. All of the potential conflicts of interest will be
resolved through exercise by the directors of such judgment as is
consistent with their fiduciary duties to the company. It is the
intention of management, so as to minimize any potential conflicts of
interest, to present first to the board of directors of the company, any
proposed investments for its evaluation.
No Cumulative Voting.
Holders of the shares are not entitled to accumulate their votes for the
election of directors or otherwise. Accordingly, the holders of a
majority of the shares present at a meeting of shareholders will be able
to elect all of the directors of the company, and the minority
shareholders will not be able to elect a representative to the company's
board of directors.
Absence of Cash Dividends.
The board of directors does not anticipate paying cash dividends on the
shares for the foreseeable future and intends to retain any future
earnings to finance the growth of the company's business. Payment of
dividends, if any, will depend, among other factors, on earnings,
capital requirements, and the general operating and financial condition
of the company, and will be subject to legal limitations on the payment
of dividends out of paid-in capital.
Limited Public Market for Company's Securities.
Prior to this offering, there has been only a limited public market for
the shares of common stock being offered. There can be no assurance
that an active trading market will develop or that purchasers of the
shares will be able to resell their securities at prices equal to or
greater than the respective initial public offering prices.
The market prices for the securities of technology companies have
historically been highly volatile. The market has from time to time
experienced significant price and volume fluctuations that are unrelated
to the operating performance of any particular company. The market
price of the shares may be affected significantly by factors such as
announcements by the company or its competitors, variations in the
company's results of operations, and market conditions in the retail,
electron commerce, and internet industries in general. The market price
may also be affected by movements in prices of stock in general. As a
result of these factors, purchasers of the shares offered hereby may not
be able to liquidate an investment in the shares readily or at all.
No Assurance of Continued Public Trading Market; Risk of Low Priced
Securities.
There has been only a limited public market for the common
stock of the company. The common stock of the company is currently
quoted on the Over the Counter Bulletin Board. As a result, an investor
may find it difficult to dispose of, or to obtain accurate quotations as
to the market value of the company's securities. In addition, the common
stock is subject to the low-priced security or so called "penny stock"
rules that impose additional sales practice requirements on broker-
dealers who sell such securities. The Securities Enforcement and Penny
Stock Reform Act of 1990 requires additional disclosure in connection
with any trades involving a stock defined as a penny stock (generally,
according to recent regulations adopted by the U.S. Securities and
Exchange Commission, any equity security that has a market price of less
than $5.00 per share, subject to certain exceptions), including the
delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated therewith.
The regulations governing low-priced or penny stocks sometimes limit the
ability of broker-dealers to sell the company's common stock and thus,
ultimately, the ability of the investors to sell their securities in the
secondary market.
Effects of Failure to Maintain Market Makers.
If the company is unable to maintain a National Association of
Securities Dealers, Inc. member broker/dealers as market makers, the
liquidity of the common stock could be impaired, not only in the number
of shares of common stock which could be bought and sold, but also
through possible delays in the timing of transactions, and lower prices
for the common stock than might otherwise prevail. Furthermore, the
lack of market makers could result in persons being unable to buy or
sell shares of the common stock on any secondary market. There can be
no assurance the company will be able to maintain such market makers.
Escrowed Proceeds
A portion of the gross proceeds of the private placement were placed
into escrow pursuant to an escrow agreement between the company, Groome
Capital, and Pacific Corporate Trust Company (as escrow agent) on the
closing of the private placement. The proceeds will be released to the
company on the earlier to occur of 4:30 p.m. on April 26, 2001, or the
date on which the escrow agent receives written notice from Groome
Capital that both a receipt for the final prospectus has been issued by
each of the Canadian securities commissions where qualification is
required (and the confirmation has been received) and this Form SB-2 is
declared effective by the U.S. Securities and Exchange Commission.
Offering Price.
The offering price of the shares will be determined in relation to the
then current market price of the shares on the Over the Counter Bulletin
Board. Because of market fluctuations, there can be no assurance that
the shares will maintain market values commensurate with the offering
price.
"Shelf" Offering.
The shares are offered directly by the company on a delayed basis. No
assurance can be given that any or all of the shares will be issued. No
broker-dealer has been retained as an underwriter and no broker-dealer
is under any obligation to purchase any of the shares. In addition, the
officers and directors of the company, collectively, have limited
experience in the offer and sale of securities on behalf of the company.
Use of Proceeds Not Specific.
The proceeds of this offering have been allocated only generally.
Proceeds from the offering have been allocated generally to legal and
accounting, and working capital. Accordingly, investors will entrust
their funds with management in whose judgment investors may depend, with
only limited information about management's specific intentions with
respect to a significant amount of the proceeds of this offering.
Shares Eligible For Future Sale.
All of the 8,572,500 shares of common stock which are currently held,
directly or indirectly, by management have been issued in reliance on
the private placement exemption under the Securities Act of 1933. Such
shares will not be available for sale in the open market without
separate registration except in reliance upon Rule 144 under the
Securities Act of 1933. In general, under Rule 144 a person (or persons
whose shares are aggregated) who has beneficially owned shares acquired
in a non-public transaction for at least one year, including persons who
may be deemed affiliates of the company (as that term is defined under
that rule) would be entitled to sell within any three-month period a
number of shares that does not exceed the greater of 1% of the then
outstanding shares of common stock, or the average weekly reported
trading volume during the four calendar weeks preceding such sale,
provided that certain current public information is then available. If
a substantial number of the shares owned by these shareholders were sold
pursuant to Rule 144 or a registered offering, the market price of the
common stock could be adversely affected.
Investment Valuation Determined by the Board of Directors.
The company's board of directors is responsible for valuation of the
company's investments. There are a wide range of values which are
reasonable for such an investments. Although the board of directors can
adopt several methods for an accurate evaluation, ultimately the
determination of fair value involves subjective judgment not capable of
substantiation by auditing standards. Accordingly, in some instances it
may not be possible to substantiate by auditing standards the value of
the company's investments. The company's board of directors will serve
as the valuation committee, responsible for valuing each of the
company's investments. In connection with any future distributions
which the company may make, the value of the securities received by
investors as determined by the board of directors may not be the actual
value that the investors would be able to obtain even if they sought to
sell such securities immediately after a distribution. In addition, the
value of the distribution may decrease or increase significantly
subsequent to the distributee shareholders' receipt thereof,
notwithstanding the accuracy of the board's evaluation.
Uncertainty Due to Year 2000 Problem.
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 before, on, or 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 company'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 company,
including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
The company 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 company 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 customers may be affected by
Year 2000 issues. The company does not currently have any information
about the Year 2000 status of its potential material suppliers. The
company's Year 2000 plans are based on management's best estimates.
USE OF PROCEEDS
The amount of proceeds from this offering will depend on the
offering price per share and the number of shares sold for cash. When
the initial offering price is determined, this prospectus will be
amended to so indicate; then the amount of proceeds from this offering
can be estimated. The proceeds of the offering, less the expenses of
the offering, will be used to provide working capital for the company.
The following table sets forth the use of proceeds from this
offering (the blank number will be completed upon the amendment of this
prospectus with the initial offering price):
Use of Proceeds Maximum Offering
Amount Percent
Transfer Agent Fee $ 1,000
Printing Costs $ 1,000
Legal Fees $25,000
Accounting Fees $ 1,500
Working Capital
Total
Management anticipates expending these funds for the purposes indicated
above. To the extent that expenditures are less than projected, the
resulting balances will be retained and used for general working capital
purposes or allocated according to the discretion of the board of
directors. Conversely, to the extent that such expenditures require the
utilization of funds in excess of the amounts anticipated, supplemental
amounts may be drawn from other sources, including, but not limited to,
general working capital and/or external financing. The net proceeds of
this offering that are not expended immediately may be deposited in
interest or non-interest bearing accounts, or invested in government
obligations, certificates of deposit, commercial paper, money market
mutual funds, or similar investments.
DETERMINATION OF OFFERING PRICE
The cash offering price of the shares will be determined, from time to
time, based on the current market price of the shares on the Over the
Counter Bulletin Board.
SELLING SHAREHOLDERS
Units Offering.
On May 11, 2000, the company completed a private placement of
847,989 special warrants to nine investors for total consideration of
$1,059,986. Each special warrant is convertible for no additional
consideration at any time after closing of the transactions on April 27,
2000 into one common share and one-half share purchase warrant,
exercisable at a price of $5.00 per whole share purchase warrant. An
aggregate of 847,989 shares of common stock to be converted from these
special warrants are being offered under this prospectus for the account
of the following selling shareholders:
Selling Shareholders Shares Shares Shares
Beneficially Being Beneficially
Owned Prior Offered Owned After
to Offering Offering
National Bank
Financial ITF Austin
Consultancy Services
Ltd. 174,000 116,000 58,000
National Bank
Financial ITF
Benevest S.A. 37,500 25,000 12,500
National Bank
Financial ITF Wajde
Darwish 124,500 83,000 41,500
Gordon G. Hoover 81,000 54,000 27,000
National Bank
Financial ITF
Joryjil Industries
Ltd. 121,980 81,320 40,660
BMO Nesbitt Burns
Inc. ITF Trevor
Leslie 216,825 144,550 72,275
Prudential
Securities Inc. ITF
Societe Financiere
Mirelis S.A. 119,998 79,999 39,999
HSBC Securities
(Canada) Inc. ITF
T.R.L. Investments
Limited 124,200 82,800 41,400
National Bank
Financial ITF
Toyotatown Limited 150,000 100,000 50,000
John Ryan 121,980 81,320 40,660
Total 1,271,983 (1) 847,989 423,994
(1) Included within this total is 423,994 shares underlying purchase
warrants which are presently exercisable until 4:30 p.m. (Toronto time)
on the date which is the earlier of:
the fifth business day following the date on which the last of the final
receipts of the filing of the prospectuses in Canada is issued and this
Form SB-2 registration statement is declared effective by the Securities
and Exchange Commission.
April 26, 2002.
The Plan of Distribution section of this prospectus contains a detailed
discussion of this special warrants offering.
Settlement Conversions.
During the fiscal year ended December 31, 1999, the company settled
debts of $86,268 to Hound Pound Equities, a private company of which an
officer is the stepmother of Jason Cassis, the president and a director
of the company and a director of Urbana Enterprises, Inc., by the
issuance of 215,670 restricted shares at $0.40 per share. The company
also settled its agreement payable of $130,000 to Da-Jung Resources
Corp., a major shareholder in the company (Da-Jung, prior to the debt
settlement, sold the debt to Clyde Resources Ltd.), and various of its
trade payables of $204,122, by the issuance of 325,000 and 510,305,
respectively, restricted shares at $0.40 per share. Subsequent to
December 31, 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.
An aggregate of 1,073,950 shares of common stock converted from
these settlements are being offered under this prospectus for the
account of the following selling shareholders:
Selling Shareholders Shares Shares Shares
Beneficially Being Beneficially
Owned Prior Offered Owned After
to Offering Offering
Douglas Symes &
Brissenden 17,630 17,630 0
Rescan Engineering
Ltd. 169,000 169,000 0
Shawn F. Hackman,
Esq. (former
counsel) 75,444 75,444 0
Nottinghill
Resources 125,000 125,000 0
Hound Pound
Equities Ltd. 215,670 215,670 0
F.R. Ventures Corp. 12,660 12,660 0
Yi-Hong Zhan 12,452 12,452 0
Robert Hoegler
(former director) 20,000 8,137 11,863
Nu-Media Systems
International 35,667 35,667 0
Lakefield Research
Ltd. 51,795 51,795 0
The Letter Shop
(1990) Ltd. 2,518 2,518 0
Clyde Resources
Ltd. 325,000 325,000 0
Ed Dorffi 6,927 6,927 0
The LOM Group 16,050 16,050 0
Total 1,073,950
Da-Jung Resources Corp.
Da-Jung Resource Corp. currently owns a total of 4,842,900 shares
of common stock of the company and is the largest shareholder of the
company. This firm is hereby offering a total of 1,000,000 shares of
its stock under this prospectus (the sale of all these shares would
leave this firm owning a total of 3,842,900 shares of common stock of
the company).
PLAN OF DISTRIBUTION
Units Offering.
