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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1999
[ ] Transition Report pursuant to 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number 0-26535
VIAVID BROADCASTING, INC.
(Exact name of Small Business Issuer as specified in its charter)
Nevada 98-020-6168
- ------------------------------- -----------
(State or other jurisdiction of (IRS Employer
incorporation ) Identification No.)
3955 Graveley Street, Burnaby, British Columbia V5C 3T4
- ----------------------------------------------- -------
(Address of principal executive offices (Zip Code)
Issuer's telephone number, including area code 604-669-0047
------------
Indicate by a check mark whether the issuer (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days [ ] Yes [X] No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding as of
Class November 12, 1999
--------------------- -----------------
Common Stock 6,416,000 shares
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PART 1 B FINANCIAL INFORMATION
Item 1. Financial Statements
GENERAL
The Company's unaudited financial statements for the six months
ending September 30, 1999 are included with this Form 10-QSB. The
unaudited financial statements for the six months ending September
30, 1999 include:
(a) Consolidated Balance Sheet as of September 30, 1999 and
March 31, 1999;
(b) Consolidated Statement of Operations - Six months ended
September 30, 1999 and period from January 20, 1999, the
date of incorporation, to March 31, 1999;
(c) Consolidated Statement of Shareholders' Equity for the
period ending September 30, 1999;
(d) Consolidated Statement of Cash Flows - Six months ended
September 30, 1999 and period from January 20, 1999, the
date of incorporation, to March 31, 1999;
(e) Notes to Consolidated Financial Statements.
The unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and, therefore, do not include
all information and footnotes necessary for a complete presentation
of financial position, results of operations, cash flows, and
stockholders' equity in conformity with generally accepted
accounting principles. In the opinion of management, all
adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included and
all such adjustments are of a normal recurring nature. Operating
results for the six months ended September 30, 1999 are not
necessarily indicative of the results that can be expected for the
year ending March 31, 2000.
FINANCIAL STATEMENTS
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VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited - Prepared by Management)
SEPTEMBER 30, 1999
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VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Expressed in United States Dollars)
(Unaudited - Prepared by Management)
===================================================================
September 30, March 31,
1999 1999
- -------------------------------------------------------------------
ASSETS
Current
Cash $ 187,007 $ 163,406
Accounts receivable 19,945 6,841
----------- -----------
206,952 170,247
Capital assets (Note 4) 129,605 17,510
----------- -----------
$ 336,557 $ 187,757
===================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and
accrued liabilities $ 4,469 $ 6,866
Due to related parties 3,918 8,459
----------- -----------
8,387 15,325
----------- -----------
Shareholders' equity
Capital stock
Authorized
25,000,000 common shares
with a par value of
$0.001 per share
Issued
6,284,000 common shares
(5,884,000 at
March 31, 1999) 6,284 5,884
Additional paid-in capital 637,816 238,216
Deficit accumulated during
the development stage (315,930) (71,668)
------------ -----------
328,170 172,432
------------ -----------
$ 336,557 $ 187,757
===================================================================
Nature and continuance of operations (Note 1)
On behalf of the Board:
"Brian Kathler" Director "Paul Watkins" Director
- ----------------- ----------------
The accompanying notes are an integral part of these consolidated
financial statements.
