<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 27, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
Amendment No. 1
to
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FETCHOMATIC GLOBAL INTERNET INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEVADA 7373 52-212549
(STATE OF INCORPORATION) (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NO.)
CLASSIFICATION CODE NUMBER)
</TABLE>
------------------------
444 VICTORIA STREET, SUITE 370
PRINCE GEORGE, BRITISH COLUMBIA
CANADA V2L 2J7
(250) 564-6868
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
WAYNE E. LOFTUS
444 VICTORIA STREET, SUITE 370
PRINCE GEORGE, BRITISH COLUMBIA
CANADA V2L 2J7
(250) 564-6868
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
Forest Glade International Inc.
--------------------------------------
(Former Name)
Please send copies of all communications to:
WILLIE E. DENNIS, ESQ.
JOHN F. STORZ, ESQ.
CAMHY KARLINSKY & STEIN LLP
1740 BROADWAY
NEW YORK, NEW YORK 10019-4315
(212) 977-6600
------------------------
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 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(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 delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
please check the following box. /x/
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM OFFERING PROPOSED
TITLE OF EACH CLASS AMOUNT TO BE PRICE PER MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock underlying the
Convertible Debentures............... 7,039,473 $1.31 $ 9,221,709.63 $2,434.53
Common Stock underlying the
Warrants............................. 521,765 $1.31 $ 683,512.15 $ 180.45
Common Stock......................... 7,508,104 $1.31 $ 9,835,616.24 $2,596.60
Total................................ $19,740,838.02 $5,211.58
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based on
the average of the bid and asked prices of our common stock as quoted on the
OTC Electronic Bulletin Board on July 25, 2000, which was $1.31.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the SEC is
effective. This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
SUBJECT TO COMPLETION, DATED July 27, 2000
PROSPECTUS
FETCHOMATIC GLOBAL INTERNET INC.
15,069,342 SHARES OF COMMON STOCK
------------------------
This prospectus is part of a registration statement that covers the
issuance of up to:
1. 7,039,473 shares of our common stock that is issuable by us upon
the conversion of our 7% convertible debenture issued in our
private placement.
2. 521,765 shares of our common stock that is issuable by us upon the
conversion of our warrant issued in our private placement.
3. 175,000 shares of our common stock issuable to Ira Terk and Next
Millennium Capital Holdings LLC as a finder's fee in connection
with our private placement.
4. 7,333,104 shares of our common stock issuable to Sivla, Inc. in
connection with an advertising and media services agreement
The shares of our common stock are listed on the OTC Electronic Bulletin
Board under the symbol "FGLB." On July 25, 2000, the closing price of one share
of our common stock on the OTC Electronic Bulletin Board was $1.281 per share.
------------------------
The securities offered hereby are speculative and involve a high degree of
risk. SEE "RISK FACTORS" COMMENCING ON PAGE 5.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
THE DATE OF THIS PROSPECTUS IS JULY 27, 2000.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Prospectus Summary......................................................................................... 2
Summary Financial Information.............................................................................. 4
Risk Factors............................................................................................... 5
Special Note on Forward-Looking Statements................................................................. 15
Use of Proceeds............................................................................................ 15
Dividend Policy............................................................................................ 15
Selected Financial Data.................................................................................... 16
Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 17
Our Business............................................................................................... 20
Management................................................................................................. 24
Principal Stockholders..................................................................................... 27
Certain Relationships and Related Transactions............................................................. 27
Description of Securities.................................................................................. 28
Plan of Distribution....................................................................................... 29
Selling Securityholders.................................................................................... 30
Shares Eligible for Future Sale............................................................................ 30
Legal Matters.............................................................................................. 31
Experts.................................................................................................... 31
Disclosure of Commission Position on Indemnification for Securities Act Liabilities........................ 32
Market for Our Common Stock................................................................................ 32
Financial Statements....................................................................................... 32
Index to Financial Statements.............................................................................. F-1
Index to Financial Statements.............................................................................. F-12
</TABLE>
<PAGE>
PROSPECTUS SUMMARY
Since this is a summary, it does not contain all the information that may
be important to you in evaluating your investment. You should read the following
summary and "Risk Factors" section, along with the more detailed information and
financial statements and notes to the financial statements appearing elsewhere
in this prospectus before you decide whether to make an investment in our common
stock or our common stock warrants.
ABOUT FETCHOMATIC GLOBAL INTERNET INC.
Through our wholly-owned subsidiary, fetchOmatic.com Online Inc., we are
the developer and operator of www.fetchomatic.com, an innovative search engine
and portal that utilizes a geographical searching capability.
Our search engine permits us to locate a business or service based upon
geographical search criteria.
We recently began showcasing live demonstrations of our search engine, and
released Version 1.0 for beta testing on our Internet web site in December 1999.
Management expects the web site to be fully operational in August 2000.
OUR HISTORY
We were formed under the laws of the State of Nevada on August 27, 1998
under the name "Forest Glade International Inc." On June 2, 2000, we changed our
name to "Fetchomatic Global Internet Inc." As a result of the name-change, our
new trading symbol became FGLB as of June 9, 2000. On November 3, 1999, we
acquired all the issued and outstanding shares of Fetchomatic.com Online Inc.
Until November 3, 1999, our principal business was the ownership and operation
of a mobile home park in Canada. In June 2000, we sold all of our interest in
the mobile home park and our business is now focused solely on the development
and commercial exploitation of our search engine and web site.
Our corporate headquarters are located at 444 Victoria Street, Suite 370,
Prince George, British Columbia, Canada. Our Internet address is
http://www.Fetchomatic.com. We also have offices located at 36-1835 56th Street,
Delta, British Columbia, Canada and 1521 56th Street, Delta, British Columbia,
Canada.
THE OFFERING
<TABLE>
<S> <C>
Securities offered........................ Up to 15,069,342 shares of our common stock. The shares registered
with this prospectus include 7,039,473 shares of our common stock
issuable upon the conversion of our 7% convertible debenture.
Up to 521,765 shares of our common stock issuable upon exercise of a
warrant to purchase common stock.
175,000 shares of our common stock issuable as a finder's fee in
connection with the May 2000 private placement. Up to 7,333,104
shares of our common stock issuable in connection with an advertising
and media services agreement.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Common stock to be outstanding after the
offering(1)............................. The conversion of the convertible debentures and exercise of the
warrant will result in the issuance of additional shares. For
purposes of this prospectus, we have assumed that an additional
7,561,238 shares will be issued upon conversion or exercise of these
securities. Because the number of shares issuable upon conversion of
the convertible debenture is based on a formula that varies with the
market price of our common stock, and because there is no obligation
on the holders of the convertible debenture and the warrant to
convert or exercise these securities, we may issue more or less than
the additional 7,561,238 shares covered by this prospectus.
Use of proceeds........................... Any proceeds received by us from the exercise of our warrant may be
used for our general working capital to grow our business. We will
not receive any proceeds from the sale of the common stock.
Risk factors.............................. An investment in the shares involves a high degree of risk. See "Risk
Factors."
OTC Electronic Bulletin Board Trading
symbol.................................. FGLB
</TABLE>
- ------------------
(1) Does not include shares issuable upon exercise of all options under our 1999
Stock Option Plan, of which 5,000,000 have been granted and 4,700,000 have
been exercised as of July 25, 2000.
3
<PAGE>
SUMMARY FINANCIAL INFORMATION
The summary financial information set forth below is derived from and
should be read in conjunction with the consolidated financial statements,
including the notes thereto, appearing elsewhere in this prospectus. As a result
of our acquisition of fetchOmatic.com Online Inc. (formerly SSA Coupon Ltd.) via
reverse acquisition on November 3, 1999, our financial statements are presented
as a continuation of fetchOmatic.com Online Inc. Accordingly, financial
information relating to periods prior to the acquisition is that of
fetchOmatic.com Online Inc.
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 4, 1998
NINE MONTHS ENDED APRIL 30 (INCORPORATION)
--------------------------- TO JULY 31,
2000 1999 1999
----------- ----------- ------------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue........................................................ $ -- $ -- $ --
Expenses....................................................... 5,841,871 54,705 235,354
Loss from Continued Operations................................. (5,841,871) (54,705) (235,354)
Loss from Discontinued Operations.............................. (569,239) - -
Net loss for the period........................................ (6,411,110) (54,705) (235,354)
Loss per share--after discontinued operations--basic and
diluted...................................................... (0.20) (0.00) (0.01)
<CAPTION>
APRIL 30, JULY 31,
2000 1999
----------- -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficiency)................................................. $ (257,070) $ (63,736)
Total assets................................................................. 1,206,907 57,347
Total liabilities............................................................ 801,685 117,635
Accumulated deficit.......................................................... (6,646,464) (235,354)
Total Stockholders' Equity (Deficit)......................................... 405,222 (60,288)
</TABLE>
4
<PAGE>
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully review and consider the information below, as well as the other
information contained in this prospectus and incorporated by reference, before
you make an investment in our common stock or our common stock warrants.
THE LIMITED OPERATING HISTORY OF OUR ONLINE BUSINESS MAKES IT DIFFICULT TO
EVALUATE WHETHER WE WILL OPERATE PROFITABLY.
Historically, we were in the business of owning and operating a mobile home
park in Canada. On June 2, 2000 we completed the process of divesting ourselves
of our real estate holdings and interest in the mobile home park and began to
focus our operations on the development, marketing and commercial exploitation
of our Internet search engine. Our Internet business operations have a limited
history upon which an evaluation of our company can be based. Our prospects are
subject to the risks, expenses and uncertainties frequently encountered by
companies in their early stage of development, especially in the new and rapidly
evolving markets for Internet products and services. There can be no assurance
that we will be able to address any of these challenges.
SINCE WE HAVE A HISTORY OF NET LOSSES, WE EXPECT TO INCUR NET LOSSES IN THE
FUTURE.
Our financial statements reflect that we, through our wholly-owned
subsidiary fetchOmatic.com Online Inc., have incurred significant net losses
since inception, including a net loss of $6,411,110 (including a loss from
discontinued operations of $569,239) in the nine-month period ended April 30,
2000. As of April 30, 2000, we had an accumulated deficit of $6,646,464. We
expect to have increasing net losses and negative cash flows for the foreseeable
future. The size of these net losses will depend, in part, on the rate of growth
in our revenues. It is critical to our success that we continue to expend
financial and management resources to develop brand loyalty through marketing
and promotion.
With the acquisition of fetchOmatic.com Online Inc. on November 3, 1999, we
significantly increased our operating expenses and we expect that our operating
expenses will continue to increase in the future. To the extent that any such
expenses are not timely followed by increased revenues, our business, results of
operations, financial condition and prospects would be materially adversely
affected.
WE ARE UNCERTAIN THAT WE WILL BE ABLE TO OBTAIN THE ADDITIONAL CAPITAL THAT MAY
BE NECESSARY TO ESTABLISH OUR BUSINESS.
Our recurring operating losses and growing working capital needs may
require us to obtain additional capital to operate our business before we have
established that our business will generate significant revenue. Although
management believes that we will be able to achieve our plans to begin
generating revenue, we cannot be sure that those plans will succeed. If
additional financing is required, the terms of the financing may be adverse to
the interests of existing stockholders, including the possibility of
substantially diluting their ownership position.
WE ARE IN A HIGHLY COMPETITIVE INDUSTRY AND SOME OF OUR COMPETITORS MAY BE MORE
SUCCESSFUL IN ATTRACTING AND RETAINING CUSTOMERS.
The market for Internet products and services is highly competitive and we
expect that competition will continue to intensify. Negative competitive
developments could prevent our business from being successful.
We compete with many other providers of online navigation, information,
entertainment, business, community, electronic commerce and broadcast services.
As we expand the scope of our Internet offerings, we will compete directly with
a greater number of Internet sites, media companies, and companies providing
business services across a wide range of different online services, including:
o companies offering communications services either on a stand alone
basis or integrated into other products and media properties;
o vertical markets where competitors may have advantages in expertise,
brand recognition, and other factors;
5
<PAGE>
o manufacturers of personal computers who may develop their own
Internet portals to which they would direct their customers;
o online merchant hosting services; and
o online broadcasting of business events.
In particular, we face significant competition from Yahoo!, Inc., America
Online Inc. and Microsoft Corporation. To a less significant extent, we face
competition from other companies that have combined a variety of services under
one brand in a manner similar to Yahoo! including CMGI Inc. (through Alta
Vista), the Walt Disney Company (through The GO Network), At Home Corporation
(through Excite@Home), and Lycos, Inc.
In certain of these cases, our competition has a direct billing
relationship with the user, which we generally lack. This relationship permits
our competitors to have several potential advantages including the potential to
be more effective than us in targeting services and advertisements to the
specific taste of their users. America Online and Time Warner Inc. recently
announced the proposed merging of their companies. If completed, the merger will
provide America Online with content from Time Warner's movie and television,
music, books and periodicals, news, sports and other media holdings; access to a
network of cable and other broadband delivery technologies; and considerable
resources for future growth and expansion. The proposed America Online and Time
Warner combination will also provide America Online with access to a broad
potential customer base consisting of Time Warner's current customers and
subscribers of its various media properties. We also face competition from web
sites focused on vertical markets where expertise in a particular segment of the
market may provide a competitive advantage. We must continue to obtain more
knowledge about our users and their preferences as well as increase our branding
and other marketing activities in order to remain competitive.
A large number of those web sites and online services as well as
high-traffic e-commerce merchants such as Amazon.com, Inc. also offer or are
expected to offer informational and community features that may be competitive
with the services that we offer or intend to offer in the future. In order to
effectively compete, we may need to expend significant internal engineering
resources or acquire other technologies and companies to provide or enhance such
capabilities. Any of these efforts could have a material adverse effect on our
business, operating results and financial condition and be dilutive to our
stockholders.
WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY BECAUSE WE ARE IN THE PROCESS OF
ESTABLISHING OUR NAME RECOGNITION AND BECAUSE OUR COMPETITORS ARE MORE
ESTABLISHED AND HAVE GREATER RESOURCES THAN WE DO.
Many of our existing competitors, such as Yahoo!, America Online and
Microsoft (MSN) have longer operating histories, greater name recognition,
larger customer bases and significantly greater financial, technical and
marketing resources than we do. This may allow them to devote greater resources
than we can to the development and promotion of their products and services. In
addition, many of these competitors offer a wider range of services than we do.
Our competitors' services may attract users to their sites and may consequently
result in decreased visits to our site.
Our competitors may also engage in more extensive research and development,
adopt more aggressive pricing policies and make more attractive offers to
existing and potential employees, partners, advertisers and electronic commerce
partners. Our competitors may develop products and services that are equal or
superior to ours or that achieve greater market acceptance. In addition, current
and potential competitors may establish relationships among themselves or with
third parties to better address the needs of advertisers and businesses engaged
in electronic commerce. As a result, it is possible that existing or new
competitors may emerge and rapidly acquire a significant market share.
WE WILL RELY HEAVILY ON REVENUES DERIVED FROM INTERNET ADVERTISING, WHICH MAY
PROVE TO BE AN INEFFECTIVE MEANS OF ADVERTISING FOR OUR CURRENT AND POTENTIAL
CLIENTS.
We expect to generate the majority of our revenues from advertisements
displayed on our online properties. Our ability to continue to achieve
substantial advertising revenue depends upon:
o growth of our user base;
o our user base being attractive to advertisers;
6
<PAGE>
o our ability to derive better demographic and other information from
our users;
o acceptance by advertisers of the Internet as an advertising medium;
and
o our ability to transition and expand into other forms of
advertising.
If we are unsuccessful in adapting to the needs of our advertisers, our
ability to generate revenues may be significantly reduced.
WE EXPECT TO DERIVE THE MAJORITY OF OUR REVENUES FROM THE SALE OF ADVERTISEMENTS
UNDER SHORT-TERM CONTRACTS, WHICH ARE DIFFICULT TO FORECAST ACCURATELY.
We expect that most or all of our revenues will be derived from agreements
with advertisers or sponsorship arrangements. Agreements for advertising and
sponsorship arrangements on the Internet are customarily for short terms. We
expect that the advertising and sponsorship agreements that we enter will have
terms of less than three years. In cases where the advertiser is providing
services, the agreements will often have payments contingent on usage levels.
Accordingly, it is difficult to accurately forecast these revenues. However, our
expense levels are based in part on expectations of future revenues and, to a
large extent, are fixed. We may be unable to adjust spending quickly enough to
compensate for any unexpected revenue shortfall. Accordingly, the cancellation
or deferral of advertising or sponsorship (once obtained) may impede our future
growth. Because our operating expenses are likely to increase significantly over
the near term, to the extent that expenses increase but our revenues do not, we
may be required to seek funds from third parties to finance our continued
operations.
THE RATE STRUCTURE OF SOME OF OUR PLANNED SPONSORSHIP ARRANGEMENTS SUBJECTS US
TO FINANCIAL RISK.
A key element of our strategy is to generate advertising revenues through
sponsored services and placements by third parties in our online media
properties in addition to banner advertising. We expect to receive sponsorship
fees or a portion of transaction revenues in return for minimum levels of user
impressions to be provided by us. These arrangements expose us to potentially
significant financial risks in the event our usage levels decrease, including
the following:
o fees we are entitled to receive may be adjusted downwards;
o we may be required to "make good" on our obligations by providing
alternative services;
o sponsors may not renew the agreements or may renew at lower rates;
and
o arrangements may not generate anticipated levels of shared
transaction revenues, or sponsors may default on the payment
commitments in such agreements.
Accordingly, any leveling off or decrease of our future user base or the
failure to generate anticipated levels of shared transaction revenues could
result in a significant decrease in our revenue levels.
WE MAY NOT BE SUCCESSFUL IN EXPANDING THE NUMBER OF USERS OF OUR ELECTRONIC
COMMERCE SERVICES AND OUR ABILITY TO EFFECTIVELY PROVIDE THESE SERVICES IS
LIMITED BECAUSE WE DO NOT HAVE A DIRECT BILLING RELATIONSHIP WITH OUR CUSTOMERS.