The company entered into an agency agreement effective April 10,
2000 with Groome Capital.com Inc. whereby the company and Groome engaged
in a best efforts offering of up to 20,000,000 special warrants at a
price of $1.25 per special warrant. The price of the special warrants
was negotiated between the company and Groome Capital with reference to
the market price of the common shares of the company, dilution, and the
capital needs of the company. Each special warrant is convertible for
no additional consideration into one common share and one-half share
purchase warrant, exercisable at a price of $5.00 per whole share
purchase warrant.
On May 11, 2000, the company completed a private placement of
847,989 special warrants pursuant to exemptions from prospectus
requirements of applicable securities laws in Canada, resulting in gross
proceeds to the company of $1,059,986 from a total of nine investors (a
similar offering was undertaken in the United States, but no sales
resulted from this offering), as follows:
Name of Special Warrant Holder No. of Warrants
Special Warrants
Purchased
National Bank Financial ITF
Austin Consultancy Services
Ltd. 116,000
National Bank Financial ITF
Benevest S.A. 25,000
National Bank Financial ITF
Wajde Darwish 83,000
Gordon G. Hoover 54,000
National Bank Financial ITF
Joryjil Industries Ltd. 81,320
BMO Nesbitt Burns Inc. ITF
Trevor Leslie 144,550
Prudential Securities Inc.
ITF Societe Financiere Mirelis
S.A. 79,999
HSBC Securities (Canada) Inc.
ITF T.R.L. Investments Limited 82,800
National Bank Financial ITF
Toyotatown Limited 100,000
John Ryan 81,320
Total 847,989
Groome received an agent's fee equal to 8% of the total amount
raised (reduced to 4% for investors on the President's List), resulting
in total fees paid of $84,798.88. In addition, Groome has been granted
non-assignable agent's special warrants equaling 10% of the number of
special warrants sold, resulting in the issuance of 84,798 non-
transferable agent's special warrants to Groome Capital. These warrants
entitle the holder to acquire, without additional consideration, one
non-transferable agent's compensation option. Each agent's compensation
option will entitle Groome Capital to purchase, at a price of U.S.
$1.25, one unit consisting of one agent's option share and one-half of
one agent's purchase warrant. Each agent's purchase warrant will
entitle Groome Capital to purchase one agent's warrant share at a price
of U.S. $5.00 each.
The warrants are exercisable at any time after closing until 4:30 p.m.
(Toronto time) on the date which is the earlier of:
the fifth business day following the date on which the last of the final
receipts of the filing of the prospectuses in Canada is issued and this
Form SB-2 registration statement is declared effective by the Securities
and Exchange Commission.
April 26, 2002.
Any special warrants, agent's special warrants, agent's compensation
options, or agent's purchase warrants not previously exercised will be
automatically deemed to have been exercised by the holder at this time
without any further action on the part of the holder.
If, for any reason, a Form SB-2 to register the shares underlying the
warrants and options is not declared effective by September 25, 2000,
the holders of the special warrants and agent's warrants will be
entitled to receive, for no additional consideration, a unit consisting
of 1.1 common shares (rather than one common share) and 0.55 purchase
warrants (rather than 0.50 purchase warrants) upon exercise of each
special warrant held.
(a) Special Warrants
All of the special warrants are identical in all respects. The special
warrants were issued under and are subject to the terms of a Special
Warrant Agreement, dated April 27, 2000, between the company and Pacific
Corporate Trust Company, and include the following terms and conditions:
no fractional common shares will be issued; holders of special warrants
may be entitled to cash payment in respect of fractional entitlements
the special warrants, including the number of common shares issuable
upon exercise or deemed exercise thereof, may be subject to adjustment
upon the occurrence of certain stated events, including the subdivision
or consolidation of common shares, certain distributions of common
shares, or securities convertible into or exchangeable for common
shares, or of other securities or assets of the company, certain
offerings of rights, warrants or options and certain capital
reorganizations
the holding of special warrants will not give the holder rights as a
shareholder of the company
special warrants may be exercised by the holder at any time to and until
the Expiry Time, and special warrants not exercised by the Expiry Time
shall, immediately prior to the Expiry Time, be deemed to have been
exercised without any further action on the part of the holder
(b) Purchase Warrants
All of the purchase warrants are identical in all respects. The
purchase warrants were issued under and are subject to the terms of a
Purchase Warrant Agreement, dated April 27, 2000, between the company
and Pacific Corporate Trust Company, and include:
the purchase warrant agreement provides for the adjustment to exercise
price of the Purchase warrants in certain circumstances, such as a
common share reorganization including where the company subdivides its
outstanding common shares into a greater number or common shares or
where the company conducts a rights offering, and further provides for
an adjustment in the number of common shares which the holder is
entitled to receive upon the exercise of purchase warrants in certain
circumstances, such as where there is an amalgamation of the company
with or into any other corporation
no fractional shares will be issued upon the exercise of the purchase
warrants.
(c) Agent's Warrants and Agent's Special Warrants. tc "Agent's
Warrants
The agent's special warrants, agent's compensation options, and agent's
purchase warrants contain provisions that, in the event of:
the subdivision or consolidation of common shares
any issue or distribution by the company of any securities to its
shareholders, including rights, options, or warrants or securities
convertible or exchangeable into common shares of the company or
property or assets, or
any reclassification or capital reorganization (other than as a result
of a subdivision or consolidation) or any consolidation or merger of the
company, or any sale or conveyance to another corporation of the
property and assets of the company as an entirety or substantially as an
entirety
the number of common shares issuable upon exercise of the warrants or
options will be adjusted, if necessary, so that the holders will be in
the same position, to the extent reasonably possible, as they would have
been in had the warrants or options been exercised prior to the
occurrence of each such event.
To the extent that the holder of a warrant or option would otherwise be
entitled to purchase a fraction of a common share, such right may be
exercised only in combination with other rights which in the aggregate
entitle the holder to purchase a whole number of common shares; holders
of such warrants or options will be entitled to cash payment in respect
of fractional entitlements
no adjustments as to dividends will be made upon any exercise of the
warrants or options.
holders of the warrants or options do not have any voting or pre-emptive
rights or any other rights as shareholders of the company.
(d) Escrowed Proceeds
Pursuant to an agreement dated April 27, 2000, 15% of the gross proceeds
of the private placement ($158,997.90) were placed into escrow pursuant
to an escrow agreement between the company, the Agent and Pacific
Corporate Trust Company (as escrow agent) on the closing of the private
placement. The proceeds will be released to the company on the earlier
of the Expiry Time.
Loan Conversions.
During fiscal year ended December 31, 1999, the company received
loans totaling $60,000. For the quarter ended March 31, 2000, the
company received additional loans of $1,224,161.86, for total loans of
$1,284,161.86. These loans bear interest at an annual rate of 8% and
were due and payable on March 15, 2000. The company did not repay these
loans and as a result has offered the lenders the right to convert the
principal into units of the company at a price of $0.57 per unit. Each
unit is comprised of one restricted common share of the company and one-
half share purchase warrant. Each whole share purchase warrant entitles
the holder to purchase an additional share at a price of $5.00 per share
for a period of two years. A total of $110,000 of the loans, plus
accrued interest, has been repaid.
An aggregate of 2,059,933 shares of common stock underlies the
units and an aggregate of 1,029,966 shares of common stock underlies the
purchase warrants, as follows:
Loan Holders Principal Number of Number of Number of
Amount of Units Upon Shares Shares
Loan Conversion Underlying Underlying
Of Units Purchase
Principal Warrants
J.M. Collingshaw $26,000 45,614 45,614 22,807
T.R.L. Investments
Limited $50,000 87,719 87,719 43,859
Gordon McLean $20,000 35,088 35,088 17,544
Theresa Patterson $10,000 17,544 17,544 8,772
Marilyn Scott $10,000 17,544 17,544 8,772
Questech
Corporation $63,000 110,526 110,526 55,263
The Loyalist
Insurance Group
Ltd. $10,000 17,544 17,544 8,772
Leanne Arnold $10,000 17,544 17,544 8,772
John Barthel $ 5,000 8,772 8,772 4,386
Aaron Fleischer $11,500 20,175 20,175 10,087
Laura Harding $1,368.80 2,401 2,401 1,200
John Wright $3,410.40 5,983 5,983 2,991
Ray Orser $3,410.40 5,983 5,983 2,991
James Pollard $10,000 17,544 17,544 8,772
Lillian Rottar $5,000 8,772 8,772 4,386
James Topliss $10,000 17,544 17,544 8,772
Peter Travis $5,000 8,772 8,772 4,386
Peter Wong & Karen
Chiang $5,000 8,772 8,772 4,386
Kenneth Wright $3,410.40 5,983 5,983 2,991
Phantom Management $25,000 43,860 43,860 21,930
Brad Baker $10,000 17,544 17,544 8,772
Barbara Dunnington $10,000 17,544 17,544 8,772
Matthew Johnstone $12,457.39 21,855 21,855 10,927
Ron Pearson $31,000 54,386 54,386 27,193
Gary Shuchat $5,104.47 8,955 8,955 4,477
Steve Copp $10,000 17,544 17,544 8,772
Mark Donahue $10,000 17,544 17,544 8,772
Allan Drewlo $10,000 17,544 17,544 8,772
Murray Harvey $10,000 17,544 17,544 8,772
Doug Lamon $62,000 108,772 108,772 54,386
Roy Mayers $25,000 43,860 43,860 21,930
Michael Mollison $13,500 23,684 23,684 11,842
Steve Rice $25,000 43,860 43,860 21,930
W. Bryan Tamblyn $10,000 17,544 17,544 8,772
Trent Abraham $10,000 17,544 17,544 8,772
Linda Breese $17,000 29,825 29,825 14,912
John Crockett $20,000 35,088 35,088 17,544
Rosalie Harris $10,000 17,544 17,544 8,772
Kahntact
Incorporated $40,000 70,175 70,175 35,087
Ladan Javid $10,000 17,544 17,544 8,772
Patrick Logue $10,000 17,544 17,544 8,772
Amax Holdings Ltd. $10,000 17,544 17,544 8,772
Martha Sharp $10,000 17,544 17,544 8,772
Scott Washington $1,500 2,632 2,632 1,316
Marilyn Williams $31,000 54,386 54,386 27,193
Gino Di Leonardo $10,000 17,544 17,544 8,772
Dr. Paul Kordish $100,000 175,439 175,439 87,719
Norma MacLean $5,000 8,772 8,772 4,386
Sharon L. Younger
Living Trust $10,000 17,544 17,544 8,772
Ernest Raymond $75,000 131,579 131,579 65,789
Robert Kerr $10,000 17,544 17,544 8,772
Nicole Methe $2,500 4,386 4,386 2,193
Judy Rottar $26,000 45,614 45,614 22,807
Kensington
International
Enterprises Inc. $150,000 263,158 263,158 131,579
David Phillips $5,000 8,772 8,772 4,386
Ivan Vinnick $5,000 8,772 8,772 4,386
Dino Constabile $10,000 17,544 17,544 8,772
Ralph MacColl $10,000 17,544 17,544 8,772
Gordon Rottar $50,000 87,719 87,719 43,859
John Barthel $5,000 8,772 8,772 4,386
Totals $1,174,161.86 2,059,933 2,059,933 1,029,966
Registration under this Offering.
Shares of common stock of the company will be sold on a delayed basis
under a shelf registration under Rule 415. A total of 46,563,029 shares
of common stock are to be registered, as follows (maximum amounts):
2,921,939 shares for selling shareholders.
423,994 shares to be issued by the company upon exercise of purchase
warrants to be issued upon the exercise of special warrants.
84,798 shares to be issued upon the exercise of agent's compensation
options to be issued upon the exercise of agent's special warrants.
42,399 shares to be issued by the company upon exercise of agent's
purchase warrant to be issued upon the exercise of agent's compensation
options.
2,059,933 shares to be issued by the company under units to be issued
upon loan conversions.
1,029,966 shares to be issued by the company upon the exercise of
purchase warrants under units to be issued upon loan conversions.
25,000,000 shares for sales to the public for cash.
12,000,000 shares for possible future acquisitions by the company of
other companies and/or assets.
3,000,000 shares for consulting services for the company.
The cash sale price of the shares will be modified, from time to time,
by amendment to this prospectus, in accordance with changes in the
market price of the company's common stock.
