<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A-1
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999
-----------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to_____________
Commission file number 0-27675
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NetMeasure Technology Inc.
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(Name of small business issuer in its charter)
Nevada 86-0914695
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
370-1122 Mainland Street,
Vancouver, British Columbia V6B 5L1
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(604) 669-2255
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None.
------------
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001
- ------------------------------
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past twelve (12) months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past ninety (90)
days.
Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
The issuer's revenues for its most recent fiscal year were $15,227.
<PAGE> 2
The aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of
a specified date within the past 60 days was -0- since there was no established
trading market.
APPLICABLE ONLY TO CORPORATE REGISTRANTS
The number of shares outstanding of the issuer's common stock, as of March 31,
2000 was 15,194,800. In addition, the company has commitments to issue an
additional 965,000 shares through its 1999 Stock Award Program and 250,000
shares for financing received.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Transitional Small Business Disclosure Format: Yes ; No X
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
NetMeasure Technology Inc. ("NetMeasure"), formerly, Powertech, Inc.
("Powertech"), was incorporated under the laws of the State of Nevada on May 4,
1998 with no specific business plan other than to merge with or to acquire an
unspecified company. The company neither owned nor leased any real or personal
property, and had no specific business plan other than to engage in a merger or
acquisition with an unidentified company. On February 12, 1999, NetMeasure
purchased all the issued and outstanding shares of NetMeasure Technology
(Canada) Inc. ("NetMeasure (Canada)"), formerly NetSentry Technology, Inc.
NetMeasure is a development stage company that intends to develop and exploit
technologies to improve the efficiency, reliability and recoverability of the
private (intranets or corporate) networks and public (internet) networks that
use Internet protocol ("IP") to transfer data within and between these networks.
NetMeasure will either produce the products using its technologies or license
others to do so. IP is the most widely used data communications protocol or
"common language" for networks that make up the Internet; it allows different
types of networks based on various types of protocols to be able to communicate
with each other. Unless the context otherwise indicates or requires, NetMeasure
and NetMeasure (Canada), its wholly-owned subsidiary, are referred to in this
annual report as the "Company."
Currently, the Company's activities are devoted primarily to product development
of its proposed products (which are briefly described under "Plan of Operation"
in Part II, Item 6). It contemplates that its first product, ProbeNET, will be
"feature complete" and launched during the second quarter of 2000. Other efforts
are devoted by management to product development, direction and strategy, market
research, marketing and sales channel strategy, prospective customer
discussions, sales channel negotiations and discussions, financing discussions,
and general and administrative matters.
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NETMEASURE TECHNOLOGY (CANADA) INC.
Pursuant to a Share Purchase Agreement dated for reference January 11, 1999, as
amended by agreement dated January 29, 1999, NetMeasure acquired from Randy
Voldeng and Dragos Ruiu all of the issued and outstanding shares of NetMeasure
(Canada) in consideration of $115,000*, payable by the issuance of 2,442,500
shares to each of them, or an aggregate of 4,885,000 shares, plus an additional
aggregate of 1,000,000 shares from three (3) persons then serving as directors
of NetMeasure, and NetMeasure's having available funds of $1,012,500. NetMeasure
(Canada) was a start-up company with a business plan to engage in the business
of Internet software and hardware development. NetMeasure, which had about
sixty-five (65) shareholders, was seeking a merger, and NetMeasure (Canada),
whose two (2) founders were its sole shareholders, was seeking funding. The
transaction closed on February 12, 1999 after the requisite funds were obtained.
On that date, Mr. Voldeng and Mr. Ruiu each entered into Non-Competition
Agreements with NetMeasure (Canada) as a condition of closing. The agreements
have not been assigned to NetMeasure Technology Inc., as management deemed it
was not required, as NetMeasure Technology Inc.'s only operating company is
NetMeasure Technology (Canada) Inc., its wholly owned subsidiary. The Company
believes the Non-Competition Agreements are enforceable. Prior to the
transaction, there was no relationship between the companies or their
shareholders. The terms of the transaction were negotiated on an arm's-length
basis; no fairness opinion, appraisal or report was obtained. Mr. Ruiu was
removed as an officer and director, without cause, in November 1999, and has not
had an operating role with the Company since early September 1999. Mr. Ruiu has
not participated in the development of the Company's current
products-under-development and his departure will not negatively impact the
Company.
NetMeasure (Canada) was incorporated under the Company Act of British Columbia
on May 22, 1998 to develop and exploit technologies that improve the efficiency,
reliability and recoverability of the private (intranets or corporate) networks
and public (internet) networks that use the Internet Protocol ("IP") to transfer
data in and between these networks. It was (and still is) a development stage
company that had (and has) not earned any revenues and that required (and
requires) substantial financing to develop and market its technologies.
NetMeasure (Canada)'s business will focus on the development and marketing of
software products that help telecommunications companies and Internet service
providers, national and regional network operators and large corporations
increase the efficiency, reliability and recoverability of their network
infrastructures.
Some of the most common problems faced by network managers relate to the
efficiency of routing, the way that network equipment using the IP protocol
assigns paths that pieces of information take to reach their network destination
in the quickest way, and the way address resources, how source and destination
network addresses are assigned, are distributed throughout IP networks. Routing
and addressing needs are increasing and becoming more complex as traffic
increases, and not surprisingly, there is a corresponding increase in new
network-associated problems.
NetMeasure (Canada) will address the needs of network professionals by providing
them with customizable software tools that will measure and monitor network
conditions throughout their networks, alert them to the locations of specific
network problems and conditions and potentially help them identify future
trouble spots.
- --------
* All dollar amounts in this annual report, including financial statements, are
US Dollars unless otherwise indicated.
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MARKETING AND DISTRIBUTION OF NEW PRODUCTS
NetMeasure (Canada) and Hewlett Packard Network Test Division ("HP"), now known
as Agilent Technologies, Inc. ("Agilent") executed a Memorandum of
Understanding, dated May 15, 1998, with respect to a marketing and distribution
structure for NetMeasure (Canada)'s ProbeNET distributed measurement software,
providing for a period of twenty-four (24) months beginning with the product
release date, which is expected to occur in the second quarter of 2000. The
Memorandum of Understanding was entered into by NetMeasure (Canada) before it
was formally incorporated. The Memorandum of Understanding is not a formal
contract but an expression of interest by Agilent to enter into an agreement
with the Company, provided the product meets the needs of its target customers.
Should the parties enter into an agreement, it would be subject to mutually
agreed annual renewal terms and require the Company to sell the ProbeNET
software to HP at a discount up to fifty percent (50%) from the net selling
price. Agilent would then market and distribute the Company's product under
either its own or the Company's label or badge. The Company also may market and
distribute its products directly or arrange for others to do so. Revenues may
also be generated through licensing the Company's products to others. The
Company does not expect to be dependent upon Agilent or a few major customers
or suppliers.
As networks and the Internet have grown, they have also created more headaches
for network managers. IP routing and address resources are distributed
throughout IP Networks, as are their associated problems. ProbeNET is used to
identify, monitor and take action on events, conditions and traffic that happen
at different times and places within the network, but also negatively impact
network performance.
ProbeNET is a software package that is "distributed" in the sense that it can
function with several ProbeNET "agents" installed throughout the network in a
distributed fashion in order to collect and measure network performance from
various points in the network. ProbeNET is a problem-solving tool for network
professionals who need to get more visibility of which problems are occurring in
remote parts of their networks. ProbeNET uses a distributed architecture of
"agents" installed throughout the network to capture and analyze any type of
data, anywhere and anytime on the network. (Other products under development are
described briefly under "Plan of Operation" in Part II, Item 6.)
COMPETITION
ProbeNET is a technology that enables the network professional to make a network
related measurement in a fast and efficient manner; it differentiates itself
from other measurement tools by combining data intelligently collected from
distributed measurement points on the network in a meaningful way by means of an
intuitive reporting mechanism and user interface. It also is a highly
customizable tool that uses a deployed or distributed architecture of "agents"
installed throughout the network to capture and analyze any type of data,
anywhere and anytime on the network. It also enables network managers to specify
new measurement needs and to rapidly obtain a usable measurement that can then
be run by the ProbeNET program.