We have focused, and intend to continue to focus, significant resources on
the development and enhancement of our electronic commerce properties. These
properties link users with a network of retailers with which we have
relationships. However, we merely provide a means through which our users can
access the sellers of the products such users may wish to purchase and do not
establish a direct billing relationship with our users as a result of any such
purchase. In addition, a large number of our users currently utilize our online
shopping services simply to gather information for future offline purchases. We
will need to effectively induce information gatherers to make purchases in order
for our electronic commerce properties to be successful. The revenue that we
derive from our electronic commerce services is typically in the form of a
bounty or commission paid by the retailer from whom our user purchased a
product. If the user had a favorite buying experience with a particular
retailer, the user may subsequently contact that retailer directly rather than
through our service. If our users bypass our electronic commerce properties and
contact retailers directly, we will not receive any revenue for purchases made
through such direct contact. Competing providers of online shopping, including
merchants
7
<PAGE>
with whom we have relationships, may be able to provide a more convenient and
comprehensive online shopping experience due to their singular focus on
electronic commerce. As a result, we may have difficulty competing with those
merchants for users of electronic commerce services. The inability of our
electronic commerce properties to generate significant revenues could have a
material adverse effect on our business.
GROWTH OF OUR BUSINESS MAY STRAIN OUR MANAGERIAL, FINANCIAL AND OPERATIONAL
RESOURCES.
We may experience rapid growth, which will place a significant strain on
our managerial, financial and operational resources. Any growth we may
experience will result in increased responsibility for existing and new
management personnel. Our effective growth management will depend on our ability
to:
o integrate new personnel into our corporate structure;
o improve our operational, management and financial systems and
controls; and
o retrain, train, motivate and manage employees.
We cannot assure you that our systems, procedures or controls will be
adequate to support our operations or that we will be able to manage any growth
effectively. If we do not manage our growth effectively, then our expenses may
exceed our revenues.
OUR DEPENDENCE ON THIRD PARTY SOURCES FOR OUR DATABASES MAY INHIBIT THE GROWTH
AND SUCCESS OF OUR WEB SITE.
We currently have the right to use a database of approximately 16,000,000
U.S. business and 1,800,000 Canadian business listings under the terms of a
non-exclusive license from Axciom Corporation. The license agreement is for an
initial term of one year that expires on October 29, 2000, but is automatically
renewed for additional one year periods unless either party to the agreement
provides 90 days prior written notice of termination.
We received a non-exclusive license from Chicago Map Corporation. Under the
terms of the license we have a right to install and set up their mapping
software on our server. We also have the right to allow our customers to have
access to Chicago Map's software through our web site.
The database and mapping technology are integral components to our web site
and our ability to operate our web site and search engine as intended depends on
our ability to maintain the licenses and continue to use the licensed materials.
There can be no assurance that we will be able to use the database from
Axciom or the mapping technology of Chicago Map beyond their initial terms. In
the event that we are unable to utilize the database or mapping technology in
the future, we would be required to obtain similar licenses from other sources.
There can be no assurances that we will be able to obtain similar licenses from
other sources, or in the event that we can obtain such similar licenses, that we
will be able to do so on favorable terms.
SYSTEM FAILURE COULD SIGNIFICANTLY REDUCE OUR REVENUES.
The servers that host our web site are backed-up by remote servers, but we
cannot be certain that the back-up servers will not fail or cause an
interruption in our service. Our web site could also be affected by computer
viruses, electronic break-ins or other similar disruptions. Our users depend on
Internet service providers, online service providers and other web site
operators for access to our web sites. Each of these providers has experienced
significant outages in the past and could experience outages, delays and other
difficulties due to system failures unrelated to our systems. Further, our
systems are vulnerable to damage or interruption from fire, flood, power loss,
telecommunications failure, break-ins, earthquake and similar events. Any system
failure, including network, software or hardware failure, that causes an
interruption in our service could result in reduced visits to our web sites and,
therefore, reduced revenues.
8
<PAGE>
A LOSS OF ANY KEY PERSONNEL COULD IMPAIR OUR ABILITY TO SUCCEED.
In part, our future success depends on the continued service of our key
management personnel, particularly: (1) Wayne E. Loftus, our Chief Executive
Officer and President, (2) Ted Kozub, our Chief Financial Officer, (3) Maurice
Simpson, a Director, (4) Lindsay Lent, a Director, and (5) Dana Shaw, a Director
and Officer of fetchOmatic.com Online Inc. The loss of their services, or the
services of other key employees, could impair our ability to grow our business.
Currently, Mr. Simpson and Mr. Shaw have consulting agreements with
fetchOmatic.com Online Inc. that will expire in September 2003. Mr. Kozub has a
consulting agreement with fetchOmatic Online Inc. that will expire November 5,
2000.
Our future success also depends on our ability to attract, retain and
motivate highly skilled employees. Competition for employees in our industry is
intense. We may be unable to attract, assimilate or retain other highly
qualified employees in the future. In the past we have experienced from time to
time, difficulty hiring and retaining highly skilled employees with appropriate
qualifications. We expect this difficulty to continue in the future.
OUR INABILITY TO EXPAND OUR SALES AND SUPPORT ORGANIZATIONS MAY RESULT IN A
FAILURE TO INCREASE MARKET AWARENESS OF OUR PRODUCTS AND SERVICES.
We need to substantially expand both our advertising sales and corporate
sales operations as well as our marketing efforts to increase market awareness
and sales of our products and services. We plan to hire additional sales
personnel. Competition for qualified sales personnel is intense, and we may be
unable to hire the kind and number of sales personnel we are targeting. We will
need to increase our staff if our customer base increases. Hiring qualified
customer service and support personnel is very competitive in our industry due
to limited number of people available with the necessary technical skills and
understanding of the Internet. If we are unable to hire additional sales
personnel we may be unable to increase market awareness of our products and
services.
IF WE ARE UNABLE TO DEVELOP OUR BRAND, WE WILL BE UNABLE TO BUILD OUR BUSINESS.
We believe that broader brand recognition and favorable consumer perception
of the "Fetchomatic" brand are essential to our future success. We also believe
that the importance of brand recognition will increase due to the growing number
of Internet sites and the relatively low barriers to entry. Accordingly, we
intend to continue pursuing an aggressive brand-enhancement strategy, that will
include mass marketing and multimedia advertising, promotional programs and
public relations activities. As of April 30, 2000 we have spent approximately
$696,000 on these activities and we intend to incur significant expenditures on
these advertising and promotional programs and activities in the future. On May
16, 2000, we issued 8,812,500 shares of our common stock to Silvla, Inc. as
consideration for advertising services they will provide us. Silvla has
transferred these shares to six entities. These expenditures may not result in a
sufficient increase in revenues to cover our advertising and promotional
expenses. In addition, even if brand recognition increases, the number of new
users may not increase. Further, even if the number of new users increases, the
amount of our sales may not increase sufficiently to justify the expenditures.
If our brand enhancement strategy is unsuccessful, these expenses may never be
recovered and we may be unable to increase future revenues.
SINCE WE WILL NOT RECEIVE REVENUE FROM THIS OFFERING, WE ARE UNCERTAIN WE CAN
OBTAIN THE CAPITAL TO GROW OUR BUSINESS.
To fully realize our business objectives and potential, we may require
significant additional financing. Based on our current operating plan, we
anticipate that we may require additional financing by the end of the third
quarter of calendar 2000. In the past, we have been largely dependent upon
private convertible debt and financing when we required funds. We may need to
raise additional funds in the future to:
o fund more aggressive brand promotion or more rapid expansion;
o develop new or enhanced services; and
o respond to competitive pressures or to make acquisitions.
9
<PAGE>
We may be unable to obtain required additional financing on terms favorable
to us. If adequate funds are not available on acceptable terms, we may be unable
to:
o fund our expansion;
o successfully promote our brand;
o develop or enhance services;
o respond to competitive pressures, or
o take advantage of acquisition opportunities.
Additional financing may be debt, equity or a combination of debt and
equity. If we raise additional funds through the issuance of equity securities,
our stockholders may experience dilution of their ownership interest and the
newly issued securities may have rights superior to those of the common stock.
If we raise additional funds by issuing debt, we may be subject to limitations
on our operations, including limitations on the payment of dividends.
OUR COMPETITORS OFTEN PROVIDE INTERNET ACCESS OR COMPUTER HARDWARE TO OUR
POTENTIAL CUSTOMERS AND THEY COULD MAKE IT DIFFICULT FOR OUR CUSTOMERS TO ACCESS
OUR SERVICES.
Our potential users must access our services through an Internet service
provider, with which the user establishes a direct billing relationship using a
personal computer or other access device. To the extent that an access provider,
such as America Online, or a computer or computing device manufacturer offers
online services or properties that are competitive with ours, the user may find
it more convenient to use the services or properties of that access provider or
manufacturer. In addition, the access provider or manufacturer may make it
difficult to access our services by not listing them in the access provider's or
manufacturer's own directory. Also, because an access provider gathers
information from the user in connection with the establishment of the billing
relationship, an access provider may be more effective than us in tailoring
services and advertisements to the specific tastes of the user. To the extent
that a user opts to use the services offered by his or her access provider or
those offered by computer or computing device manufacturers rather than the
services provided by us, our business, operating results and financial condition
will be materially adversely affected because we may be unable to increase our
revenues in an amount that is sufficient to sustain our operations.
IF INTERNET USAGE DOES NOT GROW, WE MAY BE UNABLE TO EXECUTE OUR BUSINESS PLAN
TO INCREASE OUR OPERATIONS.
Our business will be unable to succeed if Internet usage does not continue
to grow or grows at significantly lower rates compared to current trends. The
continued growth of the Internet depends on various factors, many of which are
outside our control. These factors include, but are not limited to the following
factors:
o the Internet infrastructure's ability to support the demands placed
on it;
o the public's concerns regarding security and authentication concerns
with respect to the transmission over the Internet of confidential
information, such as credit card numbers and attempts by
unauthorized computer users, so-called hackers, to penetrate online
security systems; and
o the public's concern regarding privacy issues, including those
related to the ability of web sites to gather user information
without the user's knowledge or consent.
OUR INABILITY TO ADAPT TO EVOLVING INTERNET TECHNOLOGIES AND CUSTOMER DEMANDS
MAY IMPEDE OUR FUTURE GROWTH.
To be successful, we must adapt to rapidly changing Internet technologies
and customer demands. To that end, we must continually enhance our products and
services and introduce new services to address our customers' changing needs. If
we need to modify our services or infrastructure to adapt to changes affecting
providers of Internet services, we could incur substantial development or
acquisition costs. If we cannot adapt to these changes, or do not sufficiently
increase the features and functionality of our products and services, our
customers may switch to the product and service offerings of our competitors or
potential competitors.
10
<PAGE>
Furthermore, our competitors or potential competitors may develop novel Internet
applications that are equal or superior to our services. As a result, customer
demand for our services may decrease.
IF OUR SYSTEMS DO NOT PERFORM AS EXPECTED, OUR POTENTIAL REVENUES MAY BE
SIGNIFICANTLY REDUCED.
Any system failure, including network, software or hardware failure, that
causes an interruption in our service or a decrease in our responsiveness could
result in delays in the full launch of our web site or reduced user traffic on
our web site and therefore cause a reduction in potential revenues. Our web site
and data are backed-up on tapes and are stored remotely. Although we believe
that our current back-up methods are adequate, we cannot assure you that the
back-up tapes will not cause an interruption in our service. Computer viruses,
electronic break-ins or other similar disruptions could also affect our web
site. Our users and customers depend on Internet service providers, online
service providers and other web site operators for access to our web site. Each
of these providers has experienced significant outages in the past, and could
experience outages, delays and other difficulties due to system failures
unrelated to our systems in the future. Our systems are vulnerable to damage or
interruption from fire, flood, power loss, telecommunications failure,
break-ins, earthquake and other similar events. Our insurance policies have low
coverage limits and may not adequately compensate us for losses that may occur
due to interruptions in our service.
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS OR ARE HELD LIABLE
FOR INFRINGING ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, WE MAY BE FORCED
TO DEVOTE SIGNIFICANT TIME, ATTENTION AND MONEY TO DEFEND THESE CLAIMS.
Third parties may infringe or misappropriate our trademarks or other
proprietary rights, which could injure our reputation and business. We may be
subject to or may initiate proceedings in the United States Patent and Trademark
Office, which may demand significant financial and management resources. While
we enter into confidentiality agreements with our employees and consultants, and
generally control access to and distribution of our proprietary information, the
steps we have taken to protect our proprietary rights may not prevent
misappropriation. In addition, we do not know whether we will be able to defend
our proprietary rights since the validity, enforceability and scope of
protection of proprietary rights in Internet-related industries is uncertain and
still evolving.
Many parties are actively developing search, indexing, e-commerce and other
Internet related technologies, as well as a variety of online business models
and methods. We believe that these parties will continue to take steps to
protect these technologies, including, but not limited to, seeking patent
protection. As a result, disputes regarding the ownership of these technologies
and rights associated with online business are likely to arise in the future.
Although we believe our products and information system do not infringe
upon the proprietary rights of others, there can be no assurance that third
parties will not assert infringement claims against us. From time to time in the
ordinary course of business we may be subject to claims of alleged infringement
of the trademarks and other intellectual property rights of third parties. These
claims and any resultant litigation, should this occur, could further subject us
to significant liability for damages. In addition, even if we prevail,
litigation could be time-consuming and expensive to defend, and could result in
the diversion of our time and attention and a reduction in any potential
profits. Any claims from third parties may also result in limitations on our
ability to use the intellectual property subject to these claims unless we are
able to enter into agreements with the third parties making these claims.
IF WE ARE HELD LIABLE FOR PUBLISHING CERTAIN CONTENT ON THE INTERNET, WE MAY BE
FORCED TO DEVOTE SIGNIFICANT RESOURCES TO DEFEND THOSE CLAIMS.
As a publisher of online content, we face potential liability for
defamation, negligence, copyright, patent or trademark infringement, or other
claims based on the nature and content of materials that we publish or
distribute. In the past, plaintiffs have brought these types of claims and
sometimes successfully litigated them against online services. If a plaintiff
were to bring a claim against our company, we would incur legal expenses
associated with defending the litigation. Furthermore, there exists the
possibility that we may not prevail. Litigating any one of
11
<PAGE>
these claims would be time-consuming and expensive to defend and could impair
our ability to become profitable.
IF WE EVER DECIDE TO COLLECT PERSONAL INFORMATION ABOUT OUR USERS, WE MAY FACE
POTENTIAL LIABILITY FOR INVASION OF PRIVACY.
Although we have a policy against using personal information, current
computing and Internet technology allows us to collect personal information
about our users. We may decide in the future to compile and provide such
information to our electronic commerce partners. If we begin collecting such
information, we may face potential liability for invasion of privacy for
compiling and providing to our electronic commerce partners information based on
questions asked by users and visitors on our web site. Because we may not obtain
permission from users to distribute this information, we may potentially face
liability for invasion of privacy.
IF WE ARE UNABLE TO ACQUIRE THE NECESSARY WEB DOMAIN NAMES, OUR BRAND AND
REPUTATION COULD BE DAMAGED AND WE COULD LOSE CUSTOMERS.
We may be unable to acquire or maintain web domain names relating to our
brand in the United States and other countries in which we may conduct business.
As a result, we may be unable to prevent third parties from acquiring and using
domain names relating to our brand. Such use could damage our brand and
reputation and take customers away from our web site. We currently hold various
relevant domain names, including the "Fetchomatic.com" domain name.
Governmental agencies and their designees generally regulate the
acquisition and maintenance of domain names. The regulation of domain names in
the United States and in foreign countries is subject to change in the near
future. Such changes in the United States are expected to include a transition
from the current system to a system that is controlled by a non-profit
corporation and the creation of additional top-level domains. Governing bodies
may establish additional top-level domains, appoint additional domain name
registrars or modify the requirements for holding domain names.
IF A NEW LAW OR NEW GOVERNMENT REGULATION IS CREATED PERTAINING TO THE INTERNET,
IT COULD DECREASE THE DEMAND FOR OUR SERVICES OR INCREASE THE COST OF DOING
BUSINESS.
Any new law or regulation pertaining to the Internet, or the application or
interpretation of existing laws, could decrease the demand for our services or
increase our cost of doing business. There is, and will likely continue to be,
an increasing number of laws and regulations pertaining to the Internet. These
laws or regulations may relate to liability for information retrieved from or
transmitted over the Internet, online content regulation, user privacy, taxation
and the quality of products and services. Furthermore, the growth and
development of electronic commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on electronic commerce
companies as well as companies like ours that provide electronic commerce
services. Moreover, the applicability to the Internet of existing laws governing
intellectual property ownership and infringement, copyright, trademark, trade
secret, obscenity, libel, employment, personal privacy, advertising and other
issues is uncertain and developing.
We file tax returns in such states as required by law based on principles
applicable to traditional businesses. However, one or more states could seek to
impose additional income tax obligations or sales tax collection obligations on
out-of-state companies, such as ours, that engage in or facilitate electronic
commerce. A number of proposals have been made at state and local levels that
could impose such taxes on the sale of products and services through the
Internet. Such proposals, if adopted, could substantially impair the growth of
electronic commerce and adversely affect our opportunity to become profitable.
The United States Congress has enacted legislation limiting the ability of
the states to impose taxes on Internet-based transactions. This legislation,
known as the Internet Tax Freedom Act was enacted on October 1, 1998 and ends on
October 21, 2001. The legislation imposes only a three-year moratorium on state
and local taxes on (1) electronic commerce where such taxes are discriminatory
and (2) Internet access unless such taxes were generally imposed and actually
enforced prior to October 1, 1998. It is possible that the tax moratorium could
fail to be renewed prior to October 21, 2001. Failure to renew this legislation
would allow various states to
12
<PAGE>
impose taxes on Internet-based commerce. The imposition of such taxes could
adversely affect our ability to become profitable.
Due to the global nature of the Internet, it is possible that the
governments of other states and foreign countries might attempt to regulate its
transmissions or prosecute for violations of their laws. We might
unintentionally violate such laws, such laws may be modified, and new laws may
be enacted in the future. Any such developments could have a material adverse
effect on our business, operating results and financial condition.
SINCE WE PLAN TO ENTER INTO REVENUE-SHARING CONTRACTS WITH THIRD PARTIES, THIS
EXPOSURE MAY SUBJECT US TO LEGAL RISKS AND POSSIBLE LIABILITIES.