There can be no assurance that all of these shares will be issued or
that any of them will be sold for cash. The gross proceeds to the
company will depend on the amount actually sold for cash and the sales
price per share. No commissions or other fees will be paid, directly or
indirectly, by the company, or any of its principals, to any person or
firm in connection with solicitation of sales of the shares. These
securities are offered by the company subject to prior issue and to
approval of certain legal matters by counsel.
Selling Shareholders.
(a) Manner of Sales; Broker-Dealer Compensation.
The selling shareholders, or any successors in interest to the selling
shareholders, may sell their shares of common stock in one or more of
the following methods:
ordinary brokers' transactions;
transactions involving cross or block trades or otherwise on the
Bulletin Board;
purchases by brokers, dealers or underwriters as principal and resale by
these purchasers for their own accounts pursuant to this prospectus;
"at the market" to or through market makers or into an existing market
for the company's common stock;
in other ways not involving market makers or established trading
markets, including direct sales to purchases or sales effected through
agents;
through transactions in options, swaps or other derivatives (whether
exchange-listed or otherwise);
in privately negotiated transactions;
to cover short sales; or
any combination of the foregoing.
The selling shareholders also may sell their shares in reliance upon
Rule 144 under the Securities Act at such times as they are eligible to
do so. The company has been advised by the selling shareholders that
they have not made any arrangements for the distribution of the shares
of common stock. Brokers, dealers or underwriters who effect sales for
the selling shareholders may arrange for other brokers, dealers or
underwriters to participate. Brokers, dealers or underwriters engaged
by the selling shareholders will receive commissions or discounts from
them in amounts to be negotiated prior to the sale. These brokers,
dealers or underwriters may act as agent or as principals.
From time to time, one or more of the selling shareholders may pledge,
hypothecate or grant a security interest in some or all of the shares of
common stock being offered for sale, and the pledgees, secured parties
or persons to whom these securities have been pledged shall, upon
foreclosure in the event of default, be considered a selling shareholder
hereunder. In addition, a selling shareholders may, from time to time,
sell short their common stock. In these instances, this prospectus may
be delivered in connection with these short sales and the shares of the
common stock may be used to cover these short sales.
From time to time one or more of the selling shareholders may
transfer, pledge, donate or assign shares of their common stock to
lenders or others and each of these persons will be considered a selling
shareholder for purposes of this prospectus. The number of shares of
the company's common stock beneficially owned by those selling
shareholders who so transfer, pledge, donate or assign shares of their
common stock will decrease as and when they take these actions. The
plan of distribution for the company's common stock by the selling
shareholders set forth herein will otherwise remain unchanged, except
that the transferees, pledgees, donees or other successors will be
considered selling shareholders hereunder.
Subject to the limitations discussed above, a selling shareholder may
enter into hedging transactions with broker-dealers and the broker-
dealers may engage in short sales of the company's common stock in the
course of hedging the positions they assume with this selling
shareholders, including in connection with distributions of the common
stock by these broker-dealers. A selling shareholder may also enter
into option or other transactions with broker-dealers that involve the
delivery of the company's common stock to the broker-dealers, who may
then resell or otherwise transfer these shares. A selling shareholder
also may loan or pledge the company's common stock to a broker-dealer
and the broker-dealer may sell the common stock so loaned or upon a
default may sell or otherwise transfer the pledged common stock.
(b) Filing of a Post-Effective Amendment In Certain Instances.
If any selling shareholders notifies the company that he, she, or it has
entered into a material arrangement (other than a customary brokerage
account agreement) with a broker or dealer for the sale of shares of
common stock under this prospectus through a block trade, purchase by a
broker or dealer or similar transaction, the company will file a post-
effective amendment to the registration statement for this offering.
The post-effective amendment will disclose:
The name of each broker-dealer involved in the transaction.
The number of shares of common stock involved.
The price at which those shares of common stock were sold.
The commissions paid or discounts or concessions allowed to the broker-
dealer(s).
If applicable, that these broker-dealer(s) did not conduct any
investigation to verify the information contained or incorporated by
reference in this prospectus, as supplemented.
Any other facts material to the transaction.
(c) Certain Persons May Be Deemed to Be Underwriters.
The selling shareholders and any broker-dealers who execute sales for
them may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933 because of the number of shares of common stock
to be sold or resold by these persons or entities or the manner of sale
of these shares, or both. If a selling shareholder or any broker-dealer
or other holders were determined to be underwriters, any discounts,
concessions or commissions received by them or by brokers or dealers
acting on their behalf and any profits received by them on the resale of
their shares of common stock might be deemed to be underwriting
discounts and commissions under the Securities Act.
(d) Regulation M.
The company has informed the selling shareholders that Regulation M
promulgated under the Securities Exchange Act of 1934 may be applicable
to them with respect to any purchase or sale the company's common stock.
In general, Rule 102 under Regulation M prohibits any person connected
with a distribution of the company's common stock from directly or
indirectly bidding for, or purchasing for any account in which it has a
beneficial interest, any of the common stock or any right to purchase
this stock, for a period of one business day before and after completion
of its participation in the distribution.
During any distribution period, Regulation M prohibits the selling
shareholders and any other persons engaged in the distribution from
engaging in any stabilizing bid or purchasing the company's common stock
except for the purpose of preventing or retarding a decline in the open
market price of the common stock. None of these persons may effect any
stabilizing transaction to facilitate any offering at the market. As
the selling shareholders will be reoffering and reselling the company's
common stock at the market, Regulation M will prohibit them from
effecting any stabilizing transaction in contravention of Regulation M
with respect to this stock.
Opportunity to Make Inquiries.
The company will make available to each offeree, prior to any sale of
the shares, the opportunity to ask questions and receive answers from
the company concerning any aspect of the investment and to obtain any
additional information contained in this prospectus, to the extent that
the company possesses such information or can acquire it without
unreasonable effort or expense.
Execution of Documents.
Each person desiring to be issued shares, either as a conversion of a
debenture, or an exercise of a warrant, must complete, execute,
acknowledge, and deliver to the company certain documents. By
executing these documents, the subscriber is agreeing that such
subscriber will be, a shareholder in the company and will be otherwise
bound by the articles of incorporation and the bylaws of the company in
the form attached to this prospectus.
LEGAL PROCEEDINGS
The company is not a party to any material pending legal proceedings
and, to the best of its knowledge, no such action by or against the
company has been threatened.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,
AND CONTROL PERSONS
The names, ages, and respective positions of the directors,
officers, and key employees of the company are set forth below. There
are no other persons which can be classified as a promoter, controlling
person, or significant employee of the company.
Officer and Directors.
(a) 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
company, and will have a hands-on roll in the development and marketing
of the products and services offered by Urbana Enterprises Corp.
(b) 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.
(c) 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 the issuer
since 1997. Mr. Tyson is responsible for the corporate affairs of the
company, including all issues to do with corporate governance and
assisting with finance, administrative, contract and corporate
communications issues.
(d) 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
company delivers product to its customers in a reliable and timely
manner.
(e) 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 company's LocalNet project.
Key Employees.
(a) 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 company's
Electronic Bill Presentment products and solutions.
(b) 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 company does not have standing audit, ominating 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.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of shares of the company's common stock as of June 30, 2000
(22,038,283 issued and outstanding) by (i) all stockholders known to the
company to be beneficial owners of more than 5% of the outstanding
common stock; and (ii) all directors and executive officers of the
company, and as a group (each person has sole voting power and sole
dispositive power as to all of the shares shown as beneficially owned by
them):
Title of Name and Address of Amount of Percent
Class Beneficial Owner Beneficial of
Ownership(1) class
Common Da-Jung Resources Corp. 4,842,900 21.97%
Stck P.O. Box 71
Road Town, British Virgin Islands
Common David Groves 1,817,500 (2) 8.25%
Stock 211 Water Street
North, Cambridge, Ontario, N1R 3B9
Common Richard Whittaker 1,575,000 (2) 7.15%
Stock 211 Water Street
North, Cambridge, Ontario, N1R 3B9
Common John Cullen 1,125,000 (2) 5.10%
Stock 98 Willow Street
Waterloo, Ontario N2J 1W2
Common Doris Cullen 1,125,000 (2) 5.10%
Stock 98 Willow Street
Waterloo, Ontario N2J 1W2
Common Jason Cassis 1,102,500 (2) 5.00%
Stock 211 Water Street
North, Cambridge, Ontario, N1R 3B9
Common Greg Alexanian 1,102,500 (2) 5.00%
Stock 211 Water Street
North, Cambridge, Ontario, N1R 3B9
Common Henry Tyler 725,000 (2) 3.29%
Stock 211 Water Street
North, Cambridge, Ontario, N1R 3B9
Common Robert Tyson 0 0.00%
Stock 750 West Pender Street, Suite 804
Vancouver, British Columbia
V6C 2T8
Common Shares of all 8,572,500 (2) 38.90%
Stock directors and
executive officers as a
group (7 persons)
(1) Other than as set forth in footnote (2), none of these security
holders has the right to acquire any amount of the shares within sixty
days from options, warrants, rights, conversion privilege, or similar
obligations.
(2) These share holding consist solely of shares of the one wholly
owned subsidiary of the company, U.R.B.A. Holdings Inc., a private
British Columbia corporation, which are exchangeable into shares of the
company. U.R.B.A. Holdings Inc. in turn owns all of the issued and
outstanding shares of Urbana Enterprises Corp., a private Ontario
corporation. Urbana Enterprises Corp. resulted from the merger of three
subsidiaries of U.R.B.A. Holdings Inc., Urbana.ca Enterprises Corp. (a
British Columbia private corporation), Enersphere.com Inc. (an Ontario
private corporation) and E-Bill Direct, Inc. (an Ontario private
corporation) on March 10, 2000. Urbana Enterprises Corp. is the
operating subsidiary of the company.
DESCRIPTION OF SECURITIES
General Description.
The securities being offered are shares of common stock. The authorized
capital of the company consists of 80,000,000 shares of common stock,
$0.001 par value per share, and 10,000,000 preferred shares, $0.001 par
value per share. The holders of common stock shall: (a) have equal
ratable rights to dividends from funds legally available therefore,
when, as, and if declared by the board of directors of the company; (b)
are entitled to share ratably in all of the assets of the company
available for distribution upon winding up of the affairs of the
company; and (c) are entitled to one non-cumulative vote per share on
all matters on which shareholders may vote at all meetings of
shareholders. The shares of common stock do not have any of the
following rights: (a) special voting rights; (b) preference as to
dividends or interest; (c) preemptive rights to purchase in new issues
of Shares; (d) preference upon liquidation; or (e) any other special
rights or preferences. In addition, the Shares are not convertible into
any other security. There are no restrictions on dividends under any
loan other financing arrangements or otherwise. There are no
restrictions on dividends under any loan or financing arrangements or
otherwise. As of June 30, 2000, the company had 22,038,283 shares of
common stock issued and outstanding. There are no preferred shares
issued and outstanding.
Non-Cumulative Voting.
The holders of shares of common stock of the company do not have
cumulative voting rights, which means that the holders of more than 50%
of such outstanding shares, voting for the election of directors, can
elect all of the directors to be elected, if they so choose. In such
event, the holders of the remaining shares will not be able to elect any
of the company's directors.
Dividends.
The company does not currently intend to pay cash dividends. The
company's proposed dividend policy is to make distributions of its
revenues to its stockholders when the company's board of directors deems
such distributions appropriate. Because the company does not intend to
make cash distributions, potential shareholders would need to sell their
shares to realize a return on their investment. There can be no
assurances of the projected values of the shares, nor can there be any
guarantees of the success of the company.
A distribution of revenues will be made only when, in the judgment of
the company's board of directors, it is in the best interest of the
company's stockholders to do so. The board of directors will review,
among other things, the investment quality and marketability of the
securities considered for distribution; the impact of a distribution of
the investee's securities on its customers, joint venture associates,
management contracts, other investors, financial institutions, and the
company's internal management, plus the tax consequences and the market
effects of an initial or broader distribution of such securities.
Possible Anti-Takeover Effects of Authorized but Unissued Stock.
