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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO FORM 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
VIAVID BROADCASTING, INC.
(Exact name of Company as specified in its charter)
NEVADA 98-020-6168
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 520, 625 Howe Street
Vancouver, British Columbia, Canada V6C 2T6
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: 604-669-0047
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
25,000,000 Shares of Common Stock
---------------------------------
(Title of class)
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TABLE OF CONTENTS
Page
COVER PAGE i
TABLE OF CONTENTS ii
PART I 3
DESCRIPTION OF BUSINESS 3
DESCRIPTION OF PROPERTY 17
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES 17
REMUNERATION OF DIRECTORS AND OFFICERS 19
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITYHOLDERS 20
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS 21
SECURITIES BEING REGISTERED 22
PART II 23
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS 23
LEGAL PROCEEDINGS 23
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 24
RECENT SALES OF UNREGISTERED SECURITIES 24
INDEMNIFICATION OF DIRECTORS AND OFFICERS 24
PART F/S 25
FINANCIAL STATEMENTS 25
PART III 26
INDEX TO EXHIBITS 26
SIGNATURES 27
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PART I
The issuer has elected to follow Form 10-SB, Disclosure
Alternative 2.
Item 6. Description of Business
CORPORATE BACKGROUND
1. Corporate Organization
ViaVid Broadcasting, Inc. (the "Company") is a Nevada corporation
incorporated on January 20, 1999.
The Company conducts its business through its wholly owned
operating subsidiary, ViaVid Broadcasting Corp. ("ViaVid").
ViaVid is a British Columbia company incorporated on
July 26, 1994.
2. Acquisition of ViaVid Broadcasting Corp
The Company acquired ViaVid pursuant to an Acquisition Agreement
dated January 26, 1999 by and between the Company and Mr. Paul
Watkins, Ms. Cheryl Watkins, 549419 BC Ltd. and Kathler Holdings
Inc. (the "Acquisition Agreement"). As consideration for this
transfer, the Company issued to Mr. Paul Watkins, Ms. Cheryl
Watkins, 549419 BC Ltd. and Kathler Holdings Inc. a total of
5,100,000 restricted shares of common stock of the Company.
ViaVid was an inactive British Columbia company from the date of
its incorporation in July, 1994 to the time of its acquisition by
Paul Watkins, Cheryl Watkins, Kathler Holdings Ltd. and 549419 B.C.
Ltd. in October, 1998. ViaVid commenced operations of the ViaVid
Business in November, 1998. ViaVid has not carried on any other
business operations other than the ViaVid Business.
THE VIAVID BUSINESS
ViaVid provides its customers with video production and Internet
news broadcasting and dissemination services (the "ViaVid
Business"). The ViaVid Business is carried on through ViaVid's web
site on the Internet at "www.viavid.com" (the "ViaVid Web Site").
It is the intent of the Company as part of its business plan to
develop an internet video broadcasting company that offers a wide
variety of video services utilizing streaming video technology.
1. Development of the ViaVid Business
The ViaVid Business is still in the development stage. ViaVid
started development of the ViaVid Business in November, 1998.
ViaVid established the ViaVid Web Site in January, 1999. The
Company has spent $181,615 on development and start-up of the
ViaVid Business. The ViaVid Business has generated revenues of
$9,204 during the period from its incorporation to June 30, 1999.
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2. Further Description of the ViaVid Business
The Company is targeting public and financial companies as its
customer base. The Company plans to offer the following services
to these customers:
(1) Video production of news releases, corporate events and
corporate announcements;
(2) Broadcast and dissemination of video productions from the
ViaVid Web Site over the Internet;
(3) Assistance in making video productions available from the
customer's web site.
The Company has completed the development of its web site and is
now in the process of starting video productions for customers and
broadcasting these video productions via the Internet.
The Company has also started developing its own financial news
broadcasts and video tapes for dissemination from the ViaVid Web
Site.
3. Format of the ViaVid Web Site
The Company has developed the ViaVid Web Site with the objective of
creating a financial resources site in which Internet users can
access and view video productions of the Company's customers and
the Company's own financial news broadcasts. The ViaVid Web Site
has been developed to enable users to access "channels". The
Company launched its first channel, VBC News 1, in the first
quarter of 1999. With sufficient funding, the Company plans to
launch additional channels for broadcast via the ViaVid Web Site.
An Internet user accessing the ViaVid Web Site is presented with
options on which video productions or financial news broadcasts to
view. Upon selection, the ViaVid Web Site launches a "streaming"
media program that enables the video production to be viewed by the
user more efficiently. "Streaming" is the term used for computer
data media files that begin playing at the same time they are being
transmitted to the user's computer. As the name streaming
suggests, files flow like a stream. Rather than attempting to send
a whole reservoir of data at one time, streaming sends the first
part of an audio or video clip through the Internet first, and
then, while that clip is playing, the rest of the data is sent,
arriving in time to be played. To make sure playback isn't
interrupted if logjams slow the network, the player collects a
small backlog of data, called a buffer, before it starts playing
the first clip. If the data keeps flowing fast enough, playback is
continuous. Thus, users only have to wait the few seconds it takes
to create a buffer before viewing a file, regardless of whether the
file lasts 30 seconds or 30 minutes.
The ViaVid Web Site also displays the Company's logo and
advertisements from advertisers who have arranged to post their ads
on the site.
REVENUE OPPORTUNITIES
The Company's objective is to derive revenue from three distinct
services:
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(1) The broadcast of corporate overviews, press releases and
interviews with officials from public companies in the
financial markets.
(2) Advertising.
(3) Hosting and server storage of video footage and web content
for corporate clients.
1. The Broadcast of Corporate Information
The Company will produce and broadcast corporate overviews,
updates, press releases and financial information for publicly
traded companies to its viewing audience. The goal is to make
these broadcasts a regular part of each customer's financial news
dissemination process.
The Company will broadcast news coverage for both its customers who
are paying a fee for the broadcast of news coverage, and for public
companies where the Company deems the news coverage to be of
interest to its audience. The Company's objective in broadcasting
news coverage for public companies who are not paying customers is
to enhance the content of the Company's broadcasts with the
objective of building and maintaining an audience for the Company's
customers who are paying for the broadcast of news coverage. The
Company considers that building and maintaining an audience that
views the Company's broadcasts is essential to the marketing and
sales of the Company's broadcast services.
As a company releases news, a ViaVid news crew will arrive at the
company's office, or any other pre-arranged location, to video
company officials announcing their news in detail. The video
footage would then be immediately edited into a streaming Internet
video format and broadcast on ViaVid's VBC News 1 Channel from the
ViaVid Web Site. The video footage may also be broadcast from the
customer's own web site and other strategic financial sites. All
footage shown outside of the ViaVid VBC News 1 Channel will be
clearly identified as ViaVid footage with ties
back to the ViaVid Channel. A fee will be charged to the Company's
customers for the broadcast and dissemination of this information.
The Company will re-evaluate the fees charged if the Company is
successful in achieving market acceptance for its Internet
broadcasting services and demand for the Company's Internet
broadcast services increases. Each customer that broadcasts will
bring its own audience to the channel which ViaVid will attempt to
retain through its daily programming.
The Company perceives that there is demand by public companies with
small capitalization's for the Company's corporate news broadcast
via the Internet. The Company competes against other larger
companies who also broadcast financial video on the Internet,
including Bloomberg and CNBC. The Company believes that its
Internet broadcast services are distinct from the services offered
by large Internet broadcast companies such as Bloomberg and CNBC as
these large Internet broadcast companies do not offer news coverage
for small-cap public companies. In addition, these large Internet
broadcasters do not offer the opportunity for small-cap public
companies to pay for Internet news broadcast at affordable rates.