As part of our business, we plan to enter into agreements with sponsors,
content providers, service providers and merchants. As a result, we will be
entitled to receive a share of revenues from the purchase of goods and services
by users of our online properties. Such arrangements may expose us to additional
legal risks and uncertainties, including potential liabilities to consumers of
such products and services. Although we carry general liability insurance, our
insurance may not cover potential claims of this type or may not be adequate to
indemnify us against all potential liability.
Some of the risks that may result from these arrangements with businesses
engaged in electronic commerce include, but are not limited to the following:
o potential liabilities for illegal activities that may be conducted
by participating merchants;
o product liability or other tort claims relating to goods or services
sold through third-party commerce web sites;
o consumer fraud and false or deceptive advertising or sales
practices;
o breach of contract claims relating to merchant transactions;
o claims that materials included in merchant web sites or sold by
merchants through these web sites infringe third-party patents,
copyrights, trademarks or other intellectual property rights, or are
libelous, defamatory or in breach of third-party confidentiality or
privacy rights; and
o claims relating to any failure of merchants to appropriately collect
and remit sales or other taxes arising from electronic commerce
transactions.
Even to the extent that such claims do not result in material liability,
investigating and defending such claims could cause a strain on our finances,
damage our reputation and distract the attention of our management.
SINCE OUR OFFICERS AND DIRECTORS OWN A LARGE PERCENTAGE OF OUR OUTSTANDING
SHARES, THEY ARE ABLE TO SIGNIFICANTLY INFLUENCE MATTERS REGARDING STOCKHOLDER
APPROVAL.
As of July 25, 2000, our executive officers, directors and their affiliates
beneficially own (or control via proxy) in the aggregate 26,531,044 shares or
approximately 47.89% of our outstanding common stock on a fully diluted basis
(excluding shares issuable under the media and advertising agreement for future
services) and 52.40% of our currently issued and outstanding stock. These
stockholders may be able to exercise control over all matters requiring approval
by our stockholders, including the election of directors and the approval of
significant corporate transactions. This concentration of ownership may also
have the effect of delaying or preventing an acquisition or change in control of
our company, which could significantly reduce our stock price.
SINCE THE MARKET FOR STOCKS OF INTERNET COMPANIES HISTORICALLY HAS EXPERIENCED
EXTREME PRICE FLUCTUATIONS, OUR SHARES MAY EXPERIENCE EXTREME PRICE AND VOLUME
FLUCTUATIONS.
The market for the stocks of Internet-related companies has experienced
extreme price and volume fluctuations. The market price of our common stock may
be volatile and may decline. In the past, securities class action litigation has
often been initiated against companies following periods of volatility in the
market price of their securities. If initiated against us, regardless of the
outcome, litigation could result in substantial costs and a diversion of our
management's attention and resources.
13
<PAGE>
IF HOLDERS OF OUR CONVERTIBLE DEBENTURES CONVERT THE DEBENTURES OR EXERCISE
THEIR WARRANTS, OUR COMMON STOCK MAY BE DILUTED AND SALES OF THE SHARES MAY
REDUCE OUR STOCK PRICE.
The existence of warrants and convertible debentures may make it more
difficult for us to raise capital when necessary and may depress the market
price of our common stock in any market that may develop for such securities.
Future sales of a substantial number of shares of our common stock in the public
market could reduce the market price of the stock. It could also impair our
ability to raise additional capital by selling more of our common stock.
THE CONVERSION OF OUR OUTSTANDING CONVERTIBLE DEBENTURES AND THE PAYMENTS FOR
ADVERTISING SERVICES MAY MAKE IT DIFFICULT TO EVALUATE A SHAREHOLDER'S EQUITY
POSITION IN THE COMPANY.
The number of shares of our common stock which is issuable upon conversion
of our outstanding convertible debentures will fluctuate based on the average
closing bid price of our common stock as listed on the OTC Electronic Bulletin
Board for the three lowest three days (which need not be consecutive) in the
prior twenty days. The number of shares of our common stock which is issuable
upon exercise from time to time under the media and advertising services
agreement with Sivla, Inc. will fluctuate based on the average market price of
our common stock as listed on the OTC Electronic Bulletin Board for the month
prior to the date the services are rendered. Therefore, the percentage of our
common stock held by a shareholder on any given day may be substantially
different from another day depending on our common stock's closing bid prices,
as the number of shares of our common stock issuable pursuant to our convertible
debentures and our media and services agreement with Sivla, Inc. may vary
significantly from day to day.
THE PREVAILING MARKET PRICE OF OUR COMMON STOCK MAY BE ADVERSELY AFFECTED BY
SALES OF A SUBSTANTIAL NUMBER OF SHARES INTO THE PUBLIC MARKET
As of the date of this registration statement, there were 50,623,500 shares
of our common stock outstanding. Of the outstanding shares, 37,357,500 are
subject to the volume limitations on sale set forth in Rule 144 of the
Securities Exchange Act of 1934. Sales of the shares issued in private
transactions, as well as the common stock issuable upon conversion of the
convertible debentures and upon exercise of the warrant, may affect the market
price of our common stock.
FUTURE SALES OF COMMON STOCK BY OUR EXISTING STOCKHOLDERS COULD REDUCE THE PRICE
OF OUR COMMON STOCK.
The market price of our common stock could decline as a result of sales by
our existing stockholders of shares of common stock in the market. Likewise, the
perception that these sales could occur may result in the decline of the market
price of our common stock. These sales also might make it more difficult for us
to sell equity securities in the future at a time and at a price that we deem
appropriate.
PROVISIONS IN OUR CHARTER OR AGREEMENTS MAY PREVENT OR DELAY A CHANGE OF
CONTROL.
Provisions of our certificate of incorporation and bylaws as well as
provisions of applicable Nevada law may discourage, delay or prevent a merger or
other change of control that a stockholder may consider favorable. Our board of
directors has the authority to issue up to 200,000,000 shares of common stock
and to determine the price and terms, including preferences and voting rights,
of those shares without stockholder approval. We have issued the following:
(1) 50,623,500 shares of common stock, (2) 721,765 warrants to purchase common
stock and (3) $3,500,000 of convertible debentures (principal convertible into
3,289,473 shares of common stock based upon market price information available
as of July 25, 2000). The issuance of additional shares of common stock or
convertible securities could, among other things, have the following effect:
o delay, defer or prevent an acquisition or a change in control of our
company;
o discourage bids for our common stock at a premium over the market
price; or
o reduce the market price of, and the voting and other rights of the
holders of, our common stock.
14
<PAGE>
Furthermore, we are subject to Nevada laws that could have the effect of
delaying, deterring or preventing a change in control of our company. One of
these laws prohibits us from engaging in a business combination with any
interested stockholder for a period of three years from the date the person
became an interested stockholder, unless certain conditions are met. In
addition, certain provisions of our certificate of incorporation and by-laws,
and the significant amount of common stock held by our executive officers,
directors and affiliates, could together have the effect of discouraging
potential takeover attempts or making it more difficult for stockholders to
change management.
WE DO NOT EXPECT TO PAY DIVIDENDS.
We have not paid dividends on our common stock or preferred stock and do
not expect to do so in the foreseeable future.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
Some of the statements contained in or incorporated by reference in this
prospectus discuss our plans and strategies for our business or state other
forward-looking statements. The words "anticipates," "believes," "estimates,"
"expects," "plans," "intends" and similar expressions are intended to identify
these forward-looking statements, but are not the exclusive means of identifying
them. These forward-looking statements reflect the current views of our
management; however, various risks, uncertainties and contingencies could cause
our actual results, performance or achievements to differ materially from those
expressed in, or implied by, these statements, including the following:
o the success or failure of our efforts to implement our business
strategy; and
o the other factors discussed under the heading "Risk Factors" and
elsewhere in this prospectus.
We assume no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. In light of
these risks, uncertainties and assumptions, the forward-looking events discussed
in or incorporated by reference in this prospectus might not occur.
USE OF PROCEEDS
We will not receive any part of the proceeds from the sale by our
stockholders of our common stock. Any proceeds received by us from the exercise
of our warrant may be used for general corporate purposes to grow our business.
The use of any proceeds from the exercise of the warrant, or the timing of such
use, will depend on the availability to us of cash from other sources.
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock. We
presently intend to retain any earnings for use in the business and do not
anticipate paying cash dividends in the foreseeable future. Any future cash
dividends will be at the discretion of the board of directors and will depend on
our earnings, financial condition, cash flows, capital requirements and other
considerations that the board of directors may consider relevant.
15
<PAGE>
SELECTED FINANCIAL DATA
Set forth below is selected financial data as of April 30, 2000 and 1999
and for the period from September 24, 1998 (incorporation of fetchOmatic.com
Online Inc.) to July 31, 1999. The financial statements of fetchOmatic.com
Online Inc. as of July 31, 1999 and for the period then ended are derived from
the financial statements audited by BDO Dunwoody LLP that appear elsewhere in
this prospectus. As a result of our acquisition of fetchOmatic.com Online Inc.
(formerly SSA Coupon Ltd.) via reverse acquisition on November 3, 1999, our
financial statements are presented as a continuation of fetchOmatic.com Online
Inc. Accordingly, financial information relating to periods prior to the
acquisition is that of fetchOmatic.com Online Inc. The information set forth
below should be read in conjunction with our financial statements and
"Management's Discussion and Analysis" included herein.
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 24,
NINE MONTHS ENDED 1998
APRIL 30, (INCORPORATION)
--------------------- TO JULY 31
2000 1999 1999
---------- ------- ---------------
<S> <C> <C> <C>
Revenue.................................................................. $ -- $ -- $ --
Administration........................................................... 98,341 35,910 79,800
Advertising and promotion................................................ 696,276 -- --
Depreciation............................................................. 21,180 -- --
Investor Relations....................................................... 4,550,939 -- --
Management fees.......................................................... 309,206 -- --
Professional fees........................................................ 70,694 -- 840
Research and development................................................. -- 17,955 39,900
Write-down of advances................................................... 95,235 -- 114,814
Loss from discontinued operations........................................ 569,239 -- --
---------- ------- ---------
Net loss for the period.................................................. $6,411,110 $54,705 $ 235,354
========== ======= =========
</TABLE>
<TABLE>
<CAPTION>
APRIL 30, 2000 JULY 31, 1999
----------------- ----------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficiency)................................................... $ (257,070) $ (63,736)
Total assets................................................................... 1,206,907 57,347
Total liabilities.............................................................. 801,685 117,635
Accumulated deficit............................................................ (6,646,464) (235,354)
Total Stockholders' Equity (Deficit)........................................... 405,222 (60,288)
</TABLE>
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our financial
statements and the related notes that appear elsewhere in this prospectus. The
following discussion contains forward-looking statements that reflect our plans,
estimates, and beliefs. Our actual results could differ materially from those
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
below and elsewhere in this prospectus, particularly in "Risk Factors."
GENERAL
We were formed under the laws of the State of Nevada on August 27, 1998
under the name "Forest Glade International Inc." Our change of name to
"Fetchomatic Global Internet Inc." was approved by the State of Nevada on June
2, 2000. Until the acquisition of 100% of the issued and outstanding shares of
SSA Coupon Ltd. on November 3, 1999, we were principally engaged in the
ownership and operation of a mobile home park in Sparwood, British Columbia,
Canada. Our wholly owned subsidiary SSA Coupon Ltd. (now fetchOmatic.com Online
Inc.), incorporated in British Columbia, Canada on September 24, 1998 is
developing www.fetchomatic.com, a web-site with an integrated search engine and
portal that utilizes a geographical searching capability. With divestiture of
the mobile home park in June 2000, our primary business focus is the development
and launch of www.fetchomatic.com.
We intend to become a leading brand in on-line search services for Internet
users seeking businesses and services. By utilizing the unique search
capabilities of our search technology, consumers will be able to locate
categorized businesses in specific geographic locations and view a detailed map
of the neighborhood where the business is located. In July 2000, portions of
www.fetchomatic.com were launched. Our management believes that
www.fetchomatic.com will be fully launched in August 2000.
To increase the general public's awareness of our company and our web-site,
we will embark on an extensive marketing program that will include mass media
advertising and sponsorships throughout the United States and Canada. In
connection therewith, we signed an agreement with Sivla, Inc. on March 30, 1999,
whereby Sivla, Inc. would arrange media advertising (including print, radio,
billboard, television and sponsorships) and production thereof for our company
in exchange for shares of our common stock up to a value of $43.5 million to
cover the initial launch of www.fetchomatic.com.
We expect that our initial revenues will be derived from (1) advertising on
our web page, (2) use of a merchant banking system to allow us to process online
purchases, (3) commissions or royalties paid by strategic partners and third
party retailers for orders placed through us or from links to such third parties
provided on our web page; and (4) an expected affiliation with an Internet
Service Provider. To date, we have not earned any revenue from development of
www.fetchomatic.com and are considered to be in the development stage.
NINE MONTHS ENDED APRIL 30, 1999 COMPARED TO NINE MONTHS ENDED APRIL 30, 2000
RESULTS OF OPERATIONS
We acquired 100% of the issued and outstanding common shares of
Fetchomatic.com Online on November 3, 1999 in exchange for 19,000,000 shares of
our common stock. The acquisition of Fetchomatic.com Online was accounted for as
a reverse acquisition, as the former stockholders of Fetchomatic.com Online
controlled approximately 52% of our common stock immediately after the
acquisition. Pursuant to the accounting requirements for reverse acquisitions,
the financial statements subsequent to the acquisition are presented as a
continuation of Fetchomatic.com Online. The operations of Fetchomatic.com Online
prior to the acquisition were limited to services provided by its founders. The
acquisition by us provided Fetchomatic.com Online with financing necessary to
rapidly expand development of the web site. As a result, comparisons of results
of operations to the corresponding period in 1999 do not provide a meaningful
analysis due to the limited activity in 1999. Therefore, the discussion below
focuses upon expenditures during the nine-month period ended April 30, 2000 and
upon our plans of operation.
We incurred a net loss of $6,411,110 for the nine-month period ended
April 30, 2000 (including $569,239 from operations of the mobile home park and a
write-down of net assets to net realizable value, which have been
17
<PAGE>
classified in the April 30, 2000 financial statements as discontinued
operations). Some of the significant components to the composition of the loss
for the nine-month period were:
o Administration expense of $98,341, consisting of fees to
administrative personnel and rent on our offices in Prince George
and Delta, British Columbia;
o Advertising and promotion of $696,276, relating to various marketing
efforts with respect to our search engine, including an accrual of
$561,579 as the estimated portion of the cost of the DellaPenna
Motorsports entry in the Championship Auto Racing Teams ("CART") Fed
Ex Championship 2000 racing season pertaining to the period ended
April 30, 2000;
o Investor relation fees of $4,550,939 incurred to create awareness of
us in the public markets as we first became listed for trading in
July 1999. This amount includes stock option compensation of
$3,800,000 consisting of the imputed value assigned under United
States accounting principles to 5 million fully vested stock options
granted to consultants during the period as determined using the
Black-Scholes option pricing model. The model uses historical market
values of our stock as a key assumption in determining the value of
the options granted. The imputed value of the options was $0.76 per
option. Additional amounts for investor relations include the
payment of fees for personnel and consultants involved in investor
relations activity and the cost of the preparation and dissemination
of news releases;
o Management fees of $309,206 with respect to fees paid to certain
officers and consultants for management services provided to us;
o Professional fees of $70,694, consisting of legal and accounting
services provided to us; and
o A loss from discontinued operations of $569,239 in connection with
the operations of the mobile home park to April 30, 2000 which
yielded a loss of $86,224 on revenue of $68,941 and the
corresponding write-down to net realizable value of $483,015
relating to the property and equipment (net of a $158,105 income tax
recovery) and goodwill.
During the nine-month period ended April 30, 2000, Fetchomatic.com Online
continued its research and development program and hired additional
programmer-consultants and purchased new equipment. In support of our ongoing
effort to enhance the "Fetchomatic" brand, we entered into a media and
advertising services agreement that permits us to receive advertising, public
relations and promotional services in exchange for shares of our common stock.
As a result of the media agreement, we expect to participate in a series of
advertising campaigns and sponsorships with a total cost of up to $43.5 million
(fully payable in our common stock using prices specified in the agreement,
except for $100,000 payable in cash) through September 30, 2000. To May 15,
2000, we committed for advertising of approximately $16 million including
sponsorships of racecars on the CART and NASCAR circuits and various print,
radio, billboard and television media. On May 15, 2000, we issued 8,812,500
shares of restricted common stock in connection with this agreement for future
media advertising and publicity.
Upon conclusion of our initial advertising agreement, we expect to continue
to incur significant costs for advertising, marketing, and promotional
activities. In connection with our initial advertising and promotional efforts,
common stock was used to preserve cash flow for development of the technology.
Financing alternatives for future marketing efforts will be evaluated based on
their particular merits and our cash flow situation.
Product and technology development costs consist principally of payroll and
related expenses for product development, systems and operations personnel and
consultants, and systems infrastructure. We believe that continued investment in
product development is critical to achieving strategic objectives. In addition
to ongoing investments in our web site, search engine and infrastructure, we
intend to increase investments in products and services. In June 2000, we
ordered approximately $700,000 of new computer hardware and software as required
for the expected launch of www.fetchomatic.com in July 2000. Further
expenditures for computer hardware will allow www.fetchomatic.com to handle a
very large volume of "hits." Proposed new equipment is capable of handling 1,000
simultaneous transactions and will be able to receive up to 2,000,000 "hits" per
day.
We expect to hire up to forty (40) additional employees and/or consultants
in the next six months as our needs may require to sustain growth and to remain
competitive.
18
<PAGE>
Presently, we have no source of revenue from continuing operations. We have
incurred operating losses since inception. The continuation of our business is
dependent upon the continuing financial support of our creditors and
stockholders and long term financing as well as the successful development of
our web-site and achieving a profitable level of operations. There are, however,
no assurances that any such activity will generate funds that will be available
for operations. Accordingly, our financial statements contain note disclosures
describing the circumstances that lead there to be doubt over our ability to
continue as a going concern. In their report on the financial statements of
fetchOmatic.com Online, Inc., their auditors included an explanatory paragraph
regarding our subsidiary's ability to continue as a going concern.