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VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
(Expressed in United States Dollars)
(Unaudited - Prepared by Management)
====================================================================
Period From
Incorporation
Cumulative On
From Six Months January 20,
Incorporation Period Ended 1999 to
to September 30, September 30, March 31,
1999 1999 1999
- --------------------------------------------------------------------
REVENUE $ 18,989 $ 15,553 $ 3,436
----------- ----------- -----------
EXPENSES
Consulting 123,972 87,158 36,814
Depreciation 28,227 20,178 8,049
Internet, website and graphics 39,644 39,644 -
Office and miscellaneous 40,437 33,328 7,109
Professional fees 36,236 26,305 9,931
Rent 24,796 16,998 7,798
Salary and benefits 24,669 20,380 4,289
Telephone 5,153 4,039 1,114
Travel and entertainment 11,785 11,785 -
----------- ----------- -----------
334,919 259,815 75,104
----------- ----------- -----------
Loss for the period $ (315,930) $ (244,262) $ (71,668)
====================================================================
Loss per share $ (0.05) $ (0.04) $ (0.01)
====================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
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VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Expressed in United States Dollars)
(Unaudited - Prepared by Management)
=========================================================================
Deficit
Common Stock Accumulated
------------------
Additional During the
Number Paid-in Development
of Shares Amount Capital Stage Total
- -------------------------------------------------------------------------
Issued shares for
acquisition (Note 3) 5,100,000 $ 5,100 $ - $ - $ 5,100
Issued shares for cash
at $0.01 per share 500,000 500 4,500 - 5,000
Issued shares for cash
at $0.50 per share 100,000 100 49,900 - 50,000
Issued shares for cash
at $1.00 per share 184,000 184 183,816 - 184,000
Loss for the period - - - (71,668) (71,668)
--------- -------- --------- ---------- --------
Balance at March 31,
1999 5,884,000 5,884 238,216 (71,668) 172,432
Issued shares for cash
at $1.00 per share 295,000 295 294,705 - 295,000
Allotted shares for
cash 105,000 105 104,895 - 105,000
Loss for the period - - - (244,262)(244,262)
--------- ------- --------- ------------ -------
Balance at September
30, 1999 6,284,000 $ 6,284 $ 637,816 $ (315,930) 328,170
=========================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
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VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in United States Dollars)
(Unaudited - Prepared by Management)
======================================================================
Period From
Cumulative Incorporation
From Six Month on January
Incorporation Period Ended 20, 1999 to
to September 30, September 30, March 31,
1999 1999 1999
- ----------------------------------------------------------------------
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Loss for the period $ (315,930) $ (244,262) $ (71,668)
Items not affecting cash
Depreciation 22,792 20,178 2,614
Write-down of goodwill 5,435 - 5,435
Changes in non-cash
working capital items
Increase in accounts
receivable (19,945) (13,104) (6,841)
Increase in accounts
payable 4,469 (2,397) 6,866
------------- ------------ ------------
Net cash used in operating
activities (303,179) (239,585) (63,594)
------------- ------------ ------------
INVESTING ACTIVITIES
Acquisition of
capital assets (152,397) (132,273) (20,124)
Acquisition of subsidiary (335) - (335)
------------- ------------ ------------
Net cash used in
investing activities (152,732) (132,273) (20,459)
------------- ------------ ------------
FINANCING ACTIVITIES
Proceeds from
common shares 639,000 400,000 239,000
Loans from related
parties 3,918 (4,541) 8,459
------------- ------------ ------------
Net cash provided
by financing activities 642,918 395,459 247,459
------------- ------------ ------------
Change in cash for
the period 187,007 23,601 163,406
Cash, beginning of period - 163,406 -
------------- ------------- ------------
Cash, end of period $ 187,007 $ 187,007 $ 163,406
======================================================================
Supplemental disclosure
for non-cash operating,
investing, and financing
activities
Shares for purchase of
subsidiary $ - $ - $ 5,100
Cash paid during the
period for interest 222 222 -
Cash paid during the
period for income taxes - - -
======================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
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VIAVID BROADCASTING INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited - Prepared by Management)
SEPTEMBER 30, 1999
==================================================================
1. NATURE AND CONTINUANCE OF OPERATIONS
ViaVid Broadcasting Inc., a Nevada corporation, was
incorporated on January 20, 1999. On January 27, 1999, the
Company completed the acquisition of ViaVid Broadcasting
Corp., a Canadian company operating in Vancouver, British
Columbia, Canada.
The Company was incorporated in order to create a global
internet video broadcasting company that offers a network of
video services utilizing streaming video technology. The
Company has developed the ViaVid Investment News Channel, a
site geared to take maximum advantage of advertising revenue
while broadcasting its news.
The Company's financial statements have been presented on the
basis that it is a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in
the normal course of business. The Company incurred a loss of
$315,875 for the period from inception to September 30, 1999.
The Company anticipates expending approximately $1,000,000
over the next twelve month period in pursuing its anticipated
plan of operations. The Company anticipates covering these
costs by operating revenues and additional equity financing.
The Company completed an offering of 497,000 common shares of
the Company at $1.00 per share to persons who are "Non - U.S.
Persons" in accordance with Regulation S of the United States
Securities Act of 1933 during the period from May 15, 1999 to
October 7, 1999. The Company also completed an offering of
35,000 shares of its common stock pursuant to Regulation D of
the Securities Act of 1933 on November 8, 1999. The Company
requires additional financing in order to enable the Company
to complete its anticipated plan of operations. If the
Company is unable to complete its financing requirements or
achieve revenue as projected, it will then modify its
expenditures and plan of operations to coincide with the
actual financing completed and actual operating revenues. The
financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that
might be necessary should the Company be unable to continue in
existence.