The company's authorized but unissued capital stock consists of
57,961,717 shares of common stock. One effect of the existence of
authorized but unissued capital stock may be to enable the board of
directors to render more difficult or to discourage an attempt to obtain
control of the company by means of a merger, tender offer, proxy
contest, or otherwise, and thereby to protect the continuity of the
company's management. If, in the due exercise of its fiduciary
obligations, for example, the board of directors were to determine that
a takeover proposal was not in the company's best interests, such shares
could be issued by the board of directors without stockholder approval
in one or more private placements or other transactions that might
prevent, or render more difficult or costly, completion of the takeover
transaction by diluting the voting or other rights of the proposed
acquirer or insurgent stockholder or stockholder group, by creating a
substantial voting block in institutional or other hands that might
undertake to support the position of the incumbent board of directors,
by effecting an acquisition that might complicate or preclude the
takeover, or otherwise.
Transfer Agent.
The company has engaged the services of Pacific Corporate Trust Co., 625
Howe Street, Suite 830, Vancouver, British Columbia V6C 3B8, to act as
transfer agent and registrar.
INTEREST OF NAMED EXPERTS AND COUNSEL
No named expert or counsel was hired on a contingent basis, will receive
a direct or indirect interest in the small business issuer, or was a
promoter, underwriter, voting trustee, director, officer, or employee of
the company.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Limitation of Liability.
No director of the company will have personal liability to the
Corporation or any of its stockholders for monetary damages for breach
of fiduciary duty as a director or officers involving any act or
omission of any such director or officer. The foregoing provision shall
not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts of omissions not in good faith or, which involve
intentional misconduct or a knowing violation of law, (iii) under
applicable Sections of the Nevada Revised Statutes, (iv) the payment of
dividends in violation of Section 78.300 of the Nevada Revised Statutes
or, (v) for any transaction from which the director derived an improper
personal benefit. Any repeal or modification of this Article by the
stockholders of the Corporation shall be prospective only and shall not
adversely affect any limitation on the personal liability of a director
or officer of the Corporation for acts or omissions prior to such repeal
or modification.
Indemnification.
The bylaws of the company provide the following with respect to
indemnification:
Every person who was or is a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he
or a person of whom he is the legal representative is or was a director
or officer of the corporation or is or was a director or officer of the
corporation or is or was serving at the request of the corporation or
for its benefit as a director or officer of another corporation, or as
its representative in a partnership, joint venture, trust or other
enterprise, shall be indemnified and held harmless to the fullest extent
legally permissible under the General Corporation Law of the State of
Nevada from time to time against all expenses, liability and loss
(including attorneys' fees, judgments, fines and amounts paid or to be
paid in settlement) reasonably incurred or suffered by him in connection
therewith. The expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by
the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay the
amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the
corporation. Such right of indemnification shall be a contract right
which may be enforced in any manner desired by such person. Such right
of indemnification shall not be exclusive of any other right which such
directors, officers or representatives may have or hereafter acquire
and, without limiting the generality of such statement, they shall be
entitled to their respective rights of indemnification under any bylaw,
agreement, vote of stockholders, provision of law or otherwise, as well
as their rights under this Article.
The board of directors may cause the corporation to purchase and
maintain insurance on behalf of any person who is or who was a director
or officer of the corporation, or is or was serving at the request of
the corporation as a director or officer of another corporation, or as
its representative in a partnership, joint venture, trust or other
enterprise against any liability asserted against such person and
incurred in any such capacity or arising out of such status, whether or
not the corporation would have the power to indemnify such person.
The board of directors may from time to time adopt further Bylaws with
respect to indemnification and may amend these and such Bylaws to
provide at all times the fullest indemnification permitted by the Nevada
Revised Statutes.
(a) NRS 78.7502 Discretionary and mandatory indemnification of
officers, directors, employees and agents: General provisions.
(1) A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in the right of
the corporation, by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by
him in connection with the action, suit or proceeding if he acted in
good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal
action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
(2) A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him
in connection with the defense or settlement of the action or suit if he
acted in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to
which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to
the corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action or suit
was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the
person is fairly and reasonably entitled to indemnity for such expenses
as the court deems proper.
(3) To the extent that a director, officer, employee or agent of
a corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in subsections 1 and 2, or
in defense of any claim, issue or matter therein, the corporation shall
indemnify him against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
(b) NRS 78.751 Authorization required for discretionary
indemnification; advancement of expenses; limitation on indemnification
and advancement of expenses.
(1) Any discretionary indemnification under NRS 78.7502 unless
ordered by a court or advanced pursuant to subsection 2, may be made by
the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or
agent is proper in the circumstances. The determination must be made:
(i) By the stockholders;
(ii) By the board of directors by majority vote of a quorum consisting
of directors who were not parties to the action, suit or proceeding;
(iii) If a majority vote of a quorum consisting of directors who were
not parties to the action, suit or proceeding so orders, by independent
legal counsel in a written opinion; or
(iv) If a quorum consisting of directors who were not parties to the
action, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
(2) The articles of incorporation, the bylaws or an agreement
made by the corporation may provide that the expenses of officers and
directors incurred in defending a civil or criminal action, suit or
proceeding must be paid by the corporation as they are incurred and in
advance of the final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the director or officer to
repay the amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights
to advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or otherwise by
law.
(3) The indemnification and advancement of expenses authorized in
NRS 78.7502 or ordered by a court pursuant to this section:
(i) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
articles of incorporation or any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, for either an action in his
official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant
to or for the advancement of expenses made pursuant to subsection 2, may
not be made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to
the cause of action.
(ii) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
(c) NRS 78.752 Insurance and other financial arrangements against
liability of directors, officers, employees and agents.
(1) A corporation may purchase and maintain insurance or make
other financial arrangements on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise for any liability asserted against him and
liability and expenses incurred by him in his capacity as a director,
officer, employee or agent, or arising out of his status as such,
whether or not the corporation has the authority to indemnify him
against such liability and expenses.
(2) The other financial arrangements made by the corporation pursuant
to subsection 1 may include the following:
(i) The creation of a trust fund.
(ii) The establishment of a program of self-insurance.
(iii) The securing of its obligation of indemnification by granting a
security interest or other lien on any assets of the corporation.
(iv) The establishment of a letter of credit, guaranty or surety.
No financial arrangement made pursuant to this subsection may provide
protection for a person adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable for intentional
misconduct, fraud or a knowing violation of law, except with respect to
the advancement of expenses or indemnification ordered by a court.
(3) Any insurance or other financial arrangement made on behalf of a
person pursuant to this section may be provided by the corporation or
any other person approved by the board of directors, even if all or part
of the other person's stock or other securities is owned by the
corporation.
(4) In the absence of fraud:
(i) The decision of the board of directors as to the propriety of the
terms and conditions of any insurance or other financial arrangement
made pursuant to this section and the choice of the person to provide
the insurance or other financial arrangement is conclusive; and
(ii) The insurance or other financial arrangement:
(A) Is not void or voidable; and
(B) Does not subject any director approving it to personal liability for
his action, even if a director approving the insurance or other
financial arrangement is a beneficiary of the insurance or other
financial arrangement.
(5) A corporation or its subsidiary which provides self-insurance for
itself or for another affiliated corporation pursuant to this section is
not subject to the provisions of Title 57 of NRS.
Undertaking.
The company undertakes the following:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised
that in the opinion of the U.S. Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable.
ORGANIZATION WITHIN LAST FIVE YEARS
The names of the officers and directors as disclosed elsewhere in
this Form SB-2. None of these individuals, as promoters, have received
anything of value from the company.
DESCRIPTION OF BUSINESS
Company History.
The company was originally organized in the State of Delaware in
February 1993 under the name of PLR, Inc. In November 1997, the company
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.
In 1997, the company 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.
The company 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 company
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 January, 2000, the company 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 company. The aggregate
consideration paid for the Acquired Entities was 10,450,000 common
shares of the company (after conversion) plus $84,828 CDN in cash
payments to Enersphere.com, Inc. All consideration is paid in full.
In March 2000, the company undertook the merger of the three Acquired
Entities into Urbana Enterprises Corp., an Ontario registered
corporation wholly owned by the company. The resulting corporate
structure has the company, which operates as a financing and holding
company 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 company.
The terms of each of these acquisitions is set forth below:
(a) Urbana Enterprises.
Urbana Enterprises was incorporated November 18, 1998 in the province of
British Columbia. Urbana Enterprises is engaged in the distribution of
Linux based set top boxes used as an alternative method of delivering
Internet content. From inception (second quarter in 1999) to the date
of acquisition, losses totaled $193,171. Comparative pro forma
financial information is therefore not available in this quarter.
In consideration of the acquisition, URBA 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 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 common
shares. At its option, URBA may satisfy this obligation in cash or in
company shares. Any exchangeable share not exchanged within 25 years is
to be cancelled.
The terms of the acquisition agreement required the company to issue
3,000,000 common shares to ensure URBA has sufficient shares of the
company to satisfy its repurchase obligations. The common shares are
held under a trust agreement until such time as the exchangeable shares
are exchanged or cancelled. In connection with the acquisition, the
company signed five-year management contracts with the two principals.
The Company agreed to grant a total of 400,000 stock options to these
individuals.
(b) E-Bill Direct, Inc.
E-Bill was incorporated May 27, 1999 in the province of Ontario. E-
Bill is engaged in designing, developing and providing electronic
presentment and payment services to the business community. From
inception (second quarter in 1999) to the date of acquisition, losses
totaled $16,214. Comparative pro-forma financial information for 1999
is therefore not available in this quarter.
In consideration of the acquisition, URBA 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 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 common
shares. At its option, URBA may satisfy this obligation in cash or in
company shares. Any exchangeable share not exchanged within 25 years is
to be cancelled
The terms of the acquisition agreement required the company to issue
2,950,000 common shares to ensure URBA has sufficient shares of the
company to satisfy its repurchase obligations. The common shares are
held under a trust agreement until such time as the exchangeable shares
are exchanged or cancelled. In connection with the acquisition, the
company signed three-year management contracts with the two principals.
The company agreed to grant a total of 200,000 stock options to these
individuals.
(c) Enersphere.com, Inc.
Enersphere was incorporated September 28, 1999 in the province of
Ontario. Enersphere is a content company that utilizes set top boxes as
their medium to deliver internet and intranet-based services to
customers. From inception (third quarter in 1999) to the date of
acquisition, losses totaled $114,917. Comparative pro-forma financial
information for 1999 is therefore not available in this quarter.
In consideration of the acquisition, URBA paid $84,828 cash 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 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 common shares. At its option, URBA may satisfy this
obligation in cash or in company shares. Any exchangeable share not
exchanged within 25 years is to be cancelled
The terms of the acquisition agreement required the company to issue
4,500,000 common shares to ensure URBA has sufficient shares of the
company to satisfy its repurchase obligations. The common shares are
held under a trust agreement until such time as the exchangeable shares
are exchanged or cancelled. In connection with the acquisition, the
company signed two-year management contracts with the two principals.
The company agreed to grant a total of 200,000 stock options to these
individuals.
General.
The company 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 company 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
maximum target market on a one-to-one basis through both PC's and to
areas and viewers where PC use is non-existent. The company's aim is to
achieve that success by delivering rich content through a set-top-box
medium to non-PC consumers.
As part of its business strategy, the company will seek collaborative
partners with experience in the development and marketing of its
products in the relevant market areas. The intention is to select
partners with both the human and financial resources to spearhead the
market penetration and development of the company's products. The form
of collaboration would depend in part on the product candidate, the
stage of development, and the partner's expertise. The company would
also expect any potential partner to be involved in the market of the
products. No assurance can be given that any such proposed partnership
arrangements will be entered into, or, if entered into, will be
successful in completing the development programs for the products in
any particular jurisdiction. Currently, the Company has entered into
preliminary agreements whereby two individuals will be licensing two
separate communities by the fall of 2000. The Company, in order to
license its products, will need to complete Version 2.0 of its software
which will enable replication of its portal product to licensees. There
is no guarantee that the software will be completed on time or that
sufficient financing will be acquired to fund the completion.
Notwithstanding the company's business strategy described above, the
company has no regular cash flow and is dependent, initially, on
generating required funds primarily by way of equity financing. The
company expects to continue to rely, in whole or in part, on outside
sources of financing to meet its capital requirements for at least the
next two years. There can be no assurance that the company will be able
to arrange and complete the required financings on favourable terms.
Such equity financings could be highly dilutive.