LIQUIDITY AND CAPITAL RESOURCES
Our principal capital requirements to date have been to fund (1) the
development of our search engine and (2) the promotion and investor relation
programs in place to disseminate information about our company and
www.fetchomatic.com. Net cash used in operating activities for the nine-month
period ended April 30, 2000 was $1,425,706. Net cash used in investing
activities during the nine-month period ended April 30, 2000 was $311,869,
consisting of $284,598 directly spent in the development of our web-site and
$173,028 for the acquisition of fixed assets, primarily computer equipment. Net
cash used in investing activities was reduced by $145,757 as a result of our
company's cash on hand existing as of the date of the reverse acquisition of
Fetchomatic.com Online. Net cash provided from financing activities for the
nine-month period ended April 30, 2000 was $1,894,873. Our primary financing
activity during the nine-month period ended April 30, 2000 was the exercise of
stock options at $1.09 per share for shares of our common stock. At April 30,
2000, subscriptions receivable in connection with the exercise of options total
$1,261,857 resulting in net proceeds to us of $2,941,183. Of the net proceeds of
$2,941,183, approximately $890,000 was received by us prior to the date of
acquisition of Fetchomatic.com Online.
The net increase in cash during the nine-month period ended April 30, 2000
was $157,298. During the period, we also issued common stock and warrants to a
consultant in consideration for a contract to provide us with investor relation
services for a twelve-month period. The total value of the contract is
approximately $410,000, which was set up as a prepaid expense at the date of
issuance and is being amortized to operations on a straight-line basis over the
term of the agreement. We will also issue common stock to purchase advertising
and publicity as discussed above.
In May 2000, we completed the private placement of $3.5 million of our 7%
convertible debentures which transaction included the sale of common stock
purchase warrants to acquire 521,765 shares of common stock at an exercise price
of $2.295 per warrant until expiry on May 1, 2005. The debentures are
convertible into shares of our common stock at the lesser of $2.295 and 80% of
the average of the lowest three per share closing market values during the last
twenty trading days (not necessarily consecutive) immediately preceding the
conversion date. Any convertible debentures outstanding on May 1, 2003
automatically convert into shares of our common stock at the then applicable
conversion price. A finder's fee of $350,000 plus 175,000 shares of common stock
was paid in connection with the private placement. We and the investor agreed
that, in the event that certain conditions are met, the private placement would
include two additional tranches of convertible debentures (and common stock
purchase warrants) in the principal amount of $3,250,000 each. Net proceeds from
the private placement transactions, which we expect to be approximately
$9,000,000, will be used for working capital, research and development, and
equipment purchases.
We believe, based on currently proposed plans and assumptions relating to
its operations, that the net proceeds from the private placement financings and
the disposal of the mobile home park, together with anticipated revenues from
operations, will be sufficient to fund our operations and working capital
requirements for at least twelve months. In the event that our plans or
assumptions change or prove inaccurate (due to unanticipated expenses, increased
competition, unfavorable economic conditions, or other unforeseen circumstances)
we would be required to seek additional financing sooner than currently
expected. There can be no assurance that such additional funding would be
available to us, or if available, that the terms of such additional financing
will be acceptable to us.
19
<PAGE>
PERIOD FROM SEPTEMBER 24, 1998 (INCORPORATION) TO JULY 31, 1999.
On November 3, 1999, we closed the share exchange agreement to acquire the
remaining 80% of fetchOmatic.com Online Inc. in exchange for 19 million shares
of our common stock. The acquisition was accounted for using the purchase method
as applicable for reverse acquisitions since the former stockholders of
fetchOmatic.com Online Inc. controlled approximately 52% of our common stock
immediately upon conclusion of the acquisition. Following accounting principles
applicable for reverse acquisitions, our financial statements are presented as a
continuation of fetchOmatic.com Online Inc. with operations of our company
(formerly Forest Glade International Inc.) included only from the date of
acquisition forward. Prior to the acquisition, we were solely involved in the
business of operating a mobile home park in Sparwood, British Columbia, Canada.
Upon conclusion of the acquisition, and subsequently the disposal of the mobile
home park, our primary business is the development of an innovative search
engine and portal using geographical search capabilities.
fetchOmatic.com Online Inc. was incorporated in British Columbia on
September 24, 1998 by its three founders. Discussion below centers upon the
first fiscal year of fetchOmatic.com Online Inc. ended July 31, 1999.
fetchOmatic.com Online Inc. incurred a net loss of $235,354 for the period
from September 24, 1998 to July 31, 1999, its initial year of operations. No
revenue was earned in the period as fetchOmatic.com Online Inc. devoted its
efforts to its corporate structure and financing opportunities as well as market
research and early stage development of the search engine. Included in the loss
for the period was $79,800 for administration fees and market research to two of
its stockholders and $39,900 in research and development fees to its other
stockholder. Additionally, fetchOmatic.com Online Inc. recorded a loss of
$114,814 relating to amounts we advanced to a consultant on behalf of
fetchOmatic.com Online Inc. to cover the costs of locating external financing
and for general corporate finance expenses. Subsequent to July 31, 1999,
fetchOmatic.com Online Inc. terminated its relationship with the consultant over
his refusal to provide an accounting for amounts advanced and alleged
misappropriation. Amounts advanced to July 31, 1999 (along with $95,235 advanced
subsequent to July 31, 1999) were written off to the Statement of Operations.
The former consultant commenced litigation against fetchOmatic.com Online Inc.
alleging breach of contract while fetchOmatic.com Online Inc. counterclaimed,
alleging misappropriation of funds. The lawsuit was settled in February 2000
with no damages awarded either party.
To July 31, 1999, the only source of cash flow to fetchOmatic.com Online
Inc. was from us pursuant to a condition in the July 23, 1999 agreement whereby
we acquired our 20% initial interest in fetchOmatic.com Online Inc. Under the
agreement, we were required to advance (without repayment) fetchOmatic.com
Online Inc. $40,000 per week to fund development costs. To July 31, 1999,
$175,000 had been advanced in connection with the agreement. Additionally, the
founding stockholders of fetchOmatic.com Online Inc. agreed to waive payment of
their monthly fees until such time as cash flow improved resulting in an accrual
of $117,048 to the three founding stockholders at July 31, 1999.
Due to the losses incurred in the initial year of operations of
fetchOmatic.com Online Inc. and the lack of revenue, their auditors included an
explanatory paragraph regarding our subsidiary's ability to continue as a going
concern in their report.
OUR BUSINESS
THE HISTORY OF THE COMPANY
Our company was inactive until December 1, 1998, when we acquired
beneficial control of certain assets and liabilities comprising the Mountain
View Park, a mobile home park in British Columbia, Canada, from 514592 BC Ltd.,
a company 50% controlled by one of our directors, in exchange for the issuance
of 200,000 shares of common stock. In July 1999, shares of our common stock
commenced trading on the OTC Electronic Bulletin Board. On August 31, 1999, the
terms of the acquisition were amended such that we acquired the shares of 514592
BC Ltd. as opposed to the assets. As part of the acquisition agreement, we
repurchased and cancelled 100,000 shares of common stock previously issued to
two stockholders controlling 50% of the common stock of 514592 BC Ltd. in
exchange for approximately $287,000. As a result of the share purchase, we
became the sole
20
<PAGE>
shareholder of 514592 BC Ltd. Fifty percent (50%) of the purchase price was paid
on closing with the balance due without interest on March 2, 2000, which balance
was timely paid.
On June 2, 2000 we completed the necessary agreements and registration to
complete the sale of the mobile home park and related property and equipment to
an unrelated third party. Prior to the completion of the sale of the mobile home
park, 514592 B.C. Ltd transferred its remaining assets and liabilities to us
except for the mortgage obligations on the mobile home park of approximately
$442,000 and a portion of the proceeds due on the mobile home park's sale equal
to the balance of the mortgage outstanding at that date. The common stock of
514592 BC Ltd. was then sold to four of our directors and we divested ourselves
of any interest in the mobile home park. As a result of the sale of the mobile
home park and the transfer of the 514592 BC Ltd. stock, we now focus our
business efforts on the development and commercial exploitation of our search
engine.
In July 1999, we purchased 20% of the common stock of fetchOmatic.com
Online Inc. (formerly SSA Coupon Ltd.), a company incorporated in British
Columbia, Canada. In November 1999, we purchased the remaining 80% of
fetchOmatic.com Online Inc.'s common stock in exchange for 19 million shares of
our restricted common stock. The restrictions on these shares will be removed at
the rate of 10% each year after issuance. Pursuant to the terms of the share
exchange agreement, we are required to pay to the three founding members of
fetchOmatic.com Online Inc. in perpetuity, royalties in the aggregate amount of
7% of the gross revenues derived from the technology developed by
fetchOmatic.com Online Inc., paid on a quarterly basis.
fetchOmatic.com Online Inc. was incorporated for the purpose of developing,
exploiting and marketing a geographically enabled Internet search engine, smart
source data base and Internet portal and personalized Internet communications
tool under the name of www.fetchomatic.com. Prior to our initial investment in
July 1999, fetchOmatic.com Online Inc. had undertaken early stage research and
development of the web site. Such activity was performed and financed by the
founders of fetchOmatic.com Online Inc. Subsequent to our investment,
fetchOmatic.com Online Inc. further developed the web site and released version
1.0 for beta testing. In July 2000, portions of www.fetchomatic were launched.
Our management expects the web site to be fully operational in August 2000.
The share exchange with the stockholders of fetchOmatic.com Online Inc. was
accounted for as a reverse acquisition, since, at the conclusion of the share
exchange, the former stockholders of fetchOmatic.com Online Inc. controlled our
Company. Following the accounting for reverse acquisitions, the financial
statements subsequent to closing of the share exchange are presented as a
continuation of fetchOmatic.com Online Inc., consistent with a change of the
primary business focus from trailer park rentals to web site development.
Accordingly, our operations are consolidated with those of fetchOmatic.com
Online Inc. from the date of acquisition. No value was assigned to the common
stock issued in thereverse acquisition of fetchOmatic.com Online Inc. based on
the estimated fair values of our net assets immediately prior to the date of
acquisition.
On March 30, 2000, we entered into an advertising and media services
agreement with Sivla, Inc. Under the terms of the agreement, we will receive
public relations and advertising services from Sivla Inc. in exchange for
$100,000 cash (paid in May 2000) plus up to approximately $43.5 million of our
common stock, of which 25% will be registered to remove trading restrictions.
The first $23,500,000 due in common stock is based upon a $2 imputed value with
the balance due based upon a 35% discount to the average of the previous month's
closing trading price. For advertising contracts signed to date, 8,812,500
shares of common stock were issued on May 15, 2000, with the balance of
2,937,500 shares to be issued upon completion of the registration statement
qualifying these shares.
In May 2000, we completed the private placement transaction for the sale of
our 7% convertible debentures and warrants. We received net proceeds of
approximately $3,100,000 from the private placement. The proceeds from the
private placement will be used to continue to develop our search engine and web
site, to provide financing for the marketing and promotion of the web site and
for other working capital purposes. An aggregate of $350,000 and 175,000 shares
of our common stock were issued to Ira Terk and Next Millennium Capital Holdings
LLC as a finders' fee in connection with the private placement.
21
<PAGE>
OUR SEARCH ENGINE
Fetchomatic Global Internet Inc. is a holding company whose wholly owned
subsidiary, fetchOmatic.com Online Inc., is developing a new Internet search
engine, portal and personal web assistant at www.fetchomatic.com.
The new search engine focuses on serving the local business community and
will provide these businesses with a means to place online advertising
specifically targeted to their own customers within their own geographic region.
The engine is linked to a database containing more than 16 million businesses in
the United States and Canada. Each business address is geocoded so that it can
be pinpointed on a map by the user/consumer.
One of the many unique features of the search engine is that the search can
begin by clicking on a map, thereby establishing the location of the search.
This will also initiate the targeted banner advertising that will appear on the
page. The level of the map view determines the ad displayed, whether national,
regional or local. This information is linked with the search criteria, and the
advertising message returned is then exactly targeted to the consumer's area of
interest.
The site is also linked to a portal known as fetchOmatic Island. The portal
is a graphical representation of an island with a "retro" appearance, complete
with a town site, airport, seaport, golf course and infinite room to grow.
Linked to the database, the shops on each of the streets will have a search
capability, allowing the user to select whether they want to enter a virtual
online store or if they want information on a retailer in their locale. In
addition, the "storefronts" on the site can be further developed to represent
regional and local stores, depending on the user's search criteria. This allows
us to generate advertising sales revenues by selling the same virtual space for
every region of the country. Users will only see the "storefronts" that
represent the region in which they are searching. Once again, our advertising is
targeted to reach only those people who have an interest in seeing it.
In the near future fetchOmatic Island will be animated with a variety of
images which may include moving vehicles, bicycles, airplanes, balloons, blimps
and people. Many of these will become another advertising opportunity as
corporations secure sponsorship positions that will allow their logos to appear
on the sides of buildings, vehicles or even airplanes and cruise ships.
Currently, Fetchomatic Island has a day and night feature. This is based on the
time of day in each users time zone. Further development will see this feature
expanded to evenings, sunsets, and dawn. Our goal is to develop the site with
full multimedia capability, including sound and video, as new technologies make
this feasible for both development and delivery.
The third element of the site is a personal fetchOmatic assistant. This
"virtual" device features a search engine and information storage capability
that will reside on the user's computer. It is represented graphically, and will
be able to display business listings and map locations. The graphic presented by
the fetchOmatic assistant's interface can be changed to display a variety of
images, including corporate branding for advertising, promotions, or a corporate
image within organizational networks and intranets.
All of the data and functionalities of the three fetchOmatic elements are
fully integrated. This insures accuracy of all data and reduces maintenance and
updating costs.
DEVELOPMENT COSTS
From inception to April 30, 2000, we have spent approximately $324,498 on
construction of our web site and on development of our search engine (excluding
the costs of computer hardware and equipment). We expect to invest a minimum of
$1,000,000 on construction and further development of our web site in the next
twelve months.
COMPETITION
The Internet search engine and e-commerce business is highly competitive,
both on a national and regional level. We believe that barriers to entry in the
Internet search engine and e-commerce business are relatively low, and new
competitors can begin doing business relatively quickly. Competition within our
market is from both traditional "bricks and mortar" companies and other online
business. The "bricks and mortar" businesses are primarily focused on targeting
local companies for advertising sales. They consist of Yellow Page companies,
22
<PAGE>
newspapers, discount coupon companies, local magazines, radio and television.
Many of these companies are using the Internet to augment their direct sales
efforts.
Our competition from the "bricks and mortar" companies moving online
includes, among others, KnightRidder.com, BellSouth, U.S. West Dex, GTE, NYNEX,
AT&T, New Times, Inc. Additional competition comes from companies doing all or
substantially all of their business online, such as America Online, Alta Vista,
Ticketmaster's City Search, MapQuest, InfoUSA, Vicinity Corp. and
Switchboard.com. Our competitors also include a variety of search engines and
portals that not only offer Internet search-related services, but also sell
products and services, such as Yahoo! and Lycos. Many of these companies are
well established in the market with a recognizable brand. As a new company that
is currently in the developmental stage, we are known primarily through word of
mouth and do not have any significant market share.
SALES AND MARKETING
In connection with the media and advertising agreement with Sivla, Inc.
(described above), we are developing a media advertising campaign designed to
enhance the Fetchomatic brand and attract new users and businesses to the site.
The campaign will include: print, outdoor, radio, television and sponsorship
ads. As interest grows, our campaign will change from awareness to one targeted
at specific market segments.
Once on our web site, businesses can choose the type of advertising that
they wish to participate in. Sales of local advertising will be completed online
by way of self-serve templates. Regional and national advertising will be
undertaken by us in conjunction with the advertiser. In addition, regional and
national accounts will have sales executives responsible for looking after their
requirements. The sales executives will be located in the regions so that
businesses known only in the region will be well served.
PATENTS AND TRADEMARKS
Our wholly owned subsidiary fetchOmatic.com Online Inc. has registered with
the Canada Registrar of Trademarks for the following trademarks: "fetchOmatic,"
"Net Pet," "Net Pet.com," "fetchville," "fetchOmatic Island," and "Think Global,
Search Local." We intend on submitting an application for each of these
trademarks with the U.S. Patent and Trademark Office by the end of the third
quarter of calendar 2000. We do not hold any patents for our technology, nor
have we submitted a patent application with the U.S. Patent and Trademark
Office.
EMPLOYEES
As of June 15, 2000, our staff consisted of seven full-time employees,
fifteen full-time consultants and ten part-time consultants. None of our
employees or consultants are represented by a labor union, and we consider our
relationship with our employees to be good.
PROPERTIES
We currently lease office space at the following three locations: 444
Victoria Street, Suite 370, Prince George, British Columbia, Canada; 36-1835
56th Street, Delta, British Columbia, Canada and 1521 56th Street, Delta,
British Columbia, Canada. The total monthly rent is approximately $7,500. We
believe that our space is adequate for our immediate needs. These premises are
used for office space and as the facility for our computer equipment and we
believe that they are adequately covered by insurance.
LEGAL PROCEEDINGS
We are not a party to any legal proceedings.
23
<PAGE>
MANAGEMENT
The following table sets forth certain information regarding our executive
officers and directors:
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------------------------------- --- -----------------------------------------------
<S> <C> <C>
Wayne F. Loftus......................................... 50 President, Chief Executive Officer and Director
Ted Kozub............................................... 63 Chief Financial Officer and Director
Frank A. Denis.......................................... 63 Vice President and Director
Gil Rahier.............................................. 59 Secretary, Treasurer and Director
Maurice Simpson......................................... 36 Director
Michael Jenks........................................... 47 Director
Lindsay Lent............................................ 46 Director
</TABLE>
Wayne Loftus has been our President, Chief Executive Officer and Chairman
of the Board of Directors since our inception. From 1983 to present, Mr. Loftus
has been the owner/manager of Pacific Rim Mortgage & Loan Corp. located in
Prince George, British Columbia, Canada. Pacific Rim is a private corporation
involved in brokering loans and private financing in all facets of residential,
commercial and institutional lending. Mr. Loftus holds a degree in Business
Management & Economics from Douglas Community College, Burnaby, British
Columbia, Canada.