The Company is currently receiving revenues for video
production and hosting services. The Company anticipates an
increase in revenue for production, advertising and hosting
video footage and web content if the Company is successful in
increasing its viewership over the next twelve months.
2. SIGNIFICANT ACCOUNTING POLICIES
In preparing these financial statements, management is
required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of
the balance sheet and revenues and expenses for the period.
Actual results in future periods could be different from these
estimates made in the current period. The following is a
summary of the significant accounting policies of the Company:
Principles of consolidation
These consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiary, ViaVid
Broadcasting Corp. All significant inter-company balances and
transactions have been eliminated.
Start-up and development costs
Since inception, certain expenditures have been incurred
primarily for product development, business development,
market development and financing purposes. While these
expenditures are intended to benefit future periods, the
Company follows the accounting policy of expensing as incurred
those expenditures not identified with specific projects or
financing activities.
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VIAVID BROADCASTING INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited - Prepared by Management)
SEPTEMBER 30, 1999
===================================================================
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd...)
Capital assets
Capital assets are recorded at cost and are depreciated over
their useful lives on the declining balance method at the
following rates:
Computer equipment 30%
Office furniture 20%
Telephone equipment 20%
Video equipment 20%
Financial instruments
The Company's financial instruments consist of cash, accounts
receivable, accounts payable and due to related parties.
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 value of these financial instruments approximate their
carrying values, unless otherwise noted.
Revenue recognition
Revenue is recognized once the filming and editing has been
completed.
Foreign currency translation
Financial statements of the Company's foreign subsidiary are
translated using the temporal method whereby all monetary
assets and liabilities are translated into U.S. dollars at the
rate of exchange at the balance sheet date. Non-monetary
assets and liabilities are translated at exchange rates
prevailing at the transaction date. Income and expenses are
translated at rates which approximate those in effect on
transactions dates. Gains and losses arising from restatement
of foreign currency monetary assets and liabilities at each
period end are included in earnings.
Loss per share
Loss per share is calculated using the weighted average number
of shares allotted during the period.
Segmented information
The Company conducts substantially all of its operations in
Canada in one business segment.
3. ACQUISITION OF VIAVID BROADCASTING CORP.
On January 27, 1999, the Company completed the acquisition of
ViaVid Broadcasting Corp. ("VBC"), a related company having
common directors and officers. VBC is a Canadian company
incorporated under the laws of British Columbia on July 26,
1994. VBC was inactive from incorporation until October 30,
1998 when it changed its name from 477504 British Columbia
Ltd. to ViaVid Broadcasting Corp.
The Company acquired VBC pursuant to a share exchange
agreement whereby the Company agreed to issue 5,100,000 common
shares to the shareholders of VBC in exchange for their 3,000
common shares. The Company has accounted for this transaction
as a capital transaction. For accounting purposes, the
financial statements of the Company and its subsidiary are
deemed to have been combined for the prior and current
accounting periods. As of the date of acquisition, VBC held
no significant assets and liabilities and the accumulated
losses to January 27, 1999 was $355.
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VIAVID BROADCASTING INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
SEPTEMBER 30, 1999
(Unaudited - Prepared by Management)
===================================================================
4. CAPITAL ASSETS
=====================================================================
Net Book Value
-----------------------
Accumulated September 30, March 31,
Cost Depreciation 1999 1999
- ---------------------------------------------------------------------
Computer equipment $ 104,701 $ 17,287 $ 87,414 $ 10,229
Office furniture 7,989 1,297 6,692 4,953
Telephone equipment 2,180 403 1,777 1,834
Video equipment 37,527 3,805 33,722 494
---------- ----------- ------------ ---------
$ 152,397 $ 22,792 $ 129,605 $ 17,510
=====================================================================
5. CAPITAL STOCK
The Company completed an offering of 497,000 common shares at
$1.00 per share to persons who are "Non-U.S. Persons" in
accordance with regulation S of the United States Securities
Act of 1933 during the period from May 15, 1999 to October 7,
1999. The Company has received $400,000 and subsequent to
September 30, 1999, it received a further $97,000 pursuant to
this offering.
The Company completed an offering of 35,000 shares of the
common stock to accredited investors pursuant to Regulation D
of the United States Securities Act of 1933 subsequent to
September 30, 1999 on November 8, 1999.
