As Filed with the Securities and Exchange Commission on February 3, 2000
Registration No. 333-__________
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ViaVid Broadcasting, Inc.
- --------------------------------------------------------------------------------
(Name of small business issuer in its charter)
NEVADA 7389 98-0206168
- --------------------------------------------------------------------------------
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classification Identification Number)
incorporation or Code Number)
organization)
3955 GRAVELEY STREET -
BURNABY, BRITISH COLUMBIA, CANADA V5C 3T4
(604) 669-0047
- --------------------------------------------------------------------------------
(Address, and telephone number, of principal executive offices)
3955 GRAVELEY STREET
BURNABY, BRITISH COLUMBIA, CANADA V5C 3T4
- --------------------------------------------------------------------------------
(Address of principal place of business or intended principal place of business)
BRIAN KATHLER, PRESIDENT
3955 GRAVELEY STREET
BURNABY, BRITISH COLUMBIA, CANADA V5C 3T4
(604) 669-0047
- --------------------------------------------------------------------------------
(Name, address, and telephone number, of agent for service)
Copy to:
WILLIAM S. CLARKE, ESQUIRE
WILLIAM S. CLARKE, P.A.
457 NORTH HARRISON STREET, SUITE 103
PRINCETON, NEW JERSEY 08540
(609) 921-3663
FACSIMILE (609) 921-3933
Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT HAS BECOME EFFECTIVE.
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
TITLE OF EACH
CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock, 1,037,000 $3.75(1) $3,888,750 $1027.00
$.001 par value
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
TOTAL $1027.00
- ------------------------------------------------------------------------ ---------------------- ----------------------
</TABLE>
(1) The registration fee has been calculated in accordance with Rule 457(c). On
January 31, 2000, the average of the bid and asked price for the Company's
Common Stock on the OTC Bulletin Board was $3.75.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its Effective Date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
2
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 3 , 2000
PROSPECTUS
VIAVID BROADCASTING, INC.
1,037,000 SHARES
COMMON STOCK
Par Value $0.001 Per Share
----------------
ViaVid Broadcasting, Inc. is in the business of providing our customers
with video production and Internet news broadcasting and dissemination services.
We broadcast news and corporate information for our customers over the Internet
through our Web site at http://www.viavid.com. Our business objective is to
develop an Internet video broadcasting company that offers a wide variety of
video services utilizing streaming video technology. We are a development-stage
company that has only recently commenced business and has earned only minimal
revenues to date.
This Prospectus relates to the resale by the holders of up to an aggregate
of 1,037,000 shares of our Common Stock, all of which are currently outstanding.
The shares were acquired by the selling shareholders directly from us in
transactions that were exempt from the registration requirements of the U.S.
Securities Act of 1933, as amended.
Our Common Stock is quoted on the OTC Bulletin Board(R) with a trading
symbol of "VVDB." On January 31, 2000, the closing bid quotation of our Common
Stock as reported on the OTC Bulletin Board(R) was $3-3/4. Quotations for our
Common Stock first were entered onto the OTC Bulletin Board on January 4, 2000.
We expect that these shares of Common Stock may be sold or distributed from
time to time by or for the account of the holders through underwriters or
dealers, through brokers or other agents, or directly to one or more purchasers,
including pledgees, at market prices prevailing at the time of sale or at prices
otherwise negotiated. The shares also may be sold by donees or by other persons
acquiring the shares. We will receive no portion of the proceeds from the sale
of the shares. We will bear certain expenses incident to the registration of the
shares.
We ask that you consider carefully the risk factors beginning on page 6 of
this prospectus. There can be no assurance that our business plan will be
successful.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THE DATE OF THIS PROSPECTUS IS FEBRUARY , 2000
<PAGE>
TABLE OF CONTENTS
Summary.................................................................... 4
Risk Factors............................................................... 6
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1996........................... 19
Use of Proceeds............................................................ 20
Price Range of Common Stock................................................ 20
Dividend Policy............................................................ 20
Management's Discussion and Analysis of Financial Condition or Plan of
Operation ................................................................ 20
Description of Business................................................... 25
Directors, Executive Officers, Promoters and Control Persons.............. 32
Executive Compensation.................................................... 34
Certain Relationships and Related Transactions............................ 35
Selling Shareholders...................................................... 36
Plan of Distribution....................................................... 37
Security Ownership of Certain Beneficial Owners and Management............ 38
Description of Securities................................................. 39
Disclosure of Commission Position of Indemnification for Securities Act
Liabilities .............................................................. 40
Index to Financial Statements............................................. F-1
Financial Statements......................................................
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and its rules and regulations. This means that we file
reports, proxy and information statements and other information with the
Securities and Exchange Commission. The reports, proxy and information
statements and other information that we file can be read and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, Northwest, Washington, DC 20549; and at the Commission's regional
offices located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and at Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of
such material can also be obtained from the Commission at prescribed rates
through its Public Reference Section at 450 Fifth Street, Northwest, Washington,
DC 20549. The Commission maintains a Web site that contains the reports, proxy
and information statements and other information that we file electronically
with the Commission and the address of that Web site is http://www.sec.gov.
This Prospectus is part of a registration statement we filed with the
Commission. You should rely only on the information or representations provided
in this Prospectus and any information we have incorporated by reference. We
have authorized no one to provide you with any information other than that
provided in this Prospectus. We have authorized no one to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this Prospectus is accurate as of any date other than the date on
the front of the document
3
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information, financial statements and other data appearing elsewhere in this
Prospectus. At various places in this Prospectus, we make reference to the
"Company." When we use that term, we mean ViaVid Broadcasting, Inc., a Nevada
corporation and its wholly owned subsidiary, ViaVid Broadcasting Corp.
VIAVID BROADCASTING, INC.
We are currently in the business of providing small-cap public companies
with video production and Internet news broadcasting and dissemination services.
We broadcast news and corporate information for our customers over the Internet
through our Web site at http://www.viavid.com. We refer to this site as VBC News
1 Channel.
We believe that small-cap public companies have not been able to achieve
coverage on traditional media based Internet broadcast services such as
Bloomberg and CNBC. We believe that there is market demand from small-cap public
companies that want to broadcast corporate news and information on the Internet
and our objective is to meet this demand by providing Internet broadcasting
services to these companies. Our Internet broadcasts will be produced solely for
broadcast via the Internet as opposed to being Internet broadcasts of television
coverage. We will target public and financial services companies as customers in
order to educate them on the availability of our service and technology. Our
business objective is to develop an Internet video broadcasting company that
offers a wide variety of video services utilizing streaming video technology.
We are also establishing other Channels to provide viewers with access to
news and information relating to such topics as entertainment, health and
lifestyles and sports.
We are a development stage company that has only recently commenced
business and that has earned only minimal revenues to date. There can be no
assurance that our business plans will be successful.
Our principal executive offices are located at 3955 Graveley Street,
Burnaby, British Columbia, V5C 3T4 (telephone no.: (604) 669-0047).
SECURITIES BEING OFFERED 1,037,000 shares of common stock.
SECURITIES ISSUED
AND TO BE ISSUED 6,546,000 shares of common stock were
issued and outstanding as of the date of
this Prospectus. All of the common stock
to be sold pursuant to this prospectus
will be sold by existing shareholders.
4
<PAGE>
USE OF PROCEEDS We will not receive any proceeds from
the sale of the common stock by the
selling shareholders. See "Use of
Proceeds."
RISK FACTORS For a discussion of certain risks
you should consider in connection with a
purchase of the shares of our Common
Stock, see "Risk Factors."