There are vendors providing measurements for specific applications, such as IP
billing, network performance, service level agreements and policy management,
but the Company's management is not aware of any commercially available,
comprehensive test tools similar to ProbeNET, for its intended use. Products
offering specific applications similar to those incorporated in ProbeNET are
available from such competitors as NFR, Narrus, Saville, Xacct, Network
Associates, Cisco and others.
In general, however, the development of Internet software and hardware is
intensely competitive. The Company competes with numerous other companies,
including several major manufacturers and distributors. Some of the Company's
competitors have greater financial and other resources than the Company.
Consequently, such entities may begin to develop, manufacture, market and
distribute
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In general, however, the development of Internet software and hardware is
intensely competitive. The Company competes with numerous other companies,
including several major manufacturers and distributors. Some of the Company's
competitors have greater financial and other resources than the Company.
Consequently, such entities may begin to develop, manufacture, market and
distribute Internet software and hardware that is substantially similar or
superior to the Company's products. There is no assurance that the Company will
be able to develop and sell products that have a competitive advantage in the
market.
GOVERNMENT SUPERVISION AND REGULATION
The phenomenal growth of the Internet indicates a fundamental change in the way
people and organizations interact. Electronic connectivity, once solely the
realm of larger corporate business systems, is now impacting every business
segment in the worldwide economy and all consumers in the form of the Internet.
Voice, fax, e-commerce and video now converge on the Internet. However, although
the government is closely monitoring the development of this new communications
infrastructure, especially to ensure there is fair competition, the Internet is
largely unregulated.
RESEARCH & DEVELOPMENT
The Company estimates spending approximately $1 million on product development
during fiscal 2000, including $175,000 in expected support funding which is
being applied for from Technology BC, a British Columbia provincial government
funding program for joint development activities between the Company and
Advanced Technology Group of the British Columbia Institute of Technology.
The Advanced Technology Group of the British Columbia Institute for Technology
has received funding on many occasions for collaborative projects with industry
partners. Based upon their past experience, the Group has advised the registrant
that is confident that the proposed project, which the Group supports, would
qualify for funding. The registrant is currently working with the Group to
complete the funding application. However, should the funding application not be
successful, or should the Company not secure the funds to fulfill its part, it
would not significantly impact the Company's economic viability as the funds are
intended to be used for prototyping a second product (code named "TestBot") and
not the Company's flagship product ("ProbeNet"), which is currently under
development.
The most significant part of the Company's activities since the closing of the
Share Purchase Agreement with NetMeasure (Canada) in February 1999 has been
product development activities. Research and development activities ordinarily
are not, but may be, paid for by customers.
INTELLECTUAL PROPERTY
The Company believes that the software and hardware technology products it
develops are proprietary in nature, but generally does not intend to seek patent
protection. Rather, the Company intends to protect its intellectual property
through a combination of trade secret laws, non-disclosure agreements and
similar means.
EMPLOYEES
As of January 1, 2000, the Company employed nine (9) full-time employees,
including programmers, technicians and others. The Company considers relations
with employees to be good. Messrs. Voldeng and Plato, officers and directors,
devote their full time to the business of the Company.
5
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FORWARD-LOOKING STATEMENTS.
The information in this annual report contains forward-looking statements,
including statements of management's belief or expectation, within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such statements are subject to known and unknown risks and
uncertainties that could cause actual future results and developments to differ
materially from those projected or suggested in the forward-looking statements.
Such risks and uncertainties are set forth under "Part I, Item 1., Description
of Business", "Part II, Item 6., Management's Discussion and Analysis or Plan of
Operation" and elsewhere in this annual report.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company subleases office space of approximately 2,300 square feet for its
executive offices and primary operating facility from an unrelated entity for
monthly rent of Cdn $4,600 (US $3,172) on a lease expiring on May 14, 2001, with
an option to extend the lease for two (2) years and to increase the space by
1,000 square feet. The Company also leases approximately 750 feet for its main
test lab and network infrastructure facility in an adjacent building for monthly
rent of Cdn $442 (US $305) on a lease expiring on June 15, 2001, with an option
to extend the lease for two (2) years. In the opinion of management, these
properties are adequate and suitable for the Company's use for the foreseeable
future. Until November 1999, the Company maintained, at no cost, a test lab at
the home of Mr. Ruiu in Vancouver and a remote test site at an apartment of Mr.
Ruiu in Edmonton, Alberta.
ITEM 3. LEGAL PROCEEDINGS.
There are no material legal proceedings pending to which the Company is a party
or to which any of its property is the subject.
On January 13, 1999, the SEC announced the temporary, ten (10) day suspension,
pursuant to Section 12(k) of the Securities Exchange Act of 1934, of over the
counter trading of the securities of Powertech, commencing at 9:30 a.m. on
January 14, 1999 and terminating at 11:59 p.m. on January 28, 1999, because of
questions raised about the accuracy and adequacy of publicly disseminated
information concerning, among other things, contracts entered into by the
issuer.
The SEC also is conducting a private investigation involving the Company
pursuant to a formal order entered on January 26, 1999, styled In the Matter of
PTC Group, Inc. (NY-6515). To the registrant's knowledge, the investigation is
continuing.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None/Not Applicable.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Shares. The shares of common stock were quoted and traded on the OTC Bulletin
Board for two (2) days, from January 11, 1999 until the temporary, ten (10) day
trading suspension by the Securities and Exchange Commission ("SEC") on January
13, 1999 and, to the knowledge of the Company, trading has not resumed although
the trading suspension no longer is in effect.
6
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Dividends. The Company has not declared any dividends since inception and does
not intend to declare or pay any cash dividends in the foreseeable future.
Rather, any net earnings shall be used for working capital and other corporate
purposes.
Holders. As of March 31, 2000, there were approximately thirty (30)
holders of record of the Company's shares.
Recent sales of unregistered securities since January 1, 1999:
On February 3 and 4, 1999, 809,800 shares were issued without registration at
$1.25 per share, or an aggregate consideration of $979,003 (net of issue costs
$33,247), to two accredited investors outside the United States, in reliance
upon the exemption provided by Rule 903 of Regulation S. There were no
underwriters involved.
On February 12, 1999, Powertech acquired from Randy Voldeng and Dragos Ruiu,
citizens of Canada and residents of British Columbia, all of the issued and
outstanding shares of NETSentry in consideration of $115,000 payable by the
issuance of 2,442,500 shares to each of them, or an aggregate of 4,885,000
shares, without registration, in reliance upon the exemptions afforded by
Section 4(2) and Rule 903 of Regulation S. There were no underwriters involved.
Messrs. Voldeng and Ruiu had acquired their shares of NetMeasure (Canada) for no
cash consideration upon its organization in May 1998.
There were two separate transactions in which the registrant committed to issue
a total of 125,000 shares without registration at $2.00 per share, or an
aggregate of $250,000 to each of two accredited investors outside the United
States, in reliance upon Rule 903 of Regulation S, on January 11, 2000 and March
1, 2000, two year warrants for a total of 125,000 shares at an exercise price of
$2.50 per share, also were issued to each investor. No underwriters were
involved.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The independent auditors' report comments that the Company's having no
established source of revenue and its being dependent on its ability to raise
substantial amounts of equity funds raise substantial doubt about the Company's
ability to continue as a going concern. The technologies the Company intends to
develop will require significant cash. The ability of the Company to develop the
technologies into marketable products is dependent on management's ability to
obtain adequate additional financing, develop commercially saleable products and
achieve profitable operation. There can be no assurance that any of these
objectives will be realized.
PLAN OF OPERATION
The Company has not had revenues from operations since inception. With the
acquisition of NetMeasure (Canada), NetMeasure's plan of operation contemplates
utilizing the $1.2 million additional financing to be obtained in an on-going
private offering during the next six (6) months for the continued development of
its technologies in order to achieve profitable operations. Management currently
is actively seeking this funding. Approximately, $500,000 has already been
obtained for operations through the end of April 2000, when customer field
trials of ProbeNET are expected to be completed and ProbeNET is launched. The
Company expects to begin generating revenues by the second quarter of 2000. The
Company presently has no contingency plan in the event it does not obtain all
the additional financing, although it is cautiously optimistic that it will do
so, provided a trading market is established for the registrant's shares in the
immediate future. A merger or the sale of technologies likely would result if
the Company is unsuccessful in obtaining financing.