Ted Kozub has been our Chief Financial Officer since April, 2000 and a
Director since February 4, 2000. Mr. Kozub is a former tax partner of KPMG LLP
an international accounting firm, and since 1998, has served as a consultant to
that firm. From 1971 to 1979, Mr. Kozub served as a Corporate Account Manager
for Canada Customs and Revenue Agency. Prior to his tenure with Canada Customs
and Revenue Agency, he was a Senior Accountant and Tax Manager with Hudson's Bay
Oil & Gas Ltd. Mr. Kozub received his Certified Management Accountant
designation in 1963.
Frank A. Denis has been our Vice President and a Director since our
inception. Mr. Denis has been President and owner of Kenda Enterprises Ltd.,
located in Prince George, British Columbia, since 1986. Kenda Enterprises is
engaged in buying and selling land and timber. Mr. Denis graduated from Prince
George Senior Secondary High School.
Gil Rahier has been our Secretary, Treasurer and a Director since our
inception. From 1976 to present, Mr. Rahier has been associated with the Barton
Group of Companies located in Prince George, British Columbia, and is presently
a Senior Vice President with a portfolio of forest industry and commercial
insurance accounts. Since April 1996, Mr. Rahier has also served as president
and a director of 514592 B.C., Ltd. Mr. Rahier graduated from Prince George
Senior Secondary School in Prince George, British Columbia, Canada.
Michael Jenks has been a Director since inception. Since 1968, Mr. Jenks
has been an owner of Jemi Holdings Ltd., located on Gabriola Island, British
Columbia, Canada. Jemi owns and develops commercial, industrial and residential
real estate properties throughout British Columbia. Mr. Jenks graduated from
Duchess Park Senior Secondary School, located in Prince George, British
Columbia, Canada.
Lindsay Lent has been a Director since April 20, 2000. Mr. Lent has over
25 years of business experience including 15 years of technology-related
marketing and management. His past marketing experience includes: international
product launches; development of new markets and distribution channels; and
corporate sales to various Fortune 500 companies, including IBM, U.S. West,
First Union Corp. and Computer Sciences Corp. His management skills include
business plan development, financial management, business systems analysis, and
strategic planning and implementation.
Maurice Simpson has been a Director since March 30, 2000. As a web site
developer, entrepreneur and investor relations specialist, Mr. Simpson has
several years experience working with public companies trading on NASDAQ, the
Toronto Stock Exchange and the Vancouver Stock Exchange. In this capacity he was
responsible for fundraising activities, marketing, patent management and
copyright development. Mr. Simpson was a founder, owner, and operator of
fetchOmatic.com Online Inc., a web site development company that developed our
search engine. From 1997 to present, Mr. Simpson has focused his expertise on
e-commerce, Internet marketing, programming, web site graphic design and
development.
24
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
Currently we have no nominating, executive or compensation committees.
The Audit Committee is responsible for making recommendations to the Board
of Directors as to the selection of our independent auditor, maintaining
communication between the Board and the independent auditor, reviewing the
annual audit report submitted by the independent auditor, and determining the
nature and extent of issues, if any, presented by such audit warranting
consideration by the Board. The current members of this Committee are Messrs.
Loftus, Simpson and Kozub.
DIRECTOR COMPENSATION
The members of the Board of Directors do not receive any compensation at
this time. However, Mr. Kozub received options to purchase 500,000 shares of our
common stock, respectively, under the terms of our 1999 Stock Option Plan.
EMPLOYMENT AND CONSULTING AGREEMENTS
We do not have any employment agreements with any of our employees.
We have entered into a consulting agreement with William Murray that
provides for him to act as our Vice President for a term expiring on September
24, 2003, unless extended for additional two year terms. The agreement provides
for a salary of $6,000 per month until we have net quarterly earnings of
$250,000; to be increased to $8,000 per month until we have net quarterly
earnings of $500,000; to be increased to $12,000 per month until we have net
quarterly earnings of $1,000,000; to be increased to $16,000 per month until we
have net quarterly earnings of $3,000,000; to be increased to $24,000 per month
until we have net quarterly earnings of $6,000,000; to be increased to $44,000
per month at such time as we have net quarterly earnings of $6,000,000.
Mr. Murray is also eligible for bonuses, stock options or shareholders dividends
at the discretion of the Board of Directors. The agreement provides that if
Mr. Murray is terminated at the end of the initial five year term or at the end
of any additional two year term, he will be entitled to receive $500,000 upon
such termination. The agreement contains certain restrictions on competition.
We have entered into a consulting agreement with Dana Shaw. The agreement
provides that he will act as Chief of Programming for a term expiring on
September 24, 2003, unless extended for additional two year terms. The agreement
provides for an initial salary of $6,000 per month until we have net quarterly
earnings of $250,000; to be increased to $8,000 per month until we have net
quarterly earnings of $500,000; to be increased to $12,000 per month until we
have net quarterly earnings of $1,000,000; to be increased to $16,000 per month
until we have net quarterly earnings of $3,000,000; to be increased to $24,000
per month until we have net quarterly earnings of $6,000,000; to be increased to
$44,000 per month at such time as we have net quarterly earnings of $6,000,000.
Mr. Shaw is also eligible for bonuses, stock options or shareholders dividends
at the discretion of the Board of Directors. The agreement provides that if
Mr. Shaw is terminated at the end of the initial five year term or at the end of
any additional two year term, he will be entitled to receive $500,000 upon such
termination. The agreement contains certain restrictions on competition.
We have entered into a consulting agreement with Maurice Simpson. The
agreement provides that he will act as a consultant for a term expiring on
September 24, 2003, unless extended for additional two year terms. The agreement
provides for an initial salary of $6,000 per month until we have net quarterly
earnings of $250,000; to be increased to $8,000 per month until we have net
quarterly earnings of $500,000; to be increased to $12,000 per month until we
have net quarterly earnings of $1,000,000; to be increased to $16,000 per month
until we have net quarterly earnings of $3,000,000; to be increased to $24,000
per month until we have net quarterly earnings of $6,000,000; to be increased to
$44,000 per month at such time as we have net quarterly earnings of $6,000,000.
Mr. Simpson is also eligible for bonuses, stock options or shareholders
dividends at the discretion of the Board of Directors. The agreement provides
that if Mr. Simpson is terminated at the end of the initial five year term or at
the end of any additional two year term, he will be entitled to receive $200,000
upon such termination. The agreement contains certain restrictions on
competition.
We have entered into an agreement with Barbara Little. The agreement
provides for her to act as a consultant for a term expiring on November 5, 2000.
The agreement grants Ms. Little options to purchase 30,000 shares of the common
stock with an exercise price of $1.09 per share. Ms. Little has exercised such
25
<PAGE>
options.
We have entered into an agreement with Chris Harrington which provides for
him to act as a consultant for a term expiring on November 5, 2000. The
agreement grants Mr. Harrington options to purchase 100,000 shares of the common
stock with an exercise price of $1.09 per share. Mr. Harrington has exercised
such options.
We have entered into an agreement with Mr. Kozub which provides for him to
act as a consultant for a term expiring on November 5, 2000. The agreement
grants Mr. Kozub options to purchase 500,000 shares of the common stock with an
exercise price of $1.09 per share. Mr. Kozub has exercised such options.
We have entered into a management contract with Ted Kozub Enterprises Ltd.
The agreement provides for the provision of management services for a fee of
$5,000 per month for such services to us.
All salaries and net quarterly earnings for the above agreements are paid
in Canadian dollars.
SUMMARY EXECUTIVE OFFICER COMPENSATION TABLE
The Company has omitted the Summary Compensation Table as it has not paid
any cash or non-cash compensation to its Chief Executive Officer or other
officers from our inception to the date of the Registration Statement.
Currently, options have been granted to management as indicated below.
STOCK OPTION PLAN
Our 1999 Stock Option Plan allows us to grant options to our employees,
executive officers, directors, consultants and advisors to purchase up to
5,000,000 shares of our common stock. The Plan is administered by the Board of
Directors, which has the authority to designate the number of shares to be
covered by each award and the vesting schedule of such award, among other terms.
Each option granted must be granted within five years from the effective date of
the Plan. The option period during which an option may be exercised shall not
exceed five years from the date of grant and will be subject to such other terms
and conditions of the Plan. Unless the Board of Directors provides otherwise,
option awards terminate when a participant's employment or services end, except
that a participant may exercise an option to the extent that it was exercisable
on the date of termination for a period of time thereafter. As of July 25, 2000,
5,000,000 options to purchase shares of our common stock have been granted under
the Plan, of which 4,700,000 options have been exercised. All of the options
have an exercise price of $1.09 per share and expire on November 5, 2000.
OPTION GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE
NAME AND PRINCIPAL POSITION GRANTED FISCAL YEAR PRICE EXPIRATION DATE
- ----------------------------------------------------------- ---------- ------------- -------- ----------------
<S> <C> <C> <C> <C>
Ted Kozub, Chief Financial Officer
and Director............................................. 500,000 100% $ 1.09 11/5/00
</TABLE>
INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
Our bylaws provide that we indemnify all of our directors and officers to
the fullest extent permitted by the Nevada General Corporation Law. Under our
bylaws, any director or officer, who in his capacity as such is made or
threatened to be made, party to any suit or proceeding, will be indemnified.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and persons controlling our company pursuant
to the foregoing provision, or otherwise, we have been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
26
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of July 25, 2000, certain information
with respect to the beneficial ownership of each class of our equity securities
as follows:
o By each person who is known by us to beneficially own more than 5% of our
common stock, fully diluted;
o By each of our directors;
o By each officer under the "Management--Summary Compensation Table"; and
o By all executive officers and directors as a group.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF BENEFICIAL OWNER(1) COMMON SHARES BENEFICIALLY OWNED(2) PERCENT OF CLASS
- ------------------------------------------------------------ ----------------------------------- ----------------
<S> <C> <C>
Wayne E. Loftus............................................. 1,583,333 3.14%
Ted Kozub................................................... 500,000 *
Frank Denis................................................. 2,866,668 5.66%
Michael Jenks............................................... 9,147,710(3) 18.07%
Lindsay Lent................................................ 50,000 *
William Murray ............................................. 4,000,000 7.9%
c/o Metro Town Law Office
12308-4700 Kingsway
Burnaby, British Columbia
Canada, V5H 4M1
Gil Rahier.................................................. 1,683,333 3.33%
Maurice Simpson............................................. 10,700,000 21.14%
Dana Shaw .................................................. 4,000,000 7.9%
5260 Sixth Avenue
Delta, British Columbia
Canada, V4M 1L5
All Officers and Directors as a Group (7 persons)........... 26,531,044 52.41%
</TABLE>
- ------------------
* Less than one percent.
(1) Unless otherwise indicated, all addresses are c/o Fetchomatic Global
Internet Inc. 444 Victoria Street, Suite 370, Prince George, British
Columbia, Canada V2L 2J7.
(2) Beneficial ownership has been determined in accordance with Rule 13d-3 under
the Exchange Act, and unless otherwise indicated, represents shares for
which the beneficial owner has sole voting and investment power. The
percentage of class is calculated in accordance with Rule 13d-3.
(3) Includes 7,564,417 shares of common stock that Mr. Jenks holds proxies to
vote. Mr. Jenks holds a proxy for Venture Capital Media Ltd. with respect to
2,879,265 shares of our common stock. Mr. Jenks holds a proxy for Global
Ventures Ltd. with respect to 2,012,599 shares of our common stock.
Mr. Jenks holds a proxy for Newsmakers Inc. with respect to 911,250 shares
of our common stock. Mr. Jenks holds a proxy for Sox Ltd. with respect to
1,761,303 shares of our common stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the last two years, there has not been, nor is there currently proposed,
any material transactions between us and any of our officers, directors, or 5%
stockholders, other than compensation agreements and other arrangements, which
are described where required in "Management."
On June 1, 2000, Forest Glade Properties Inc., our wholly owned subsidiary,
transferred its sole asset (all of the common stock of 514592 B.C. Ltd.) to four
of our directors: Wayne Loftus, Frank Denis, Gil Rahier and Michael Jenks.
27
<PAGE>
DESCRIPTION OF SECURITIES
COMMON STOCK
Our Articles of Incorporation authorizes the issuance of an aggregate of
200,000,000 shares of common stock at $0.001 par value. As of July 25, 2000
there were 50,623,500 shares of common stock issued and outstanding. As of July
25, 2000, the number of holders of our common stock was at least 116. Each
holder of record of common stock is entitled to one vote for each share held on
all matters promptly submitted to the stockholders for their vote. Holders of
outstanding shares of common stock are entitled to such dividends as may be
declared from time to time by the Board of Directors out of legally available
funds. We have not paid a dividend and it is not anticipated that any cash
dividends will be paid in the foreseeable future. The Board of Directors
initially may follow a policy of retaining earnings, if any, to finance our
future growth. Accordingly, future cash dividends, if any, will depend on our
need for working capital and its financial condition at the time. Shares of
common stock are not redeemable, carry no preemptive rights, or other rights to
subscribe for additional shares of common stock in the event of an offering. All
outstanding shares of common stock are fully paid and non-assessable.
CONVERTIBLE DEBENTURES
On May 1, 2000, we raised $3,500,000 in the private placement sale of our
7% convertible debentures, due May 1, 2003, to Collinson Road, LLC. The
debentures may be converted into shares of our common stock at the option of the
holders of such debentures, in whole or in part at any time and from time to
time. The number of shares of common stock issuable upon a conversion is based
on the conversion price in effect at the time of conversion. The conversion
price is the lesser of (i) $2.295 and (ii) 80% of the average of the lowest
three per share market values (determined as the last closing bid price per
share), which need not occur on consecutive days, during the twenty
(20) trading days immediately preceding the applicable conversion date. In the
event of a conversion, the holder of the debenture exercising its right to
convert will receive a number of shares of common stock equal to the sum of
(i) the quotient obtained by dividing (x) the outstanding principal of the
debenture to be converted and (y) the conversion price, and (ii) the amount of
interest accrued on the principal amount of the debentures to be converted as of
the date of conversion divided by the conversion price. Any convertible
debentures outstanding on May 1, 2003 automatically convert into shares of our
common stock at the then applicable conversion price. The convertible debentures
are redeemable under certain circumstances as stated therein.
Each holder of the convertible debentures may not convert its securities
into shares of our common stock if after the conversion, such holder, together
with any of its affiliates, would beneficially own over 4.999% of the
outstanding shares of our common stock. This restriction may be waived by each
holder on not less than 61 days' notice to us. Since the number of shares of our
common stock issuable upon conversion of the convertible debentures will change
based upon fluctuations of the market price of our common stock prior to a
conversion, the actual number of shares of our common stock that will be issued
under the convertible debentures, and consequently the number of shares of our
common stock that will be beneficially owned by Collinson Road cannot be
determined at this time. Because of this fluctuating characteristic, we agreed
to register a number of shares of our common stock that exceeds the number of
our shares of common stock currently beneficially owned by Collinson Road. The
number of shares of our common stock listed in the table below as being
beneficially owned by Collinson Road includes the shares of our common stock
that are issuable to Collinson Road, subject to the 4.999% limitation, upon
conversion of their convertible debentures and exercise of the warrant. However,
the 4.999% limitation would not prevent Collinson Road from acquiring and
selling in excess of 4.999% of our common stock through a series of conversions
and sales under the convertible debentures and acquisitions and sales under the
warrant.
Under the terms of a registration rights agreement executed in connection
with the convertible debenture agreement, we are required to register a number
of shares of common stock equal to no less than the sum of (1) 200% of the
number of shares of common stock issuable upon conversion in full of the
outstanding principal amount of the debentures, assuming all interest is paid in
shares of common stock, that the debentures remain outstanding for three years,
and that such conversion occur on May 9, 2000; June 30, 2000 or the business day
preceding the date that we file a request with the Securities and Exchange
Commission for acceleration of this
28
<PAGE>
registration statement, whichever yields the lowest conversion price, and
(2) the number of shares of common stock issuable upon exercise in full of the
warrant issued in connection with the private placement.
WARRANTS
In connection with the private placement of our convertible debentures, we
issued a warrant to purchase up to 521,765 shares of our common stock at a price
per share of $2.295, exercisable on or after May 1, 2000 and expiring on May 1,
2005. The exercise price and number of shares of common stock issuable upon
exercise of the warrant are subject to adjustment upon the occurrence of certain
events, including, but not limited to our issuance of a stock dividend, stock
splits, reclassification of our common stock or compulsory share exchange
pursuant to which our common stock is converted into other securities, or sales
of shares of our common stock for less than the exercise price.
In connection with an agreement to receive marketing services, we issued
warrants to purchase (1) up to 100,000 shares of our common stock at a price per
share of $1.09, and (2) up to 100,000 shares of our common stock at a price per
share of $3.00. All of the warrants issued under this agreement are exercisable
on or after December 17, 1999 and expire at the close of business on
December 17, 2003. The number of shares of common stock issuable upon exercise
of the warrants are subject to adjustment upon the occurrence of certain events,
including, but not limited to stock splits, consolidation or reclassification of
our common stock or compulsory share exchange pursuant to which our common stock
is converted into other securities.
PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o Short Sales;
o broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The Selling Stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades. The
Selling Stockholders may pledge their shares to their brokers under the margin
provisions of customer agreements. If a Selling Stockholder defaults on a margin
loan, the broker may, from time to time, offer and sell the pledged shares.
Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The Selling Stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. In such
29
<PAGE>
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration
of the shares, including fees and disbursements of counsel to the Selling
Stockholders. We have agreed to indemnify the Selling Stockholders against
certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.
SELLING SECURITYHOLDERS
The table below sets forth certain information, as of the date of this
prospectus, with respect to the amount and percentage ownership of each selling
securityholder before this offering, the number of shares covered by this
prospectus with respect to each selling securityholder, and the amount and
percentage ownership of each selling securityholder after this offering,
assuming that all of the shares covered by this prospectus are sold by the
selling securityholders. Unless otherwise indicated, none of the selling
securityholders have had any position, office, or other material relationship
with us within the past three years, other than as a result of the ownership of
the shares or other securities of ours.