SUMMARY HISTORICAL FINANCIAL DATA
The summary historical financial information presented below has been
derived from our financial statements for the period from January 20, 1999 to
March 31, 1999 and from our unaudited financial statements for the six months
ended September 30, 1999.
<TABLE>
<CAPTION>
PERIOD JANUARY 20 TO MARCH SIX MONTHS ENDED SEPTEMBER 30,
31, 1999 1999
--------------------------- ------------------------------
(AUDITED) (UNAUDITED)
<S> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue $3,436 $15,553
Expenses $75,104 $259,815
Loss for the period $(71,668) $(244,262)
Loss per share (basic and diluted) $(0.01) $(0.04)
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
1999
-------------------
(UNAUDITED)
<S> <C>
BALANCE SHEET DATA:
Cash $187,007
Working capital $206,952
Shareholders' equity $328,170
</TABLE>
5
<PAGE>
RISK FACTORS
An investment in shares of our Common Stock involves a high degree of risk.
You should consider the following factors, in addition to the other information
contained in this Prospectus, in evaluating our business and proposed activities
before you purchase any shares of our common stock. You should also see the
"Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1996" regarding risks and uncertainties
relating to us and to forward looking statements in this Prospectus.
RISKS APPLICABLE TO OUR BUSINESS
EXTREMELY LIMITED OPERATING HISTORY; HISTORY OF NET LOSSES
We have had an extremely limited operating history. Our business was
established in January 1999 and our Web site began operations on the Internet in
February 1999. Our total revenues since inception through September 30, 1999
were $18,989. An investor must consider the risks, expenses and difficulties
frequently encountered by companies such as ours, in the early stages of their
development particularly in the new and rapidly evolving market for Internet
products, content and services. We cannot assure you that we will be successful
in addressing such risks. We cannot assure you that our revenue will grow
sufficiently to assure our future success. New companies, such as ours,
experience expenses, difficulties and unforeseen problems that create a higher
risk of business failure. If we are not successful in overcoming these expenses
and difficulties, our business may fail.
POSSIBLE INABILITY TO IMPLEMENT OUR BUSINESS STRATEGY
Our business strategy includes completion of the following business
objectives:
- - Attracting public companies and other financial industry customers who are
prepared to pay for having us prepare digital video productions and
broadcast these video productions on our Web site. We have only recently
begun to seek payment from customers for these video productions;
- - Continuing to expand the usage of our Web site by attracting both financial
industry customers and viewers;
- - Expanding the functionality and capability of our Web site;
- - Attracting advertising to our Web site and establishing other revenue
generating opportunities for our Web site;
- - Responding to competitive developments;
- - Implementing and executing our business strategy successfully; and
- - Continuing to develop and upgrade our technologies and our Web site.
6
<PAGE>
If we are not successful in implementing all components of our business
strategy successfully, our operating results and financial condition may be
harmed and our business may fail.
POSSIBLE INABILITY TO GENERATE REVENUES AND PROFITABLE OPERATIONS
We have earned minimal revenues to date and we are presently not
profitable. Our business and marketing strategy contemplates that we will earn
revenues from public customers who pay for the broadcast of digital video
productions on the Internet via our Web site and through advertising posted on
our Web site. If we are not able to generate revenues from these activities or
if the revenues generated do not exceed the operating costs of our business,
then our business will not be profitable and our business may fail.
ANTICIPATED LOSSES IN FUTURE PERIODS
We incurred a loss of $71,668 for our first fiscal period ending March 31,
1999. We incurred a loss of $244,262 for the six month period ending September
30, 1999. We expect that our operating expenses will increase as we implement
our business and marketing strategy due to the following factors:
- - We will incur substantial marketing expense in order to advertise and
promote our Web site, to establish a customer base and to increase usage of
our Web site.
- - We expect that increased usage of our Web site will lead to increased
operating expenses and require additional capital expenditures on new
computer equipment, software and technology.
- - We expect our operating expenses will continue to increase as we expand the
technical capabilities of our Web site.
- - We expect our operating expenses will increase as we solicit potential
customers and complete video productions for customers for broadcast via
our Web site.
- - We expect our operating expenses will increase as we solicit potential
advertisers and attempt to enter into agreements for advertising on our Web
site.
- - We expect our operating expenses will increase as we undertake to implement
programs to monitor usage of our Web site and develop customer profiles of
Web site users.
If our operating expenses increase as anticipated, we will realize losses for
the foreseeable future.
LOCAL NATURE OF OUR PRESENT OPERATIONS
We focused our operations initially on public companies located in
Vancouver, British Columbia. We are able to provide services to companies
located in other markets, but our ability to provide on-location productions has
been constrained by financial and manpower limitations. At present, we have
produced only a few events outside the Vancouver area. Our objective is to
expand production of news and information throughout the United States and
Canada, as well as elsewhere. This sort of expansion, however, is subject to
available funding and our ability to
7
<PAGE>
market our services in diverse areas. There can be no assurance that we will e
successful in developing our business plan throughout these areas.
DEPENDENCE ON ADVERTISING REVENUE
We intend to derive the principal portion of our revenue from the sale of
advertising on our Internet site, and we intend that advertising revenue will
continue to be the principal source of our revenue in the foreseeable future.
Our ability to generate advertising revenue will depend on several factors,
including:
- the continued development of the Internet as an advertising medium,
- the pricing of advertising on other Internet sites,
- the amount of traffic on our site,
- pricing pressures, delays and new product launches,
- our ability to achieve, demonstrate and maintain user demographics
attractive to advertisers, and
- our ability to develop and retain a skilled advertising sales force.
Others engaged in seeking to attract users to their Internet sites have
significantly greater assets and substantially larger advertising budgets than
we have. These limitations on our advertising budget can be expected to
adversely affect our ability to attract users to our site.
We believe Internet advertising typically slows in the first quarter of the
year. Seasonality and cyclicality in the level of Internet advertising
expenditures generally could become more pronounced in the future as the
Internet becomes more accepted as an advertising vehicle.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING
The report of our independent auditors on their audit of our financial
statements as of March 31, 1999 contains an explanatory paragraph that describes
an uncertainty as to our ability to continue as a going concern due to our
recurring losses and the necessity to obtain additional financing. At both March
31, 1999 and December 31, 1999, we did not have available to us the funds
necessary to meet our anticipated capital needs. Accordingly, in order to meet
our plan of operations, we will need to raise additional capital. We have no
present plans or commitments to raise this additional capital. There can be no
assurance that any additional financing will be available to us on favorable
terms, or at all. If adequate funds are not available or not available on
acceptable terms, we may not be able to fund our business plans as we desire,
or, develop or enhance services or respond to competitive pressures. Any such
inability could have a material adverse effect on our business, results of
operations and financial condition. Additional funds raised through the issuance
of equity or convertible debt securities, will result in reducing the percentage
ownership of our stockholders and, our stockholders may experience additional
dilution and such securities may have rights, preferences or privileges senior
to those of the rights of our Common Stock.
8
<PAGE>
As a result of our limited Internet operating history, we have limited
meaningful historical financial data upon which our planned operating expenses
can be based. Accordingly, our anticipated expense levels in the future are
based in part on our expectations as to future revenue and will become, to a
large extent, fixed. Revenues and operating results generally will depend on the
volume of, timing of and ability to complete transactions, which are difficult
to forecast.