Attracting additional members to a team of highly skilled experienced technical
professionals, including programmers and marketing engineers, also is
contemplated. The Company expects to pay compensation of Cdn $100,000 (US
$69,000) to Mr. Voldeng and Cdn $100,000 (US $69,000) to Jeff Plato during
fiscal 2000. The Company also has lease obligations aggregating about $42,000 in
fiscal 2000. The Company expects to meet the compensation and lease commitments,
as well as other financial obligations, through funds obtained from private
offerings if sufficient funds are not generated from operations.
With the additional financing and staff, the Company expects to continue
development of and to launch ProbeNET and other innovative products during the
next several years, including:
-ProbeNET Version 2 - will include an architecture for consultants and
customers to develop their own customized measurements and will include
more data exchange between the distributed ProbeNET software "agents" in
the network, to provide more detailed network performance measurement;
estimated release in the third quarter of 2000.
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-TestBOT -is a handheld portable network tester designed for use by
system and network administration professionals. It is envisioned with a
processor speed of 270 MIPS (millions of instructions per second), 32MB
(megabytes of random access memory) 100 base T (network jack interface
type and speed, which is 100 megabits per second), handheld,
battery-operated console and test tool about the size and weight of a
35mm camera.
There can be no assurance that any of the products under development will be
successfully developed or will be commercially successful.
Comparison of fiscal years ended December 31, 1998 and December 31, 1999.
During the fiscal year ending December 31, 1998, the Company had no revenues and
incurred a net loss of $226,390. The Company's activities during this period of
time were related to securing initial seed financing and seeking an appropriate
acquisition. Most of the expenses in 1998 were consulting expenses of $186,688,
which were related to these activities.
During the fiscal year ending December 31, 1999, the Company had revenues of
$15,227 and incurred a net loss of $1,132,851. The Company's primary activities
during 1999 were related to business operations, i.e. product specification and
development. Most of the expenses in 1999 were related to management and
employee compensation of $810,818, including salaries, benefits, consulting fees
and non-cash compensation. The non-cash compensation component was $387,665,
which was the value of the current portion of the cash awards.
YEAR 2000/Y2K ISSUES
Because many computer and computer applications define date by the last two
digits of the year, "00" may not be properly identified as the year 2000. This
error could have resulted in miscalculations or systems failure in computer
systems, network elements, software applications and other business systems that
have time-sensitive programs.
The Company has been unaffected by the Year 2000/Y2K issues and management does
not believe there will be any Year 2000/Y2K issues in the future that will
impact its operations.
ITEM 7. FINANCIAL STATEMENTS.
The following financial statements are included in this annual report:
(a) Independent Auditors' Report on the Consolidated Financial Statements
(b) Consolidated Balance Sheet at December 31, 1998 and 1999
(c) Consolidated Statements of Operations for the year ended December 31, 1999
and for the period from Inception to December 31, 1999
(d) Consolidated Statements of Cash Flows for the year ended December 31,
1999 and for the period from Inception to December 31, 1999
(e) Consolidated Statements of Stockholders Equity from the Date of
Inception to December 31, 1999
(f) Notes to the Consolidated Financial Statements
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NETMEASURE TECHNOLOGY INC.
(FORMERLY POWERTECH, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED
FINANCIAL STATEMENTS
(EXPRESSED IN U.S. DOLLARS)
DECEMBER 31, 1999
9
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CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report on the Consolidated Financial Statements 1
Consolidated Balance Sheet 2
Consolidated Statement of Operations 3
Consolidated Statement of Cash Flows 4
Consolidated Statement of Shareholders Equity 5
Notes to the Consolidated Financial Statements 6-12
</TABLE>
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INDEPENDENT AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
To the Shareholders of
NetMeasure Technology Inc.
We have audited the consolidated balance sheet of NetMeasure Technology Inc.
(formerly Powertech, Inc.) as at December 31, 1999 and the consolidated
statements of operations, cash flows and stockholders equity for the year then
ended. 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 generally accepted auditing standards
in Canada, which are in substantial agreement with those in the United States of
America. 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 consolidated financial statements present fairly, in all
material respects, the financial position of NetMeasure Technology Inc. as at
December 31, 1999 and the results of its operations and its cash flows for the
year then ended in accordance with generally accepted accounting principles in
the United States of America.
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 no established source of revenue and is dependent on
its ability to raise substantial amounts of equity funds. This raises
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
The financial statements as at December 31, 1998 and for the period from
inception to December 31, 1998 were audited by a firm of certified public
accountants who expressed an opinion on those statements in their report dated
October 5, 1999 which included an emphasis paragraph with respect to issues
raising substantial doubt about the company's ability to continue as a going
concern.
"DAVIDSON & COMPANY"
Vancouver, Canada
March 20, 2000 Chartered Accountants
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NETMEASURE TECHNOLOGY INC.
(FORMERLY POWERTECH, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
December 31 1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current
Cash $ 114,422 $ -
Prepaids 6,495 -
Receivables 22,163 -
Stock subscription receivable - 54,688
------------ ------------
143,080 54,688
Due from company controlled by a shareholder (Note 3) 17,208 -
Capital assets (Note 4) 138,441 -
Goodwill (net of amortization of $44,367; 1998: $Nil)
(Note 5) 197,635 -
------------ ------------
$ 496,364 $ 54,688
------------ ------------
- -------------------------------------------------------------------------------------
Liabilities
Current
Accounts payable and accruals (Note 7) $ 457,320 $ 14,452
------------ ------------
Shareholders' Equity
Capital stock (Note 8) 15,195 9,500
Authorized:
100,000,000 $0.001 par value common shares
Issued:
15,194,800 shares (1998: 9,500,000)
Additional paid-in capital 1,383,090 257,126
Deficit (1,359,241) (226,390)
------------ ------------
39,044 40,236
------------ ------------
$ 496,364 $ 54,688
------------ ------------
- -------------------------------------------------------------------------------------
</TABLE>
Commitments (Note 11)
Contingencies (Note 12)
See accompanying notes to the consolidated financial statements.
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NETMEASURE TECHNOLOGY INC.
(FORMERLY POWERTECH, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the For the For the
Period from Year Period from
Inception to Ended Inception to
December 31 December 31 December 31
1999 1999 1998
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
Interest $ 15,227 $ 15,227 $ -
------------ ------------ ------------
Expenses
Marketing
Advertising 1,497 1,497 -
Consulting fees 49,442 49,442 -
Salaries and benefits 53,076 53,076 -
Travel 16,330 16,330 -
------------ ------------ ------------
120,345 120,345 -
------------ ------------ ------------
Product development
Consulting fees 54,907 54,907 -
Salaries and benefits 179,132 179,132 -
Travel 5,832 5,832 -
------------ ------------ ------------
239,871 239,871 -
------------ ------------ ------------
General and administrative
Bank charges 474 474 -
Communication 21,242 18,492 2,750
Computer and office supplies 74,528 45,041 29,487
Consulting fees 195,688 9,000 186,688
Depreciation and amortization 70,359 70,359 -
Employee relocation 9,080 9,080 -
Professional fees 137,961 132,496 5,465
Rent 28,246 28,246 -
Salaries and benefits 77,096 77,096 -
Stock award compensation (Note 8) 387,665 387,665 -
Travel 11,913 9,913 2,000
------------ ------------ ------------
1,014,252 787,862 226,390
------------ ------------ ------------
Total expenses 1,374,468 1,148,078 226,390
------------ ------------ ------------
Net loss $ (1,359,241) $ (1,132,851) $ (226,390)
------------ ------------ ------------
Weighted average number of shares
outstanding 14,570,641 2,995,436
------------ ------------
Loss per share - basic and diluted $ (0.08) $ (0.08)
------------ ------------
- -------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 14
NETMEASURE TECHNOLOGY INC.