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The Company's objective is to attract an audience which is
interested in small cap public companies and who do not have any
competing opportunity in which to view news being broadcast by
small cap public companies.
2. Advertising
As in the television broadcast industry, the Company anticipates
that advertising revenues will make up the bulk of its future
revenue. The Company has developed the VBC News 1 Channel to take
advantage of advertising revenue while broadcasting its news. The
ViaVid Web Site can display multiple advertisements while
broadcasting its video coverage through the VBC 1 Channel. This
advertising format has been devised by the Company in order to
increase potential advertising revenues.
3. Hosting and Storage of Video Footage and Web Content
The Company will maintain the archived video footage produced for
its corporate clients on its servers so that the footage can be
re-broadcast on demand from the VBC News 1 Channel, the customer's
own web site or other financial sites. The Company proposes to
charge its customers a monthly fee for the maintenance and storage
of this footage. The Company proposes to evaluate increases in the
fee charged if demand for the Company's Internet broadcast services
increases.
ViaVid will also offer the service of hosting and updating its
customers' web sites for a monthly fee. In early marketing tests,
a number of the companies requested the ViaVid video footage be
incorporated into their web sites and indicated that they would
rely on ViaVid's expertise with video on the web to provide them
with the necessary web site programming.
BUSINESS DEVELOPMENT AND MARKETING STRATEGY
The Company has undertaken minimal marketing efforts to date,
having focused largely on the development of the ViaVid Web Site.
With the ViaVid Web Site and the VBC News 1 Channel now in
operation, the Company is preparing to initiate more significant
marketing efforts.
The Company's objective is to become the Internet broadcasting site
of choice for public companies and the financial services industry.
The Company intends to achieve this objective by pursuing the
following key strategies:
1. Offering a Unique Corporate News Broadcasting Service.
The Company believes the ViaVid Web Site offers a unique venue for
public companies wanting to broadcast corporate news and
information on the Internet. As discussed above in Item 6,
"Description of Business - The Broadcast of Corporate Information",
the Company's Internet broadcast services are unique in that the
Company focuses on the broadcast of news coverage of small-cap
public companies who are not able to achieve coverage on
traditional media based Internet broadcast services such as
Bloomberg's and CNBC. In addition, the Company's Internet
broadcasts are unique as they are produced solely for broadcast via
the Internet as opposed to being Internet broadcasts of television
coverage.
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The Company will target public and financial services companies as
customers in order to educate them on the availability of the
Company's service and technology. The Company believes that many
potential customers are not aware of the Company's services and
would take advantage of Internet broadcasting if the opportunity is
presented to them.
2. Increasing Awareness of the Web Site.
The Company operates in a market in which strong brand recognition
is critical to differentiating itself and attracting a high-level
of customer awareness and user traffic. Accordingly, the Company's
strategy is to increase its visibility and brand recognition
through a variety of marketing and promotional techniques.
Specifically, the Company intends to increase points of access by
forming relationships with, and advertising on, leading web sites,
such as StockHouse, Canada Stockwatch Carlson Online, E*Trade, PC
Quote etc. Premier positioning on these sites is intended to give
the ViaVid Web Site credibility with potential clients who are
unfamiliar with the Company. The Company also proposes to reinforce
the ViaVid brand in users' minds by employing consistent branding
from the design of the ViaVid Web Site and logo.
The Company will pursue co-marketing arrangements by cross-linking
with other web sites on the Internet. The Company may post links
to other web sites in return for that site posting the Company's
link. The Company proposes to pursue cross-linking only where
there is a mutually beneficial synergy with other web sites.
3. Promote Repeat Visits.
The Company has designed the ViaVid Web Site with an attractive and
engaging format in order to enhance the experience of users and
encourage repeat visits. The Company believes that repeat visits
can be further encouraged by the addition of new video content on a
daily basis.
4. Expansion of the Capabilities of the ViaVid Web Site.
The Company will attempt to continually enhance the functionality
and attractiveness of the ViaVid Web Site by regularly updating the
technology used to broadcast video information. The Company
proposes to expand the capability of the ViaVid Web Site by adding
additional channels according to perceived market demand.
5. Customer Monitoring and Data Gathering.
The Company believes that increased information regarding the
customers using the ViaVid Web Site will assist the Company in
marketing the ViaVid Web Site and increasing revenues. At present,
the Company gathers minimal information regarding users of the
site. The Company is proposing to expand the capability of the
ViaVid Web Site to obtain personal and business profile information
on users. This information will assist in marketing the site to
advertisers who are prepared to pay for the placement of ads on the
site. Information regarding the location, nature of business,
income level
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and other marketing criteria of users of the ViaVid Web Site
will assist in developing user profiles which will assist
in maximizing advertising revenue and marketing the Company's
video production and broadcast services.
6. Expand the Revenue Generating Capacity of the ViaVid Web Site
The Company will pursue alternate revenue streams for the ViaVid
Web Site and the ViaVid Business. The Company also proposes to
pursue arrangements with other companies whereby the Company may
earn a commission or fee based on customers referred to web sites
operated by other companies.
TECHNOLOGY
The Company uses commercially available licensed technology to
operate the ViaVid Web-Site.
1. Commercially Available Licensed Technology
The Company licenses commercially available technology whenever
possible instead of purchasing custom-made or internally developed
solutions. The Company believes that this strategy lowers operating
costs, and allows it to concentrate more fully on creating content
for the VBC News 1 Channel and developing new channels.
2. Operations
Substantially all of the Company's communications hardware and
computer hardware is located at a leased facility in Vancouver,
British Columbia, Canada. As a result, the Company's systems are
vulnerable to damage from earthquake, fire, floods, power loss,
telecommunications failures, break-ins and similar events. The
Company does not presently have fully redundant systems and has not
yet completed implementing a formal disaster recovery plan.
Despite the implementation of network security measures, the
Company's servers are also vulnerable to computer viruses, physical
or electronic break-ins, attempts by third parties deliberately to
exceed the capacity of the Company's systems and similar disruptive
problems. The Company's coverage limits on property and business
interruption insurance may not be adequate to compensate the
Company for all losses that may occur.
The Company uses independent Internet Service Providers to provide
connectivity to the Internet, Internet traffic and data routing
services and email services for the Company. The Company believes
that these telecommunication and Internet service facilities are
essential to its operation and anticipates upgrading these
facilities, though more costly, telecommunication services in the
future.
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
The Company's performance and ability to compete are dependent to a
significant degree on its proprietary content. The Company relies
on a combination of trademark, copyright and trade secret laws, as
well as confidentiality agreements and non-compete agreements
executed by employees and consultants as the means to establish and
protect its proprietary rights.
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The Company has applied to the United States Trademark office for
registration of "ViaVid" as a trademark in the United States. The
Company has also applied to the Canada Patent and Trademark Office
for registration of "ViaVid" as a trademark in Canada. No
trademark has been issued to the Company for "ViaVid" in either the
United States or Canada. The Company is not aware of any other
companies currently using the name "ViaVid". The Company has
conducted searches of trademark databases in both the United States
and Canada and has not found any registration of the name "ViaVid"
as a trademark. There is no assurance that the Company will be
able obtain a trademark for the "ViaVid" name, or that once
obtained it will stand up to objections by others who have made
prior use of the name. It is also possible that competitors of the
Company or others will adopt product or service names similar to
"ViaVid" or other service marks or trademarks of the Company,
thereby impeding the Company's ability to build brand identity and
possibly leading to customer confusion. The inability of the
Company to protect the name "ViaVid" adequately could have a
material adverse effect on the Company's business, results of
operations and financial condition.