6. RELATED PARTY TRANSACTIONS
During the period, the Company entered into the following
transactions with related parties:
a) Paid consulting fees as follows:
* $47,381 (March 31, 1999 - $20,074) to two directors of the
Company
* $Nil (March 31, 1999 - $6,574) to an officer of the Company
* $Nil (March 31, 1999 - $1,673) to a director of the
subsidiary
b) Paid salary of $17,406 (March 31, 1999 - $4,015) to an officer of
the Company.
7. INCOME TAXES
The Canadian operating loss for the period to date of
$315,875, may be carried forward and applied against taxable
income in future years. Future tax benefits which may arise
as a result of these losses have not been recognized in these
financial statements. The Company has not commenced
operations in the U.S.A., therefore, there is no income or
loss to report.
8. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems
use two digits rather than four to identify a year. Date-
sensitive systems may incorrectly recognize the year 2000 as
some other date, resulting in errors. The effects of the Year
2000 Issue may be experienced before, on, or after January 1,
2000 and, if not addressed, the impact on operations and
financial reporting may range from minor errors to significant
systems failure which could affect an entity's ability to
conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
GENERAL
ViaVid provides its customers with video production and Internet
news broadcasting and dissemination services. The Company
broadcasts news and corporate information for its customers over
the Internet through its Web site at http://www.viavid.com.
The Company is a development stage company which has only recently
commenced business and has earned minimal revenues to date. Its
business objective is to develop an internet video broadcasting
company that offers a wide variety of video services utilizing
streaming video technology.
The Company completed the move of its head office and production
facilities to 3955 Gravely Street, Burnaby, British Columbia, Canada
V5C 3T4 in the beginning of November, 1999. The Company remains
obligated under the lease for its former premises at Suite 520,
625 Howe Street, Vancouver, British Columbia, Canada V6C 2T6 until
February 29, 2000.
RESULTS OF OPERATIONS
Sales. ViaVid's revenues were $15,553 for the six month period
ending September 30, 1999, compared to revenues of $3,436 for the
period from January 20, 1999, the date of its incorporation, to
March 31, 1999. ViaVid's revenues were achieved primarily from
video production and Internet broadcast services provided to its
customers. The Company also achieved revenues from hosting
services provided to customers.
The Company's revenues are minimal in comparison to its operating
expenses as The Company is currently in the start-up phase of its
operations. The Company is attempting to increase its future
revenues by completing its plan of operations, as discussed below.
In addition, The Company plans to commence "live" Internet
broadcasts in December, 1999. ViaVid's objective is to attract
corporate sponsorship and advertising for these "live" Internet
broadcasts.
Operating Expenses. ViaVid's operating expenses were $244,262 for
the six month period ending September 30, 1999, compared to
operating expenses of $71,669 for the period from January 20, 1999
to March 31, 1999. A substantial portion of the Company's
operating expenses were attributable to the start-up and upgrade of
the ViaVid Web site. The Company believes that its operating
expenses will increase during the next quarter. The Company will
incur additional operating expenses as it completes a move to its
new production studio in November, 1999 and works to provide live
broadcast feeds of its productions on the Internet. The Company
will continue to have operating expenses in connection with the
continued up-grade of its Web site. The Company also anticipates
that
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operating expenses will increase as the number of video
productions which the Company produces and broadcasts for its
customers increases.
Net Loss. ViaVid's net loss was $244,262, or $0.04 per share, for
the six months ending September 30, 1999. Its net loss was
$71,668, or $0.01 per share, for the period from January 20, 1999
to March 31, 1999. Its net loss reflects the fact that the Company
has not earned significant revenues to date.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations have been financed principally through
sales of the Company's equity securities.
The Company had cash of $187,007 as of September 30, 1999, compared
to cash of $163,406 as of March 31, 1999.
The Company realized net proceeds of $400,000 from the sales of its
equity securities during the six month ending September 30, 1999.
These proceeds were used to finance the Company's operating
activities.