(FORMERLY POWERTECH, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
For the For the For the
Period from Year Period from
Inception to Ended Inception to
December 31 December 31 December 31
1999 1999 1998
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash derived from (applied to)
OPERATING
Net loss $ (1,359,241) $ (1,132,851) $ (226,390)
Depreciation and amortization 70,359 70,359 -
Stock award compensation expense 387,665 387,665 -
Shares issued for services
rendered 111,938 - 111,938
Change in non-cash operating
working capital
Prepaids (6,495) (6,495) -
Receivables (3,854) (3,854) -
Accounts payable and accruals 31,764 19,153 12,611
------------ ------------ ------------
(767,864) (666,023) (101,841)
------------ ------------ ------------
FINANCING
Bank overdraft - (1,841) 1,841
Shares issued for cash 1,079,003 979,003 100,000
Share subscriptions received 54,688 54,688 -
Cash assumed on acquisition of
subsidiary 34,113 34,113 -
Payment of promissory notes payable
by subsidiary company (Note 6) (127,373) (127,373) -
------------ ------------ ------------
1,040,431 938,590 101,841
------------ ------------ ------------
INVESTING
Capital assets (140,937) (140,937) -
Advances to company controlled
by a shareholder (17,208) (17,208) -
------------ ------------ ------------
(158,145) (158,145) -
------------ ------------ ------------
Net increase in cash 114,422 114,422 -
Cash
Beginning of period - - -
------------ ------------ ------------
End of period $ 114,422 $ 114,422 $ Nil
------------ ------------ ------------
- -------------------------------------------------------------------------------------
NON-CASH ITEMS NOT INCLUDED IN CASH FLOWS:
Stock award compensation expense $ 387,665 $ 387,665 $ -
Shares issued for subscription
receivable $ - $ - $ 54,688
Shares issued for services $ 111,938 $ - $ 111,938
Shares issued to acquire subsidiary $ 152,656 $ 152,656 $ -
Supplemental cash
flow
information
Taxes paid $ - $ - $ -
Interest paid $ - $ - $ -
- -------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
14
<PAGE> 15
NETMEASURE TECHNOLOGY INC.
(FORMERLY POWERTECH, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(expressed in U.S. dollars)
From the Date of Incorporation to December 31, 1999
<TABLE>
<CAPTION>
Common Shares
----------------------
Additional
Paid-in
<S> <C> <C> <C> <C> <C>
Common stock issued to
officers for services
rendered 1,000,000 $ 1,000 $ - $ - $ 1,000
Common stock issued by
offering at $.03125 per
share 4,950,000 4,950 149,738 - 154,688
Common stock issued by
offering at $.03125 per
share for services
rendered 3,550,000 3,550 107,388 - 110,938
Net loss for the period
from inception to
December 31, 1998 - - - (226,390) (226,390)
---------- ---------- ----------- -------------- -------------
Balance, December 31,
1998 9,500,000 9,500 257,126 (226,390) 40,236
Common stock issued
for cash, net of issue
costs of $33,247 809,800 810 978,193 - 979,003
Common stock issued at
$.03125 per share on
acquisition of
NETSentry Technology
Inc. (Note 5) 4,885,000 4,885 147,771 - 152,656
Net loss for the year ended
December 31, 1999 (1,132,851) (1,132,851)
---------- ---------- ----------- -------------- -------------
Balance, December
31,
1999 15,194,800 $ 15,195 $ 1,383,090 $ (1,359,241) $ 39,044
---------- ---------- ----------- -------------- -------------
- ----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
15
<PAGE> 16
NETMEASURE TECHNOLOGY INC.
(FORMERLY POWERTECH, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(expressed in U.S. dollars)
December 31, 1999
1. OPERATIONS AND GOING CONCERN
The company was incorporated as Powertech, Inc. under the laws of the State of
Nevada on May 4, 1998 to engage in the business of internet software and
hardware development. On January 4, 2000, the company changed its name to
NetMeasure Technology Inc.
On February 12, 1999, the company acquired all the issued and outstanding common
shares of NetMeasure Technology (Canada) Inc. (formerly NETSentry Technology
Inc.), a Vancouver, Canada based company in business to develop and exploit
technologies that improve the efficiency, reliability and recoverability of
internet protocol networks.
The company has commenced its planned principal operations through its newly
acquired subsidiary, however, it has not yet earned any revenue. The company
intends to release its first product (code named ProbeNET) commercially during
the second quarter of 2000. Management has been successful in obtaining the
required funding to launch the product commercially and intends to obtain
additional equity financing to accelerate the development of its ProbeNET
technology. There is no guarantee that management will be successful in
obtaining this additional equity financing.
The company's current operational focus is to ensure that ProbeNET is able to be
commercially exploited. To that end, management is devoting substantially all of
the company's resources to the development of the technology and is negotiating
with various potential sales channel partners to support the marketing of the
technology once its development is complete.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements are presented in U.S. dollars in
accordance with accounting principles generally accepted in the United States.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
CONSOLIDATION
These financial statements include the accounts of the company and its
wholly-owned subsidiary, NetMeasure Technology (Canada) Inc. The financial
statements at December 31, 1998 and for the period then ended are not
consolidated.
16
<PAGE> 17
NETMEASURE TECHNOLOGY INC.
(FORMERLY POWERTECH, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(expressed in U.S. dollars)
December 31, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Capital assets
Capital assets are recorded at cost less accumulated depreciation. Depreciation
is recorded on the straight line method at the following rates:
<TABLE>
<CAPTION>
<S> <C>
Office equipment 20%
Computer hardware 30%
Computer software 50%,
Furniture and fixtures 20%
Leasehold improvements over the term of the lease
</TABLE>
Technology
The company capitalizes the acquisition costs of technologies where their
technological feasibility has been established. The acquisition cost of the
ProbeNET technology (Note 5) has been recorded at $Nil since it has yet to
attain technological feasibility. All costs incurred to develop this technology
are expensed as incurred.
GOODWILL
Goodwill arises from the acquisition of the operations of NetSentry and consists
of the excess of the purchase price over the estimated fair value of the net
assets acquired. Goodwill is being amortized over five years. The company
reviews the value assigned to goodwill to determine if it has been impaired by
adverse conditions affecting the company. Management is of the opinion that
there has been no diminuation in the value assigned.
Financial instruments
The company has financial instruments that include cash, receivables and
payables and amounts due from a company controlled by a shareholder. It was not
practicable to estimate the fair value of the amounts due from a company
controlled by a shareholder.
The fair value of all other financial instruments approximates their recorded
amounts.
Foreign currency translation
The company considers the U.S. dollar its functional currency.
Monetary assets and liabilities resulting from foreign currency transactions are
translated into United States dollars using the year end conversion rates.
Revenues, expenses, receipts and payments are translated throughout the year at
exchange rates prevailing at the date of the transaction. Exchange gains and
losses are included in earnings for the period.
17
<PAGE> 18
NETMEASURE TECHNOLOGY INC.
(FORMERLY POWERTECH, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(expressed in U.S. dollars)
December 31, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
STATEMENT OF CASH FLOWS
For the purpose of the statement of cash flows, the company considers cash on
hand and balances with banks, net of overdrafts, and highly liquid temporary
money market instruments with original maturities of three months or less as
cash or cash equivalents.
Stock awards
The company uses the intrinsic value method to account for employee stock
awards. The company records compensation expense for non-vested common stock
awards ratably over the vesting period.
Deferred income taxes
Deferred income taxes are provided for significant carryforwards and temporary
differences between the tax basis of an asset or liability and its reported
amount in the financial statements that will result in taxable or deductible
amounts in future periods. Deferred tax assets or liabilities are determined by
applying presently enacted tax rates and laws.
A valuation allowance is required when it is more likely than not that some
portion or all of the deferred tax asset will not be realized.
3. DUE FROM COMPANY CONTROLLED BY A SHAREHOLDER
Advances to this related party are due on demand, bear no interest and are
unsecured.
<TABLE>
<CAPTION>
4. CAPITAL ASSETS 1999 1998
---- ----
Accumulated Net Net
Cost Depreciation Book Value Book Value
---- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Computer hardware
and software $ 129,151 $ 21,764 $ 107,387 $ -
Office equipment 13,585 1,370 12,215 -
Furniture and
fixtures 8,299 836 7,463 -
Leasehold
improvements 13,742 2,366 11,376 -
----------- --------------- --------------- --------------
$ 164,777 $ 26,336 $ 138,441 $ Nil
----------- --------------- --------------- --------------
</TABLE>
18
<PAGE> 19
NETMEASURE TECHNOLOGY INC.