In addition, there can be no assurance that we will be able to accurately
predict our revenue, particularly in light of the unproven manner in which we
intend to derive our Internet revenue, the intense competition for the sale of
products and services on the Web, revenue-sharing opportunities, our limited
operating history and the uncertainty as to the broad acceptance of the Web as a
news broadcasting medium. We may be unable to adjust our spending in a timely
manner to compensate for disappointing results of our marketing efforts and
efforts to develop Internet revenue, any unexpected revenue shortfall or other
unanticipated changes in the Internet industry. Our failure to accurately make
such predictions or adjustments in our spending would have a material adverse
effect on our business, results of operations and financial condition.
MANAGEMENT OF GROWTH AND RELATIONSHIPS; BRIEF TENURE OF MANAGEMENT; DEPENDENCE
ON KEY PERSONNEL
In developing our business plan, we expect to be required to establish and
manage multiple relationships with various strategic providers of services,
technology licensors, marketers and other third parties. To date, only a limited
number of such relationships have been established. These requirements to enter
into these relationships will be exacerbated in the event of our material growth
or in the number of third party relationships, and there can be no assurance
that our systems, procedures or controls will be adequate to enable us to
establish and enter into these relationships, to support any substantial growth
in our operations or that our management will be able to implement or manage any
growth effectively.
To effectively manage growth, we must establish, implement and improve
operational, financial and management information systems and expand, train and
manage our employee base. Our development is and will continue to be
substantially dependent on the abilities and performance of our executive
officers and other key employees. The loss of the services of any of our
executive officers or other key employees could have a material adverse effect
on our prospects, business development, and results of operations and financial
condition. Competition for senior management, experienced sales and marketing
personnel, qualified Web engineers and other employees is and is expected to
continue to be intense. There can be no assurance that we will be successful in
attracting and retaining such personnel. There can be no assurance that we may
not experience difficulty from time to time in hiring and retaining the
personnel necessary to support the growth of our business. Our failure to
successfully manage our personnel requirements would have a material adverse
effect on our business, results of operations and financial condition.
Our performance is substantially dependent on the continued services and
performance of our senior management and other key personnel, including Brian
Kathler, President and a Director, Paul Watkins, a Director, Robert Gamon, a
Director, David Formosa, a Director, James King, a Director, and Cheryl Watkins,
Secretary and Treasurer. Cheryl Watkins is the wife of Paul Watkins. We do not
have long-term employment agreements with any of our key personnel and maintain
no "key person" life insurance policies. Our future success also depends on our
ability to identify, attract, retain and motivate highly skilled, technical,
managerial, sales, marketing and
9
<PAGE>
customer service personnel. Competition for such persons is intense. We cannot
assure you that we will be able to attract or retain such personnel. The failure
to do so could have a material adverse effect on our business, financial
condition and results of operations.
DEPENDENCE ON THIRD PARTIES FOR INTERNET TRAFFIC
We believe that traffic originating from links we intend to seek to
establish on other Internet sites (particularly search engines, directories and
other navigational tools managed by Internet service providers and Web browser
companies) will be an important segment of the overall traffic on our Internet
site. These linking arrangements are expected to be either short-term contracts
and/or be able to be terminated with little notice. There is intense competition
for these types of linking arrangements. We cannot assure you that these
arrangements will be able to be created or that advertising or links will be
available on reasonable commercial terms or at all. Likewise, we cannot assure
you that any such relationships, once established, will be maintained and
continued. Our failure to establish and retain these links can be expected to
adversely affect our ability to attract persons to our site.
DEPENDENCE ON LICENSED TECHNOLOGY
We rely on certain technology licensed from third parties for use in
operating and managing our Internet site and providing related services to users
and advertisers. We cannot assure you that such technology licenses will be
available at all, that they will be available on reasonable commercial terms or
that they will operate as intended.
RISKS APPLICABLE TO INTERNET BUSINESS ACTIVITIES
UNPREDICTABILITY OF FUTURE REVENUE; POTENTIAL FLUCTUATIONS IN QUARTERLY
OPERATING RESULTS
As a result of the evolving nature of the Internet and our limited
operating history, we cannot accurately forecast our revenue. Current and future
expense levels are based principally on anticipated future revenues and, as we
increase the scope of our activities, these expenses, to a large extent, will
increase and become fixed. Accordingly, we may be unable to adjust spending to
compensate for shortfalls in our anticipated revenues. If our revenues do not
materialize as anticipated, this could have an immediate material adverse effect
on our business, financial condition and results of operations which could lead
to an investor's loss of his investment in our company.
Our quarterly operating results may fluctuate significantly because of a
variety of factors, many of which are outside our control, including:
- - overall usage levels of the Internet and of our sites in particular,
- - demand for Internet advertising and the loss of advertisers,
- - seasonal trends in Internet use and advertising,
10
<PAGE>
- - the amount and timing of our capital expenditures,
- - costs relating to the expansion of our operations and the introduction of
new sites and services and Channels,
- - price competition or pricing changes in Internet advertising, and
- - costs relating to technical difficulties or system downtime.
Quarterly comparisons of our results of operations are not expected to be a
reliable indication of our future performance.
DEPENDENCE ON GROWTH IN INTERNET USE AND ACCEPTANCE AS AN ADVERTISING AND
COMMERCE MEDIUM
Our future revenue will depend largely on the widespread acceptance and use
of the Internet as an information source and as an advertising and commerce
vehicle. Rapid growth in Internet use is a recent trend and market acceptance of
the Internet as an advertising and commercial medium is highly uncertain. The
Internet may not be accepted as a viable advertising and commerce medium for
distribution of information and engaging in commerce for a number of reasons,
including:
- inadequate development of the network infrastructure,
- inadequate development of enabling technologies,
- insufficient commercial support for Internet advertising,
- concerns about privacy and security among users, and
- lack of widely accepted standards for measuring the effectiveness of
advertising on the Internet.
RAPID TECHNOLOGICAL CHANGE
The market for Internet products and services is characterized by rapid
technological developments, frequent new product introductions and evolving
industry standards. We will be required to continually improve the performance,
features and reliability of our infrastructure and Internet site, particularly
in response to competition and changing customer demands. We cannot assure you
that we will be successful in responding rapidly, cost-effectively or adequately
to such developments.
COMPETITION
The business of broadcasting news through the Internet is new, rapidly
evolving and extremely competitive. We compete with a variety of other companies
who offer competing means of broadcasting financial news and corporate
information through the Internet, substantially all of whom are larger and more
well established than we are. We expect new competitors to enter into this
market due to the expansion of use of the Internet and changes in technology
that will increase
11
<PAGE>
the ability of companies to use video streaming technology on the Internet.
Substantially all of our current competitors have significantly greater
financial, technical, marketing and other resources than we do. If we experience
increased competition in the business of broadcasting news and video productions
on the Internet, our ability to obtain customers and achieve revenues for our
services will be limited. In addition, the potential rates that we may be able
to charge for advertising on our Web site may decrease if the growth of the
Internet and electronic commerce brings increased competition.
Competition among Internet content providers, including news broadcasters,
is intense and is expected to increase significantly in the future. The market
for Internet content sites is rapidly evolving and barriers to entry are low,
enabling newcomers to launch competitive sites at relatively low cost. We
believe we compete most directly with Pseudo Programs, Inc. However, we also
generally compete for users and advertisers with a large number of Internet
portals, search sites and content aggregators, general news sites (such as those
provided by CNN and ABC) and general purpose online service providers (such as
America Online and MSN). In addition, we compete with traditional media content
businesses such as newspapers, magazines, radio and television. In order to
compete successfully and attract users, advertisers and strategic partners, we
must provide high quality, engaging content in a timely and cost-effective
manner. We cannot assure you that we will be able to do so. Moreover, increased
competition could result in price reductions, reduced margins or loss of market
share, any of which could have a material adverse effect on our business,
financial condition and results of operations.