The Company also relies on a variety of technologies that it
licenses from third parties, including its Internet server
software, which is used in the Company's ViaVid Web Site to perform
key functions. There can be no assurance that these third-party
technology licenses will continue to be available to the Company on
commercially reasonable terms. The loss or inability of the Company
to maintain or obtain upgrades to any of these technology licenses,
could result in delays in completing enhancements and have a
material adverse effect on the Company's business, results of
operations and financial condition.
COMPETITION
In general, business on the Internet is rapidly being developed by
companies with greater technical and financial resources than the
Company. Competitors may target the Company's business directly
and may offer services comparable to the Company's at no cost or at
prices below the Company's cost. There is no assurance that the
Company will have the financial or technical resources to compete
with such action or competitors.
The Internet news dissemination market is new, rapidly evolving and
intensely competitive, and the Company expects competition to
intensify in the future. The Company currently or potentially
competes with a variety of other companies. These competitors
include:
(i) Visual Data Corporation;
(ii) a number of indirect competitors that specialize in
Internet news broadcasting;
(iii) conventional news broadcasting and dissemination
services, including television, newspapers, and magazines;
(iv) a variety of other companies that offer services similar
to that of the Company.
Increased competition is likely to result in reduced operating
margins, loss of market share and
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reduced revenues, any one of which could materially adversely
affect the Company's business, results of operations and financial
condition. Many of the Company's current and potential competitors
have significantly greater financial, marketing, customer support,
technical and other resources than the Company. As a result, such
competitors may be able to attract potential users away from the
ViaVid Web-Site, and they may be able to respond more quickly to
changes in customer preferences or to devote greater resources to
the development, promotion and sale of their web sites than can
the Company.
PLAN OF OPERATIONS
The Company currently intends to pursue the following plan of
operations during the next twelve months:
1. The Company will continue to develop a customer base of public
and financial companies who will use the Company services for
digital video productions and Internet broadcasting. The Company
anticipates it will spend approximately $100,000 on this marketing
expense over the next twelve month period;
2. The Company will continue to develop the VBC News 1 Channel for
broadcast from the ViaVid Web Site. The Company anticipates it
will spend approximately $350,000 on this development expense over
the next twelve month period;
3. The Company will evaluate additional channels for broadcast from
the ViaVid Web Site, depending on market demand. The Company
anticipates it will spend approximately $50,000 on additional
channels over the next twelve month period;
4. The Company will evaluate whether to set up an additional office
or offices in additional cities in order to expand the business of
the Company and meet customer demand. The Company anticipates it
will spend approximately $150,000 on additional offices over the
next twelve month period if the Company determines to proceed with
an additional office;
5. The Company will expand the ViaVid 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 the
ViaVid Web Site over the next twelve month period;
6. The Company will purchase additional equipment to expand the
ViaVid 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 that it will spend approximately
$1,000,000 over the next twelve month period in pursuing the
Company's stated plan of operations. Of these anticipated
expenditures, the Company anticipates that approximately $514,000
will be required to be spent on the Company's plan of operations in
the next six months. Of this amount, the Company anticipates that
$105,000 will be realized from operating revenues of the Company
and $409,000 will be raised by additional equity financings of the
Company. The Company is presently undertaking an offering
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of its shares of up to 1,000,000 shares of the Company's common
stock at a price of $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. See Part II - Item 4 "Recent
Sales of Unregistered Securities". The Company has sold
approximately $130,000 of this offering to date. If this offering
pursuant to Regulation S is fully completed, the Company
anticipates it will be able to complete the stated Plan of
Operations without additional equity financing. However, the
actual expenditures and business plan of the Company may differ
from the stated Plan of Operations. The Board of Directors of
the Company may decide not to pursue the stated Business Plan of
Operations. In addition, the Company may modify the stated Plan
of Operations based on the available amounts of financing in the
event that the Company cannot achieve the required equity
financings to complete the stated Plan of Operations. The Company
does not have any arrangement in place for the debt or equity
financing to the Company to meet the Stated Plan of Operations.
In the event the Company is not successful in achieving any further
sales of its common stock, the Company anticipates that it could
sustain its business operations for approximately six months
without additional equity financing based on the Company's current
cash position and revenues presently being realized by the Company.
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 the Company is successful in increasing its
viewership over the next twelve months.
Notwithstanding the above plan of operations, as the Company has
had a short operating history with minimal revenues, the management
anticipates continuing operating losses in the foreseeable future.
The Company bases this expectation in part on the following:
1. The Company will incur substantial marketing expense in order to
advertise and promote the ViaVid Web Site, to establish a customer
base and to increase the usage of the ViaVid Web Site.
2. Increased usage of the ViaVid Web Site will lead to increased
operating expenses and require additional capital expenditures on
new computer equipment, software and technology.
3. Operating expenses will continue to increase as the Company
expands the technical capabilities of the ViaVid Web Site.
4. Operating expenses will increase as the Company solicits
potential customers and completes video productions for customers
for broadcast via the ViaVid Web Site.
5. Operating expenses will increase as the Company solicits
potential advertisers and attempts to enter into agreements for
advertising on the ViaVid Web Site.
6. Operating expenses will increase as the Company undertakes to
implement programs to monitor usage of the ViaVid Web Site and
develops customer profiles of its users.
Even so, it should be noted that the Company's future financial
results are uncertain due to a number
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of factors, many of which are outside the Company's control.
These factors include, but are not limited to:
1. the ability to increase usage of the ViaVid Web Site;
2. the ability to attract customers who are prepared to pay for
broadcast of video productions via the ViaVid Web Site;
3. the timing, cost and availability of advertising on other web
sites comparable to the Company's and over other media;
4. the amount and timing of costs relating to expansion of the
Company's operations;
5. the announcement or introduction of competing web sites and
products of competitors; and
6. general economic conditions and economic conditions specific to
the Internet and electronic commerce.
The Company believes the above statements may be forward-looking
statements. Actual results of the Company and the Company's actual
plan of operations may differ materially from what is stated above.
Factors which may cause the actual results of the Company or its
actual plan of operations to vary include, among other things,
decisions of the board of directors not to pursue a specific course
of action based on its re-assessment of the facts or new facts,
changes in the Internet business or general economic conditions and
those other factors identified herein.
EMPLOYEES
The Company has one full-time employee and has no part-time
employees. The Company conducts its business primarily through
agreements with its consultants and arms-length third parties. The
services of Mr. Brian Kathler, President of the Company, are
provided pursuant to a consulting agreement between the Company and
Kathler Holdings Inc., a private company controlled by Mr. Kathler,
as discussed below. Ms. Cheryl Watkins, Secretary and Treasurer of
the Company, is the Company's only employee and is a full-time
employee of the Company. The services of Mr. Paul Watkins, a
director of the Company, are provided pursuant to a consulting
agreement between the Company and Watkins Communications, as
discussed below. Watkins Communications is a private company
controlled by Mr. Watkins. The services of Mr. Kathler and Mr.
Watkins are provided through consulting agreements with companies
controlled by each of Mr. Kathler and Mr. Watkins at the request of
Mr. Kathler and Mr. Watkins. Each of Mr. Kathler and Mr. Watkins
have indicated to the Company their preference for such
arrangements due to their business reasons.
The services of Mr. Brian Kathler, President of the Company, are
provided pursuant to a Consulting Contract dated February 1, 1999
by and between the Company and Kathler Holdings Inc ("Kathler
Agreement"). The Kathler Agreement requires, among other things,
that Mr. Brian Kathler will act as the Company's President,
providing the following services: (1) exercising general direction
and supervision over the business and financial affairs of the
Company; (2) providing overall direction to the management of the
Company; (3) managing the day to day operations of the Company; (4)
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performing such other duties and observing such instructions as
may be reasonably assigned to him from time to time by the Board
of Directors; and (5) generally at all times abiding by all lawful
directions given to him by the Board of Directors of the Company.