(FORMERLY POWERTECH, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(expressed in U.S. dollars)
December 31, 1999
5. ACQUISITION
On February 12, 1999, the company acquired all the issued and outstanding shares
of NETSentry Technology Inc. from unrelated parties for 4,885,000 shares. This
acquisition was accounted for by the purchase method with the company being the
acquirer.
The net assets acquired were recorded at their net book value which approximated
their fair values except for the in-process technology acquired which was not
recognized in these financial statements as it has not yet reached technological
feasibility. The stock issued in this transaction was recorded at an estimate of
its fair market value at the time that the acquisition agreement was negotiated.
The results of operations of NETSentry Technology Inc. have been included in
these consolidated financial statements from the date of acquisition.
<TABLE>
<CAPTION>
<S> <C>
Assets acquired
Cash $ 34,113
Receivables 18,309
Capital assets 23,496
Goodwill 242,002
-------------
317,920
Liabilities assumed
Payables and accruals 37,891
Advances from Powertech, Inc. to repay
promissory notes payable by NETSentry 127,373
-------------
Net assets acquired $ 152,656
-------------
Purchase price consisted of:
4,885,000 of the company's common shares
at $.03125 per share $ 152,656
-------------
</TABLE>
6. TECHNOLOGY
By an agreement dated December 23, 1998, the company's subsidiary purchased from
one of its shareholders for nominal consideration, all world-wide rights, title
and interest in the Internet technology known as ProbeNET.
The company plans to launch its first product during the second quarter of 2000.
Although this first product will be code named ProbeNET, the underlying
technology has been newly invented and is different than what was acquired.
The company plans to market its first product through its own Internet site as
well as numerous international distributors. In addition, the company has a
Memorandum of Understanding ("MOU") with a large multinational, whereby, should
the parties decide to formalize the agreement, the company would also sell the
ProbeNET software through the multinational at a negotiated 50% discount from
its net selling price.
19
<PAGE> 20
NETMEASURE TECHNOLOGY INC.
(FORMERLY POWERTECH, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(expressed in U.S. dollars)
December 31, 1999
<TABLE>
<CAPTION>
7. ACCOUNTS PAYABLE AND ACCRUALS 1999 1998
---- ----
<S> <C> <C>
Bank overdraft $ - $ 1,841
Accounts payable 50,399 8,611
Accruals 406,921 4,000
----------------- ----------------
$ 457,320 $ 14,452
----------------- ----------------
</TABLE>
8. CAPITAL STOCK
Restricted securities
Of the issued and outstanding shares, 5,885,000 shares are restricted
securities as defined under the Securities Act of 1933 and in the future may be
sold only in compliance with Rule 144 of the Act, pursuant to a registration
statement filed under the Act, or other applicable exemptions from registration
thereunder.
SHARES FOR SERVICES
On September 30, 1998 the Board of Directors authorized a stock issuance of
3,550,000 common shares of the company at $.03125 per share subject to
Regulation D, Rule 504 Offering Memorandum. The offering was closed on October
10, 1998. An amount of 3,550,000 common shares were issued in exchange for
services. These services were recorded at an estimate of the fair value of the
shares issued of $110,938, and were recorded as consulting expense.
1999 STOCK INCENTIVE PLAN
The company has 1,519,480 shares of common stock authorized for issuance to
eligible employees under its 1999 Stock Incentive Plan ("the Plan"). The Plan
authorizes the company to grant to eligible participants of the company and its
subsidiary, deferred stock awards.
During fiscal 1999, 965,000 shares of the company's common stock were granted as
stock awards. These shares had a fair value at the date of grant of
approximately $1,200,000. Compensation under the plan is charged to earnings
over the vesting period and amounted to $387,665 in fiscal 1999.
The shares granted under the Plan are not issued until the grantee has completed
a period of employment as required. The vesting period for these stock awards
varies between two to three years from the commencement of employment. As of
December 31, 1999, no shares have been issued under the Plan.
20
<PAGE> 21
NETMEASURE TECHNOLOGY INC.
(FORMERLY POWERTECH, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(expressed in U.S. dollars)
December 31, 1999
9. OPTION AGREEMENT
The company's subsidiary has entered into an option agreement with a company
controlled by a director and shareholder of the company. This agreement enables
this subsidiary to obtain the related rights and equipment for an Internet
Protocol Tester known as TestBOT for consideration consisting of $50,000 in cash
and 500,000 of its common shares. This option expires on September 10, 2003.
Should the option be exercised, the consideration issued under this option will
be capitalized in the event that TestBOT has attained technological feasibility.
The shares issued to exercise this option will be recorded at their fair value
based on current trading price on the date that they are issued.
10. INCOME TAXES
At December 31, 1999, the company has net operating losses carried forward of
approximately $960,000 that may be offset against future taxable income until
2006 for $660,000 and until 2014 for $300,000. The deferred tax asset arising
from these net operating losses has been reduced to $Nil by a valuation
allowance due to uncertainties regarding the utilization of the deferred assets.
11. COMMITMENTS
The company's subsidiary has obligations under premises lease agreements. The
leases provide for approximate annual commitments as follows:
<TABLE>
<CAPTION>
<S> <C>
2000 $ 41,690
2001 17,500
</TABLE>
12. SEC INVESTIGATION AND SUSPENSION OF TRADING
On January 13, 1999, the Securities and Exchange Commission (SEC) announced the
temporary ten-day suspension, pursuant to Section 12(k) of the Securities
Exchange Act of 1934, of over the counter trading of the securities of
NetMeasure, as a result of questions raised about the accuracy and adequacy of
information publicly disseminated regarding the company.
A private investigation styled "In the Matter of PTC Group, Inc." involving
NetMeasure is being conducted by the SEC pursuant to a formal order of
investigation entered by the Commission on January 26, 1999. The investigation
is continuing as of the date of this audit report.
21
<PAGE> 22
NETMEASURE TECHNOLOGY INC.
(FORMERLY POWERTECH, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(expressed in U.S. dollars)
December 31, 1999
12. SEC INVESTIGATION AND SUSPENSION OF TRADING (Continued)
The outcome of the investigation and the potential loss, if any, cannot be
reasonably determined at this time since the probability that a negative outcome
will result is currently indeterminable and the extent of any monetary loss
cannot be reasonably estimated. No amount has therefore been included in the
financial statements.
13. SUBSEQUENT EVENTS
Subsequent to year-end, the company issued 250,000 shares and 250,000 warrants
in two private placements of 125,000 shares and warrants each to private
investors for total cash consideration of $500,000.
The warrants issued allow the holders to purchase up to 250,000 additional
common shares. These warrants are exercisable at $2.50 per share. 125,000 of
these warrants expire on January 11, 2002 and 125,000 expire on March 1, 2002.
22
<PAGE> 23
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Peter Demian, CPA, Peter Demian & Co., Certified Public Accountants Clark, New
Jersey, was the principal independent accountant for Powertech as of December
31, 1998 and for the partial period of May 4, 1998 (corporate inception) to
December 31, 1998. Following the closing of the Share Purchase Agreement on
February 12, 1999, Davidson and Company, Vancouver, British Columbia, were
engaged as the principal independent accountants. The new accountants were not
consulted regarding the application of accounting principles to a specific
completed or contemplated transaction, or the type of audit opinion that might
be rendered.
The decision to change accountants was made by Mr. Voldeng, primarily because of
previous working relationships and the new accountants' physical proximity to
the registrant. The former accountant's report on the financial statements did
not contain an adverse opinion or disclaimer of opinion, and was not modified as
to uncertainty, audit scope, or accounting principles. There were no
disagreements with the former accountants on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The directors and executive officers of the Company are:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
---- --- --------------------
<S> <C> <C>
Randy Voldeng 50 Director, President and Chief Executive Officer
of NetMeasure and NetMeasure (Canada)
Jeff Plato 32 Director and Vice President of NetMeasure and
NetMeasure (Canada)
</TABLE>
Each director is elected to hold office until the next annual meeting of
stockholders and until his successor is elected or appointed and qualified. Each
officer serves at the discretion of the Board of Directors. There is no family
relationship between or among any of the directors or executive officers.