<TABLE>
<CAPTION>
Shares Beneficially
Owned Shares Beneficially owned after
Prior to the Offering Offering(4)
--------------------- -----------
Name of Selling Number of Shares to be Number of
Stockholder Shares Percent(1) sold in Offering Shares Percent
- ----------- ------ ---------- ---------------- ------ -------
<S> <C> <C> <C> <C> <C>
Collinson Road, LLC 2,530,669(2) 4.99% 7,561,238(3)
Ira Terk 87,500 * 87,500 -- --
Next Millennium Capital
Holdings, LLC 87,500 * 87,500 -- --
Venture Capital Media Ltd. 1,779,265 3.51% 4,394,922 -- --
Newsmakers, Inc. 911,250 1.80% 758,243 -- --
Sox Ltd. 2,448,920 4.84% 1,979,938 -- --
Just Marketing 1,000,000 1.98% 200,000 -- --
</TABLE>
- -----------------------------
* Less than one percent.
(1) Percentages are based on 50,623,500 shares of our common stock
outstanding as of July 25, 2000.
(2) Includes the shares of our common stock issuable to Collinson
Road, subject to the 4.999% limitation, upon conversion of its
convertible debentures and exercise of its warrants.
(3) Under a Registration Rights Agreement between us and Collinson
Road, we are required to register such number of shares of
common stock equal to the sum of (i) 200% of the number of
shares of common stock issuable upon conversion in full of
their debentures, assuming for such purposes that all interest
is paid in shares of our common stock, that the debentures are
outstanding for three years and that such conversion occurred
on June 30, 2000, the date of filing of this registration
statement with the commission, (or May 9, 2000 or the business
day preceding the date that we file a request with the
Securities and Exchange Commission for acceleration of the
registration statement, depending on which yields the lowest
conversion price) and (ii) the number of shares of common
stock issuable upon exercise in full of the warrants.
(4) Assumes all shares to be sold in offering are sold.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of our common stock in the public market could
adversely affect prevailing market prices of our common stock. Upon the
consummation of this offering, we will have up to 62,403,368 shares of common
stock outstanding (assuming no exercise of any outstanding options or warrants
not covered by this registration statement or the issuance of stock under the
media and advertising agreement for future services), of which up to 25,045,868
shares of common stock will be freely tradable without restriction or further
registration under the Securities Act, unless such shares are purchased by
"affiliates" as that term is defined in Rule 144 under the Securities Act. The
remaining 37,357,500 shares of our common stock held by existing stockholders
are "restricted securities" as that term is defined in Rule 144 under the
Securities Act. Restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rule 144
or 701 under the Securities Act, which rules are summarized below.
30
<PAGE>
RULE 144
In general, under Rule 144 as currently in effect, after the date of this
prospectus, a person who has beneficially owned shares of our common stock for
at least one year would be entitled to sell within any three-month period a
number of shares that does not exceed the greater of:
o 1% of the number of shares of common stock then outstanding; or
o The average weekly trading volume of the common stock on the
American Stock Exchange during the four calendar weeks preceding the
filing of a notice on Form 144 with respect to such sale.
Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about our company.
Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144. Therefore,
unless otherwise restricted, "144(k) shares" may be sold immediately upon the
completion of this offering.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Camhy Karlinsky & Stein LLP, New York, New York.
EXPERTS
Our consolidated financial statements for the period from September 24,
1998 (Inception) to July 31, 1999 included in this prospectus and registration
statement has been audited by BDO Dunwoody LLP, chartered accountants, as
indicated in their report with respect thereto (that contains an explanatory
paragraph regarding our ability to continue as a going concern) and are included
herein in reliance upon the authority of said firm as experts in auditing and
accounting.
31
<PAGE>
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our by-laws provide that we shall indemnify all directors and officers of
our company to the fullest extent permitted by Nevada law. Under such
provisions, any director or officer, who in his capacity as such is made or
threatened to be made, party to any action, suit or proceeding, shall be
indemnified. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and persons
controlling us pursuant to the foregoing provision, or otherwise, we have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable.
MARKET FOR OUR COMMON STOCK
Our common stock is traded on the OTC Electronic Bulletin Board under the
symbol "FGLB."
The following table sets forth the range of high and low bid quotations for
our common stock for each of the quarters of the fiscal year ended July 31, 1999
and for the first three quarters of the fiscal year ending July 31, 2000. Our
common stock began trading on the OTC Electronic Bulletin Board under the name
Forest Glade International Inc., symbol "FGII.OB" on July 9, 1999. Our common
stock commenced trading on the OTC Electronic Bulletin Board under the name
Fetchomatic Global Internet Inc., symbol "FGLB.OB" in June 2000. Prior to
July 9, 1999, there was no public market for our securities. The quotations
represent inter-dealer prices without retail markup, mark down or commission and
may not necessarily represent actual transactions
<TABLE>
<CAPTION>
PERIOD HIGH LOW
- ----------------------------------------------------------------------------- ----- -----
<S> <C> <C>
Fourth Quarter--2000......................................................... $2.44 $1.28
Third Quarter--2000.......................................................... 3.53 1.38
Second Quarter--2000......................................................... 2.03 .94
First Quarter--2000.......................................................... 2.88 .78
Fourth Quarter--1999......................................................... 2.50 .63
</TABLE>
FINANCIAL STATEMENTS
BDO Dunwoody LLP, chartered accountants, have audited the financial
statements of fetchOmatic.com Online Inc. for the period from September 24, 1998
(incorporation of fetchOmatic.com Online Inc.) to July 31, 1999.
Information in response to this item is set forth in the Financial
Statements, beginning on Page F-1 of this filing.
32
<PAGE>
FETCHOMATIC GLOBAL INTERNET INC.
INDEX TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDED APRIL 30, 2000
<TABLE>
<S> <C>
Consolidated Balance Sheets as of April 30, 2000 (Unaudited) and July 31, 1999.............................. F-2
Consolidated Statements of Operations (Unaudited)
for the three months ended April 30, 2000 and 1999,
for the nine months ended April 30, 2000 and 1999,
for the period from September 24, 1998 (Incorporation) to April 30, 2000.................................. F-3
Consolidated Statement of Changes in Stockholders' Equity (Deficit) (Unaudited)............................. F-4
Consolidated Statements of Cash Flows (Unaudited)
for the nine months ended April 30, 2000 and 1999
and for the period from inception to April 30, 2000....................................................... F-5
Notes to Consolidated Financial Statements (Unaudited)...................................................... F-6
</TABLE>
F-1
<PAGE>
FETCHOMATIC GLOBAL INTERNET INC.
(FORMERLY FOREST GLADE INTERNATIONAL INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30, JULY 31,
2000 1999(A)
----------- ---------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current:
Cash................................................................................ $ 208,344 $ 49,725
Prepaid expenses and deposits (Note 6).............................................. 336,271 4,174
----------- ---------
544,615 53,899
Property and equipment................................................................ 144,396 3,448
Software development costs (Note 4)................................................... 284,598 --
Net assets held for sale (Note 3)..................................................... 233,298 --
----------- ---------
$ 1,206,907 $ 57,347
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities
Current:
Accounts payable.................................................................... $ 160,816 $ 117,635
Accrued expenses.................................................................... 598,279 --
Due to stockholders................................................................. 42,590 --
----------- ---------
801,685 117,635
----------- ---------
Stockholders' equity (deficit)
Capital stock
Authorized
200,000,000 common shares, par value $0.001
Issued
40,756,000 (July 31, 1999--19,000,000) common shares........................... 40,756 19,000
Additional paid-in capital....................................................... 8,279,884 156,066
Accumulated deficit.............................................................. (6,646,464) (235,354)
Accumulated other comprehensive losses--foreign currency translation............. (7,097) --
----------- ---------
1,667,079 (60,288)
Stock subscriptions receivable................................................... (1,261,857) --
----------- ---------
405,222 (60,288)
----------- ---------
$ 1,206,907 $ 57,347
=========== =========
</TABLE>
- ------------------
a) Represents the financial position of FetchOmatic.com Online Inc. (formerly
SSA Coupon Ltd.)
See accompanying notes to the consolidated interim financial statements.
F-2
<PAGE>
FETCHOMATIC GLOBAL INTERNET INC.
(FORMERLY FOREST GLADE INTERNATIONAL INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 24
THREE MONTHS ENDED NINE MONTHS ENDED 1998
APRIL 30 APRIL 30 (INCEPTION)
-------------------------- -------------------------- TO APRIL 30
2000 1999(A) 2000 1999(A) 2000
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Expenses:
Administration..................... $ 54,730 $ 23,940 $ 98,341 $ 35,910 $ 178,074
Advertising and promotion.......... 613,398 -- 696,276 -- 696,276
Depreciation....................... 11,521 -- 21,180 -- 21,180
Investor relations (including stock
option compensation of
$3,800,000) (Note 8)............ 611,939 -- 4,550,939 -- 4,550,939
Management fees.................... 256,341 -- 309,206 -- 309,273
Professional fees.................. 30,560 -- 70,694 840 71,534
Research and development........... -- 11,970 -- 17,955 39,900
----------- ----------- ----------- ----------- ------------
1,578,489 35,910 5,746,636 54,705 5,867,176
Write-down of advances (Note 5)...... -- -- 95,235 -- 210,049
----------- ----------- ----------- ----------- ------------
Loss from continued operations....... (1,578,489) (35,910) (5,841,871) (54,705) (6,077,225)
Loss from discontinued operations,
net of tax (Note 3)................ (521,097) -- (569,239) -- (569,239)
----------- ----------- ----------- ----------- ------------
Net loss for the period.............. $(2,099,586) $ (35,910) $(6,411,110) $ (54,705) $ (6,646,464)
=========== =========== =========== =========== ============
Loss per share-basic and diluted
From continued operations.......... $ (0.04) $ (0.00) $ (0.18) $ (0.00)
Discontinued operations (Note 3).. (0.01) -- (0.02) --
----------- ----------- ----------- -----------
After discontinued operations...... $ (0.05) $ (0.00) $ (0.20) $ (0.00)
=========== =========== =========== ===========
Weighted average shares
outstanding..................... 39,403,067 19,000,000 31,849,766 19,000,000
=========== =========== =========== ===========
</TABLE>
- ------------------
a) Represents the results of operations of FetchOmatic.com Online Inc. (formerly
SSA Coupon Ltd.)
See accompanying notes to the consolidated interim financial statements.
F-3
<PAGE>
FETCHOMATIC GLOBAL INTERNET INC.
(FORMERLY FOREST GLADE INTERNATIONAL INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATED TOTAL
COMMON SHARES ADDITIONAL OTHER STOCKHOLDERS'
-------------------- PAID-IN ACCUMULATED COMPREHENSIVE SUBSCRIPTIONS EQUITY
NUMBER AMOUNT CAPITAL DEFICIT INCOME RECEIVABLE (DEFICIT)
---------- ------- ---------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, August 1, 1999--
SSA Coupon Ltd............ 100 $ 66 $ 175,000 $ (235,354) $ -- $ -- $ (60,288)
Adjustment for the issuance
of common stock on reverse
acquisition............... 18,999,900 18,934 (18,934) -- -- -- --
---------- ------- ---------- ----------- ------- ----------- -----------
19,000,000 19,000 156,066 (235,354) -- -- (60,288)
Issuance of common stock by
SSA Coupon Ltd. prior to
acquisition............... -- -- 14 -- -- -- 14
Adjustment for the
stockholders' equity of
the Company at the
acquisition date.......... 17,800,000 17,800 (193,080) -- -- -- (175,280)
Stock option compensation
(Note 8).................. -- -- 3,800,000 -- -- -- 3,800,000
Issuance of common stock on
exercise of stock options
at $1.09 per share
(Note 8).................. 3,856,000 3,856 4,199,184 -- -- (1,261,857) 2,941,183
Issuance of common stock for
services in January 2000
at $1.25 per share
(Note 6).................. 100,000 100 124,900 -- -- -- 125,000
Issuance of warrants for
services (Note 6)......... -- -- 192,800 -- -- -- 192,800
---------- ------- ---------- ----------- ------- ----------- -----------
40,756,000 40,756 8,279,884 (235,354) -- (1,261,857) 6,823,429
---------- ------- ---------- ----------- ------- ----------- -----------
Net loss for the period..... -- -- -- (6,411,110) -- -- (6,411,110)
Foreign currency translation
adjustments............... -- -- -- -- (7,097) -- (7,097)
---------- ------- ---------- ----------- ------- ----------- -----------
Total comprehensive
loss.................. -- -- -- (6,411,110) (7,097) -- (6,418,207)
---------- ------- ---------- ----------- ------- ----------- -----------
Balance, April 30, 2000..... 40,756,000 $40,756 $8,279,884 $(6,646,464) $(7,097) $(1,261,857) $ 405,222
========== ======= ========== =========== ======= =========== ===========
</TABLE>
See accompanying notes to the consolidated interim financial statements.
F-4
<PAGE>
FETCHOMATIC GLOBAL INTERNET INC.
(FORMERLY FOREST GLADE INTERNATIONAL INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 24
NINE MONTHS ENDED 1998
APRIL 30 (INCEPTION)
------------------------ TO APRIL 30
2000 1999(A) 2000
------------ -------- ------------
<S> <C> <C> <C>
Cash provided by (used in)
Operating activities:
Net loss for the period............................................... $ (6,411,110) $(54,705) $ (6,646,464)
Adjustments to reconcile net loss to net cash used in
operating activities
Amortization and depreciation...................................... 86,543 -- 86,543
Write-off of goodwill.............................................. 339,632 -- 339,632
Loss on disposal of property and equipment......................... 301,488 -- 301,488
Deferred income tax recovery....................................... (158,105) -- (158,105)
Stock option compensation.......................................... 3,800,000 -- 3,800,000
(Increase) decrease in assets
Prepaid expenses and other......................................... 75,279 -- 71,105
Increase (decrease) in liabilities
Accounts payable................................................... (37,712) 54,705 79,923
Accrued expenses................................................... 578,279 -- 578,279
------------ -------- ------------
(1,425,706) -- (1,547,599)
------------ -------- ------------
Investing activities:
Software development costs............................................ (284,598) -- (284,598)
Cash acquired on reverse acquisition of SSA Coupon Ltd................ 145,757 -- 145,757
Purchase of property and equipment.................................... (173,028) -- (176,476)
------------ -------- ------------
(311,869) -- (315,317)
------------ -------- ------------
Financing activities:
Proceeds on issuance of common stock, net of subscriptions receivable
(Note 7)........................................................... 2,051,652 -- 2,226,718
Repayment of advances from directors.................................. (7,519) -- (7,519)
Repayment of note payable on acquisition of discontinued operations... (138,000) -- (138,000)
Repayment of long-term debt from discontinued operations.............. (11,260) -- (11,260)
------------ -------- ------------
1,894,873 -- 2,069,939
------------ -------- ------------
Increase in cash for the period......................................... 157,298 -- 207,023
Effect of foreign exchange on cash...................................... 1,321 -- 1,321
Cash, beginning of period............................................... 49,725 -- --
------------ -------- ------------
Cash, end of period..................................................... $ 208,344 $ -- $ 208,344
============ ======== ============
</TABLE>
- ------------------
a) Represents the cash flows of FetchOmatic.com Online Inc. (formerly SSA Coupon
Ltd.)
See accompanying notes to the consolidated interim financial statements.
F-5
<PAGE>
FETCHOMATIC GLOBAL INTERNET INC.
(FORMERLY FOREST GLADE INTERNATIONAL INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated interim financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments which, in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
consolidated interim financial statements be read in conjunction with the
financial statements of the Company and the financial statements of SSA Coupon
Ltd. for the year ended July 31, 1999 and notes thereto included in the
Company's 10-KSB annual report and in the Form 8-K current report filed in
respect of the Company's acquisition of SSA Coupon Ltd. The Company follows the
same accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual
results.
Previously, the Company carried on operations in two business segments: the
development of an Internet search engine and the operation of a mobile home
park. In May 2000, the Company entered an agreement to sell all the assets
constituting its mobile home park business. (Note 3) The sale closed in June
2000 and as a result, the Company is solely involved in the development and
marketing of a geographically enabled internet web search engine and smart
source data base and internet portal and personalized internet communications
tool. In connection with its business focus, the Company changed its legal name
to Fetchomatic Global Internet Inc. on June 2, 2000.
These accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities and commitments in the normal course of business. As at
April 30, 2000, the Company has recognized no revenues and has accumulated
operating losses from the Internet business of approximately $6,600,000 since
its inception. The continuation of the Company is dependent upon the successful
completion of development of the Company's web site, fetchomatic.com, the
continuing financial support of creditors and stockholders and obtaining
long-term financing as well as achieving a profitable level of operations.
Subsequent to April 30, 2000, the Company issued $3.5 million of convertible
debentures (Note 9) and plans to raise additional equity capital as necessary to
finance the operations and capital requirements of the Company. Amounts raised
will be used to continue development of the Company's web site, to provide
financing for the marketing, promotion and launch of its web site, to secure
products and for other working capital purposes including operational hardware
and software upgrades. While the Company is expending its best efforts to
achieve the above plans, there is no assurance that any such activity will
generate sufficient funds for operations.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include any
adjustments that might arise from this uncertainty.
2. ACQUISITION OF SSA COUPON LTD.
On November 3, 1999, the Company closed the share exchange agreement with
the stockholders of SSA Coupon Ltd. ("SSA", now renamed FetchOmatic.com Online
Inc.), a company that was incorporated in British Columbia, Canada on
September 24, 1998 for the purpose of developing, exploiting and marketing a
geographically enabled internet web search engine and smart source data base and
internet portal and personalized internet communications tool. The Company
acquired 100% of the issued and outstanding shares of SSA in exchange for
19 million restricted shares of the Company's common stock. Restrictions on
these shares
F-6
<PAGE>
FETCHOMATIC GLOBAL INTERNET INC.
(FORMERLY FOREST GLADE INTERNATIONAL INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
2. ACQUISITION OF SSA COUPON LTD.--(CONTINUED)
will be removed at the rate of 10% each year after their issuance. Additionally,
the Company has agreed to pay, or cause SSA to pay to the three founding
shareholders of SSA, in perpetuity, royalties aggregating to 7% of the gross
revenues of SSA and/or the Company relating to the technology created by SSA.
Such royalties will be paid on a quarterly basis.
Effective as of the closing date, the transaction was accounted for using
the purchase method of accounting as applicable for reverse acquisitions.