PLAN OF OPERATIONS
The Company currently intends to pursue the following plan of
operations during the next twelve months:
A. The Company will continue to develop a customer base of public
and financial companies who will use its services for digital
video productions and Internet broadcasting. The Company
anticipates that it will spend approximately $100,000 on this
marketing expense over the next twelve month period;
B. The Company will continue to develop the VBC News 1 Channel for
broadcast from its Web site. The Company anticipates it will
spend approximately $350,000 on this development expense over the
next twelve month period;
C. The Company will evaluate additional channels for broadcast from
its Web site, depending on market demand. The Company
anticipates it will spend approximately $50,000 on additional
channels over the next twelve month period;
D. The Company will evaluate whether to set up an additional office
or offices in additional cities in order to expand its business
and meet customer demand. The Company anticipates it will spend
approximately $150,000 on additional offices over the next twelve
month period if it determines to proceed with an additional
office;
E. The Company will expand its Web site to attempt to extract
marketing information and data from users in order to obtain a
basis for earning advertising revenue. The Company anticipates it
will spend approximately $10,000 on expansion of its Web site
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over the next twelve month period;
F. The Company will purchase additional equipment to expand its
digital video production studio and video production
capabilities. The Company anticipates it will spend approximately
$250,000 on additional production equipment over the next twelve
month period.
In sum, the Company anticipates it will spend approximately
$1,000,000 over the next twelve month period in pursuing its stated
plan of operations. Of these anticipated expenditures, the Company
anticipate that approximately $514,000 will be spent on it plan of
operations in the next six months. Of this amount, the Company
anticipates that $105,000 will be paid from operating revenues,
approximately $200,000 will be paid from existing cash reserves
from previously completed equity financings and approximately
$225,000 will be raised by additional equity financings. ViaVid's
actual expenditures and business plan may differ from this
anticipated plan of operations. The Company's board of directors
may decide not to pursue the stated plan of operations. In
addition, the Company may modify its plan based on the available
amounts of financing in the event that the Company cannot raise the
required equity financings to complete its plan. The Company does
not have any arrangement in place for any debt or equity financing
that would enable it to meet its stated plan of operations.
In the event the Company is not successful in making any further
sales of common stock, the Company anticipates that it could
sustain its business operations for approximately six months
without additional equity financing based on its current cash
position and revenues.
The Company is currently receiving revenues from video production
and hosting services. The Company anticipates an increase in
revenue from production, advertising and hosting video footage and
Web content if it is successful in increasing its customer base
over the next twelve months.
Notwithstanding the above plan of operations, the Company
anticipates it will have continuing operating losses in the
foreseeable future. The Company bases this expectation in part on
the following:
A. The Company will incur substantial marketing expense in order to
advertise and promote its Web site, to establish a customer base
and to increase the usage of its Web site.
B. Increased usage of ViaVid's Web site will lead to increased
operating expenses and require additional capital expenditures on
new computer equipment, software and technology.
C. ViaVid's operating expenses will continue to increase as it
expands the technical capabilities of its Web site.
D. ViaVid's operating expenses will increase as it solicits
potential customers and
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completes video productions for customers
for broadcast via its Web site.
E. ViaVid's operating expenses will increase as it solicits
potential advertisers and attempts to enter into agreements for
advertising on its Web site.
F. ViaVid's operating expenses will increase as it undertakes to
implement programs to monitor usage of its Web site and develop
customer profiles of its users.
YEAR 2000 RISK
Background
Computer systems, software packages, and microprocessor dependent
equipment may cease to function or generate erroneous data when the
Year 2000 arrives. The problem affects those systems or products
that are programmed to accept a two-digit code in date code fields.
To correctly identify the Year 2000, a four-digit date code field
will be required to be what is commonly termed "Year 2000
compliant."
Readiness
The Company has completed an assessment of all internal systems and
operations to determine Year 2000 compliance. The Company's
assessment has included an assessment of computer hardware systems
and web site operations systems. The Company has determined that
its internal computer hardware systems and web site operations
systems and operations are Year 2000 compliant. As such, the
Company does not anticipate any material adverse operational issues
to arise from the Year 2000 problem affecting internal systems and
operations.
The Company has completed an upgrade of all third party licensed
software to ensure Year 2000 compliance. The Company has relied
upon the written representations of each of the third parties from
whom the Company licenses third party software that the upgraded
software is Year 2000 compliant. While the Company has relied upon
representations of third parties, it cannot give any assurance that
all third party licensed software will be Year 2000 compliant. The
Company has implemented all Year 2000 software patches for the
software used by it in its operations, including software patches
for its Microsoft operating system. The Company will continue to
implement any new software patches for Year 2000 problems provided
by software manufacturers through to January 1, 2000.
The Company has investigated the Year 2000 compliance of all
computer hardware purchased by it since commencement of operations.
The Company has relied upon representations by hardware
manufactures that all computer hardware purchased is Year 2000
compliant. While the Company has relied upon representations by
manufacturers, it cannot give any assurance that all computer
hardware will be Year 2000 compliant.