RANDY VOLDENG is a director and the President and Chief Executive Officer of
Company since 1999, and NetMeasure (Canada), since 1998. Prior to co-founding
NetMeasure (Canada) in 1998, Mr. Voldeng was the President of Hayes Voldeng
Management, Inc., since 1993. Prior to founding Hayes Voldeng Management, Inc.
in 1993, Mr. Voldeng was responsible for worldwide sales and marketing for the
IDACOM Telecom Division of Hewlett-Packard ("HP"), since May 1992. Previous to
that, he served as HP's Operations Manager, from August 1990. Before joining HP,
Mr. Voldeng was Vice-President and Chief Operating Officer of IDACOM Electronics
Ltd. of Edmonton, Alberta, from December 1998. While at IDACOM Electronics Ltd.,
he played a key role in the company's management and eventual sale to HP.
JEFF PLATO is a director and Vice President of NetMeasure and NetMeasure
(Canada), since December 1999. Mr. Plato has twelve (12) years experience
related to the management of product lines and marketing and sales in a
high-tech data communications environment.
23
<PAGE> 24
Mr. Plato has been NetMeasure (Canada)'s Product General Manager since February
1999. In 1998, he was Director of Customer Operations at Total Control Software,
a division of General Electric's GE-Fanuc subsidiary, which provides automation
software and hardware for the industrial automation industry; he was responsible
for production, quality, customer support, training, and IT for the one hundred
twenty (120) person Canadian operations. In 1997, Mr. Plato was in charge of
overall marketing responsibilities for a portfolio of test and measurement
products for the IDACOM division of HP; from 1992 to 1994, he was in charge of
worldwide sales and support for the same division. He also spent two (2) years
in Europe, where he managed business development of IDACOM products. In total,
Mr. Plato worked for IDACOM Electronics Ltd. and the IDACOM Hewlett-Packard
division for twelve (12) years, from 1985 to 1997, in various roles including
engineering, supporting, selling and marketing network measurement equipment,
including the Broadband Series protocol analyzers. Mr. Plato has a degree in
Computer Engineering.
The Company maintains "key man" life insurance for Mr. Voldeng in the amount of
Cdn $750,000 (US $517,500).
By virtue of his positions and beneficial ownership of shares, Mr. Voldeng may
be deemed a "control person" and a "parent" of the Company, within the
definition of those terms in Rule 12b-2 of the Securities Exchange Act of 1934.
By virtue of their activities in founding and organizing NetMeasure and
NetMeasure (Canada), each of Messrs. Voldeng, Ruiu, Daniel Para, David Raftery,
Daniel Hodges and Ms. Kathy Para, who is married to Daniel Para, may be deemed a
"promoter" of those companies, within the definition of that term in Rule 12b-2
of the Securities Exchange Act of 1934.
SIGNIFICANT EMPLOYEES.
The following persons, each of whom joined NetMeasure (Canada) in 1999, are not
executive officers, but are expected by the Company to make a significant
contribution to its business:
BRENT MARYKUCA is NetMeasure (Canada)'s Director of Product Development and
Chief Software Architect. Mr. Marykuca has sixteen (16) years experience with
operating systems, programming languages and the tools used to build software.
He has a B.Sc. in Computer Science. Prior to joining NetMeasure (Canada), Mr.
Marykuca was a Development Manager with Paradigm Development Corporation, from
June 1997 to May 1999. He was responsible for managing Paradigm's projects with
the Office Business Unit at Microsoft. His responsibilities included
coordinating new development and upgrades to existing components, determining
staffing levels, negotiating contracts and specifications, as well as acting as
project lead on several projects. Prior to becoming a Development Manager, he
was a software engineer at Paradigm, from June 1996 to June 1997. From October
1995 to March 1996. Mr. Marykuca was Manager, Systems Group at Essential
Planning Systems, where he led a group responsible for the design and
development of Windows user interface software as well as data access
Application Programming Interfaces for Geographic Information System software.
Previously, he was Technical Manager, Geographic Applications Group at OCS
Technologies Corp., from September 1994 to October 1995, and Programmer/Analyst
at Essential Planning Systems, from June 1993 to September 1994. From 1986 to
1993, Mr. Marykuca held various programming positions at the University of
Victoria. From 1983 to 1986, he worked as an independent programmer.
24
<PAGE> 25
ROWAN WING is NetMeasure (Canada)'s Lead Programmer. Before joining NetMeasure
(Canada), Mr. Wing worked at two (2) Canadian software companies, Merak Projects
Ltd. and Infowave Software Inc. He has been responsible for the design and
implementation of microcomputer-based products for wireless messaging, network
protocols, oil and gas information systems, real-time data collection and
Geographical Information Systems. He has ten (10) years experience related to
software development. Prior to joining NetMeasure (Canada), Mr. Wing was a
senior programmer at Merak, from May 1997 to January 1999, where he worked on
the development and architecture of a petroleum information system and a
geospatial visualization component. Previously, from May 1996 to May 1997, he
worked at Infowave as a senior programmer on such projects as a wireless email
client user interface, protocols for wireless modems and a client server
architecture for a next generation of wireless messaging services. Mr. Wing also
was a programmer at PCI Pacific Inc., from March 1994 to May 1996, where he
worked on a Geographic Information System user interface and GIS spatial
analysis and indexing; he also worked on several projects for the University of
Victoria, from September 1990 to January 1994.
ITEM 10. EXECUTIVE COMPENSATION.
Neither Mr. Voldeng, the Chief Executive Officer, nor any other executive
officer of the Company received compensation (total salary and bonus) in excess
of US $100,000 in any fiscal year since inception. Mr. Voldeng, Chief Executive
Officer, received Cdn $12,000 (US $8,275) from May 22, 1998, inception of
NetMeasure (Canada), through December 31, 1998, and Dragos Ruiu, former Chief
Technical Officer, received Cdn $15,000 (US $10,344) during that period. In
1999, Mr. Voldeng received an annual salary of Cdn $90,000 (US $62,000). In
2000, Mr. Voldeng and Mr. Plato each will receive an annual salary of Cdn
$100,000 (US $69,000).
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of March 31, 2000, the beneficial ownership
of shares of Company's common stock by any person known to be the beneficial
owner of more than five percent (5%), each of the directors and executive
officers, and all directors and executive officers as a group. Except as
otherwise indicated, each of the persons named has sole voting and investment
power with respect to all shares beneficially owned. Beneficial ownership is
calculated in accordance with Rule 13d-3(d) of the Securities Exchange Act of
1934.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
---------------- -------------------- --------
<S> <C> <C>
*Randy Voldeng 2,942,500 Shares 19.4%
370-1122 Mainland Street
Vancouver, BC V6B 5L1
Dragos Ruiu 2,942,500 shares 19.4%
370-1122 Mainland Street
Vancouver, BC V6B 5L1
</TABLE>
- --------------------
* Officer and/or Director.
25
<PAGE> 26
<TABLE>
<S> <C> <C>
*Jeff Plato -0- -0-
370-1122 Mainland Street
Vancouver, BC V6B 5L1
Officers & Directors as a group 2,942,500 Shares 19.4%
</TABLE>
- --------------------
* Director and/or Officer
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Pursuant to a Share Purchase Agreement dated for reference January 11, 1999, as
amended by agreement dated January 29, 1999, NetMeasure acquired all of the
issued and outstanding shares of NetMeasure (Canada) from Messrs. Voldeng and
Ruiu in consideration of $115,000 payable by the issuance of 2,442,500 shares to
each of them, or an aggregate of 4,885,000 shares, plus the transfer of an
aggregate of 1,000,000 shares from promoters Kathy Para (300,000), Daniel Hodges
(400,000) and David Raftery (300,000).
Each of Ms. Para and Mr. Raftery had acquired 300,000 shares in August 1998 and
Mr. Hodges had acquired 400,000 shares in June 1998 for management services and
organizational development services provided in connection with the
incorporation of NetMeasure and serving as initial officers and/or directors.
Daniel Para, who is married to Kathy Para, acquired 600,000 shares in December
1998 for $.03125 per share. Mr. Para also loaned NetMeasure (Canada) $100,000 in
December 1998, which indebtedness was repaid by NetMeasure in connection with
the closing of the Share Purchase Agreement in February 1999. The purpose of the
loan was to allow NetMeasure (Canada) management to purchase development
equipment, locate facilities and hire staff.