The e-commerce industry is characterized by increasingly intense and
intense competition. Competition in the e-commerce industry is based
primarily on product performance, including efficacy, ease of use and
adaptability to various modes of administration, price, marketing, and
distribution. Barriers to entry into the market include the
availability of patent protection in the United States and other
jurisdictions of commercial interest, and the ability and time needed
and cost incurred obtaining governmental approval for testing,
manufacturing and marketing.
The company's products are in the late stages of development.
Therefore, any discussion of a market for the company's products is of a
preliminary nature. In addition, some of the company's competitors may
have substantially more financial and technical resources, more
extensive research and development capabilities, products at a later
stage of development, and greater marketing, distribution, production
and human resources than the company.
Status.
The company has successfully completed a six month pilot project known
as the Guelph LocalNet. The purpose of the pilot was 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 to gain market intelligence and to
test the effectiveness of the Guelph LocalNet software. The Company,
upon the initial indications of success of the pilot, agreed to move the
product to its next stage of development. The last stage of development
will enable the Company to move toward the preparation of licensing its
product for sale in the fall of 2000. The preparation of the product and
sale of the product are contingent on many factors, including, but not
limited to, the raising of sufficient capital, completion of the
software, delivery by Eagle of a merchandisable set-top box, etc.
In January, 2000, the company 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 company and granted exclusive right to the company to
sell Eagle Manufactured set top boxes in Canada in return for certain
volume purchases by the company over a 24 month period. The company
also entered into a License Agreement with USA Video of Mystic,
Connecticut wherein certain compression technology developed by USA
Video will be embedded in set top boxes manufactured by Eagle and sold
by the company. To date, Eagle has failed to provide Urbana with a
product that has met regulatory approval or is marketable to the overall
market. The Company has taken steps to ensure that it has alternative
sources of set-top boxes if necessary.
In March, 2000, the company entered into a non-binding 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. In the event the company
proceeds with its acquisition of J.D. Donahue & Associates, the
consideration paid will be a combination of cash and shares of common
stock in the capital of the company. The final terms and consideration
will be formalized following the completion of due diligence and
financing. The company has six months from the close of the Offering to
complete the acquisition. The company's agreement to purchase the JDD
Shares is conditional upon its raising U.S. $25,000,000 in financing, a
sum the company does not at this time, expect to raise.
The company has five potential revenue producing divisions:
LocalNet
Advertising
Electronic Billing
Set-Top-Box Sales
Corporate Sponsorships
LocalNet Systems Technology.
The company'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 utilize the Internet to provide residents with current community
activities, movies and other entertainment based content as well as such
value added services as 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
consumer's television through a connection provided by an Internet
Service Provider ("ISP").
(a) 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 company 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 of
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, it's 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 the company believes, local Web will be
everywhere, and it will, the company believes, 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.
(b) 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 has computers in their homes and about 50% of
this population subscribes 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 company has developed a unique method of providing a low cost portal
connection (LocalNet) for every resident in a geographic area. The
company 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 company and its consortium of
sponsors receive 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 company can offer new services such as direct linkage to
the fire department and to utility monitoring. These services are
provided at a nominal fee which further defrays the cost of the set top
box.
(c) Growth Strategy.
Based on the success of the Guelph project, the company 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 planned to be highlighted by 2 internally funded LocalNet sites
and 4 licensed sites in Canada and the U.S.
Electronic Billing.
(a) Background.
The electronic bill presentment 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.
(b) Product.
The company'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.
(c) Strategy.
The company's approach to bill presentment is as follows. Most
organizations are luring customers to their websites to pay bills. This
approach is time consuming for the recipient to locate the website and
the billing information. The company 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. The company will send the bill as e-mail and
eliminate the unnecessary steps.
The company 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 electronic bill presentment market is predicated on
electronic delivery by pulling customers to web-centric sites. The
company'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. 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 company has the ability to integrate this rich, powerful, animated
advertising. Compression techniques allow for statements and digital
advertising to be transmitted in tolerable download times to customers
without wide band-width transmission. The company's billing capacity
has the ability to send up to " 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 can equate to substantial dollar savings.
(d) 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. Much of the cost of this could
potentially be eliminated by eliminating the paper process of mailing
statements and trade confirmations.
(e) Major Competition.
The company's major competitors are as follows:
Canada Post: In pilot since 1999 with expected service offering in late
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 US based company with a web-based service offering consumer
bill delivery.
Others: Paysense, Edocs, Checkfree, Transpoint, Whitehill.
(f) Competitive Advantage.
The company has three competitive advantages over its competitors:
Management has years of multimedia, animation and advertising experience
combined with electronic processing expertise;
The company currently has a capacity to transmit 20,000 units per hour;
and
The set top boxes the company plans to distribute can be used to reach
the 75% of the current market that currently do not have Internet
service in their homes.
Set-Top Boxes.
(a) Description.
The set top box 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 set top box 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.
The company's approach to the set top box market is to offer consumers a
set top box, with a standard Internet browser, and applications pre-
loaded from the server at the ISP. Adding, updating or changing
applications is done through the company or channel partner's networks,
meaning the user does not need to install new software in the set top
box every time a feature is added, enhanced or changed.
The company is currently distributing a set top box in its pilot markets
that is manufactured by Acer Corporation in Taiwan (Acer NT 150);
however, the company has discovered that the Liberate Operating System
("OS") used by Acer is overly proprietary to meet the feature growth
requirements of the company. The company therefore, has decided to
deploy the next generation of set top box utilizing the Linux OS and
sourcing Eagle Wireless International Inc. set top boxes as described
below.
(b) Product and Manufacturing.
The company entered into an Exclusivity Agreement with Eagle Wireless
International Inc. in January 2000 wherein Eagle Wireless agreed to
manufacture and sell set top boxes to the company and granted the
exclusive right to the company to sell Eagle Wireless manufactured set
top boxes in Canada and the non-exclusive right to sell the set top
boxes in the United States. Eagle Wireless has the first right to
provide the company's set top box requirements. The company must make
certain volume purchases to maintain its rights under the Exclusivity
Agreement. The company presently has no plans for developing an in-
house manufacturing capability for its set top boxes.
Eagle Wireless is a Texas corporation with offices in League City,
Texas. It was incorporated in Texas in May 1993 and began business in
April 1996. Eagle Wireless is a worldwide supplier of telecommunications
equipment and related software used by service providers in the paging
and other wireless personal communications markets. In 1999, Eagle
Wireless invested substantial resources in a multi-media Internet
appliance product line known as a set top box in an effort to prepare it
for the new era of wireless consumer products and multimedia internet
related products. Eagle Wireless announced sales of its first set top
boxes in early 2000. Eagle Wireless will have contracted the actual
manufacturing of its set top box line to SCI Corp. of Singapore.
The company's set top box is a unique combination of hardware and
software that creates the simplest user interface for the company's end
users yet has powerful capabilities. The company 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.
(c) Product Features.
The company's set top box 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 set top box software updates while
in service.
Smartcard reader and writer for programming, loyalty and financial
operations.
(d) Market Summary and Target Market.
An set top box user can be anyone with a television set and a desire to
go on-line. The consumer target market consists of a broad cross-
section - from young families 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 World Wide Web to find
exactly what they need.
The company's target markets are:
Baby Boomers - 89 million in the US and Canada people born between 1946
and 1964.
Empty Nesters - top 1/4 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 US households.
Worldwide units sales of set top box were US$0.80M in 1999 compared to
US$0.3M in 1996.
Sales are expected to reach US$8.0M in 2002 - and are expected to
dominate the marketplace by 10:1 according to "Cite eStats/Datamonitor".
Currently there are 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 our 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.
(e) Industry Analysis and Trends.
"Datamonitor" predicts that interactive TV will reach 67 million homes
in the U.S. and Europe by 2003 - a large increase 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 set top box 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 set top boxes 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.
(f) Warranty, Technical Support and Service Policies.
The company'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 company'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
company customers to ensure a single point for communications. All
technical and reference materials are on-line in a secure website for
customer access.
(g) Direct Competition
The competition in the set top box market consists of approximately 87
manufacturers who are actively marketing a number of set top boxes, and
of these, approximately 12 are considered as being direct competitors
with the company:
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
(i) Indirect Competition.
The major cable networks are deploying two-way interactive services
utilizing the Internet (e.g. AT&T, Rogers Cable and Cox Communications.
Also, there exist the National Internet Service Providers and major
portals (e.g. AOL).
The company 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 against both its direct and
indirect competitors.
(j) 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 Urbana the resources to be successful in the
market while incurring minimal costs.
(k) Engineering and Design
The company's engineering and design teams are limited to application
engineering and high-level specification technical writers. The company
is a sales and marketing company and has, therefore, outsourced its
product engineering and manufacturing to Eagle Wireless. This company's
strengths are in consumer and commercial product, and solution
engineering, wireless technologies and manufacturing.
Proprietary Protection
(a) General.
The company's patent and trademark strategy is to pursue in selected
jurisdictions the broadest possible patent protection on its proprietary
products and technology. The company plans to protect its technology,
any inventions and improvements to its inventions by filing patent
applications in selected key countries according to industry standard in
a timely fashion.
In addition to its patents and licenses, the company also relies upon
trade secrets, know-how and continuing technological innovations to
develop its competitive position. It is the company's policy to require
its directors, employees, consultants, members of its scientific
advisory board and parties to collaborative agreements to execute
confidentiality agreements upon the commencement of employment,
consulting or collaborative relationships with the company. These
agreements provide that all confidential information developed or made
known during the course of the relationship with the company is to be
kept confidential except in specific circumstances. In the case of
employees and consultants, the agreements provide that all inventions
resulting from work performed for the company utilizing property of the
company or relating to the company's business and conceived or completed
by the individual during employment are the exclusive property of the
company to the extent permitted by law.
(b) Patents, Copyrights and Trade Secrets.
Set top boxes manufactured for Urbana Enterprises Corp. by Eagle
Wireless incorporate "shelf" components and technologies that are custom
configured to the company'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 Urbana.ca are not reliant
on single-source, third party suppliers. This leaves the company with
minimal risk associated with parts and component supply.
The company, 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 company to be embedded into all set top box's
manufactured for the company by Eagle Wireless. This ensures the
company's right and know-how to provide its customers with Streaming
Video features.
Eagle, the technology licensors who has granted the
company rights under the Eagle Agreement, has been granted patents or
has filed patent applications in the United States of America and other
jurisdictions in respect of certain core technologies utilized by the
company through its purchase of set top boxes from Eagle. Given that
the patent applications for these technologies involve complex legal,
scientific and factual questions, there can be no assurance that patent
applications relating to the technology used by the company will result
in patents being issued or that, if issued, the patents will provide a
competitive advantage or will afford protection against competitors with
similar technology, or will not be challenged successfully or
circumvented by competitors.
The company itself does not have patents or patents pending and it is
unlikely that the process by which the company produces its contemplated
products would itself be patentable.
(c) Trademark Applications.
The company is in the process of applying for Canadian and US protection
for the trademark of "Urbana.ca". No filings have yet been completed.
Organizational Structure and Facilities
The company currently has 15 full-time employees, 9 of which are
employed in research and development and 6 of which are engaged in
administration. At this time, none of the company's employees are
subject to collective bargaining agreements. A number of key employees,
officers and directors have in place management agreements the terms of
which protect the company from future competition by these persons and
against disclosure of confidential information they come into contact
with during the course of their employment or other association with the
company. The company anticipates hiring 5 additional full-time
personnel during the remainder of 2000 in order to meet its business
objectives, of which 2 of the new personnel will fall within
administration and 3 will fall within product research and development.
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 company and notes thereto contained
elsewhere in this prospectus.
Results of Operations.
(a) Six Months Ended June 30, 2000 and 1999.
For the six months ended June 30, 2000, the company had a net loss
of $1,708,290 or $0.15 cents per share. This loss compares with a net
loss of $232,121 or $0.02 cents per share for the corresponding six-
month period ended June 30, 1999.
The net loss for the six months ended June 30, 2000 includes
expenses as follows: consulting and management of $335,393, depreciation
and amortization of $382,651, technology contract fees of $348,095,
office and general of $266,712, professional fees of $144,709 and
salaries of $164,802.