NEW SERVICE RISKS
Our future success may depend in part on our ability to expand our Internet
site to include new subject matters and services and other Internet sites. Costs
related to developing new content areas and services are expensed as they are
incurred while revenue related to these new content areas and services typically
builds over time and, accordingly, our profitability from year to year may be
adversely affected by the number and timing of new launches. In addition, we
cannot assure you that any new areas or services will be developed in a timely
or cost-effective manner or that they will be successful.
RISKS ASSOCIATED WITH BRAND DEVELOPMENT
We believe brand identity is important to attracting and expanding our user
base, Internet traffic and advertising and commerce relationships. We believe
the significance of brand and name recognition will intensify as the number of
Internet sites increases. We cannot assure you that we will be able to continue
to develop our brand.
RISK OF CAPACITY CONSTRAINTS AND SYSTEM DISRUPTIONS
The performance and reliability of our Internet site and network
infrastructure are critical to our reputation and ability to attract and retain
users, advertisers and strategic partners. Any system error or failure, or a
sudden and significant increase in traffic, may result in the unavailability of
our site and significantly delay response times. Individual, sustained or
repeated occurrences could result in a loss of potential or existing users,
advertisers or strategic partners. In addition, because our advertising revenue
is expected to directly relate to the number of advertisements we deliver to
users, system interruptions or delays would reduce the number of impressions
delivered and thereby reduce our revenue.
12
<PAGE>
Our systems and operations are vulnerable to interruption or malfunction
due to certain events beyond our control, including natural disasters,
telecommunications failures and computer hacking. We also rely on Web browsers
and online service providers to provide Internet access to our sites. We cannot
assure you that we will be able to expand our network infrastructure, either
internally or through use of third-party hosting systems or service providers,
on a timely basis sufficient to meet demand. We presently have only a limited
amount of redundant facilities or systems, no formal disaster recovery plan and
no sufficient business interruption insurance to compensate for losses that may
occur. Any interruption to our systems or operations could have a material
adverse effect on our business, financial condition and results of operations.
Substantially all of our communications hardware and computer hardware is
located at a leased facility in Burnaby, British Columbia, Canada. Our systems
are vulnerable to damage from earthquake, fire, floods, power loss,
telecommunications failures, break-ins and similar events. We do not presently
have fully redundant systems and have not yet completed implementing a formal
disaster recovery plan. Despite our implementation of network security measures,
our servers are also vulnerable to computer viruses, physical or electronic
break-ins, attempts by third parties deliberately to exceed the capacity of our
systems and similar disruptive problems. If our computer systems fail to operate
for any of these reasons, then we will not be able to operate our Web site or
achieve revenues from customers and advertisers and our business will be harmed.
SECURITY RISKS
Our system may be vulnerable to unauthorized access, computer viruses and
other security problems. A user who circumvents security measures could
misappropriate proprietary information or cause interruptions or malfunctions in
our operations. We may be required to expend significant resources to protect
against the threat of such security breaches or to alleviate problems caused by
such breaches. Although we intend to continue to implement industry-standard
security measures, such measures may be inadequate.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
We are not currently subject to direct regulation by any government agency,
other than regulations applicable to businesses generally. There are currently
few laws or regulations directly applicable to access to or commerce on the
Internet. However, due to the increasing popularity and use of the Internet, a
number of legislative and regulatory proposals are under consideration by U.S.
and Canadian federal, state, provincial, local and foreign governmental
organizations. It is possible that a number of laws or regulations may be
adopted with respect to the Internet relating to such issues as user privacy,
user screening to prevent inappropriate uses of the Internet by, for example,
minors or convicted criminals, taxation, infringement, pricing, content
regulation, quality of products and services and intellectual property ownership
and infringement. The adoption of any such laws or regulations may decrease the
growth in the use of the Internet, which could, in turn, decrease the demand for
our community, increase our cost of doing business, or otherwise have a material
adverse effect on our business, results of operations and financial condition.
Moreover, the applicability to the Internet of existing laws governing
issues such as property ownership, copyright, trademark, trade secret,
obscenity, libel and personal privacy is uncertain and developing. Any new
legislation or regulation, or application or interpretation of existing laws,
could have a material adverse effect on our business, results of operations and
financial condition.
13
<PAGE>
There can be no assurance that any legislation will not be enacted in the future
that could expose us to substantial liability. Legislation could also dampen the
growth in the use of the Web generally and decrease the acceptance of the Web as
a communications and commercial medium. The result could, thereby, have a
material adverse effect on our business, results of operations and financial
condition.
It is also possible that our use of "cookies" to track demographic
information and user preferences and to target advertising may become subject to
laws limiting or prohibiting their use. A "cookie" is a bit of information keyed
to a specific server, file pathway or directory location that is stored on a
user's hard drive, possibly without the user's knowledge. A user is generally
able to remove cookies. Germany, for example, has imposed laws limiting the use
of cookies, and a number of Internet commentators, advocates and governmental
bodies in the United States and other countries have urged the passage of laws
limiting or abolishing the use of cookies. Limitations on or elimination of our
use of cookies could limit our effectiveness in targeting of advertisements,
which could have a material adverse effect on our business, results of
operations and financial condition.
In addition, a number of legislative proposals have been made at the U.S.
and Canadian federal, state, provincial and local level that would impose
additional taxes on the sale of goods and services over the Internet and certain
jurisdictions have taken measures to tax Internet-related activities. The U.S.
Congress enacted the Internet Tax Freedom Act on October 21, 1998 which imposes
a national moratorium in the United States on state and local taxes on Internet
access services, on-line services, and multiple or discriminatory taxes on
electric commerce effective October 1, 1998 and ending three years after its
enactment. There can be no assurance that, once such moratorium is lifted, some
type of U.S. federal and/or state taxes will be imposed upon Internet commerce,
and there can be no assurance that such legislation or other attempts at
regulating commerce over the Internet will not substantially impair the growth
of commerce on the Internet and as a result, our opportunity to derive financial
benefit from these activities may be adversely affected.
In addition to the foregoing areas of recent legislative activities,
several telecommunications carriers are currently seeking to have
telecommunications over the Web regulated by the U.S. Federal Communications
Commission (the "FCC") in the same manner as other telecommunications services.
In addition, because the growing popularity and use of the Web have burdened the
existing telecommunications infrastructure and many areas with high Web use have
begun to experience interruptions in phone service, local telephone carriers
have petitioned the FCC to regulate ISPs and OSPs in a manner similar to long
distance telephone carriers and to impose access fees on the ISPs and OSPs. If
either of these petitions is granted, or the relief sought is otherwise granted,
the costs of communicating on the Web could increase substantially, potentially
slowing growth in use of the Web. This could, in turn, decrease demand for our
services or increase our cost of doing business.
Due to the global nature of the Web, it is possible that, although our
transmissions over the Internet originate primarily in British Columbia, Canada,
the governments of various states in the United States and foreign countries
might attempt to regulate our transmissions or prosecute us for violations of
their laws. There can be no assurance that violations of local laws will not be
alleged or charged by state or foreign governments, that we might not
unintentionally violate such laws or that such laws will not be modified, or new
laws enacted, in the future. Any of the foregoing developments could have a
material adverse effect on our business, results of operations and financial
condition.