NetMeasure (Canada) entered into an option agreement dated September 10, 1998,
amended by an agreement with NetMeasure, with Dragostech.com Inc., a company
controlled by Mr. Ruiu, to obtain the related rights and equipment for an
internet protocol tester known as TestBOT for $50,000 in cash and 500,000 common
shares of NetMeasure. Management expects to exercise the option sometime in
2001, provided management still believes the product will achieve commercial
success.
The Company has no formal policy, procedure or method concerning transactions
with related or interested persons other than that any such transactions be fair
to the Company and, where appropriate, be approved by a majority of
disinterested directors or shareholders.
26
<PAGE> 27
ITEM 13. EXHIBITS LIST AND REPORTS ON FORM 8-K.
(a) Exhibit Index. The following exhibits are filed with or incorporated
by reference into this annual report:
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- ----
<S> <C> <C>
2(a) Corporate Charter of Powertech, Inc..................................... *
2(a)(1) Articles of Amendment of Articles of Incorporation...................... *
2(b) By-Laws of Powertech, Inc............................................... *
4 Specimen Stock Certificate.............................................. *
6(a) Non-Competition Agreement dated February 12, 1999 between Dragos........ *
Ruiu and NETSentry Inc.
6(b) Non-Competition Agreement dated February 12, 1999 between Randy......... *
Voldeng and NETSentry Technology Inc.................................... *
6(c) NETSentry Technology Inc. $100,000 (Cdn) Promissory Note dated.......... *
December 3, 1998 to Dan Para
6(d) Agreement dated February 12, 1999 between Powertech, Inc., Randy........ *
Voldeng, Dragos Ruiu and Dan Para
6(e) Assignment Agreement dated December 23, 1998 between Dragos Ruiu........ *
and Dragostech.com Inc. and NETSentry Technology Inc.
6(f) Memorandum of Understanding dated May 15, 1998 between NETSentry........ *
Technology Inc. and Hewlett-Packard Network System Test Division
6(g) Asset Purchase and Sale Agreement made August 1998 between.............. *
Dragostech.com Inc. and NETSentry Technology Inc.
6(h) Sublease between Gruppo Moda Holdings Ltd. and NETSentry Inc. for....... *
122 Mainland Street
6(i) Indenture between Lyco Holdings Ltd. and NETSentry Technology Inc....... *
for 1152 Mainland Street
8(a) Share Purchase Agreement between Powertech, Inc. and Randy Voldeng...... *
and Dragos Ruiu dated, for reference January 11, 1999
8(b) Amending Agreement among Randy Voldeng and Dragos Ruiu and.............. *
NetMeasure, Inc., dated for reference January 29, 1999
8(c) Mutual Waiver dated February 12, 1999................................... *
16(a) Letter from Damain & Company............................................ *
16(b) Letter from Davidson & Company.......................................... *
27 Financial Data Schedule................................................. *
99 1999 Stock Incentive Plan...............................................
</TABLE>
* INCORPORATED BY REFERENCE TO THE SAME EXHIBIT NUMBER IN THE REGISTRANT'S
FORM 10-SB, AS AMENDED, FILE NUMBER 0-27675.
(b) Reports on Form 8-K. None.
27
<PAGE> 28
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report, as amended, to be signed on its behalf by the undersigned,
thereunto duly authorized.
NETMEASURE TECHNOLOGY INC.
By /S/ RANDY VOLDENG
----------------------------------------------
RANDY VOLDENG, PRESIDENT
Date May 17, 2000
---------------------
In accordance with the Exchange Act, this report, as amended, has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
NETMEASURE TECHNOLOGY INC.
By /S/ RANDY VOLDENG
----------------------------------------------
RANDY VOLDENG, DIRECTOR, PRESIDENT AND CHIEF EXECUTIVE OFFICER
(Principal Executive Officer and Principal Financial Officer)
Date May 17, 2000
---------------------
By /S/ JEFF PLATO
----------------------------------------------
JEFF PLATO, DIRECTOR AND VICE PRESIDENT
Date May 17, 2000
---------------------
28
<PAGE> 1
EXHIBIT 99
POWERTECH, INC.
1999 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of this Powertech, Inc. 1999 Stock Incentive Plan
(the "Plan") is to further the long term stability and financial success of
Powertech, Inc. (the "Company") by attracting and retaining key employees
through the use of stock incentives. It is believed that ownership of common
stock of the Company will stimulate the efforts of those employees upon whose
judgment and interest the Company will be largely dependent for the successful
conduct of its business. It is also believed that Restricted Stock Awards to
such employees under this Plan will strengthen their desire to remain with and
provide services to the Company and will further the identification of their
interests with those of the Company's shareholders.
2. DEFINITIONS. As used in the Plan, the following terms have the meanings
indicated:
(a) "Applicable Withholding Taxes" means the aggregate amount of
federal, provincial, state and local income and payroll taxes that the
Company is required to withhold in connection with the award of Restricted
Stock.
(b) "Board" means the board of directors of Poweretech, Inc.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the committee appointed by the Board as
described under Section 11.
(e) "Company" means Powertech, Inc., a Nevada corporation.
<PAGE> 2
(f) "Company Stock" means common stock, $0.001 par value, of the
Company. If the par value of the Company Stock is changed, or in the event
of a change in the capital structure of the Company (as provided in Section
10), the shares resulting from such a change shall be deemed to be Company
Stock within the meaning of the Plan.
(g) "Date of Grant" means the date on which an award of Restricted
Stock is granted by the Committee.
(h) "Disability" or "Disabled" means the inability of a Participant to
perform his normal duties with the Company or any similar duties due to a
condition that is expected to last indefinitely. The Committee shall
determine whether a Disability exists and such determination shall be
conclusive.
(i) "Fair Market Value" means, if the Company Stock is not publicly
traded, the fair market value of a share of Company Stock as determined in
good faith by the Committee. At any time when the Company Stock is publicly
traded, the Fair Market Value of a share of Company Stock shall be the
average, for any ten consecutive trading days within 30 days prior to the
applicable determination date, of the daily average of the high and low
trading prices or the bid and asked prices or, if high and low trading
prices or bid and asked prices are not available, the last sales price, as
the case may be, for a share of Company Stock on the principal securities
exchange on which the Company Stock is then listed or, if the Company Stock
is not so listed, on the National Association of Securities Dealers
Automated Quotation System or, if not so quoted, on the principal other
market on which the Company Stock is then traded.
2
<PAGE> 3
(j) "Parent" means, with respect to any corporation, a parent
corporation of that corporation.
(k) "Participant" means any person who receives a Restricted Stock
Award under the Plan.
(l) "Restricted Stock" means Company Stock awarded upon the terms and
subject to the restrictions set forth in Section 6.
(m) "Restricted Stock Award" means an award of Restricted Stock
granted under the Plan.
(n) "Subsidiary" means, with respect to any corporation, a subsidiary
of that corporation or any subsidiary of a Parent of that corporation.
3. GENERAL. Restricted Stock Awards may be granted under the Plan.
4. STOCK. Subject to Section 10 of the Plan, there shall be reserved for
issuance under the Plan an aggregate number of shares of Company Stock equal to
10% of the total common stock of the Company, which shall be authorized, but
unissued shares. Shares granted under the Plan that are forfeited because of a
restriction may again be subjected to a Restricted Stock Award under the Plan.
For purposes of determining the number of shares that are available for
Restricted Stock Awards under the Plan, such number shall include the number of
shares surrendered by a Participant or retained by the Company in payment of
Applicable Withholding Taxes.
5. ELIGIBILITY.
(a) All present and future employees of the Company (or any Subsidiary of
the Company, whether now existing or hereafter created or acquired) whom the
Committee determines to be key employees shall be eligible to receive Restricted
Stock Awards under the
3
<PAGE> 4
Plan. The Committee shall have the power and complete discretion, as provided in
Section 11, to select persons to receive Restricted Stock Awards and to
determine for each Participant the terms and conditions, the nature of the award
and the number of shares to be allocated to each Participant as part of each
Restricted Stock Award.