The Kathler Agreement provides for a term of 1 year and
compensation to Kathler Holdings Inc. of $5,000 CDN per month. The
services of Mr. Kathler under this agreement are on a full time
basis. A copy of the Kathler Agreement is provided herewith and
made a part hereof by this reference. For more information on Mr.
Kathler, see the section on "Directors, Executive Officers and
Significant Employees" below.
The services of Mr. Paul Watkins as director and consultant are
provided to the Company pursuant to a Consulting Contract between
the Company and Watkins Communications Ltd. ("Watkins Agreement").
The Watkins Agreement requires, among other things, that Mr. Paul
Watkins act as the Company's director and consultant, providing the
following services: (1) exercising general direction and
supervision over the marketing and development of the business of
the Company; (2) providing direction to the management of the
Company; (3) assisting with the day to day operations of the
Company; (4) performing such other duties and observing such
instructions as may be reasonably assigned to him from time to time
by the Board of Directors; and (5) generally at all times abiding
by all lawful directions given to him by the Board of Directors of
the Company. The Watkins Agreement provides for a term of 1 year
and compensation to Watkins Communications Inc. of $5,000 CDN per
month. The services of Mr. Watkins under this agreement are on a
full time basis. A copy of the Watkins Agreement is provided
herewith and made a part hereof by this reference. For more
information on Mr. Watkins, see the section on "Directors,
Executive Officers and Significant Employees" below.
The Company employs Ms. Cheryl Watkins as its Secretary and
Treasurer to provide administrative, accounting and corporate
services to the Company. Ms. Watkins is an employee at will
without a written employment agreement, and is paid $4,000 CDN per
month for her services. For more information on Ms. Watkins, see
the section on "Directors, Executive Officers and Significant
Employees" below.
The services of Mr. O. Ronald Jones as Vice President of finance
are provided on a part time basis as an independent contractor,
without any formal written agreement with the Company. Consulting
fees paid to Mr. Jones are made on the basis of actual services
provided, as and when agreed by the Board of Directors. The
Company has four additional contract personnel who provide video
production services to the Company. These individuals an their
duties are:
Name of Consultant Duties
- ------------------ --------------------------------
Erica Henderson Videographer, Films video shoots
and edits video for streaming on
internet
Chelsea Atchison Video Production Coordinator.
Organizes video shoots and
provides production assistance
for VBC News 1
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Aubyn Freybe-Smith Video Editor. Edits all video
shoots prior to streaming on the
internet
Michael Moore Broadcaster
The Company has no written employment or consulting agreements with
any of the above-named persons.
None of the Company's employees are represented by a labor union,
and the Company considers its employee relations to be good.
Competition for qualified personnel in the Company's industry is
intense, particularly for software development and other technical
staff. The Company believes that its future success will depend in
part on its continued ability to attract, hire and retain qualified
personnel.
The Company does not maintain key person life insurance.
The Company also depends on several third parties in conducting
operations, including the following:
(1) the Company does not own a gateway onto the Internet, but
instead relies on an Internet service provider to connect the
ViaVid Web Site to the Internet; and
(2) the ViaVid Web Site depends on operating system, database, and
server software that has been developed, produced by and licensed
from third parties.
The Company has limited control over these third parties and has no
long-term relationships with any of them. If the Company is unable
to develop and maintain satisfactory relationships with such third
parties on acceptable commercial terms, or if the quality of
products and services by such third parties falls below a
satisfactory standard, the Company's business could be harmed.
Also, any loss of or inability to maintain or obtain upgrades to
certain of its technology licenses could result in delays in
developing the Company's systems until equivalent technology could
be identified, licensed or developed, and integrated.
RESEARCH AND DEVELOPMENT EXPENDITURES
Since the commencement of the ViaVid business in November, 1998,
the following amounts have been spent by the Company on start-up
and development expenses:
November 1,1998 to March 31, 1999 November 1, 1998
March 31, 1999 to June 30, 1999 to June 30, 1999
- ------------------ ---------------- ----------------
$75,104 $106,511 $181,615
14
<Page 15>
Start-up and development expenses have consisted of expenses
associated with product development, including development of the
ViaVid Web Site and the VBC News 1 Channel, business development
and market development.
YEAR 2000 RISK
1. 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."
2. 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 upgrading 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 by third parties, the Company cannot give any
assurance that all third party licensed software will be Year 2000
compliant.
The Company has investigated the Year 2000 compliance of all
computer hardware purchased by the Company 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, the Company 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. ("AT&T"), as to the Year 2000 compliance of the Internet
service provider's systems and operations. AT&T has given
representations to the Company that the 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.
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<Page 16>
3. Risks
The Company may realize exposure and risk if the systems for which
it is dependent upon to conduct day-to-day operations are not year
2000 compliant. The Company's worst case scenario would be the
inability of the 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 the Web Site would be
inoperable until such time as the Company had replaced or upgraded
computer hardware or software components. If the Year 2000
problem affects 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 will result in increased expense to the Company and
decreased revenues being earned from the Web Site or the delay the
realization of revenues from the Web Site.
4. Estimated Year 2000 Costs
The Company estimates that its total internal cost for ensuring
Year 2000 compliance for all internal systems to date to be 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.
5. Contingency Planning
The Company is developing a contingency plan to address situations
that may result if the Company 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 Company's business.
GOVERNMENT REGULATION
Due to the increasing popularity and use of the Internet, it is
likely that a number of laws and regulations may be adopted with
respect to the Internet generally, covering issues such as user
privacy, pricing, and characteristics and quality of products and
services. Similarly, the growth and development of the market for
Internet commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on those
companies conducting business over the Internet. The adoption of
any additional laws or regulations may decrease the growth of
commerce over the Internet, increase the cost of doing business or
otherwise have a harmful effect on the Company's business.
Government regulation may also impact the introduction of high
speed Internet access to consumers. The functionality of the
ViaVid Web Site and its attractiveness to users is enhanced using
high speed Internet access over conventional access.
16
<Page 17>
The Company may have to qualify to do business in other
jurisdictions. As the Company's broadcasts will be available over
the Internet in multiple states and foreign countries, such
jurisdictions may claim that the Company is required to qualify to
do business as a foreign Company in each such state and foreign
country. Failure to qualify as a foreign company in a jurisdiction
where required to do so could subject the Company to taxes and
penalties.
There are no material environmental protection laws that will apply
to or effect the Company's business.
TRADING OF THE COMPANY'S COMMON STOCK
There is currently no market for the Company's common stock and
there is no assurance that a market will develop. If a market
develops, the Company anticipates that the market price of its
common stock will be subject to wide fluctuations in response to
several factors, such as:
* actual or anticipated variations in the Company's results of
operations;
* the Company's ability or inability to generate new revenues;
* increased competition; and
* conditions and trends in the Internet and electronic commerce
industries.
Further, the Company hopes to have its common stock traded on the
Nasdaq OTC Bulletin Board. Companies traded on the OTC Bulletin
Board have traditionally experienced extreme price and volume
fluctuations. The Company's stock price may be adversely impacted
by factors which are unrelated or disproportionate to the operating
performance of the Company. The trading prices of many technology
companies' stocks are currently at or near historical highs and
reflect price earnings ratios substantially above historical
levels. These market fluctuations, as well as general economic,
political and market conditions such as recessions, interest rates
or international currency fluctuations may adversely affect the
market price of our common stock.