14
<PAGE>
In addition, as our services are available over the Internet in multiple
foreign countries, provinces, states and other jurisdictions, such jurisdictions
may claim that we are required to qualify to do business as a foreign
corporation in each of those jurisdictions. We are qualified to do business only
in British Columbia, and our failure to qualify as a foreign corporation in a
jurisdiction where we are required to do so could subject us to taxes and
penalties and could result in our inability to enforce contracts in such
jurisdictions. Any such new legislation or regulation, the application of laws
and regulations from jurisdictions whose laws do not currently apply to our
business, or the application of existing laws and regulations to the Internet
and other online services could have a material adverse effect on our business,
results of operations and financial condition.
LIABILITY FOR INFORMATION RETRIEVED FROM THE WEB; ABSENCE OF LIABILITY INSURANCE
Because materials may be downloaded by users of our Web site and
subsequently distributed to others, there is a potential that claims will be
made against us for defamation, negligence, copyright or trademark infringement,
personal injury or other theories based on the nature, content, publication and
distribution of these materials, including financial and other information
disseminated by use of our Web site by the small-cap public companies that are
our customers. Such claims have been brought, and sometimes successfully
pressed, against OSPs for example, in the past. We have received inquiries from
time to time from third parties regarding such matters, all of which have been
resolved to date without any payments or other material adverse effect on us.
In addition, the increased attention focused upon liability issues as a
result of these lawsuits and legislative proposals could impact the overall
growth of Internet use. We could also be exposed to liability with respect to
the offering of third party content that may be accessible through our Web site,
or through content and materials that may be posted by Members on their personal
Web sites or chat rooms, or on-line discussions offered by us. Such claims might
include, among others, that by directly or indirectly hosting the personal Web
sites of third parties, we are liable for copyright or trademark infringement,
or other wrongful actions by such third parties through such Web sites.
It is also possible that if any third party content information provided on
our web site contains errors, third parties could make claims against us for
losses incurred in reliance on such information. Even to the extent that such
claims do not result in liability to us, we could incur significant costs in
investigating and defending against such claims. The imposition on us of
potential liability for information carried on or disseminated through our
systems could require us to implement measures to reduce our exposure to such
liability, which may require the expenditure of substantial resources and limit
the attractiveness of our services to Members and visitors.
Currently, we do not carry general liability insurance intended to protect
us from any liability arising out of the foregoing. In any event, however,
insurance may not cover all potential claims to which we are exposed or may not
be adequate to indemnify us for all liability that may be imposed. Any
imposition of liability that is not covered by insurance or is in excess of our
insurance coverage would have a material adverse effect on our business, results
of operations and financial condition. In addition, the increased attention
focused upon liability issues as a result of these lawsuits and legislative
proposals could impact the overall growth of Internet use.
15
<PAGE>
RELIANCE ON INTELLECTUAL PROPERTY RIGHTS
To establish and protect our trademark, service mark and other proprietary
rights in its products and services, we rely on a combination of:
- copyright, unfair competition, trademark, service mark and trade
secret laws and
- confidentiality agreements with our licensees and other third parties
and confidentiality agreements and policies covering its employees.
We cannot assure you that these measures will be adequate, that we will be
able to secure registrations for all of its marks in the U.S. or internationally
or that third parties will not infringe upon or misappropriate our proprietary
rights. Any infringement or misappropriation, or litigation relating to
intellectual property rights, may have a material adverse effect on our
business, financial condition and results of operations.
We have applied to the United States Trademark office for registration of
"ViaVid" as a trademark in the United States. We have also applied to the Canada
Patent and Trademark Office for registration of "ViaVid" as a trademark in
Canada. No trademark has been issued to us for "ViaVid" in either the United
States or Canada. We are not aware of any other companies currently using the
name "ViaVid". We have conducted searches of trademark databases in both the
United States and Canada and have not found any registration of the name
"ViaVid" as a trademark. There is no assurance that we 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. Also, there can be no
assurance that we will obtain any significant commercial advantage from this
trademark if granted or that we will have the financial resources to protect our
rights in the name through legal proceedings or otherwise. It is also possible
that our competitors or others will adopt product or service names similar to
"ViaVid" or other similar service marks or trademarks, thereby impeding our
ability to build brand identity and possibly leading to customer confusion. Our
inability to protect the name "ViaVid" adequately could have a material adverse
effect on our business, results of operations and financial condition.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related business are
uncertain and evolving. In particular, new registration and ownership priority
procedures may be adopted which may make it more difficult for us to retain or
obtain desirable domain names.
CONTROL BY PRINCIPAL STOCKHOLDERS AND POTENTIAL CONFLICTS OF INTEREST
Our officers and Directors own approximately 79% of our outstanding shares
of Common Stock. As a result, such persons could elect all the members of our
Board. Such persons could also control those actions requiring the approval of
the holders of a majority of our voting stock, including amendments to our
Articles of Incorporation and any business combinations. Such persons
concentration of ownership could prevent a change in control of our company that
might otherwise be beneficial to stockholders.
DIFFICULTIES IN CREATING AWARENESS OF OUR WEB SITE
We believe that development and awareness of our Web site is critical to
our success in attracting consumers and advertisers. The importance of customer
awareness will increase as low
16
<PAGE>
barriers to entry encourage the proliferation of Web sites. We intend to
increase our marketing and advertising spending in order to attract and retain
users and advertisers, and to promote and maintain awareness of our Web site in
response to competitive pressures. If we are unsuccessful in building strong
recognition of our Web site and if our marketing efforts are not successful, we
will not be successful in attracting customers for our Web site and earning
revenues from our Web site with the result that our business will be harmed.
The success of our business will depend on acceptance of our business
format by customers of the video production and Internet broadcast service that
we offer. There is no assurance that potential customers will accept the format
of our Web site. Potential customers have a variety of competing means for which
to disseminate corporate information and news, both via the Internet and through
traditional commercial means. If we are not successful in creating an awareness
of our Web site and attracting users to our Web site, then we will not be
successful in achieving revenues and our business will be harmed.
EXPENSE OF TECHNOLOGICAL DEVELOPMENTS AND EQUIPMENT UPGRADES
The market for Internet products and services is characterized by rapid
technological developments, evolving industry standards and consumer demands. It
is possible that the introduction of new technology could render our existing
Web site technology and the services we offer obsolete. We anticipate that the
introduction of new technology will require us to continually upgrade and change
our Web site technology in order to maintain our competitive position and offer
competitive services. We anticipate that the incorporation of new technology
into our Web site will result in us incurring increased operating expenses. If
we are required to incur these expenses and increased revenues do not match
these expenses, our business will be harmed. If we do not incorporate new
technology into our Web site operations, then our competitive position and our
ability to attract customers and advertisers may be harmed.
RISKS APPLICABLE TO THE MARKET FOR OUR COMMON STOCK
NO ACTIVE PRIOR PUBLIC MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF STOCK
PRICE
Prior to January 4, 2000, there was no active public market for our Common
Stock. Since then, our Common Stock has been quoted on the OTC Bulletin Board.
There can be no assurance that an active trading market for our Common Stock
will be sustained or that the market price of our Common Stock will not decline
based upon market or other conditions. The market price may bear no relationship
to our revenues, earnings, assets or potential and may not be indicative of our
future business performance. The trading price of our Common Stock has been and
can be expected to be subject to wide fluctuations in response to variations in
our quarterly results of operations, the gain or loss of significant strategic
relationships, unanticipated delays in our development, changes in estimates by
analysts, announcements of technological innovations or new solutions by us or
our competitors, general conditions in the technology and Internet sectors and
in Internet-related industries, other matters discussed elsewhere in this
Prospectus and other events or factors, many of which are beyond our control.