Following reverse acquisition accounting, financial statements subsequent to the
closing of this acquisition are presented as a continuation of SSA. The
operations of the Company are consolidated with those of SSA from the date of
acquisition. The fair value of the net assets of the Company at November 3, 1999
was as follows:
<TABLE>
<S> <C>
Current assets............................................. $ 9,440
Property and equipment and other long-term assets.......... 1,652,326
-----------
1,661,766
Current liabilities........................................ (274,421)
Deferred income taxes...................................... (156,843)
Long-term debt............................................. (1,607,870)
-----------
Goodwill................................................... $ (377,368)
===========
</TABLE>
Goodwill was being amortized on a straight-line basis over five years. The
value assigned to the common stock issued on the transaction was $Nil based on
the estimated fair value of the net assets of the Company at the acquisition
date. The net book value of goodwill at April 30, 2000 of $339,632 was written
off on that date as part of the Company's loss from discontinued operations.
(Note 3)
3. DISPOSAL OF MOBILE HOME PARK OPERATIONS
On December 1, 1998, as amended on August 31, 1999, the Company acquired
100% of the common shares of 514592 BC Ltd. (a company 50% owned by a director
of the Company) the beneficial owner of the assets and liabilities comprising
the Mountain View Park ("the Park") in British Columbia, Canada.
On May 1, 2000, the Company made the decision to dispose of all of the
assets constituting its mobile home park business, the sale of which was
completed in June 2000. Total proceeds on the sale were approximately $675,000,
with $135,000 received on closing, $98,000 due on July 15, 2000 and the balance
due in installments of $4,500 per month including interest at Prime plus 1% per
annum with the balance due on May 15, 2002. The balance due is collateralized by
equipment and an unconditional guarantee by the purchaser. Immediately following
the sale, the Company transferred the shares of 514592 BC Ltd. to its four
directors for nominal consideration. Prior to the sale of the shares of 514592
BC Ltd., 514592 BC Ltd. transferred all of its remaining assets and liabilities
to the Company except for the mortgage obligation on the Park of approximately
$442,000 and a portion of the installments receivable equal to the balance of
the mortgage payable outstanding.
The financial results of the Park have been segregated and presented as a
discontinued operation and the Balance Sheets and Statements of Operations and
Cash Flows have been reclassified to reflect this presentation.
F-7
<PAGE>
FETCHOMATIC GLOBAL INTERNET INC.
(FORMERLY FOREST GLADE INTERNATIONAL INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
3. DISPOSAL OF MOBILE HOME PARK OPERATIONS--(CONTINUED)
The Statement of Operations for the nine-month period ended April 30, 2000
includes a writedown to net realizable value. The results of discontinued
operations were as follows:
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE NINE-
MONTH PERIOD
ENDED
APRIL 30,
2000
---------------
<S> <C>
Revenue.................................................. $ 68,941
---------
Loss from operations..................................... (86,224)
---------
Loss on disposal of property and equipment............... (301,488)
Write-off of goodwill.................................... (339,632)
Deferred tax recovery.................................... 158,105
---------
Loss on disposal of discontinued operations.............. (483,015)
---------
Loss from discontinued operations........................ $(569,239)
=========
Loss per share from discontinued operations is summarized
as follows:
-- from operations..................................... $ --
-- on disposal of the net assets....................... (0.02)
---------
$ (0.02)
=========
</TABLE>
The Company's net assets held for sale are comprised of the following at
April 30, 2000:
<TABLE>
<S> <C>
Property and equipment.................................... $ 675,300
Mortgage payable.......................................... (442,002)
---------
Net assets held for sale.................................. $ 233,298
=========
</TABLE>
4. SOFTWARE DEVELOPMENT COSTS
The Company has adopted Statement of Position ("SOP") 98-1, "Accounting for
the Costs of Computer Software Development or Obtained for Internal Use".
Accordingly, direct internal and external costs associated with the development
of the features, content and functionality of the Company's internet software,
incurred during the application development stage, will be capitalized and
amortized over the estimated useful life of three years once development is
complete.
During the period prior to July 31, 1999, SSA carried out procedures in the
preliminary project stage including the research and evaluation of ideas and
determination of an implementation plan as well as certain activities relating
to the application software development. The Company commenced the
capitalization of costs associated with software development on August 1, 1999.
5. CONTINGENT LIABILITY
SSA, along with its three founding stockholders, was the defendant in an
action filed in the Supreme Court of British Columbia in October 1999 by a
former consultant to the Company. The action claimed breach of contract and
sought unspecified damages. On November 17, 1999, the Company commenced an
action against
F-8
<PAGE>
FETCHOMATIC GLOBAL INTERNET INC.
(FORMERLY FOREST GLADE INTERNATIONAL INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
5. CONTINGENT LIABILITY--(CONTINUED)
the consultant seeking compensation for $235,000 allegedly misappropriated by
the consultant as well as general damages.
Amounts advanced by the Company subsequent to July 31, 1999 to the
consultant and not received by SSA totalling $95,235 were written off in the
first quarter. On February 28, 2000, SSA reached a settlement with the former
consultant to release both parties from damages claimed in the action and from
future claims associated with the action.
6. PREPAID EXPENSES
In December 1999, the Company entered into a promotional agreement with a
company for a one-year term in exchange for 175,000 shares of common stock plus
200,000 warrants to purchase common stock. 100,000 of the warrants are
exercisable at a price of $1.09 with the balance exercisable at $3 for a
four-year period. The value assigned to the common stock based on the trading
price of the stock on the agreement date was $218,750. Using a Black-Scholes
option-pricing model, a value of $192,800 was assigned to the warrants. The
expenses are amortized to the Statement of Operations over the term of the
contract.
100,000 shares of common stock were issued by the Company while a
stockholder provided 75,000 shares to satisfy the balance. Amounts due to the
stockholder were settled during the third quarter of fiscal 2000. The warrants
remain outstanding at April 30, 2000.
7. SUPPLEMENTAL CASH FLOW INFORMATION
Required disclosures of supplemental information on the Statements of Cash
Flows include:
a) Supplemental disclosure of non-cash investing and financing activities:
<TABLE>
<CAPTION>
2000 1999
-------- -----
<S> <C> <C>
i) issuance of common stock and warrants in satisfaction of promotional
expenses, including obligation to stockholder (Note 6)............... $411,550 $ --
ii) acquisition of the shares of SSA in exchange for 19 million shares
of common stock...................................................... $ -- $ --
iii) issuance of common stock for subscription proceeds received prior to
acquisition of SSA................................................... $889,545 $ --
</TABLE>
b) Interest paid for the nine-month periods ended April 30, 2000 and 1999
included in the loss from discontinued operations was $19,382 and $Nil.
8. STOCK OPTIONS
On November 5, 1999, the Company adopted its 1999 Stock Option Plan to
offer an inducement to obtain services of key employees, directors and
consultants of the Company. The maximum number of shares issuable under the Plan
shall not exceed 5 million. Under the Plan, the Company's Board of Directors
determines the exercise price and terms of the options not, however, to exceed
five years from the date of grant.
The Company's Board of Directors approved the grant of five million options
to consultants on November 5, 1999 vesting immediately at an exercise price of
$1.09 per share. During the period, 3,856,000
F-9
<PAGE>
FETCHOMATIC GLOBAL INTERNET INC.
(FORMERLY FOREST GLADE INTERNATIONAL INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
8. STOCK OPTIONS--(CONTINUED)
options were exercised for total proceeds of $4,203,040 less amounts receivable
from the optionees of $1,261,857 for net proceeds of $2,941,183 as follows:
<TABLE>
<CAPTION>
OPTIONS
EXERCISED
---------
<S> <C>
December 1999................................................ 995,000
January 2000................................................. 215,000
February 2000................................................ 806,000
March 2000................................................... 780,000
April 2000................................................... 1,060,000
---------
3,856,000
=========
</TABLE>
Subsequent to April 30, 2000, an additional 535,000 options were exercised.
The Company follows Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-based Compensation", in accounting for stock
options granted to non-employees. Under SFAS No. 123, compensation cost is
recognized based upon the fair value based method prescribed using the
Black-Scholes option pricing model. The fair value of these options of $0.76 was
estimated at the date of grant using the following assumptions:
o No dividends.
o Risk-free interest rate of 4.4%.
o Volatility of the expected market price of the Company's common
stock of 380%.
o Weighted average expected life of the options of 6 months.
Compensation expense of $3.8 million has been recorded in the nine-month
period ended April 30, 2000 in connection with the grant of these options.
9. COMMITMENTS AND SUBSEQUENT EVENTS
a) On March 30, 2000, the Company entered into an agreement to acquire
public relations and advertising services from Sivla Inc. in exchange
for $100,000 cash (paid in May 2000) plus up to approximately
$43.5 million of the Company's common stock of which 25% will be
registered to remove trading restrictions. The first $23,500,000 due in
common stock is based upon a $2 imputed value with the balance due based
upon a 35% discount to the average of the previous month's closing
trading price. For advertising contracts signed to date, 8,812,500
shares of common stock were issued in connection with this agreement for
future advertising and promotion on May 15, 2000 with the balance of
2,937,500 shares to be issued upon completion of the registration
statement qualifying these shares.
An accrual has been provided at April 30, 2000 with respect to the cost
of advertising completed to April 30, 2000 in the amount of $561,579.
The cost of sponsorship of a Championship Auto Racing Team ("CART") car
for the 2000 race season is being amortized over the race season.
b) On May 25, 2000, the Company entered into an agreement to obtain an
Internet profile of the Company for a period of ninety days in exchange
for the issuance of 100,000 shares of common stock.
c) In June 2000, the Company ordered approximately $700,000 of new computer
hardware.
F-10
<PAGE>
FETCHOMATIC GLOBAL INTERNET INC.
(FORMERLY FOREST GLADE INTERNATIONAL INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
9. COMMITMENTS AND SUBSEQUENT EVENTS--(CONTINUED)
d) On May 9, 2000, the Company issued $3.5 million of convertible
debentures due May 1, 2003 and bearing interest at 7% per annum due
annually. Four million shares of common stock owned by directors
collateralize the convertible debenture. The debentures are convertible
at the option of the holder into shares of common stock of the Company
at the lesser of (1) $2.295 and (2) 80% of the average of the lowest
three per share market values (not necessarily consecutive) during the
twenty trading days immediately preceding the conversion date. As a
result, a beneficial conversion amount will be recorded as interest
expense in the fourth quarter of the Company's 2000 fiscal year. The
Company has the option to pay annual interest in cash or shares of its
common stock.
The convertible debentures also contain 521,765 detachable warrants
exercisable to purchase shares of the Company's common stock at any time
until May 1, 2005 at a price of $2.295 per share. The warrants will be
assigned a value on issuance, which will be amortized over the
three-year term of the convertible debentures.
The debenture agreement contains provisions to adjust conversion
privileges in connection with certain changes to the Company's capital
structure and provides an option available to the debenture-holder to
acquire an additional $6,500,000 of convertible debentures. $350,000 was
deducted from proceeds of the convertible debentures and 175,000 shares
of common stock were issued as a finder's fee. The finder's fee
attributable to the common stock will be determined based upon the
market value of the common stock on the issuance date.
10. NEW ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
requires companies to recognize all derivatives contracts as either assets or
liabilities on the balance sheet and to measure them at fair value. If certain
conditions are met, a derivative may be specifically designated as a hedge, the
objective of which is to match the timing of gain or loss recognition on the
hedging derivative with the recognition of (I) changes in the fair value of the
hedged assets or liability that are attributable to the hedged risk or (ii) the
earnings effect of the hedged forecasted transaction. For a derivative not
designated as a hedging instrument, the gain or loss is recognized in income in
the period of change. SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000.
Historically, the Company has not entered into derivatives contracts either
to hedge existing risks or for speculative purposes. Accordingly, the Company
does not expect adoption of the new standards on August 1, 2000 to affect its
financial statements.
F-11
<PAGE>
FETCHOMATIC.COM ONLINE INC.
INDEX TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM SEPTEMBER 24, 1998 (INCORPORATION) TO JULY 31, 1999
<TABLE>
<S> <C>
Report of Independent Accountants.......................................................................... F-13
Balance Sheet--July 31, 1999............................................................................... F-14
Statement of Changes in Stockholders' Equity............................................................... F-15
Statement of Operations--period ended July 31, 1999........................................................ F-16
Statement of Cash Flows--period ended July 31, 1999........................................................ F-17
Summary of Significant Accounting Policies................................................................. F-18
Notes to the Financial Statements.......................................................................... F-20
</TABLE>
F-12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Stockholders of
FetchOmatic.com Online Inc.
(formerly SSA Coupon Ltd.)
(a development stage company)
We have audited the Balance Sheet of FetchOmatic.com Online Inc. (formerly SSA
Coupon Ltd.) (a development stage company) as at July 31, 1999, the Statements
of Changes in Stockholders' Equity, Operations and Cash Flows for the period
from September 24, 1998 (incorporation) to July 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of FetchOmatic.com Online Inc. (formerly SSA
Coupon Ltd.) (a development stage company) as at July 31, 1999 and the related
Statements of Changes in Stockholders' Equity, Operations and Cash Flows for the
period from September 24, 1998 (incorporation) to July 31, 1999 in accordance
with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered a loss from operations in its initial year
and has no established source of revenue. This raises substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are described in Note 1. These financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ BDO DUNWOODY LLP
Chartered Accountants
Vancouver, Canada
December 3, 1999
F-13
<PAGE>
FETCHOMATIC.COM ONLINE INC.
(FORMERLY SSA COUPON LTD.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
JULY 31,
1999
---------
<S> <C>
ASSETS
Current:
Cash............................................................................................... $ 49,725
Prepaid expenses and deposits...................................................................... 4,174
---------
53,899
Fixed assets......................................................................................... 3,448
---------
$ 57,347
=========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities
Current:
Accounts payable and accrued liabilities (Note 3).................................................. $ 117,635
---------
Stockholders' equity (deficit)
Share capital
Authorized
10,000 Common shares, no par value
Issued
10,000 Common shares.......................................................................... 66
Additional paid-in capital (Note 2)................................................................ 175,000
Deficit accumulated during the development stage................................................... (235,354)
---------
(60,288)
---------
$ 57,347
=========
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statements.
F-14
<PAGE>
FETCHOMATIC.COM ONLINE INC.
(FORMERLY SSA COUPON LTD.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED TOTAL
COMMON STOCK ADDITIONAL DURING THE STOCKHOLDERS'
---------------- PAID-IN DEVELOPMENT EQUITY
SHARES AMOUNT CAPITAL STAGE (DEFICIT)
------ ------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Initial capital contributions on September 24, 1998
at C$0.01 per share............................... 10,000 $ 66 $ -- $ -- $ 66
Capital contributions by Forest Glade International
Inc. during the period (Note 2)................... -- -- 175,000 -- 175,000
Net loss for the period............................. -- -- -- (235,354) (235,354)
------ ---- -------- ---------- ---------
Balance, July 31, 1999.............................. 10,000 $ 66 $175,000 $ (235,354) $ (60,288)
====== ==== ======== ========== =========
</TABLE>
The accompanying summary of significant accounting policies and notes
form an integral part of these financial statements.
F-15
<PAGE>
FETCHOMATIC.COM ONLINE INC.
(FORMERLY SSA COUPON LTD.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 24
1998
(INCORPORATION)
TO JULY 31
1999
---------------
<S> <C>
General and administrative expenses:
Research and development.............................................................. $ 39,900
Management fees and business development.............................................. 79,800
Incorporation costs................................................................... 840
---------
120,540
Write-down of advances (Note 4)......................................................... 114,814
---------
Net loss for the period................................................................. $ 235,354
=========
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statments.
F-16
<PAGE>
FETCHOMATIC.COM ONLINE INC.
(FORMERLY SSA COUPON LTD.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 24
1998
(INCORPORATION)
TO JULY 31
1999
---------------
<S> <C>
Cash provided by (used in)
Operating activities:
Net loss for the period......................................................................... $(235,354)
Increase in prepaid expenses and deposits....................................................... (4,174)
Increase in accounts payable and accrued liabilities............................................ 117,635
---------
(121,893)
---------
Financing activities:
Issuance of common stock........................................................................ 66
Additional capital contributions................................................................ 175,000
---------
175,066
---------
Investing activities:
Purchase of fixed assets........................................................................ (3,448)
---------
Increase in cash for the period and cash, end of period........................................... $ 49,725
=========
</TABLE>
The accompanying summary of significant accounting policies and notes form an
integral part of these financial statments.
F-17
<PAGE>
FETCHOMATIC.COM ONLINE INC.
(FORMERLY SSA COUPON LTD.)
(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
<TABLE>
<S> <C>
BASIS OF PRESENTATION..................... These financial statements are expressed in US dollars and are
prepared in accordance with accounting principles generally accepted
in the United States.
The Company has selected July 31 as its fiscal year end.
FIXED ASSETS.............................. Fixed assets, consisting of computer equipment acquired in July 1999,
are carried at cost less accumulated depreciation (1999--$Nil).
Computers are depreciated using the straight-line method over their
estimated useful life of three years.
SOFTWARE DEVELOPMENT COSTS................ The Company has adopted Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use". Accordingly, direct internal and external costs
associated with the development of the features, content and
functionality of the Company's internet software, incurred during the
application development stage, will be capitalized and amortized over
the estimated useful life of three years once development is
complete.
During the period from September 24, 1998 to July 31, 1999, the
Company carried out procedures in the preliminary project stage
including the research and evaluation of ideas and determination of
an implementation plan as well as certain activities relating to
application software development. Capitalization, however, has not
occurred for periods prior to the agreement with Forest Glade
International Inc. as the Company previously lacked financing
available to complete the project.
FINANCIAL INSTRUMENTS..................... The Company's financial instruments consist of cash, receivables and
accounts payable and accrued liabilities. Unless otherwise noted, it
is management's opinion that the Company is not exposed to
significant interest, currency or credit risks arising from these
financial instruments. The fair values of these financial instruments
approximate their carrying values, unless otherwise noted, since they
are short-term in nature or they are receivable or payable on demand.
INCOME TAXES.............................. The Company follows the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes",
which requires the Company to recognize deferred tax liabilities and
assets for the expected future tax consequences of events that have
been recognized in the Company's financial statements or tax returns
using the liability method. Under this method, deferred tax
liabilities and assets are determined based on the temporary
differences between the financial statement carrying amounts and tax
bases of assets and liabilities using enacted rates in effect in the
years in which the differences are expected to reverse.