During the six month period ended June 30, 2000, the company,
through its wholly-owned subsidiary company, U.R.B.A. Holdings
Inc.("URBA"), acquired all of the outstanding shares of three Canadian
companies which are in the business of developing and marketing internet
based products and services through the distribution of set top boxes.
The companies acquired were Urbana.ca Enterprises Corp. ("Urbana
Enterprises"), E-Bill Direct Inc. ("E-Bill"), and Enersphere.com, Inc.
("Enersphere"). On March 10, 2000 these companies were amalgamated
under the statutory laws of the province of Ontario to form Urbana
Enterprises Corp.
The business combination with Urbana Enterprises was 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 arising on this acquisition is being amortized on a
straight-line basis over 5 years with amortization of $54,655 recorded
during the quarter.
The business combination with E-Bill was 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 arising on this acquisition is being amortized on a
straight-line basis over 5 years with amortization of $40,632 recorded
during the quarter.
The business combination with Enersphere was 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 cash payment. Goodwill arising on this
acquisition is being amortized on a straight-line basis over 5 years
with amortization of $86,486 recorded during the quarter.
During the quarter, a wholly-owned subsidiary company, changed its name
from ICC Integrated Carbonics (Canada) Corp. to U.R.B.A. Holdings Inc.
("URBA").
(b) Fiscal Years Ended December 31, 1999 and 1998.
During the last quarter of the fiscal year 1999, the company continued
with its program to develop the firm into an operating company. For the
12 months ended December 31, 1999, the company 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 company continued to seek financing for its joint
ventures in China. In this regard, the company engaged consultants to
assist the company 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 company's China graphite projects,
management implemented a diversification strategy to reduce the risk of
being unable to raise the necessary funding. As the company was unable
to raise the funding, the joint ventures were abandoned and the company
has written off its investment resulting in a loss of $253,408.
During the year, a wholly owned subsidiary company, URBA, was
incorporated in the province of British Columbia for the purpose of
facilitating acquisitions in Canada. During the year the company
entered into agreements to acquire, through URBA, all of the outstanding
shares of three companies in Canada: Urbana Enterprises, E-Bill Direct
Inc., and Enersphere.com, Inc.; the acquisitions were completed
subsequent to the year-end.
Liquidity and Capital Resources.
(a) Six Months Ended June 30, 2000 and 1999.
Urbana is a development stage enterprise. The company has no revenue
and is continuing to incur substantial costs in connection with pursuing
the development of its business. The company's continued existence is
dependent on its ability to obtain sufficient financing to meet its
financial needs. At June 30, 2000 the company had a working capital
deficiency of $989,704 inclusive of loans payable. This compares with a
working capital deficiency of $340,757 at June 30, 1999.
(1) Debt Conversions.
During the period the company settled debts of $40,000 due to a relative
of a director of the company by the issuance of 100,000 restricted
shares at $0.40 per share. The company settled a total of $99,900 of
accounts payable by the issuance of 333,000 restricted shares at $0.30
per share and $9,190 of accounts payable by the issuance of 22,975
restricted shares at $0.40 per share. The company issued 50,000
restricted shares at $0.40 per share as a retainer on a media relations
contract. As consideration for the acquisition of the three
subsidiaries during the period, URBA issued a total of 10,450,000
exchangeable shares.
(2) Loan Conversions.
At June 30, 2000 loans of $1,184,162 plus accrued interest of $27,771
were outstanding. During the period loans totaling $100,000 were repaid
and $10,000 was repaid subsequent to June 30, 2000. These loans bear
interest at an annual rate of 8% and were due and payable on March 15,
2000. The company has provided an option to the lenders to convert the
loan into units of the company at a price of $0.57 per unit. Each unit
is comprised of one common share of the company and one-half share
purchase warrant. Each whole share purchase warrant entitles the holder
to purchase an additional common share at a price of $5.00 per share.
This offer is to be made by way of a prospectus that is filed with the
applicable Canadian and United States regulatory authorities.
(3) Units Offering.
The company entered into an agency agreement effective April 10,
2000 with Groome Capital.com Inc. whereby the company and Groome engaged
in a best efforts offering of up to 20,000,000 special warrants at a
price of $1.25 per special warrant. Each special warrant is convertible
into one common share and one-half share purchase warrant exercisable
for a period of two years at a price of $5.00 per whole share purchase
warrant. Groome received an Agent's Fee equal to 8% of the total amount
raised (reduced to 4% for investors on the President's List). In
addition, Groome has been granted non-assignable warrants to acquire,
without payment of additional consideration, 1 year Compensation Options
providing the right to purchase, at $1.25 per unit, a number of units
equal to 10% of the number of Special Warrants sold under this offering.
This offering, which has been closed as of May 11, 2000, resulted in
total subscriptions for 847,989 units with total proceeds of $1,059,986
from a total of nine investors in Canada. A similar offering was
undertaken in the United States, but no sales resulted from this offering.
(4) Change of Business Model.
During the period, the company implemented a partial change in its
business model as strictly a retail/infrastructure development business
to a software development/licensing revenue business. The change
reflects the company's efforts to claim a more defined niche market in
light of the current financial climate and expanding competition within
the industry. This approach has enabled the company to streamline its
business and reduce monthly overhead by 60 percent. The company
continues to maintain its core product development and its plans for
entering the company's first revenue cycle by the licensing of LocalNet.
(5) Capital Expenditures.
No material capital expenditures were made during the quarter ended on
June 30, 2000.
(b) Fiscal Years Ended December 31, 1999 and 1998.
During the year, the company continued its status as a development stage
company. The company has no revenue and is continuing to incur
substantial costs in pursuing business opportunities. The company's
continued existence is dependent on its ability to obtain sufficient
financing to meet its financial needs.
At December 31, 1999 the company 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 company settled debts of
$86,268 to a private company of which an officer is a relative of a
Director of the company by the issuance of 215,665 restricted shares at
$0.40 per share. The company 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 company received loans totaling $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 company defaults on these loans the lender
has the right to convert the amount of principal borrowed into shares of
the company at $0.50 per share subject to a 15% market price adjustment.
In January, 2000, the company 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 company and granted
exclusive right to the company to sell Eagle manufactured Set-Top Boxes
in Canada.
Forward-Looking Statements.
This prospectus contains "forward looking statements" within the meaning
of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of
the Securities Act of 1934, as amended, including statements regarding,
among other items, the company's business strategies, continued growth
in the company's markets, projections, and anticipated trends in the
company'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 company's expectations and
are subject to a number of risks and uncertainties, certain of which are
beyond the company's control. The company 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 company's products, competitive pricing
pressures, changes in the market price of ingredients used in the
company's products and the level of expenses incurred in the company'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 company disclaims any
intent or obligation to update "forward looking statements."
DESCRIPTION OF PROPERTY
The company and Urbana Enterprises currently lease 10,000 square
feet of office space for administration, product research and product
development in Cambridge, Ontario. The term of the lease is 30 months
and commenced on February 1, 2000. The lease has been pre-paid for its
term. The Vancouver, British Columbia offices of the company are
provided to the company without charge by Mr. Tyson; this office space
consists of approximately 100 square feet within a larger office. These
offices are suitable for the purposes of the company at this time (there
is adequate insurance coverage on the assets of the company at these
locations).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past two years, there have not been any transaction that have
occurred between the company and its officers, directors, and five
percent or greater shareholders, except as follows:
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 company. 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 company's principals
intend to act fairly and in full compliance with their fiduciary
obligations, there can be no assurance that the company 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.
During the 1999 fiscal year, the company incurred $40,000 of
consulting fees to Hound Pound Equities, a private company in which the
stepmother of Mr. Cassis is an officer. In addition, the company
incurred $3,335 of consulting fees to this firm. Also, this firm made
advances on behalf of the company to Enersphere and Urbana Enterprises
totaling $82,933 during the third quarter of 1999. Prior to fiscal year
end, $86,268 of these amounts were settled by the issuance of 215,670
restricted shares of common stock at a price of $0.40, leaving $40,000
payable at December 31, 1999. During the first quarter of 2000, the
company settled this $40,000 debt by the issuance of 100,000 restricted
shares of common stock at a price of $0.40 per share.
The Vancouver, British Columbia offices of the company are
provided to the company without charge by Mr. Tyson; this office space
consists of approximately 100 square feet within a larger office. This
office is, in conjunction with other offices of the company, suitable
for the purposes of the company at this time (there is adequate
insurance coverage on the assets of the company at this location).
Certain of the officers and directors of the company 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 company and its officers and directors. The company
will attempt to resolve such conflicts of interest in favor of the
company. The officers and directors of the company are accountable to
it and its shareholders as fiduciaries, which requires that such
officers and directors exercise good faith and integrity in handling the
company's affairs. A shareholder may be able to institute legal action
on behalf of the company 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 company.
MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Market Information.
The company's Shares are traded in the Over-the-Counter Bulletin Board
(symbol "URBA"), having commenced trading on February 13, 1997. The
range of closing prices shown below is as reported by this market. The
quotations shown reflect inter-dealer prices, without retail mark-up,
markdown 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, 2000
High Low
Quarter Ended March 31, 2000 12.94 1.12
Quarter Ended June 30, 2000 7.50 1.19
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended on December 31, 1999
High Low
Quarter Ended March 31, 1999 1.19 0.37
Quarter Ended June 30, 1999 1.00 0.32
Quarter Ended September 30, 1999 0.75 0.25
Quarter Ended December 31, 1999 1.37 0.37
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended December 31, 1998
High Low
Quarter Ended March 31, 1998 2.37 1.50
Quarter Ended June 30, 1998 4.62 1.06
Quarter Ended September 30, 1998 1.37 0.50
Quarter Ended December 31, 1998 0.69 0.25
Holders of Common Equity
As of June 30, 2000, there were approximately 43 shareholders of record
of the company's common stock. A number of shareholders hold their
shares through intermediaries such as American Depository. As a result,
the company does not know the exact number of shareholders of its common
shares.
Dividend Information.
The company has not declared or paid a cash dividend to stockholders
since it was incorporated in February 1993. The board of directors
presently intends to retain any earnings to finance company 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 company's earnings, capital requirements and other factors.
EXECUTIVE COMPENSATION
(a) Prior to 2000, none of the officers and directors received
any compensation from the company. All directors, officers and key
employees have been retained under Management Contracts, with an
effective date of January 1, 2000. None of these individual's total
compensation under these contracts, including special allowances or
bonuses, will exceed $70,000 CDN this year (approximately $47,000 as of
August 16, 2000). All officers and directors will be reimbursed for
expenses incurred on behalf of the company including director expenses
pertaining to attendance at meetings. It is anticipated that additional
management will be hired as the company 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 1999, the company cancelled its previous
stock option plan along with all outstanding stock options previously
granted to directors, officers, and employees of the company. A new
stock option plan was adopted during the year and received shareholders'
approval. To date, no options have been granted under this plan. There
are no other compensation plans of the company.
(c) There are no annuity, pension or retirement benefits proposed
to be paid to officers, directors, or employees of the company in the
event of retirement at normal retirement date as there is no existing
plan provided for or contributed to by the company.
FINANCIAL STATEMENTS
URBANA.CA, INC.
(A development stage company)
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30,
2000
ASSETS
CURRENT ASSETS
Cash $ 43,869
Short term investments 100,195
Funds held in trust 158,998
Taxes recoverable 57,074
Prepaid expenses and deposits 116,369
476,505
FURNITURE AND EQUIPMENT, net of depreciation
of $19,105 165,823
GOODWILL, net of amortization (Note 3) 3,271,932
$ 3,914,260
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 254,276
Loans payable (Note 4) 1,211,933
1,466,209
DUE TO RELATED PARTIES (Note 6) 15,439
COMMITMENTS AND CONTINGENCIES (Notes 1 and 7)
STOCKHOLDERS' EQUITY (DEFICIT)
Capital stock (Note 5)
Authorized
Common stock, $0.0001 par value,
70,000,000 shares
Preferred stock, $0.001 par value,
10,000,000 shares
Issued and outstanding
11,588,283 (1999 - 11,082,318) shares
of common stock 11,588
Additional paid-in capital 1,301,133
Special warrant proceeds (Note 5) 886,405
Exchangeable shares (Note 5) 3,226,500
Deficit accumulated during development stage (2,985,599)
Accumulated other comprehensive income (7,415)
2,432,612
3,914,260
The accompanying notes are an integral part of these consolidated
financial statements
URBANA.CA, INC.