In addition, the stock market in general and the technology and Internet
sectors in particular have experienced extreme price and volume fluctuations
which have affected the market price for many companies in industries similar or
related to us and which have been unrelated to the
17
<PAGE>
operating performance of these companies. These market fluctuations, as well as
general economic, political and market conditions, may have a material adverse
effect on the market price of our Common Stock.
In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted against such companies. Such litigation, if instituted, and
irrespective of the outcome of such litigation, could result in substantial
costs and a diversion of management's attention and resources and have a
material adverse effect on our business, results of operations and financial
condition.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of significant amounts of our Common Stock in the public market or
the perception that such sales will or could occur could materially and
adversely affect the market price of our Common Stock or our future ability to
raise capital through an offering of our equity securities. We had, as of
January 26, 2000, 6,546,000 shares of common stock outstanding. Of such shares,
5,120,000 shares were held by officers and Directors of the Company. The
5,120,000 shares held by officers and directors, together with an additional
1,017,000 shares, or an aggregate of 6,137,000 shares, are "restricted
securities" as such term is defined in Rule 144 under the Securities Act.
Restricted securities may be sold in the public market only if registered or if
they qualify for an exemption from registration under Rules 144, 144(k) or 701
promulgated under the Securities Act. Approximately 409,000 shares of our Common
Stock are freely transferable under U.S. Federal securities laws.
In addition, the effectiveness under the Securities Act of the registration
statement of which this Prospectus is a part will enable the offer and sale of
the 1,017,000 shares sold in 1999 in the private sale of our securities. These
shares are included among the "restricted securities" described above. The sale
of these shares or the perception that such sales will or could occur could
materially and adversely affect the market price for our Common Stock.
On January 27, 2000, Kathler Holdings Inc., Paul Watkins, Cheryl Watkins
and 549419 BC Ltd., our principal shareholders, notified us that they sold or
intend to sell an aggregate of 195,000 shares of Common Stock pursuant to Rule
144. Subsequent to the sale of those shares, the shares become freely
transferrable under U.S. Federal securities laws.
We have filed a Form S-8 registration statement under the Securities Act to
register all shares of Common Stock issuable pursuant to outstanding options and
all shares of Common Stock reserved for issuance under our 1999 Stock Option
Plan. Such registration statement became effective immediately upon filing in
December 1999 and the shares issuable on exercise of options granted under the
1999 Stock Option Plan are covered by that registration statement. The shares
issuable on exercise of the options granted under the Plan are eligible for
sale, subject to Rule 144 limitations applicable to affiliates. As of January
26, 2000, we have options outstanding under the 1999 Stock Option Plan to
purchase 300,000 shares at a price of $1.00 per share and 407,000 shares at a
price of $3.50 per share. An aggregate of 125,000 shares were issued on exercise
of options granted under the 1999 Stock Option Plan on January 5 and 6, 2000 and
are included in the shares described above that are freely transferrable under
U.S. Federal securities laws. In addition, there are 243,000 shares reserved for
the future grant of options under the Plan. We intend to attract employees to
work for us through the grant of optios to purchase these shares. These options
granted to attract additional employees may be immediately exercisable and the
shares freely
18
<PAGE>
transferrable. The sale of these shares or the preception that such shares will
be sold could have an adverse effect on the market price for our Common Stock.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1996
With the exception of historical matters, the matters discussed in this
prospectus are "forward-looking statements" as defined under the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as amended, that
involve risks and uncertainties. Forward-looking statements made herein include,
but are not limited to, the statements in this prospectus regarding our plans
and objectives of management for our future operations, including plans or
objectives relating to our intentions to provide Internet news broadcasting and
other dissemination services and other products or services, as well as any
prospective financial information concerning us. These statements appear, among
other places, under the following captions: "Summary", "Risk Factors", "Dividend
Policy", "Management's Discussion and Analysis of Financial Condition or Plan of
Operation", and "Description of Business". Forward-looking statements made in
this prospectus include the assumptions made by management as to the future
growth and business direction of the Internet, e-commerce through the facilities
of the Internet and the role of video production and Internet news broadcasting
and dissemination services on the Internet. They also include our beliefs as to
the importance of privacy to users, their willingness to divulge certain
demographic information regarding themselves, to view our news broadcasting
services and programs, as well as our plans to improve the capabilities of our
servers and facilities. They also include our beliefs as to the willingness of
small-cap public companies to broadcast corporate news and information on the
internet and for us to derive revenues from providing this service. We cannot
assure you that our assumptions in this regard or our views as to the commercial
viability of our business plans discussed herein will prove to be accurate.
Likewise, we cannot assure you that we will be successful in growing our user
and customer base as we plan, attracting companies to use our Internet based
broadcast services for the dissemination of their news information, realizing
material amounts of advertising or other revenues or achieving any commercial
advantage relative to other Internet companies. Our ability to realize revenues
from the business plans discussed herein cannot be assured. If our assumptions
are incorrect or our advertising and other growth plans or plans to realize
revenues fail to materialize, we may be unsuccessful in developing as a viable
business enterprise. Under such circumstance your entire investment will be in
jeopardy and may be lost. Our inability to meet our goals and objectives or the
consequences to us from adverse developments in general economic or capital
market conditions and our inability to raise additional capital could have a
material adverse effect on us. We caution you that various risk factors
accompany those forward looking statements and are described, among other
places, under the caption "Risk Factors" herein, beginning on page 6. They are
also described in our Registration Statement on Form 10-SB, as amended, in our
Quarterly Reports on Form 10-QSB, and our Current Reports on Form 8-K. These
risk factors could cause our operating results, financial condition and ability
to fulfill our plans to differ materially from those expressed in any
forward-looking statements made in this prospectus and could adversely affect
our financial condition and our ability to pursue our business strategy and
plans.
19
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock offered
through this prospectus by the selling shareholders. We will pay all expenses
related to the registration of the securities.
PRICE RANGE OF COMMON STOCK
Our Common Stock has been quoted on the OTC Bulletin Board since January 4,
2000 under the symbol VVDB. The following table sets forth the high and low bid
quotations on the OTC Bulletin Board for the Company's Common Stock for the
period January 4, 2000 through January 25, 2000. Prior to January 4, 2000 there
was no active market for our Common Stock.
<TABLE>
<CAPTION>
BID
-------------------------------------------------------
CALENDAR QUARTER HIGH LOW
- ------------------------------------------------------------------------------------------
<S> <C> <C>
2000: First Quarter $5-1/8 $1-1/2
(commencing January 4 through
January 25)
</TABLE>
The foregoing amounts, represent inter-dealer quotations without adjustment
for retail markups, markdowns or commissions and do not represent the prices of
actual transactions. On January 26, 2000, the closing bid quotation for the
Common Stock, as reported on the OTC Bulletin Board was $4-3/8.
As of December 31, 1999, we had approximately 40 shareholders of record.
DIVIDEND POLICY
We do not intend to pay any dividends on our Common Stock for the
foreseeable future. Any determination as to the payment of dividends on our
Common Stock in the future will be made by our Board of Directors and will
depend on a number of factors, including future earnings, capital requirements,
financial condition and future prospects as well as such other factors as our
Board of Directors may deem relevant.