Item 7. Description of Property
The primary business activities of the Company and ViaVid are
carried on at leased premises located at Suite 520, 625 Howe Street
Vancouver, British Columbia, Canada V6C 2T6. The premises are
comprised of 1,862 square feet and are leased for a term of one
year expiring on February 29, 2000. The Company does not lease or
own any other property.
Item 8. Directors, Executive Officers and Significant Employees
The following information sets forth the names of the officers and
directors of the Company, their present positions, ages and
biographical information.
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<Page 18>
Directors
Name of Director Age
- ---------------- ---
Brian Kathler 36
Paul Watkins 35
Officers
Name of Officer Age Office
- --------------- --- ------
Brian Kathler 36 President
Cheryl Watkins 30 Secretary/Treasurer
O. Ronald Jones 56 Vice-President of Finance
Mr. Brian Kathler is a director and the President of the Company
and ViaVid. He has served as a director of ViaVid since October
31, 1998. Mr. Kathler has been employed since 1994 as follows:
1994 - 1996 MPR Teltech, Senior Software Engineer,
Team Lead- MPR Teltech is a company
involved in the business of telephone
research
1996 - 1997 Riptide Technologies, Director Consulting
Services
- Riptide Technologies is a company involved
in the business of software consulting
July 1997 - Nov. 1998 Self employed computer consultant.
Dec. 1998 - Present ViaVid Broadcasting Corp., President
and Director
Mr. Brian Kathler possesses more than fourteen years of experience
in the computer software development, consulting and management
industry. Most recently, Mr. Kathler has provided technical
consulting
services to several public companies based in Vancouver, British
Columbia, Canada as a self-employed computer consultant. Mr.
Kathler was a co-founder and a director of Riptide Technologies
based in Surrey, British Columbia, Canada from 1996 to 1997. Over
his fourteen years, Mr. Kathler has worked in a number of areas of
the software development industry ranging from programming to
assisting companies in getting started. Mr. Kathler was appointed
as director and President of the Company on January 20, 1999.
Mr. Paul Watkins is a director of the Company and ViaVid and is the
founder of Watkins Communications Inc., an Internet marketing and
news dissemination company with clients in the financial industry.
Watkins Communications Inc. has numerous clients listed on the
Vancouver Stock Exchange, Alberta Stock Exchange and Toronto Stock
Exchange for which it electronically files and disseminates press
releases and financial information. Mr. Watkins has a background
in
18
<Page 19>
computer sciences and has over 10 years experience in the
business of investor communications. Mr. Paul Watkins and Ms.
Cheryl Watkins are husband and wife.
Mr. Watkins has been the President and Director of Watkins
Communications Inc. from 1994 to the present. Mr. Watkins was
appointed a director of the Company on January 20, 1999.
Ms. Cheryl Watkins is the Secretary/Treasurer of the Company and
ViaVid. Ms. Watkins was appointed as Secretary/Treasurer of the
Company on January 20, 1999. Ms. Watkins has over 10 years of
experience as a legal assistant in the area of securities and
corporate commercial work. She is the co-founder of Watkins
Communications Inc., a British Columbia company which provides
public companies with a variety of investor communications
services. Ms. Watkins has been employed since 1994 as follows:
Oct 98 - Present ViaVid Broadcasting Corp. - Corporate
Secretary, Treasurer, and Administration
Oct 97 - Present Watkins Communications Inc. - Corporate
Secretary and Administrative Consultant
For Publicly Traded Companies
Mar 97 - Jul 98 Princeton Financial Services -
Administrator and Legal Support
Mar 96 - Mar 97 Gerald J. Shields Law Corp - Administrator
and Legal & Accounting Support
Feb 94 - Mar 96 Strategic Capital - Administrator and
Legal & Accounting Support
Mr. O. Ronald Jones is Vice-President of Finance of the Company.
Mr. Jones is the president and a director of O. Jones Financial
Corp., a private company which provides corporate finance and
investor relation services. Mr. Jones has been president and
director of O. Jones Financial Corp. since 1994. Mr. Jones was
appointed as Vice-President of Finance of the Company on January
20, 1999.
Item 9. Remuneration of Directors and Officers
The following table sets forth certain information as to the
Company's three highest paid officers and directors for the period
from the commencement of the ViaVid Business to July 31, 1999. No
other compensation was paid to any such officer or directors other
than the cash compensation set forth below.
19
<Page 20>
SUMMARY COMPENSATION TABLE
--------------------------
Name of Individual or Capacities in which Aggregate
Identity of Group Remuneration was Received Remuneration
- --------------------- ------------------------- ------------
Brian Kathler Director and President $23,450
Paul Watkins Director $23,450
Cheryl Watkins Secretary/Treasurer $14,740
O. Ronald Jones Vice President, Finance $ 8,543
Officers and Directors Directors and Officers $70,183
of the Company as a Group
*Payment is made in Canadian Dollars, but is provided above in US
Dollars based on a conversion rate of 1.4925 Canadian to $1.00 U.S.
as of August 31, 1999.
The Company anticipates compensation being increased upon the
Company achieving sufficient revenues and/or financing to pay such
increased compensation.
Item 10. Security Ownership of Management and Certain Security
Holders
The following table sets forth, as of August 15, 1999, the
beneficial ownership of the Company's Common Stock by each
officer and director of the Company, by each person known by
the Company to beneficially own more than 10% of the Company's
Common Stock outstanding, and by the officers and directors of
the Company as a group. Except as otherwise indicated, all
shares are owned directly.
Name and address Number of Shares Percentage of
Title of class of beneficial owner of Common Stock Common Stock(1)
- -------------- ------------------- ---------------- ---------------
Common Stock Brian Kathler(2) 1,700,000 28.3%
Director, President
40 - 16061 85th Avenue
Surrey, BC V4N 4Y5
Common Stock Paul Watkins 850,000 14.1%
Director
187 East Braemar Road
North Vancouver, BC
V7N 1P7
20
<Page 21>
Common Stock Cheryl Watkins 850,000 14.1%
Secretary
and Treasurer
187 East Braemar Road
North Vancouver, BC
V7N 1P7
Common Stock O. Ronald Jones 300,000 5.0%
Vice-President,
Finance
Suite 605 -
1155 Homer Street
Vancouver, BC V6C 5T5
Common Stock Bob Gamon(3) 1,700,000 28.3%
4768 Woodgreen
West Vancouver, BC
Common Stock All Officers
and Directors 3,700,000 62.9%
as a Group
(4 persons)
- ------------------------------------------------------------------
(1) Based on 6,014,000 shares of Common Stock of the Company
issued and outstanding on August 15, 1999.
(2) The 1,700,000 shares of common stock beneficially owned by
Brian Kathler are registered in the name of Kathler Holdings Inc.
(3) The 1,700,000 shares of common stock beneficially owned by Bob
Gamon are registered in the name of 549419 BC Ltd., a private
company. Mr. Gamon is the sole director and officer of 549419 BC
Ltd. and is the owner of all of the voting common shares of 549419
BC Ltd.
There are no options, warrants or rights to purchase securities
issued by the Company or any of its subsidiaries held by any of the
above named individuals.
Item 11. Interest of Management and Others in Certain Transactions
Except as set forth below, none of the following persons has any
direct or indirect material interest in any transaction to which
the Company is a party since the incorporation of the Company in
January, 1999, or in any proposed transaction to which the Company
is to be a party:
(A) any director or officer of the Company;
(B) any proposed nominee for election as a director of the
Company;
(C) any person who beneficially owns, directly or indirectly,
shares carrying more than 10% of the voting rights attached to
the Company's common stock; or
21
<Page 22>
(D) any relative or spouse of any of the foregoing persons, or
any relative of such spouse, who has the same house as such person
or who is a director or officer of any parent or subsidiary of
the Company.