The Company has made inquires of its Internet service provider,
AT&T Corp., as to the Year 2000 compliance of the Internet service
provider's systems and operations. AT&T
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has given representations
that its systems and operations are Year 2000 compliant. However,
there is no assurance that the Company will not be affected by Year
2000 problems arising from problems with the Internet service
provider's systems and operations or experienced by the Internet
service provider as a result of third party problems.
Risks
The Company may realize exposure and risk if the systems on which
it is dependent to conduct day-to-day operations are not year 2000
compliant. The Company's worst case scenario would be the inability
of its Web site to function due to the inability of the computer
hardware systems and Web site operations systems to function
properly and disruptions to telecommunications services experienced
by Internet service providers and their users throughout the world.
Under this worst case scenario, the Company would not be able to
continue operations and its Web site would be inoperable until such
time as it had replaced or upgraded computer hardware or software
components. If the Year 2000 problem affected the Company's
Internet service provider, the Web site would remain inoperable
until the Internet service provider re-commenced operations or
until a replacement Internet service provider had been found. In a
worst case scenario, the Year 2000 problem would result in
increased expenses being incurred and decreased revenues being
earned or delay the realization of revenues from the Web site. The
Company estimates that the cost of re-establishing operations with
a replacement Internet service provider would be approximately
$7,500. The Company is not able to estimate the potential loss of
revenue and cost of business disruption resulting from a worst-case
scenario with Year 2000 problems.
Estimated Year 2000 Costs
The Company estimates that its total internal cost for ensuring
Year 2000 compliance for all internal systems to date is less than
$10,000. The Company anticipates incurring internal costs of less
than $5,000 in completing its Year 2000 compliance plan. The
Company has not incurred any external cost in ensuring Year 2000
compliance in view of the fact that the Company has only recently
commenced operations and has purchased computer hardware and
software on the basis of representations by manufacturers as to
Year 2000 compliance.
Contingency Planning
The Company is developing a contingency plan to address situations
that may result if it is affected by Year 2000 problems.
Contingency plans include back-up of all computer software
databases. The Company is unable to make contingency plans if any
significant number of the computers constituting the Internet fail
to process dates properly for the year 2000 and there is a
system-wide slowdown or breakdown. The Company's business is
dependent on the continued successful operation of the Internet.
Any interruption or significant degradation of Internet operations
due to Year 2000 problems could harm the business.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no legal proceedings pending or threatened against the
Corporation.
Item 2. Changes in Securities and Use of Proceeds
The Registrant completed the issue of 497,000 common shares to a
total of nine (9) purchasers pursuant to Regulation S during the
period from May 15, 1999 to October 7, 1999. Each purchaser
represented to the Registrant that the purchaser was a "Non-U.S.
Person". The Registrant did not engage in distribution of this
offering in the United States. Each purchaser represented their
intention to acquire the securities for investment only and not
with a view to their distribution. The Registrant made a
determination that each of the purchasers was a sophisticated
purchaser. Appropriate legends were affixed to the stock
certificates issued in accordance with Regulation S. All
purchasers had adequate access to sufficient information about the
Registrant to make an informed investment decision. None of the
securities were sold through an underwriter and accordingly, there
were no underwriting discounts or commissions involved.
The Registrant completed the issue of 35,000 common shares to a
total of three (3) purchasers pursuant to Regulation D of the Act
on November 8, 1999. Each purchaser represented to the Registrant
that the purchaser was an "accredited investor". Each purchaser
represented their intention to acquire the securities for
investment only and not with a view to their distribution.
Appropriate legends were affixed to the stock certificates issued
in accordance with Regulation D. All purchasers had adequate
access to sufficient information about the Registrant to make an
informed investment decision. None of the securities were sold
through an underwriter and accordingly, there were no underwriting
discounts or commissions involved.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information
None.
16
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Number Description
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: November 15, 1999 By: \s\ Brian Kathler
__________________________
Brian Kathler
President
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S QUARTERLY
REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 187,007
<SECURITIES> 0
<RECEIVABLES> 19,945
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 206,952
<PP&E> 152,397
<DEPRECIATION> (22,792)
<TOTAL-ASSETS> 336,557
<CURRENT-LIABILITIES> 8,387
<BONDS> 0
0
0
<COMMON> 6,284
<OTHER-SE> 321,886
<TOTAL-LIABILITY-AND-EQUITY> 336,557
<SALES> 0
<TOTAL-REVENUES> 18,989
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 334,919
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (315,930)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