</TABLE>
F-18
<PAGE>
FETCHOMATIC.COM ONLINE INC.
(FORMERLY SSA COUPON LTD.)
(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
<TABLE>
<S> <C>
FOREIGN CURRENCY TRANSLATION.............. The Company's functional currency is the Canadian dollar as all of
the Company's operations are in Canada. The Company uses the US
dollar as its reporting currency for consistency with Forest Glade
International Inc., the Company's parent subsequent to November 3,
1999 (Note 3(b)).
Transactions undertaken in currencies other than the US dollar are
translated to US dollars using the exchange rate in effect as of the
transaction date. Assets and liabilities denominated in foreign
currencies are then translated to US dollars using the period end
rate. Translation adjustments (1999--$Nil) are included in
Stockholders' Equity.
USE OF ESTIMATES.......................... The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from management's best estimates as additional
information becomes available in the future.
NEW ACCOUNTING PRONOUNCEMENTS............. In June 1998, SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities", was issued. SFAS No. 133 requires companies
to recognize all derivatives contracts as either assets or
liabilities on the balance sheet and to measure them at fair value.
If certain conditions are met, a derivative may be specifically
designated as a hedge, the objective of which is to match the timing
of gain or loss recognition on the hedging derivative with the
recognition of (i) the changes in the fair value of the hedged asset
or liability that are attributable to the hedged risk or (ii) the
earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain or loss
is recognized in income in the period of change. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 2000.
Historically, the Company has not entered into derivatives contracts
either to hedge existing risks or for speculative purposes.
Accordingly, the Company does not expect adoption of the new
standards on August 1, 2000 to affect its financial statements.
In April 1998, the American Institute of Certified Public Accountants
issued SOP 98-5, "Reporting on the Costs of Start-Up Activities",
which provides guidance on the financial reporting of start-up costs
and organization costs. It requires costs of start-up activities and
organization costs to be expensed as incurred. The Company adopted
SOP 98-5 effective upon its incorporation.
</TABLE>
F-19
<PAGE>
FETCHOMATIC.COM ONLINE INC.
(FORMERLY SSA COUPON LTD.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND CONTINUED OPERATIONS
The Company was incorporated in the province of British Columbia, Canada on
September 24, 1998 and is engaged in the development of an internet web site
which will serve as an internet portal site to provide users with access to
various search engine and other internet features.
These accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities and commitments in the normal course of business. As at July 31,
1999, the Company has recognized no revenue and has accumulated operating losses
of $235,354 since its incorporation. The continuation of the Company is
dependent upon the continuing financial support of creditors and stockholders
and obtaining long-term financing as well as achieving a profitable level of
operations. Management plans to raise equity capital to finance the operations
and capital requirements of the Company. Management of Forest Glade intends to
raise new equity financing of approximately $3 to $5 million within the upcoming
year. Amounts raised will be used to continue development of the Company's web
site, to provide financing for the marketing and promotion of its site, to
secure products and for other working capital purposes including operational
hardware and software upgrades. While the Company is expending its best efforts
to achieve the above plans, there is no assurance that any such activity will
generate funds that will be available for operations.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include any
adjustments that might arise from this uncertainty.
2. CAPITAL CONTRIBUTIONS AND REVERSE ACQUISITION
On July 23, 1999, the Company entered into an agreement with Forest Glade
to allow Forest Glade to purchase 20% of the Company's common stock. As
consideration, Forest Glade paid $25 and agreed to contribute capital totaling
$1.25 million for working capital use to be contributed in weekly increments of
$40,000. To July 31, 1999, advances totaling $175,000 had been made by Forest
Glade. Subsequent to July 31, 1999, an additional $465,000 was contributed to
the Company.
To issue Forest Glade 2,500 shares of common stock pursuant to this
agreement, the Company amended its Memorandum on September 30, 1999 to increase
its authorized capital to 15,000 shares of common stock without par value. The
stock was issued to Forest Glade on September 30, 1999.
On November 3, 1999, the founding stockholders of the Company exchanged
their shares in the Company for 19 million shares of Forest Glade International
Inc., ("Forest Glade") a Nevada company whose shares are publicly traded in the
United States. Forest Glade operates a mobile home park in British Columbia,
Canada. Upon closing this acquisition, the transaction will be accounted for
using the purchase method of accounting as a reverse acquisition. Following
reverse acquisition accounting, consolidated financial statements subsequent to
the closing of the acquisition will be presented as a continuation of the
Company. The operations of Forest Glade
F-20
<PAGE>
FETCHOMATIC.COM ONLINE INC.
(FORMERLY SSA COUPON LTD.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)
2. CAPITAL CONTRIBUTIONS AND REVERSE ACQUISITION--(CONTINUED)
will be consolidated with those of the Company from the date of acquisition. The
fair value of the net assets of Forest Glade at July 31, 1999 was as follows:
<TABLE>
<S> <C>
Current assets.................................................................. $ 11,392
Property and equipment and other long-term assets............................... 1,207,757
----------
1,219,149
Current liabilities............................................................. (135,132)
Deferred income taxes........................................................... (155,598)
Long-term debt.................................................................. (939,445)
----------
$ (11,026)
==========
</TABLE>
3. COMMITMENTS AND SUBSEQUENT EVENTS
a) During the period, the Company entered into contracts with its three
stockholders for consulting services each at approximately $4,000 per
month for a period of five years expiring in September 2003, renewable
for successive two-year terms. Should the Company terminate these
agreements, additional termination fees aggregating to approximately
$2 million would be due to the three stockholders. The monthly fee of
$4,000 remains until the first period that the Company has quarterly
earnings in excess of approximately $167,000. Once quarterly earnings
exceed $167,000, monthly payments to the stockholders increase in
accordance with specific earnings benchmarks up to a maximum of
approximately $29,000 per month for quarterly earnings in excess of
approximately $4 million.
Accounts payable and accrued liabilities include $117,048 owed to the
three stockholders pursuant to these agreements. Amounts owing are
unsecured and non-interest bearing. Consulting fees on the Statement of
Operations consist of fees charged under these contracts.
b) Pursuant to the share exchange agreement (Note 2) whereby Forest Glade
acquired the remaining common stock of the Company it did not already
own, Forest Glade agreed to pay, or cause the Company to pay the
original three stockholders a royalty aggregating 7% (payable quarterly)
of the gross revenues of every kind and nature received by Forest Glade
or the Company arising directly or indirectly from its intellectual
property. Revenue from intellectual property includes licensing, use,
and sale of banner advertising, access fees, service fees and from any
other exploitation of the Company's technology.
c) On August 1, 1999, the Company entered into a lease agreement for office
premises in Delta, British Columbia until expiry on July 31, 2000 (with
a three-year renewal option). The minimum annual lease payments of the
Company are approximately $18,000 plus its proportionate share of
operating costs.
d) On October 29, 1999 the Company signed an agreement with a vendor to
acquire use of the vendor's proprietary data for a one-year term
renewable in additional one-year terms. The Company is obligated to pay
a license fee to the vendor in the amount of $75,000 per annum, payable
quarterly.
4. CONTINGENT LIABILITY
The Company, along with its three founding stockholders, is the defendant
in an action filed in the Supreme Court of British Columbia in October 1999 by a
former consultant to the Company. The action claims breach of contract and seeks
unspecified damages. The Company believes that the action has no merit and
intends to
F-21
<PAGE>
FETCHOMATIC.COM ONLINE INC.
(FORMERLY SSA COUPON LTD.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)
4. CONTINGENT LIABILITY--(CONTINUED)
vigorously defend the action. On November 17, 1999, the Company commenced an
action against the consultant seeking compensation for $235,000 allegedly
misappropriated by the consultant as well as general damages.
Amounts advanced by Forest Glade to July 31, 1999 to the consultant and not
received by the Company totaling $114,814 were written off in the period.
Management does not expect that the outcome of these legal proceedings
could have a material adverse effect on the Company's financial condition,
results of operations or cash flows. The outcomes of these actions are
indeterminable. Accordingly, any further losses or recoveries will be recorded
in the period they become probable and quantifiable.
5. INCOME TAXES
The tax effects of temporary differences that give rise to the Company's
deferred tax asset are as follows:
<TABLE>
<CAPTION>
1999
---------
<S> <C>
Tax loss carryforwards........................................................... $ 106,000
Valuation allowance.............................................................. (106,000)
---------
$ --
=========
</TABLE>
The Company evaluates its valuation allowance requirements based on
projected future operations. When circumstances change and this causes a change
in management's judgement about the recoverability of deferred tax assets, the
impact of the change on the valuation allowance is reflected in current income.
At July 31, 1999, the Company had losses available for income tax purposes
of approximately $235,000 which will expire in 2005.
F-22
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our certificate of incorporation and bylaws provide that we indemnify all
of our directors and officers to the fullest extent permitted by the Nevada
General Corporation Law. Under our bylaws, any director or officer, who in his
capacity as such is made or threatened to be made, party to any suit or
proceeding, will be indemnified. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and
persons controlling us pursuant to the foregoing provision, or otherwise, we
have been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
It is expected that the following expenses will be incurred in connection
with the issuance and distribution of the common stock being registered. All
such expenses are being paid by us.
<TABLE>
<S> <C>
SEC Registration fee....................................... $ 6,566.11
Printing and Edgarization.................................. 5,000.00
Accountants' fees and expenses............................. 10,000.00
Attorneys' fees and expenses............................... 15,000.00
Miscellaneous.............................................. 5,000.00
----------
Total.................................................... $41,566.11
==========
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Not applicable.
ITEM 27. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ----------------------------------------------------------------------------------------------------------
<S> <C>
2.1 Agreement between Forest Glade International Inc. and SSA Coupon Ltd., dated as of July 23, 1999(5)
2.2 Share Exchange Agreement among Forest Glade International Inc., Maurice Simpson, Dana Herbert Shaw,
William Fredric Murray and Denis Brovarone, dated as of September 29, 1999.
3.1 Articles of Incorporation of Forest Glade International Inc.(2)
3.2 Amended Articles of Incorporation of FetchOmatic Global Internet Inc. (to change name)
3.3 By-laws of FetchOmatic Global Internet Inc.(2)
4.1 Convertible Debenture Agreement between FetchOmatic Global Internet Inc. and Collinson LLC dated May
1, 2000(4)
5.1 Opinion of Camhy Karlinsky & Stein LLP, counsel for the Registrant**
10.1 Offering Sales Agency Agreement among Forest Glade International, Inc. and Pacific Rim Investment
Inc. (2)
10.2 Share Purchase Agreement dated September 30, 1998(2)
10.3 Mobile Home Park Purchase Agreement(3)
10.4 Royal Bank of Canada Offer to Finance(3)
10.5 Consulting Agreement between SSA Coupon Ltd. and William Frederic Murray dated September 24, 1998
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ----------------------------------------------------------------------------------------------------------
<S> <C>
10.6 Modification of Consulting Agreement between SSA Coupon Ltd. and William Frederic Murray dated
February 23, 2000
10.7 Consulting Agreement between SSA Coupon Ltd. and Maurice Simpson dated September 24, 1998
10.8 Consulting Agreement between SSA Coupon Ltd. and Dana Shaw dated September 24, 1998
10.9 Consulting Agreement between Forest Glade International Inc. and Ted Kozub dated November 5, 1999
10.10 Management Services Agreement between FetchOmatic Global Internet Inc. and T. Kozub Enterprises Ltd.
10.11 Data License Agreement between SSA Coupon Ltd. and Acxiom Corporation dated October 29, 1999
10.12 Media Agreement between Forest Glade International Inc. and Sivla, Inc. dated March 30, 2000(1)
10.13 Agreement between Lawrence Adams Ltd, Northern Business Consultants Ltd., and Forest Glade
International Inc. dated December 17, 1999
10.14 Agreement between Forest Glade Properties Inc., Gil Rahier Holdings Ltd., Gilbert Rahier and
Marjorie Rahier for the purchase of shares of 514592 B.C. Ltd. dated August 25, 1999
10.15 Consulting Agreement between Forest Glade International and OTC Live, Inc., dated May 25, 2000
21 Subsidiaries of the Registrant(2)
23.1 Consent of BDO Dunwoody LLP**
23.2 Consent of Camhy, Karlinsky & Stein LLP (included in Exhibit 5.1)
24 Power of Attorney**
27 Financial Data Schedule(1)
</TABLE>
- ------------------
(1) Incorporated by reference from our Quarterly Report on Form 10QSB as filed
with the Securities and Exchange Commission on June 19, 2000.
(2) Incorporated by reference from our Form 10-SB as filed with the Securities
and Exchange Commission on December 9, 1998.
(3) Incorporated by reference from our Form 10-SB/A as filed with the
Securities and Exchange Commission on March 1, 1999.
(4) Incorporated by reference from our Current Report on Form 8-K as filed
with the Securities and Exchange Commission on May 23, 2000.
(5) Incorporated by reference from our Current Report on Form 8-K as filed
with the Securities and Exchange Commission on September 13, 1999.
** Filed Herewith.
ITEM 28. UNDERTAKINGS
The Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
prospectus required by section 10(a)(3) of the Securities Act, any material
information with respect to the plan of distribution not previously
disclosed in this registration statement or any fundamental change to the
information in this registration statement.
2. That for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-2
<PAGE>
3. To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the
termination of the offering.
4. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the Registrant's certificate of
incorporation, indemnification agreement, insurance or otherwise, the
Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant 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
Registrant 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 and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL
OF THE REQUIREMENTS FOR FILING ON FORM SB-2 AND HAS DULY AUTHORIZED THIS
REGISTRATION STATEMENT OR AMENDMENT THERETO TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PRINCE GEORGE, ON
JULY 26, 2000.
FETCHOMATIC GLOBAL INTERNET INC.
By: /s/ WAYNE F. LOFTUS
---------------------------------
Wayne F. Loftus
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
under the heading "Signature" constitutes and appoints Wayne F. Loftus as his
true and lawful attorney-in-fact and agent for him and in his name, place and
stead, in any and all capacities to sign this, and any or all amendments to
this, Registration Statement on Form SB-2, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, each acting alone, 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 for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or their substitute or substitutes, 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 BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------- -------------------
<S> <C> <C>
/s/ WAYNE F. LOFTUS Chief Executive Officer, President and July 26, 2000
- ------------------------------------------ Director
Wayne F. Loftus
/s/ TED KOZUB Chief Financial Officer and Director July 26, 2000
- ------------------------------------------
Ted Kozub
/s/ FRANK A. DENIS Vice President and Director July 26, 2000
- ------------------------------------------
Frank A. Denis
/s/ GIL RAHIER Secretary, Treasurer and Director July 26, 2000
- ------------------------------------------
Gil Rahier
/s/ MICHAEL JENKS Director July 26, 2000
- ------------------------------------------
Michael Jenks
/s/ MAURICE SIMPSON Director July 26, 2000
- ------------------------------------------
Maurice Simpson
/s/ LINDSAY LENT Director July 26, 2000
- ------------------------------------------
Lindsay Lent
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
2.1 Agreement between Forest Glade International Inc. and SSA Coupon Ltd., dated as
of July 23, 1999(5)
2.2 Share Exchange Agreement among Forest Glade International Inc., Maurice
Simpson, Dana Herbert Shaw, William Fredric Murray and Denis Brovarone, dated
as of September 29, 1999.
3.1 Articles of Incorporation of Forest Glade International Inc.(2)
3.2 Amended Articles of Incorporation of FetchOmatic Global Internet Inc. (to
change name)
3.3 By-laws of FetchOmatic Global Internet Inc.(2)
4.1 Convertible Debenture Agreement between FetchOmatic Global Internet Inc. and
Collinson LLC dated May 1, 2000(4)
5.1 Opinion of Camhy Karlinsky & Stein LLP, counsel for the Registrant**
10.1 Offering Sales Agency Agreement among Forest Glade International, Inc. and
Pacific Rim Investment Inc. (2)
10.2 Share Purchase Agreement dated September 30, 1998(2)
10.3 Mobile Home Park Purchase Agreement(3)
10.4 Royal Bank of Canada Offer to Finance(3)
10.5 Consulting Agreement between SSA Coupon Ltd. and William Frederic Murray dated
September 24, 1998
10.6 Modification of Consulting Agreement between SSA Coupon Ltd. and William
Frederic Murray dated February 23, 2000
10.7 Consulting Agreement between SSA Coupon Ltd. and Maurice Simpson dated
September 24, 1998
10.8 Consulting Agreement between SSA Coupon Ltd. and Dana Shaw dated September 24,
1998
10.9 Consulting Agreement between Forest Glade International Inc. and Ted Kozub
dated November 5, 1999
10.10 Management Services Agreement between FetchOmatic Global Internet Inc. and T.
Kozub Enterprises Ltd.
10.11 Data License Agreement between SSA Coupon Ltd. and Acxiom Corporation dated
October 29, 1999
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.12 Media Agreement between Forest Glade International Inc. and Sivla, Inc. dated
March 30, 2000(1)
10.13 Agreement between Lawrence Adams Ltd, Northern Business Consultants Ltd., and
Forest Glade International Inc. dated December 17, 1999
10.14 Agreement between Forest Glade Properties Inc., Gil Rahier Holdings Ltd.,
Gilbert Rahier and Marjorie Rahier for the purchase of shares of 514592 B.C.
Ltd. dated August 25, 1999
10.15 Consulting Agreement between Forest Glade International and OTC Live, Inc.,
dated May 25, 2000
21 Subsidiaries of the Registrant(2)
23.1 Consent of BDO Dunwoody LLP**
23.2 Consent of Camhy, Karlinsky & Stein LLP (included in Exhibit 5.1)
24 Power of Attorney**
27 Financial Data Schedule(1)
</TABLE>
(1) Incorporated by reference from our Quarterly Report on Form 10QSB as
filed with the Securities and Exchange Commission on June 19, 2000.
(2) Incorporated by reference from our Form 10-SB as filed with the
Securities and Exchange Commission on December 9, 1998.
(3) Incorporated by reference from our Form 10-SB/A as filed with the
Securities and Exchange Commission on March 1, 1999.
(4) Incorporated by reference from our Current Report on Form 8-K as filed
with the Securities and Exchange Commission on May 23, 2000.
(5) Incorporated by reference from our Current Report on Form 8-K as filed
with the Securities and Exchange Commission on September 13, 1999.
** Filed Herewith.