(A development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Three Six Six February 23
Months Months Months Months 1993
Ended Ended Ended Ended (inception)
June 30 June 30 June 30 June 30 to
2000 1999 2000 1999 June 30 2000
EXPENSES
Consulting and
management $ 85,467 $ - $ 335,393 $ - $ 53,678
Depreciation and
Amortization 194,917 162 382,651 1,169 388,790
Technology contract
Fees 292,447 - 348,095 - 348,095
Engineering costs - - - - 274,170
Interest expense 25,018 59 44,636 133 54,272
Office and general 129,263 31,043 266,712 208,736 526,596
Professional fees 73,251 1,903 144,709 10,558 248,711
Rent 9,694 5,023 21,292 11,525 74,373
Salaries 120,698 - 164,802 - 248,506
Write-off of
interest
in mineral property - - - - 15,000
Write-off of
Graphite
processing joint
venture - - - - 253,408
NET LOSS FOR
THE PERIOD 930,755 38,190 1,708,290 232,121 2,985,599
BASIC NET
LOSS PER SHARE 0.08 0.01 0.15 0.02
WEIGHTED AVERAGE
NUMBER OF SHARES
OF COMMON
STOCK
OUTSTANDING 11,588,293 10,275,850 11,503,964 10, 355,350
The accompanying notes are an integral part of these consolidated
financial statements
URBANA.CA, INC.
(A development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended February 23, 1993
June 30 June 30 (inception) to
2000 1999 June 30, 2000
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss for the period $(1,708,290) $(232,121) $(2,985,599)
Adjustments to reconcile net
loss to net cash from operating
activities:
- depreciation and
amortization 382,651 1,169 388,790
- imputed interest on
long term debt - - 9,000
- organization costs - - (308)
- loss on disposal of
furniture and equip. - - 3,620
- write-off of interest
in mineral property - - 15,000
- write-off of investment
in graphite processing
joint venture - - 253,408
- net changes in non-
cash working capital (95,242) 56,797 270,750
CASH USED IN OPERATING
ACTIVITIES (1,420,881) (174,155) (2,045,339)
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of furniture and
Equipment (162,572) - (173,995)
Proceeds from sale of
furniture and equip. - - 1,972
Acquisitions of
subsidiaries,
net of cash acquired
(Note 3) (75,602) - (75,602)
Investment in graphite
processing joint venture - - (37,463)
Purchase of other assets - - (4,500)
CASH USED IN INVESTING
ACTIVITIES (238,174) - (289,588)
CASH FLOWS FROM
FINANCING ACTIVITIES
Ddvances to related parties (167,806) - (145,575)
Payments on agreement
Payable - - (70,000)
Loan advances, net of
interest and repayments 1,151,933 - 1,211,933
Issuance of common
Stock - 173,502 662,446
Special warrant
proceeds, net of trust
funds 727,407 - 727,407
CASH FROM FINANCING
ACTIVITIES 1,711,534 173,502 2,386,211
EFFECT OF EXCHANGE RATE
CHANGES ON CASH (9,145) - (7,415)
INCREASE (DECREASE) IN CASH 43,334 (653) 43,869
CASH, BEGINNING OF PERIOD 535 713 -
CASH, END OF PERIOD $ 43,869 $ 60 $ 43,869
Non-cash activities: Refer to Notes 3 and 5.
The accompanying notes are an integral part of these consolidated
financial statements
URBANA.CA, INC.
(A development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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, U.R.B.A. Holdings Inc. ("URBA"), was
incorporated under the laws of British Columbia to facilitate
acquisitions in Canada.
During January, 2000, the company acquired, through URBA, 100% of the
outstanding shares of Urbana.ca Enterprises Corp. ("Urbana
Enterprises"), E-Bill Direct Inc. ("E-Bill"), and Enersphere.com, Inc.
("Enersphere"), which are in the business of developing and marketing
internet based products and services through the distribution of set top
boxes.
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 the development of its
business and requires additional working capital to fund ongoing losses
from operations. 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.
During June, 2000 the company entered into a financing agreement to
raise up to $3,500,000 of additional working capital by way of a private
placement of common stock on a best efforts basis. To date no funds
have been received from this proposed financing.
The accompanying unaudited interim financial statements have been
prepared in accordance with the rules and disclosure requirements of
Regulation S-B and Form 10-QSB. They do not necessarily include all
information and footnotes required by generally accepted accounting
principles applicable to the company's annual audited financial
statements. However, except as disclosed herein, there has been no
material change in accounting principles used or the information
disclosed in the notes to the financial statements for the year ended
December 31, 1999 included in the company's Annual Report on Form 10-KSB
filed with the Securities and Exchange Commission. The interim unaudited
financial statements should be read in conjunction with those financial
statements included in the Form 10-KSB. In the opinion of Management,
all adjustments considered necessary for a fair presentation have been
made. Operating results for the six months ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2000.
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 subsidiaries U.R.B.A. Holdings Inc. and Urbana Enterprises
Corp. which was formed effective March 10, 2000, when Urbana
Enterprises, Enersphere and E-Bill were amalgamated under the statutory
laws of the Province of Ontario. 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.
Goodwill
The company amortizes goodwill on a straight-line basis over five years.
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 period. 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.
NOTE 3 - ACQUISITIONS
Urbana Enterprises
By agreement dated January 4, 2000, the company's wholly-owned
subsidiary URBA, 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, URBA 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
URBA held. A holder of an exchangeable share may, at any time, require
URBA to repurchase the exchangeable share for an amount equal to the
then current market value of a common share of the company. URBA may
satisfy the resulting obligation in cash or in company shares at its
option.
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.
This business combination has been 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
Urbana Enterprises had net losses totaling $193,171 for the period from
May 1, 1999 (inception) to the date of acquisition.
Goodwill arising on this acquisition is being amortized on a straight-
line basis over 5 years and amortization of $109,310 has been recorded
to June 30, 2000.
E-Bill
By agreement dated January 10, 2000, the company's wholly-owned
subsidiary URBA, 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, URBA 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
URBA held. A holder of an exchangeable share may, at any time, require
URBA to repurchase the exchangeable share for an amount equal to the
then current market value of a common share of the company. URBA may
satisfy the resulting obligation in cash or in company shares at its
option.
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.
E-Bill had losses totaling $16,214 for the period from May 27, 1999
(inception) to the date of acquisition.
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.
This business combination has been 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 is being amortized on a straight-
line basis over 5 years and amortization of $81,264 has been recorded to
June 30, 2000.
Enersphere
By agreement dated January 9, 2000, the company's wholly-owned
subsidiary URBA, 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, URBA 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 URBA held. A holder of an exchangeable share may,
at any time, require URBA to repurchase the exchangeable share for an
amount equal to the then current market value of a common share of the
company. URBA may satisfy the resulting obligation in cash or in company
shares at its option.
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.
Enersphere had net losses totaling $114,917 for the period from
September 28, 1999 (inception) to the date of acquisition.
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.
Goodwill arising on this acquisition is being amortized on a straight-
line basis over 5 years and amortization of $172,972 has been recorded
to June 30, 2000.
This business combination has been 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
NOTE 4 - LOANS PAYABLE
The company has outstanding loans totaling $1,184,162 plus accrued
interest of $27,771 calculated at an annual rate of 8%. These loans were
due and payable on March 15, 2000. During the quarter, the company
repaid $110,000 of principal. For the remainder of the unpaid loans,
the company has provided an option to the lenders to convert the
principal amount of the loan into units of the company at a price of
$0.57 per unit. Each unit will consist of one common share of the
company and one-half share purchase warrant. Each whole share purchase
warrant entitles the holder to purchase an additional common share of
the company at a price of $5.00 per share. This offer is to be made by
way of a prospectus to be filed with the applicable Canadian and United
States regulatory authorities.
NOTE 5 - CAPITAL STOCK
During the six month period ended June 30, 2000 the following shares
were issued:
Common Shares
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.
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.
Exchangeable Shares
The company's subsidiary, URBA, issued a total of 10,450,000
exchangeable shares as consideration for the acquisitions of Urbana
Enterprises, E-Bill and Enersphere as described in Note 3. The holders
of these shares have been granted votes in the company on a basis of one
vote for each exchangeable share of URBA held and may, at any time,
require URBA to repurchase the exchangeable share for an amount equal to
the then current market value of a common share of the company. URBA may
satisfy the resulting obligation in cash or in company shares at its
option.
Special Warrant Proceeds
During the quarter ended June 30, 2000 the company completed a Special
Warrant offering for 847,989 Special Warrants at $1.25 per Special
Warrant for proceeds, net of offering costs, of $886,405. Currently
$158,998 of these proceeds are being held in trust until the earlier of
one year or approval of a Prospectus in the applicable jurisdictions in
Canada and a Registration with the Securities and Exchange Commission
on Form SB-2. Each Special Warrant is convertible into one common share
and one-half share purchase warrant exercisable for a period of two
years at a price of $5.00 per whole share purchase warrant. In addition,
the Agent has been granted non-assignable warrants to acquire, without
payment of additional consideration, 1 year Compensation Options
providing the right to purchase, at $1.25 per unit, a number of units
equal to 10% of the number of Special Warrants sold under this offering.
Stock Option Plan
The company has adopted a Stock Option Plan 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 June 30, 2000, no stock-based compensation
cost has been recorded for any period and no stock options have been
issued under this plan.
Refer to Notes 3.
NOTE 6 - RELATED PARTY TRANSACTIONS
All amounts due to and from related parties are unsecured, non-interest
bearing, and have no specific terms of repayment.
Refer to Notes 3 and 5.
NOTE 7 - 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.
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.
/s/ La Bonte & Co.
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.
/s/ La Bonte & Co.
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
1999 1998
ASSETS
CURRENT ASSETS
Cash $ 535 $ 713
Prepaid expenses 7,667 2,342
8,202 3,055
UE 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
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, 1993
December 31 December 31 (inception) to
1999 1998 December 31, 9999
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 Accumu
Accumu lated
Common Stock lated other
Number Additional During Compre
Of Paid In Develop hensive
Shares Amount Capital ment Income
Stage Total
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, 1993
December 31 December 31 (inception) to
1999 1998 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
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 totaling approximately $1,224,162. (Refer to Notes 5 and 11).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCONTING 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 totaling $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 215,670 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 510,305 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, totaling $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 totaling $82,933. During the year $86,268 of these
amounts were settled by the issuance of 215,670 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:
(a) 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 totaling $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.
(b) 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 totaling $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.
(c) 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 totaling $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.
Proforma Consolidated Financial Information
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
Pro-Forma Adjustments
Pro Forma
Consoli
Urbana dated
Urbana.ca Enter- Enersphere E-Bill Urbana.ca,
Inc. prises Inc.
(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
Exchangeable
Shares - 900,000 1,530,000 796,500 - 3,226,500
Deficit
Accumulated
during
development
stage (1,277,309) - - - - (1,277,309)
Accumulated
other
comprehensive
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
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
(a) Effective on January 26, 2000, the independent accountant who
was previously engaged as the principal accountant to audit the
company's financial statements, Kurt D. Saliger, C.P.A., resigned. This
accountant's report on the financial statements for the past two years
neither contained an adverse opinion or a disclaimer of opinion, nor was
qualified or modified as to uncertainty, audit scope, or accounting
principles.
During the company's two most recent fiscal years and any subsequent
interim period preceding such resignation, there were no disagreements
with the former accountant on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure. In addition, there were no "reportable events" as described
in Item 304(a)(1)(iv)(B)1 through 3 of Regulation S-B that occurred
within the company's two most recent fiscal years and the subsequent
interim period preceding the former accountant's dismissal.
(b) Effective on January 27, 2000, the firm of LaBonte & Co. was
engaged to serve as the new principal accountant to audit the company's
financial statements. The decision to retain the new firm was approved
by the board of directors. During the company's two most recent fiscal
years, and the subsequent interim period prior to engaging that
accountant, neither the company (nor someone on its behalf) consulted
the newly engaged accountant regarding any matter.