The Company acquired ViaVid pursuant to the acquisition agreement
dated January 26, 1999 between the Company and Mr. Paul Watkins,
Ms. Cheryl Watkins, 549419 BC Ltd. and Kathler Holdings Inc. Mr.
Brian Kathler is a director and President of the Company and is a
director and the owner of 60% of the voting shares of Kathler
Holdings Inc., a private company. Kathler Holdings Inc. was issued
1,700,000 shares of the Company's common stock on completion of
the Acquisition Agreement. Mr. Paul Watkins is a director of the
Company and was issued 850,000 shares of the Company's common stock
on completion of the Acquisition Agreement. Ms. Cheryl Watkins is
the Secretary/Treasurer of the Company and was issued 850,000
shares of the Company's common stock upon completion of the
Acquisition Agreement. Mr. Bob Gamon is a director and is the
owner of all of the voting shares of 549419 BC Ltd., a private
company . 549419 BC Ltd. was issued 1,700,000 shares of the
Company's common stock on completion of the Acquisition Agreement.
The shares issued to 549419 BC Ltd. represent more than 10% of the
voting rights attached to the Company's common stock outstanding.
In addition, Kathler Holdings Inc. and Watkins Communications Inc.
have entered into consulting contracts (attached hereto), in which
those companies provide the services of Mr. Brian Kathler as
President and Mr. Paul Watkins as director and consultant,
respectively, in exchange for a payment of $5,000 per month each.
See Section on "Employees" provided above.
Item 12. Securities Being Registered
The securities being registered are the shares of the Company's
common stock, par value $0.001 per share. Under the Company's
Articles of Incorporation, the total number of shares of all
classes of stock that the Company has authority to issue is
25,000,000 shares of common stock, par value $0.001 per share (the
"Common Stock"). As of August 15, 1999, a total of 6,014,000 shares
of Common Stock are issued and outstanding.
1. Common Stock
Holders of Common Stock have the right to cast one vote for each
share held of record on all matters submitted to a vote of holders
of Common Stock, including the election of directors. Holders of
Common Stock do not have cumulative voting rights in the election
of directors. Holders of a majority of the voting power of the
Common Stock issued and outstanding and entitled to vote,
represented in person or by proxy, are necessary to constitute a
quorum at any meeting of the Company's stockholders, and the vote
of the holders of a majority of such outstanding shares is required
to effect certain fundamental corporate changes such as
liquidation, merger or amendment of the Company's Articles of
Incorporation.
Holders of Common Stock are entitled to receive dividends pro rata
based on the number of shares held, when, as and if declared by the
Board of Directors, from funds legally available therefor. In the
event of the liquidation, dissolution or winding up of the affairs
of the Company, all assets and funds of the Company remaining after
the payment of all debts and other liabilities shall be
distributed,
22
<Page 23>
pro-rata, among the holders of the Common Stock. Holders of Common
Stock are not entitled to pre-emptive or subscription or conversion
rights, and there are no redemption or sinking fund provisions
applicable to the Common Stock. All outstanding shares of Common
Stock are fully paid and non-assessable.
2. Transfer Agent
Pacific Stock Transfer of Las Vegas, Nevada is the transfer agent
for the Shares.
3. Share Purchase Warrants
The Company has not issued and does not have outstanding any
warrants to purchase shares of the Common Stock.
4. Options
The Company has not issued and does not have outstanding any
options to purchase shares of the Common Stock. The Company
anticipates approving an incentive stock option plan for its
directors, officers, employees and permitted consultants.
5. Convertible Securities
The Company has not issued and does not have outstanding any
securities convertible into shares of Common Stock or any rights
convertible or exchangeable into shares of Common Stock.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Stockholder Matters
There is no present public market for the Company's Common Stock.
The Company anticipates applying for a listing on the OTC Bulletin
Board upon effectiveness of this registration statement.
There can be no assurance that a public market will materialize.
As of the date of this registration statement, there were twenty-
nine (29) registered shareholders in the Company.
None of the holders of the Company's common shares have any right
to require the Company to register its common shares pursuant to
the Securities Act of 1933.
The Company has not declared any dividends since its incorporation
in January, 1999. There are no dividend restrictions that limit
the Company's ability to pay dividends on Common Stock.
Item 2. Legal Proceedings
The Company is not currently a party to any legal proceeding which
may or could have a material adverse impact on the Company or its
operations.
23
<Page 24>
Item 3. Changes in and Disagreements with Accountants
The Company has had no changes in or disagreements with its
accountants since its incorporation in January, 1999.
Item 4. Recent Sales of Unregistered Securities
The Company completed the issuance of 5,100,000 common shares on
January 27, 1999 pursuant to the Acquisition Agreement to the
persons and companies noted herein. These shares were issued
pursuant to Section 4(2) of the Securities Act of 1933 to the
former shareholders of ViaVid, each of whom is now a director,
officer or owner of more than 10% of the Company's issued and
outstanding common stock. The 5,100,000 shares of common stock are
"restricted" shares, as defined in the Act.
The Company completed an offering of 500,000 shares of Common Stock
to two (2) purchasers at a price of $0.01 per share on February 2,
1999. The purchasers were O. Ronald Jones, Vice-President of
Finance of the Company, and David Jones, the son of Ronald Jones.
The offering was completed pursuant to Rule 504 of Regulation D of
the Act.
The Company completed an offering of 100,000 shares of Common Stock
to eight (8) purchasers at a price of $0.50 per share on February
12, 1999 pursuant to Rule 504 of Regulation D of the Act. The
offering was completed to persons known to the officers and
directors of the Company.
The Company completed an offering of 184,000 common shares to
twelve (12) purchasers at a price of $1.00 per share on April 5,
1999 pursuant to Rule 504 of Regulation D of the Act. The offering
was completed to persons known to the officers and directors of the
Company.
The Company completed an offering of 100,000 common shares to one
(1) purchaser at a price of $1.00 per share on June 14, 1999
pursuant to Regulation S. The Company completed an additional
offering of 30,000 common shares to two (2) purchasers at a price
of $1.00 per share on July 30, 1999. Each purchaser is a private
investor. The Company has agreed to file a registration statement
in accordance with the Act in order to qualify these shares for
resale upon effectiveness of this Registration Statement and
clearance of all of the SEC's comments.
Item 5. Indemnification of Directors and Officers
The officers and directors of the Company are indemnified as
provided by the Nevada Revised Statutes (the "NRS") and the Bylaws
of the Company.
Under the NRS, director immunity from liability to a Company or its
shareholders for monetary liabilities applies automatically unless
it is specifically limited by a Company's Articles of Incorporation
(which is not the case with the Company's Articles of
incorporation). Excepted from that immunity are: (i) a willful
failure to deal fairly with the Company or its shareholders in
connection with a matter in which the director has a material
conflict of interest; (ii) a violation of criminal law (unless the
director had reasonable cause to believe that his or her conduct
was lawful or no reasonable cause to believe that his or her
conduct was unlawful); (iii) a transaction from which the director
derived an improper personal profit; and (iv) willful misconduct.