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR
PLAN OF OPERATION
GENERAL
Our company was incorporated in January, 1999 under the laws of the state
of Nevada. Prior to that time, we conducted operations as ViaVid Broadcasting,
Corp., a British Columbia company formed in July, 1994. The British Columbia
company was inactive and did not carry on any business operations prior to
January, 1999. At that time, it began development of the business described in
this prospectus. We continue to carry on our business through the British
Columbia company as our wholly owned operating subsidiary. In November 1998, the
British Columbia company changed its corporate name to ViaVid Broadcasting Corp.
We acquired all the outstanding shares of ViaVid Broadcasting Corp. in
January, 1999 from Paul Watkins, Cheryl Watkins, 549419 BC Ltd. and Kathler
Holdings Inc. in consideration for the issue of a total of 5,100,000 shares of
our common stock.
Our principal executive offices are located at 3955 Graveley Street,
Burnaby, British Columbia, Canada V5C 3T4. Our telephone number is (604)
669-0047. Our Web site is located at http://www.viavid.com. Information
contained on our Web site does not constitute part of this prospectus.
PLAN OF OPERATION
Our business objective is to become a leading Internet broadcasting site
for public companies and the financial services industry. We intend to achieve
this objective by pursuing the following key strategies:
Offering a Corporate News Broadcasting Service to Small-Cap Public Companies.
We believe that small-cap public companies have not been able to achieve
coverage on traditional media based Internet broadcast services such as
Bloomberg and CNBC. We believe that there is market demand from small-cap public
companies that want to broadcast corporate news and information on the Internet
and our objective is to meet this demand by providing Internet broadcasting
services to these companies. Our Internet broadcasts will be produced solely for
broadcast via the Internet as opposed to being Internet broadcasts of television
coverage. We will target public and financial services companies as customers,
in order to educate them on the availability of our service and technology.
Awareness of the Web site.
We have undertaken minimal marketing efforts to date, having focused
largely on the development of our Web site. With our Web site and the VBC News 1
Channel now in operation, we are preparing to initiate more significant
marketing efforts.
We operate in a market in which strong brand recognition is critical to
differentiating ourselves and attracting a high-level of customer awareness and
user traffic. Accordingly, our strategy is to increase our visibility and brand
recognition through a variety of marketing and promotional techniques.
Specifically, we intend to increase points of access by forming strategic
relationships with, and advertising on, leading Web sites. We also propose to
provide content for these other Web sites. Prominent positioning on these sites
is intended to give our Web site credibility with potential clients who are
unfamiliar with our Web site. We also propose to reinforce the ViaVid brand name
in users' minds by employing consistent branding from the design of our Web site
and logo. There can be no assurance that we will be able to accomplish these
objectives.
21
<PAGE>
We intend to pursue co-marketing arrangements by cross-linking with other
Web sites on the Internet. We may post links to other Web sites in return for
that site posting our link. We propose to pursue cross-linking only where there
is a mutually beneficial synergy with other Web sites.
Promoting Repeat Visits.
We have designed our Web site with what we believe is an attractive and
engaging format in order to enhance the experience of users and to encourage
repeat visits. We believe that repeat visits can be further encouraged by the
addition of new video content on a daily basis.
Expanding the Capabilities of our Web site.
We will attempt to continually enhance the functionality and attractiveness
of our Web site by regularly updating the technology used to broadcast video
information. We propose to expand the capability of our Web site by adding
additional channels, including, for example, entertainment, health and
lifestyles, and sports, according to what we perceive to be the market demand.
Monitoring Customers and Gathering Data.
We believe that increased information regarding users of our Web site will
assist us in marketing our Web site and increasing revenues. At present, we
gather minimal demographic information regarding users of our Web site. We are
proposing to expand the capability of our Web site to obtain personal and
business profile information on users. This information we believe will assist
in marketing the site to advertisers who are prepared to pay for the placement
of ads on our Web site. Information regarding the location, nature of business,
income level and other marketing criteria of users of our Web site will assist
in developing user profiles. We believe user profiles will assist us in
marketing our video production and broadcast services.
Expanding the Revenue Generating Capacity of our Web site.
We intend to pursue alternate revenue streams by streaming and encoding
other productions for our site or another Web site, show sponsorship and
e-commerce opportunities. We also propose to pursue arrangements with other
companies whereby we may earn a commission or fee based on customers referred to
Web sites operated by other companies.
LIQUIDITY AND CAPITAL RESOURCES
We currently intend to pursue the following plan of operations during the next
twelve months:
- Continue to develop a customer base of public and financial companies
to use our services for digital video productions and Internet
broadcasting. We anticipate we will spend approximately $100,000 on
this marketing expense over the next twelve month period;
22
<PAGE>
- Continue to develop the VBC News 1 Channel for broadcast from our Web
site. We anticipate we will spend approximately $350,000 on this
development expense over the next twelve month period;
- Evaluate additional channels for broadcast from our Web site,
depending on market demand. We anticipate we will spend approximately
$50,000 on additional channels over the next twelve month period;
- Evaluate whether to set up an additional office or offices in
additional cities in order to expand our business and meet customer
demand. If we proceed to establish additional offices, we anticipate
we will spend approximately $150,000 for this purpose over the next
twelve month period;
- Expand our Web site to attempt to extract marketing information and
data from users in order to obtain a basis for earning advertising
revenue. We anticipate we will spend approximately $10,000 on
expansion of our Web site over the next twelve month period;
- Purchase additional equipment to expand our digital video production
studio and video production capabilities. We anticipate we will spend
approximately $250,000 on additional production equipment over the
next twelve month period.
Accordingly, we anticipate that we will spend approximately $1,000,000 over
the next twelve month period in pursuing our the plan of operations described
above. Of these anticipated expenditures, we anticipate that approximately
$514,000 will be required to be spent on our plan of operations during the six
months ended June 30, 2000. Of this amount, we anticipate we will obtain
$105,000 from our operating revenues, $109,000 from the proceeds of recently
completed equity financings, and $300,000 from additional equity financings to
be completed in the future. In the event we are unable to obtain these funds
from these sources, our ability to pursue our business plan will be adversely
affected.
Our actual expenditures and business plan may differ from this stated plan
of operations. Although we have no present plans or proposals pending, a
strategic alliance relating to one aspect of streaming content or encoding may
cause our Board of Directors to modify our plans. In addition, we may modify our
plan of operations based on the available amounts of financing in the event that
we cannot obtain the required equity financings to complete our plan of
operations. We do not have any arrangement in place for any debt or equity
financing which would enable us to meet our plan of operations.
In the event we are not successful in arranging further sales of our common
stock or otherwise raising additional equity capital, we anticipate that we
could sustain our business operations through June 30, 2000, based on our
current cash position and revenues.
We are currently receiving revenues from video production and hosting
services. We anticipate an increase in revenue from production, advertising and
hosting video footage and web content if we are successful in increasing our
customer base over the next twelve months.
Notwithstanding the above plan of operations, we anticipate we will
experience continuing operating losses in the foreseeable future. We base this
expectation in part on the following:
23
<PAGE>
- We will incur substantial marketing expense in order to advertise and
promote our Web site, to establish a customer base and to increase the
usage of our Web site.
- Increased usage of our Web site will lead to increased operating
expenses and require additional capital expenditures on new computer
equipment, software and technology.
- Our operating expenses will continue to increase as we expand the
technical capabilities of our Web site.
- Our operating expenses will increase as we solicit potential customers
and complete video productions for customers for broadcast via our Web
site.
- Our operating expenses will increase as we solicit potential
advertisers and attempt to enter into agreements for advertising on
our Web site.
- Our operating expenses will increase as we undertake to implement
programs to monitor usage of our Web site and develop customer
profiles of our users.