AVAILABLE INFORMATION
The company has filed with the U.S. Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement on Form SB-2 under the
Securities Act of 1933 with respect to the shares of common stock
offered by this prospectus. This prospectus does not contain all of the
information set forth in the registration statement and the exhibits
and schedules filed with the registration statement. Certain items are
omitted in accordance with the rules and regulations of the Commission.
For further information with respect to the company and the common
stock offered by this prospectus, reference is made to the registration
statement and the exhibits and schedules filed with the registration
statement. Statements contained in this prospectus as to the contents of
any contract or any other document referred to are not necessarily
complete, and in each instance, reference is made to the copy of such
contract or other document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such
reference.
A copy of the registration statement, and the exhibits and
schedules filed with it, may be inspected without charge at the public
reference facilities maintained by the Commission in Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and the Commission's
regional offices located at the Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago Illinois 60661 and Seven World Trade
Center, 13th Floor, New York, New York 10048, and copies of all or any
part of the registration statement may be obtained from such offices
upon the payment of the fees prescribed by the Commission. The public
may obtain information on the operation of the public reference room by
calling the Commission at 1 (800) SEC-0330. The Commission maintains a
World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission, including the company. The address
of the site is http://www.sec.gov. The registration statement, including
all its exhibits and any amendments, has been filed electronically with
the Commission.
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Information on this item is set forth in the propsectus under the
heading "Disclosure of Commission Position on Indemnification for
Securities Act Liabilities."
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Information on this item is set forth in the prospectus under the
heading "Use of Proceeds."
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Other than as set forth below, during the last three years there
have not been any sales of unregistered securities of the company.
Except as noted below, no commissions or fees were paid in connection
with these sales. Except as noted below, all of the these sales were
undertaken pursuant to the limited offering exemption from registration
under the Securities Act of 1933 as provided in Regulation D as
promulgated by the U.S. Securities and Exchange Commission.
Pre-Fiscal Year 1999.
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.
Fiscal Year 1999.
During the fiscal year ended December 31, 1999 the following
transactions were completed:
In January 1999, the company entered into a one-year corporate finance
advisory agreement, cancelable 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.
The company 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
company, and a director of Urbana Enterprises, by the issuance of
215,670 restricted shares of common stock at a price of $0.40 per share.
The company settled its amount payable of $130,000 to Da-Jung Resources,
a major shareholder in the company, 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 company also settled its trade payables of $204,122 by the issuance
of restricted shares at $0.40 per share for 510,305 shares.
Quarter Ended March 31, 2000.
During the quarter ended March 31, 2000, the company settled debts of
$40,000 due to a relative of a director of the company by the issuance
of 100,000 restricted shares at $0.40 per share. The company settled a
total of $99,900 of accounts payable by the issuance of 333,000
restricted shares at $0.30 per share and $9,190 of accounts payable by
the issuance of 22,975 restricted shares at $0.40 per share. The
company issued 50,000 restricted shares at $0.40 per share as a retainer
on a media relations contract. As consideration for the acquisition of
the three subsidiaries during the quarter, URBA Holdings Inc. issued a
total of 10,450,000 exchangeable shares.
During fiscal year ended December 31, 1999, the company received
loans totaling $60,000. For the quarter ended March 31, 2000, the
company received additional loans of $1,224,162, for total loans of
$1,284,162. These loans bear interest at an annual rate of 8% and were
due and payable on March 15, 2000. The company did not repay these
loans and as a result has offered the lenders the right to convert the
principal into units of the company at a price of $0.57 per unit. Each
unit is comprised of one common share of the company and one-half share
purchase warrant. Each whole share purchase warrant entitles the holder
to purchase an additional share at a price of $5.00 per share. This
offer is to be made by way of a prospectus that is being conducted in
Ontario, Quebec and British Columbia in Canada.
Quarter Ended June 30, 2000.
The company entered into an agency agreement effective April 10,
2000 with Groome Capital.com Inc. whereby the company and Groome engaged
in a best efforts offering of up to 20,000,000 special warrants at a
price of $1.25 per special warrant. Each special warrant is convertible
into one common share and one-half share purchase warrant exercisable
for a period of two years at a price of $5.00 per whole share purchase
warrant. Groome received an Agent's Fee equal to 8% of the total amount
raised (reduced to 4% for investors on the President's List). In
addition, Groome has been granted non-assignable warrants to acquire,
without payment of additional consideration, 1 year Compensation Options
providing the right to purchase, at $1.25 per unit, a number of units
equal to 10% of the number of Special Warrants sold under this offering.
This offering, which has been closed as of May 11, 2000, resulted
in total subscriptions for 847,989 units with total proceeds of
$1,059,986 from a total of nine investors in Canada; these transactions
were exempt from the registration requirements under the Securities Act
of 1933 based on Regulation S. A similar offering under Rule 506 of
Regulation D was undertaken in the United States, but no sales resulted
from that offering. These offerings were made only to sophisticated
investors; 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 27. EXHIBITS
The Exhibits required by Item 601 of Regulation S-B, and an index
thereto, are attached.
ITEM 28. UNDERTAKINGS
The undersigned company hereby undertakes to:
(a) (1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement
to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement; and Notwithstanding the forgoing, any increase
or decrease in volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and
any deviation From the low or high end of the estimated maximum offering
range may be reflected in the form of prospects filed with the U.S.
Securities and Exchange Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in the volume and price represent no more than a
20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act of 1933, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to
be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(d) Provide to the underwriter at the closing specified in the
underwriting agreement certificates in such denominations and registered
in such names as required by the underwriter to permit prompt delivery
to each purchaser.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
small business issuer of expenses incurred or paid by a director,
officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the small business issuer will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
company certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form SB-2 and authorized
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorize, in the City of Cambridge,
Province of Ontario, Canada, on August 16, 2000.
Urbana.ca, Inc.
By: /s/ Jason Cassis
Jason Cassis
Chief Executive Officer
Special Power of Attorney
The undersigned constitute and appoint Jason Cassis their true and
lawful attorney-in-fact and agent with full power of substitution, for
him and in his name, place, and stead, in any and all capacities, to
sign any and all amendments, including post-effective amendments, to
this Form SB-2 registration statement, and to file the same with all
exhibits thereto, and all documents in connection therewith, with the
U.S. Securities and Exchange Commission, granting such attorney-in-fact
the full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as
fully and to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that such attorney-in-fact may
lawfully do or cause to be done by virtue hereof.
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 August 17, 2000
Jason Cassis
/s/ David M. Groves President/Director August 17, 2000
David M. Groves
/s/ Greg Alexanian Vice President/Chief Operating August 17, 2000
Greg Alexanian Officer/Director
/s/ Robert S. Tyson Vice August 17, 2000
Robert S. Tyson President/Secretary/Director
/s/ Rick Whittaker Vice President, Business August 17, 2000
Rick Whittaker Development/Director
EXHIBIT INDEX
Number Exhibit Description
2.1 Articles of Merger and Merger Agreement 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).
2.2 Amalgamation Agreement between Urbana.ca Enterprises Corp.,
Enersphere.com, Inc., and E-Bill Direct Inc., dated March 3,
2000 (incorporated by reference to Exhibit 2.2 of the Form 10-
QSB filed on May 17, 2000).
3.1 Articles of Incorporation (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
(incorporated by reference to Exhibit 3.2 of the Form 10-QSB
filed on November 15, 1999).
3.3 Certificate of Amendment of Articles of Incorporation (see below).
3.4 Certificate of Amendment of Articles of Incorporation (see below).
3.5 Bylaws (incorporated by reference to Exhibit 3.2 of the
Registration Statement on Form 10-SB/A filed on December 17, 1999).
4.1 Integrated Carbonics Corp. 1999 Stock Option Plan
(incorporated by reference to Exhibit 4 to the Form 10-QSB filed
on November 15, 1999).
4.2 Form of Private Placement Subscription Agreement between
the company and investors (see below).
4.3 Form of Unit Warrants to Subscribe for Common Shares issued
by the company to investors on April 27, 2000 (see below).
4.4 Form of Non-Assignable Agent's Compensation Options to
Acquire Units, issued by the company to Groome Capital.com, Inc.
on April 27, 2000 (see below).
4.5 Form of Non-Assignable Agent's Warrants to Acquire Common
Shares, issued by the company to Groome Capital.com, Inc. on
April 27, 2000 (see below).
4.6 Non-Assignable Agent's Warrants to Acquire Compensation
Options, issued by the company to Groome Capital, Inc. on April
27, 2000 (see below).
4.7 Form of Unit Warrants to Subscribe for Common Shares to be
issued by the company to holders of converted loans (see below).
4.8 Form of Common Stock Purchase Warrant to be issued by
the company to Ladenburg Thalmann & Co. Inc. (see below).
5 Opinion Re: Legality (see below).
10.1 Agreement on Establishment of Sino Equity Joint Venture,
China-Canada Liumao Graphite Products Co. Ltd., dated September
9, 1997 (incorporated by reference to Exhibit 10.3 of the
Registration Statement on Form 10-SB/A filed on December 17, 1998).
10.2 Cooperative Joint Venture Agreement between Da-Jung
Resource Corp. and Heilongjiang Geological and Mining Technology
Development Corp., dated September 9, 1997 (incorporated by
reference to Exhibit 10.5 of the Registration Statement on Form
10-SB/A filed on December 17, 1998).
10.3 Agreement between PLR, Inc. and Da-Jung Resource Corp.,
dated September 22, 1997 and PLR, Inc. (incorporated by
reference to Exhibit 10.1 of the Registration Statement on Form
10-SB/A filed on December 17, 1998).
10.4 Agreement between Integrated Carbonics Corp. and Da-Jung
Resource Corp., dated October 7, 1997 (incorporated by reference
to Exhibit 10.2 of the Registration Statement on Form 10-SB/A
filed on December 17, 1998).
10.5 Equity Joint Venture Agreement between Integrated Carbonics
Corp. and Liumao Graphite Mine, dated November 10, 1997
(incorporated by reference to Exhibit 10.4 of the Registration
Statement on Form 10-SB/A filed on December 17, 1998).
10.6 Share Exchange and Share Purchase Agreement between the
company, ICC Integrated Carbonics (Canada) Corp., and
Enersphere.com, Inc., dated December 1, 1999 (incorporated by
reference to Exhibit 10.6 of the Form 10-QSB filed on May 17, 2000).
10.7 Share Exchange and Share Purchase Agreement between the
company, ICC Integrated Carbonics (Canada) Corp., and Urbana.ca
Enterprises Corp., dated January 4, 2000 (incorporated by
reference to Exhibit 10.7 of the Form 10-QSB filed on May 17, 2000).
10.8 Management Contract between the company and Jason Cassis,
dated January 4, 2000 (see below).
10.9 Share Exchange and Share Purchase Agreement between the
company, ICC Integrated Carbonics (Canada) Corp., and E-Bill
Direct, Inc., dated January 10, 2000 (incorporated by reference
to Exhibit 10.8 of the Form 10-QSB filed on May 17, 2000).
10.10 License Agreement between the company, Eagle Wireless
International, Inc., and USA Video Interactive Corp., dated
January 13, 2000 (see below).
10.11 Exclusivity Agreement between Urbana.ca Enterprises
Corp. and Eagle Wireless International, Inc., dated January 17,
2000 (incorporated by reference to Exhibit 10.9 of the Form 10-
QSB filed on May 17, 2000).
10.12 Agency Agreement between the company and Groome
Capital.com, Inc., dated April 10, 2000 (see below).
10.13 Administration and Services Agreement between the
company, Groome Capital.com, Inc., and InvestIn.com Securities
Corp., dated April 10, 2000 (see below).
10.14 Special Warrant Agreement between the company and
Pacific Corporate Trust Company, dated April 27, 2000 (see below).
10.15 Share Purchase Warrant Agreement between the company
and Pacific Corporate Trust Company, dated April 27, 2000 (see below).
10.16 Escrow Agreement between the company, Groome
Capital.com, Inc., and Pacific Corporate Trust Company, dated
April 27, 2000 (see below).
10.17 Letter Agreement between the company and Ladenburg
Thalmann & Co. Inc., dated June 15, 2000 (see below).
21 Subsidiaries of the company (incorporated by reference to
Exhibit 21 of the Form 10-KSB filed on March 31, 2000).
23.1 Consent of Accountant (see below).
23.2 Consent of Counsel (see below).
27 Financial Data Schedule (see below).