24
<Page 25>
The By-laws of the Company provide that the Company will indemnify
its directors and officers to the fullest extent not prohibited by
Nevada law; provided, however, that the Company may modify the
extent of such indemnification by individual contracts with its
directors and officers; and, provided, further, that the Company
shall not be required to indemnify any director or officer in
connection with any proceeding (or part thereof) initiated by such
person unless (i) such indemnification is expressly required to be
made by law, (ii) the proceeding was authorized by the Board of
Directors of the Company, (iii) such indemnification is provided by
the Company, in its sole discretion, pursuant to the powers vested
in the Company under Nevada law or (iv) such indemnification is
required to be made pursuant to the By-laws.
The By-laws of the Company provide that the Company will advance to
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director
or officer, of the Company, or is or was serving at the request of
the Company as a director or executive officer of another Company,
partnership, joint venture, trust or other enterprise, prior to the
final disposition of the proceeding, promptly following request
therefor, all expenses incurred by any director or officer in
connection with such proceeding upon receipt of an undertaking by
or on behalf of such person to repay said amounts if it should be
determined ultimately that such person is not entitled to be
indemnified under the By-laws of the Company or otherwise.
The By-laws of the Company provide that no advance shall be made by
the Company to an officer of the Company (except by reason of the
fact that such officer is or was a director of the Company in which
event this paragraph shall not apply) in any action, suit or
proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made
(i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or
(ii) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, that the facts known to the
decision-making party at the time such determination is made
demonstrate clearly and convincingly that such person acted
in bad faith or in a manner that such person did not believe to be
in or not opposed to the best interests of the Company.
PART F/S
FINANCIAL STATEMENTS
The Company's audited Financial Statements, as described below, are
attached hereto.
1. Audited financial statements for the period ending March 31,
1999, including:
(a) Consolidated Balance Sheet;
(b) Consolidated Statement of Operations;
(c) Consolidated Statement of Stockholders' Equity;
25
<Page 26>
(d) Consolidated Statement of Cash Flows;
(e) Notes to the Consolidated Financial Statements.
2. Consent of Auditor
3. Unaudited financial statements for the period ending June 30,
1999, including:
(a) Consolidated Balance Sheet;
(b) Consolidated Statement of Operations;
(c) Consolidated Statement of Stockholders' Equity;
(d) Consolidated Statement of Cash Flows;
(e) Notes to the Consolidated Financial Statements.
PART III
INDEX TO EXHIBITS
Exhibit 1: Articles of Incorporation
Exhibit 2: By-Laws of the Company
Exhibit 3: Acquisition Agreement dated January 26, 1999 between
the Company and Mr. Paul Watkins, Ms. Cheryl Watkins,
549419 BC Ltd. and Kathler Holdings Inc.
Exhibit 4: Consulting Contract with Kathler Holdings Inc.
Exhibit 5: Consulting Contract with Watkins Communications Inc.
26
<Page 27>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this Amendment No. 1 to Form 10-SB Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: August 30, 1999 VIAVID BROADCASTING, INC.
By: \s\ Brian Kathler
------------------------
BRIAN KATHLER
Director and President
<Page 28>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
MARCH 31, 1999
<Page 29>
A Partnership of Incorporated Professionals
DAVIDSON & COMPANY Chartered Accountants
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
ViaVid Broadcasting Inc.
(A Development Stage Company)
We have audited the consolidated balance sheets of ViaVid
Broadcasting Inc. as at March 31, 1999 and the related
consolidated statements of operations, shareholders' equity and
cash flows for the period from incorporation on January 20, 1999
to March 31, 1999. These consolidated financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards 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 the
Company as at March 31, 1999 and the results of its operations
and the changes in its shareholders' equity and cash flows for
the period from incorporation on January 20, 1999 to March 31,
1999 in accordance with generally accepted accounting principles
in the United States of America.
The accompanying financial statements have been prepared assuming
that ViaVid Broadcasting Inc. will continue as a going concern.
As discussed in Note 1 to the financial statements, the Company's
loss from operations raises substantial doubt as to the Company's
ability to continue as a going concern unless the company attains
future profitable operations and/or obtains additional financing.
The financial statements do not include any adjustments relating
to the recoverability and classification of liabilities that might
result from the outcome of this uncertainty.
"DAVIDSON & COMPANY"
Vancouver, Canada Chartered Accountants
May 3, 1999
(except as to Notes 1 and 8,
which are as of August 18, 1999)
A Member of Accounting Group International
------------------------------------------
Suite 1200, Stock Exchange Tower, 609 Granville Street,
P.O. Box 10372, Pacific Centre, Vancouver, BC, Canada, V7Y 1G6
Telephone (604) 687-0947 Fax (604) 687-6172
<Page 30>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Expressed in United States Dollars)
AS AT MARCH 31, 1999
==================================================================
ASSETS
Current
Cash $ 163,406
Accounts receivable 6,841
-----------
170,247
Capital assets (Note 4) 17,510
-----------
$ 187,757
==================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 6,866
Due to related parties (Note 5) 8,459
-----------
15,325
-----------
Shareholders' equity
Capital stock
Authorized
25,000,000 common shares with a
par value of $0.001 per share
Allotted but not issued
5,884,000 common shares 5,884
Additional paid-in capital 238,216
Deficit accumulated during the development stage (71,668)
-----------
172,432
-----------
$ 187,757
==================================================================
Nature and continuance of operations (Note 1)
Subsequent event (Note 9)
On behalf of the Board:
"Brian Kathler" Director "Paul Watkins" Director
- --------------------- ----------------------
The accompanying notes are an integral part of these consolidated
financial statements.
<Page 31>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
(Expressed in United States Dollars)
PERIOD FROM INCORPORATION ON JANUARY 20, 1999 TO MARCH 31, 1999
==================================================================
REVENUE $ 3,436
-----------
EXPENSES
Consulting 36,814
Depreciation 8,049
Office and miscellaneous 7,109
Professional fees 9,931
Rent 7,798
Salary and benefits 4,289
Telephone 1,114
-----------
75,104
-----------
Loss for the period $ (71,668)
==================================================================
Loss per share $ (0.01)
==================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
<Page 32>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Expressed in United States Dollars)
PERIOD FROM INCORPORATION ON JANUARY 20, 1999 TO MARCH 31, 1999
==================================================================
Common Stock Deficit
-------------- Accumulated
During the
Additional Develop-
Number Paid-in ment
of Shares Amount Capital Stage Total
- -------------------------------------------------------------------
Allotted
shares for
acquisition
(Note 3) 5,100,000 $ 5,100 $ - $ - $ 5,100
Allotted shares
for cash at
$0.01 per
share 500,000 500 4,500 - 5,000
Allotted shares
for cash at
$0.50 per
share 100,000 100 49,900 - 50,000
Allotted 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
==================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
<Page 33>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in United States Dollars)
PERIOD FROM INCORPORATION ON JANUARY 20, 1999 TO MARCH 31, 1999
==================================================================
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Loss for the period $ (71,668)
Items not affecting cash
Depreciation 2,614
Write-down of goodwill 5,435
Changes in non-cash working capital items
Increase in accounts receivable (6,841)
Increase in accounts payable 6,866
-----------
Net cash used in operating activities (63,594)
-----------
INVESTING ACTIVITIES
Acquisition of capital assets (20,124)
Acquisition of subsidiary (335)
-----------
Net cash used in investing activities (20,459)
-----------
FINANCING ACTIVITIES
Proceeds from allotted shares 239,000
Loans from related parties 8,459
-----------
Net cash provided by financing activities 247,459
-----------
Cash, end of period $ 163,406
==================================================================
Supplemental disclosure for non-cash operating,
investing, and financing activities
Allotted shares for purchase of subsidiary $ 5,100
Cash paid during the period for interest -
Cash paid during the period for income taxes -
=================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
<Page 34>
VIAVID BROADCASTING INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
MARCH 31, 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
$71,668 for the period from inception to March 31, 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
is presently undertaking an offering of 1,000,000 common shares
of the Company at $1.00 per share to persons who are "Non - U.S.