(b) The grant of a Restricted Stock Award shall not obligate the Company or
any Parent or Subsidiary of the Company to pay a Participant any particular
amount of remuneration, to continue the employment of the Participant after the
grant or to make further grants to the Participant at any time thereafter.
6. RESTRICTED STOCK AWARDS.
(a) Whenever the Committee deems it appropriate to grant a Restricted Stock
Award, notice shall be given to the Participant stating the number of shares of
Restricted Stock for which the Restricted Stock Award is granted and the terms
and conditions to which the Restricted Stock Award is subject. This notice, when
accepted in writing by the Participant, shall become an award agreement between
the Company and the Participant, and certificates representing the shares shall
be issued and delivered to the Company's agent. A Restricted Stock Award may be
made by the Committee in its discretion without cash consideration.
(b) Restricted Stock issued pursuant to the Plan shall be subject to the
following restrictions:
(i) Restricted Stock may not be sold, assigned, transferred, pledged,
hypothecated, or otherwise encumbered or disposed of until the restrictions
on such shares shall have lapsed or shall have been removed pursuant to
paragraph (d) or (e) below.
4
<PAGE> 5
(ii) If a Participant ceases to be employed by the Company or a Parent
or Subsidiary of the Company, the Participant shall forfeit to the Company
any shares of Restricted Stock, the restrictions on which shall not have
lapsed or shall not have been removed pursuant to paragraph (d) or (e)
below, on the date such Participant shall cease to be so employed.
(c) Upon the acceptance by a Participant of a Restricted Stock Award, such
Participant shall, subject to the restrictions set forth in paragraph (b) above,
have all the rights of a shareholder with respect to the shares of Restricted
Stock subject to such Restricted Stock Award, including, but not limited to, the
right to vote such shares of Restricted Stock and the right to receive all
dividends and other distributions paid thereon. Certificates representing
Restricted Stock shall bear a legend referring to the restrictions set forth in
the Plan and the Participant's award agreement, and shall be held by the
Company's agent until such restrictions lapse.
(d) The Committee shall establish as to each Restricted Stock Award the
terms and conditions upon which the restrictions set forth in paragraph (b)
above and any restrictions in the Restricted Stock Award shall lapse. Such terms
and conditions may include, without limitation, the lapsing of such restrictions
as a result of the Disability, death or retirement of the Participant.
(e) Notwithstanding the forfeiture provisions of paragraph (b)(ii) above,
the Committee may at any time, in its sole discretion, accelerate the time at
which any or all restrictions will lapse or remove any or all such restrictions.
(f) If withholding taxes apply, each Participant shall agree at the time
his Restricted Stock Award is granted, and as a condition thereof, to pay to the
Company, or make arrangements satisfactory to the Company regarding the payment
to the Company of, the
5
<PAGE> 6
aggregate amount of Applicable Withholding Taxes with respect to the shares of
Restricted Stock subject to the Restricted Stock Award. Until such amount has
been paid or arrangements satisfactory to the Company have been made, no stock
certificate free of a legend reflecting the restrictions shall be issued to such
Participant.
7. NONTRANSFERABILITY OF RESTRICTED STOCK AWARDS. Restricted Stock Awards,
by their terms, shall not be transferable except by will or by the laws of
descent and distribution and Restricted Stock shall be transferable, during the
Participant's lifetime, only to the Participant or to his guardian, duly
authorized attorney-in-fact or other legal representative.
8. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective on December 10,
1999. Until the requirements of any applicable Federal or state securities laws
have been met, no Restricted Stock shall be awarded.
9. TERMINATION, MODIFICATION, CHANGE. If not sooner terminated by the
Board, this Plan shall terminate at the close of business on the tenth
anniversary of the Plan's effective date. No Restricted Stock Awards shall be
made under the Plan after its termination. The Board may terminate the Plan or
may amend the Plan in such respects as it shall deem advisable. A termination or
amendment of the Plan shall not, without the consent of the Participant,
adversely affect a Participant's rights under a Restrictive Stock Award
previously granted to him.
10. CHANGE IN CAPITAL STOCK STRUCTURE.
(a) In the event of a stock dividend, stock split or combination of shares,
recapitalization or merger in which the Company is the surviving corporation or
other change in the Company's capital stock (including, but not limited to, the
creation or issuance to shareholders generally of rights, options or warrants
for the purchase of common stock or preferred stock of the Company), the number
and kind of shares of stock or securities of the
6
<PAGE> 7
Company to be subject to the Plan and then outstanding or to be granted
thereunder, the maximum number of shares or securities which may be delivered
under the Plan, and other relevant provisions shall be appropriately adjusted by
the Committee, whose determination shall be binding on all persons. If the
adjustment would produce fractional shares, the Committee may adjust
appropriately the number of shares so as to eliminate the fractional shares.
(b) If the Company is a party to a consolidation or a merger in which the
Company is not the surviving corporation, a transaction that results in the
acquisition of substantially all of the Company's outstanding stock by a single
person or entity, or a sale or transfer of substantially all of the Company's
assets, the Committee may take such actions with respect to outstanding
Restricted Stock Awards as the Committee deems appropriate.
(c) Notwithstanding anything in the Plan to the contrary, the Committee may
take the foregoing actions without the consent of any Participant, and the
Committee's determination shall be conclusive and binding on all persons for all
purposes.
11. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a
Committee consisting of not less than two members of the Board, who are
appointed by the Board. The Committee shall have general authority to impose any
limitation or condition upon a Restricted Stock Award the Committee deems
appropriate to achieve the objectives of the Restricted Stock Award and the Plan
and, without limitation and in addition to powers set forth elsewhere in the
Plan, shall have the following specific authority:
(a) The Committee shall have the power and complete discretion to
determine (i) which Participants shall receive Restricted Stock Awards and
the nature of each Restricted Stock Award, (ii) the number of shares of
Company Stock to be covered by each Restricted Stock Award, (iii) the Fair
Market Value of Company Stock unless, as
7
<PAGE> 8
provided in Section 2(i), the Company stock is publicly traded, (iv) the
time or times when a Restricted Stock Award shall be granted, (v) whether a
Restricted Stock Award shall become vested over a period of time and when
it shall be fully vested, (vi) whether a Disability exists, (vii)
conditions relating to the length of time before disposition of Company
Stock received under the Plan, (viii) whether to approve a Participant's
election to deliver shares of already owned Company Stock to satisfy
Applicable Withholding Taxes, (ix) the terms and conditions applicable to
Restricted Stock Awards, (x) the terms and conditions on which restrictions
upon Restricted Stock shall lapse, (xi) whether to accelerate the time at
which any or all restrictions with respect to Restricted Stock will lapse
or be removed, (xii) notice provisions relating to the sale of Company
Stock acquired under the Plan, and (xiii) any additional requirements
relating to Restricted Stock Awards that the Committee deems appropriate.
The Committee shall have the power to amend the terms of previously granted
Restricted Stock Awards so long as the terms as amended are consistent with
the terms of the Plan and provided that the consent of the Participant is
obtained with respect to any amendment that would be detrimental to him.
(b) The Committee may adopt rules and regulations for carrying out the
Plan. The interpretation and construction of any provision of the Plan by
the Committee shall be final and conclusive. The Committee may consult with
counsel, who may be counsel to the Company, and shall not incur any
liability for any action taken in good faith in reliance upon the advice of
counsel.
(c) A majority of the members of the Committee shall constitute a
quorum, and all actions of the Committee shall be taken by a majority of
the members present.
8
<PAGE> 9
Any action may be taken by a written instrument signed by all of the
members, and any action so taken shall be fully effective as if it had been
taken at a meeting.
(d) The Board from time to time may appoint members previously
appointed and may fill vacancies, however caused, in the Committee.
12. NOTICE. All notices and other communications required or permitted to
be given under this Plan shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed first class, postage prepaid, as
follows (a) if to the Company - at its principal business address to the
attention of the Treasurer; (b) if to any Participant - at the last address of
the Participant known to the sender at the time the notice or other
communication is sent.
13. INTERPRETATION. The terms of this Plan shall be governed by the laws of
the State of Nevada.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed this
10th day of December, 1999.
POWERTECH, INC.
By /s/ Randy Voldeng
-----------------------------------
President and C.E.O.
9