Persons" in accordance to Regulation S of the United States
Securities Act of 1933. To date, the Company has received
$130,000 of this offering which, once fully completed, will
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 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 year. Actual results in
future periods could be different from these estimates made in
the current year. 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.
<Page 35>
VIAVID BROADCASTING INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
MARCH 31, 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 and 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.
<Page 36>
VIAVID BROADCASTING INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
MARCH 31, 1999
==================================================================
4. CAPITAL ASSETS
==================================================================
Accumulated Net
Cost Depreciation Book Value
- ------------------------------------------------------------------
Computer equipment $ 12,034 $ 1,805 $ 10,229
Office furniture 5,503 550 4,953
Telephone and video equipment 2,587 259 2,328
-------- -------- --------
$ 20,124 $ 2,614 $ 17,510
==================================================================
5. CAPITAL STOCK
Stock options and warrants
There are no options or warrants to purchase common shares
outstanding at March 31, 1999.
6. RELATED PARTY TRANSACTIONS
During the period, the Company entered into the following
transactions with related parties:
a) Paid consulting fees as follows:
* $20,074 to two directors of the Company
* $6,574 to an officer of the Company
* $1,673 to a director of the subsidiary
b) Paid salary of $4,015 to an officer of the Company.
c) The Company purchased from three directors, computer
equipment totalling $4,410. These same directors
advanced loans to the Company of $4,049.
7. INCOME TAXES
The Canadian operating loss for the period to date of $71,668,
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.
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.
<Page 37>
VIAVID BROADCASTING INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
MARCH 31, 1999
==================================================================
9. SUBSEQUENT EVENT
Subsequent to March 31, 1999, the Company is offering 1,000,000
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. The Company has received $130,000 of
this offering.
<Page 38>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited - Prepared by Management)
JUNE 30, 1999
<Page 39>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Expressed in United States Dollars)
(Unaudited - Prepared by Management)
==================================================================
June 30, March 31,
1999 1999
- ------------------------------------------------------------------
ASSETS
Current
Cash $ 81,993 $ 163,406
Accounts receivable 11,372 6,841
--------- ---------
93,365 170,247
Capital assets (Note 4) 95,211 17,510
--------- ---------
$ 188,576 $ 187,757
==================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and
accrued liabilities $ 8,428 $ 6,866
Due to related parties 8,459 8,459
--------- ---------
16,887 15,325
--------- ---------
Shareholders' equity
Capital stock
Authorized
25,000,000 common
shares with a par
value of $0.001
per share
Issued
5,984,000 common shares
(5,884,000 at
March 31, 1999) 5,984 5,884
Additional paid-in capital 338,116 238,216
Deficit accumulated during the
development stage (172,411) (71,668)
--------- ---------
171,689 172,432
--------- ---------
$ 188,576 $ 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.
<Page 40>
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 Three Month January 20,
Incorporation Period Ended 1999 to
to June 30, June 30, March 31,
1999 1999 1999
- ------------------------------------------------------------------
REVENUE $ 9,204 $ 5,768 $ 3,436
--------- --------- ---------
EXPENSES
Consulting 76,731 39,917 36,814
Depreciation 12,143 4,094 8,049
Internet, website
and graphics 16,632 16,632 -
Office and
miscellaneous 18,667 11,558 7,109
Professional fees 21,917 11,986 9,931
Rent 16,308 8,510 7,798
Salary and benefits 13,089 8,800 4,289
Telephone 2,654 1,540 1,114
Travel and
entertainment 3,474 3,474 -
--------- --------- ---------
181,615 106,511 75,104
--------- --------- ---------
Loss for the period $(172,411) $(100,743) $ (71,668)
==================================================================
Loss per share $ (0.03) $ (0.02) $ (0.01)
==================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
<Page 41>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Expressed in United States Dollars)
(Unaudited - Prepared by Management)
==================================================================
Common Stock Deficit
-------------- Accumulated
During the
Additional Develop-
Number Paid-in ment
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
Allotted
shares for
cash 100,000 100 99,900 - 100,000
Loss for
the period - - - (100,743) (100,743)
Balance at
June 30, 1999 5,984,000 $ 5,984 $ 338,116 $(172,411) $ 171,689
===================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
<Page 42>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in United States Dollars)
(Unaudited - Prepared by Management)
===================================================================
Period
From
Cumu- Incorpo-
lative ration
From on January
Incorpo- 20, 1999
ration Three Month to
to June 30, Period Ended March 31,
1999 June 30,1999 1999
- -------------------------------------------------------------------
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Loss for the period $ (172,411) $ (100,743) $ (71,668)
Items not affecting cash
Depreciation 6,708 4,094 2,614
Write-down of
goodwill 5,435 - 5,435
Changes in non-cash
working capital items
Increase in
accounts
receivable (11,371) (4,531) (6,841)
Increase in
accounts
payable 8,428 1,562 6,866
---------- ----------- ----------
Net cash used in
operating activities (163,211) (99,618) (63,594)
---------- ----------- ----------
INVESTING ACTIVITIES
Acquisition of
capital assets (101,920) (81,795) (20,124)
Acquisition of
subsidiary (335) - (335)
---------- ----------- ----------
Net cash used in
investing activities (102,255) (81,795) (20,459)
---------- ----------- ----------
FINANCING ACTIVITIES
Proceeds from common
shares 339,000 100,000 239,000
Loans from related
parties 8,459 - 8,459
---------- ----------- ----------
Net cash provided
by financing
activities 347,459 100,000 247,459
---------- ----------- ----------
Change in cash for the period 81,993 (81,413) 163,406
Cash, beginning of period 163,406 163,406 -
---------- ----------- ----------
Cash, end of period $ 245,399 $ 81,993 $ 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.
<Page 43>
VIAVID BROADCASTING INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited - Prepared by Management)
JUNE 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
$172,411 for the period from inception to June 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
is presently undertaking an offering of 1,000,000 common shares
of the Company at $1.00 per share to persons who are "Non - U.S.
Persons" in accordance to Regulation S of the United States
Securities Act of 1933. To date, the Company has received
$130,000 of this offering which, once fully completed, will
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 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.
<Page 44>
VIAVID BROADCASTING INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited - Prepared by Management)
JUNE 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.
<Page 45>
VIAVID BROADCASTING INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 1999
(Unaudited - Prepared by Management)
==================================================================
4. CAPITAL ASSETS
==================================================================
Net Book Value
--------------------
Accumulated June 30, March 31,
Cost Depreciation 1999 1999
- -----------------------------------------------------------------
Computer equipment $ 85,462 $ 5,326 $ 80,136 $ 10,229
Office furniture 5,769 805 4,964 4,953
Telephone equipment 2,038 295 1,743 1,834
Video equipment 8,650 282 8,368 494
-------- -------- -------- --------
$101,919 $ 6,708 $ 95,211 $ 17,510
=================================================================
5. CAPITAL STOCK
The Company is presently offering 1,000,000 common shares at
$1.00 per share to persons who are "Non-U.S. Persons" in
accordance with regulations of the United States Securities Act
of 1933. The Company has received $100,000 and subsequent to
June 30, 1999, it received a further $30,000.
6. RELATED PARTY TRANSACTIONS
During the period, the Company entered into the following
transactions with related parties:
a) Paid consulting fees as follows:
*$20,598 (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 $8,239 (March 31, 1999 - $4,015) to
an officer of the Company.
7. INCOME TAXES
The Canadian operating loss for the period to date of $172,411,
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.