STATEMENTS OF OPERATIONS
JANUARY 20, 1999 TO MARCH 31, 1999
REVENUES. Our revenues were $3,436 for the period from January 20 to March
31, 1999. Our revenues resulted primarily from video production, Internet
broadcast services and hosting provided to our customers.
Revenues were minimal as it was our start-up period.
OPERATING EXPENSES. Our operating expenses were $75,104 for the period from
January 20 to March 31, 1999.
NET LOSS. Our net loss was $71,668 or $0.01 per share for the period ended
March 31, 1999. Our net loss reflects the fact that we have not earned
significant revenues to date.
SIX MONTHS ENDED SEPTEMBER 30, 1999
REVENUES. Our revenues were $15,553 for the six month period ending
September 30, 1999, compared to revenues of $3,436 for the period from January
20, 1999 to March 31, 1999. Our revenues were achieved primarily from video
production and Internet broadcast services provided to our customers. We also
achieved revenues from hosting services provided to customers.
Our revenues are minimal in comparison to our operating expenses inasmuch
as we are currently in the start-up phase of our operations. We are attempting
to increase our future revenues by pursuing our plan of operations described
above.
24
<PAGE>
OPERATING EXPENSES. Our operating expenses were $259,815 for the six month
period ending September 30, 1999, compared to operating expenses of $75,104 for
the period from January 20, 1999 to March 31, 1999. A substantial portion of our
operating expenses were attributable to the start-up and upgrade of the our Web
site. We believe that our operating expenses will increase during the next
quarter.
NET LOSS. Our net loss was $244,262, or $0.04 per share, for the six months
ending September 30, 1999. Our net loss was $71,668, or $0.01 per share, for the
period from January 20, 1999 to March 31, 1999. Our net loss reflects the fact
that we have not earned significant revenues to date.
YEAR 2000 ISSUE
At the end of 1999 there was a concern that computer systems, software
packages, and microprocessor dependent equipment could cease to function or
generate erroneous data when the Year 2000 arrived. The problem was anticipated
with those systems or products that were programmed to accept a two-digit code
in date code fields. To correctly identify the Year 2000, a four-digit date code
field was required to be what is commonly termed "Year 2000 compliant."
We completed an assessment of all internal systems and operations to
determine Year 2000 compliance. Our assessment included an assessment of
computer hardware systems and Web site operations systems. We determined that
our internal computer hardware systems and Web site operations systems and
operations were Year 2000 compliant.
We completed an upgrade of all third party licensed software to ensure Year
2000 compliance. We implemented all Year 2000 software patches for the software
used by us in our operations, including software patches for our Microsoft
operating system. We also investigated the Year 2000 compliance of all computer
hardware purchased by us since commencement of operations. We made inquires of
our Internet service provider, AT&T Corp., as to the Year 2000 compliance of the
Internet service provider's systems and operations and representations were made
that our systems and operations are Year 2000 compliant.
We did not experience any problems with our computer system or Web Site
operations as a result of Year 2000 problems. Our Web site and computer systems
were able to continue operations without experiencing any down-time or
interruptions.
We estimate that our total internal cost for ensuring Year 2000 compliance
for all internal systems to be less than $10,000. We did not incur any external
cost in ensuring Year 2000 compliance in view of the fact that we have only
recently commenced operations and purchased computer hardware and software on
the basis of representations by manufacturers as to Year 2000 compliance.
DESCRIPTION OF BUSINESS
We provide our customers with video production and Internet news
broadcasting and dissemination services. We carry on our business on the
Internet through our Web site. Our business plan is to develop an internet video
broadcasting company that offers a wide variety of video services utilizing
streaming video technology to our customers.
25
<PAGE>
Our business is still in the development stage. We started development of
our business in January, 1999. We established our Web site, which we call VBC
News 1 Channel, in January, 1999 and commenced commercial operations in March,
1999. We are now in the process of starting video productions for our customers
and broadcasting these video productions via the Internet.
We have also started developing additional Channels, such as entertainment,
sports, health and lifestyles, for broadcast from our Web site.
We are targeting public and financial companies as our customer base for
our VBC News 1 Channel. We plan to offer the following services to our
customers:
- Video production of news releases, corporate events and corporate
announcements;
- Broadcast and dissemination of video productions from our Web site
over the Internet;
- Assistance in making video productions available from our customers'
Web sites.
- Advertising and hosting.
Our VBC News 1 Channel provides viewers with interviews from company
officials at locations throughout the United States and Canada. Broadcasts are
produced live and to tape and are archived on our Web site for instant on-demand
video. Interviews can also be linked to other companies' sites, allowing us to
gain additional viewers from other sites. We are also starting to establish
other channels such as the entertainment, health and lifestyles and sports.
We moved to our new studio and production facilities in Burnaby, British
Columbia in November 1999 and are now producing live Internet broadcasts.
FORMAT OF OUR WEB SITE
We have developed our Web site with the objective of creating a financial
resources site in which Internet users can access and view both video
productions made for our customers and our own financial news broadcasts. Our
Web site has been developed to enable users to access "channels". We launched
our first channel, VBC News 1, in the first quarter of 1999. Subject to the
availability of sufficient funding, we plan to launch additional channels for
broadcast via our Web site.
An Internet user accessing our Web site is presented with options on which
video productions or financial news broadcasts to view. Upon selection, our 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 is not 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.
26
<PAGE>
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.
Our Web site also displays our logo and is capable of displaying
advertisements from advertisers who have arranged to post their ads on the site.
REVENUE SOURCES
We intend to generate revenue from the following sources:
- - The video broadcast of public company officials on the VBC News 1 Show.
- - Advertising.
- - Encoding and streaming video productions from other sources for use on our
site or any other website.
- - Hosting and server storage of video footage and web content.
The Broadcast of Corporate Information
We currently produce and broadcast corporate overviews, updates, press
releases and financial information for publicly traded companies. Our goal is to
make these broadcasts a regular part of each customer's financial news
dissemination process.
We intend to broadcast news coverage for both our customers who are paying
a fee for the broadcast of news coverage, and for public companies who are not
customers where we deem the news coverage to be of interest to our audience. Our
objective in broadcasting news coverage for public companies who are not paying
customers is to enhance the content of our broadcasts. Our objective is to build
and maintain an audience for our customers who are paying for the broadcast of
news coverage. We consider that building and maintaining an audience that views
our broadcasts as essential to the marketing and sales of our broadcast
services. Our charges to customers are intended to range from $3,000 to $20,000
depending on the services the customer requests. Some customers may want to be
interviewed two or three times per year. Also, some clients may want advertising
as part of their package.
We perceive that there is demand by public companies with small
capitalization's who want to broadcast corporate news via the Internet. We
compete against other larger companies who also broadcast financial video on the
Internet, including Bloomberg and CNBC. We believe that our Internet broadcast
services can be distinguished from the services offered by large Internet
broadcast companies such as Bloomberg and CNBC as these large firms do not offer
news coverage for small-cap public companies. In addition, these broadcasters do
not offer the opportunity for small-cap public companies to pay for Internet
news broadcast at affordable rates.
Our objective is to attract an audience which is interested in small-cap
public companies and which does not have any alternative sources from which to
view news being broadcast by small-cap public companies.
27
<PAGE>
Advertising
We anticipate that advertising revenues will be the principal source of our
future revenue. We have developed the VBC News 1 Channel to take advantage of
advertising revenue while broadcasting news. Advertisements are run throughout
our VBC 1 Channel broadcasts. This advertising format has been devised by us in
order to increase potential advertising revenues. Advertisements are run
throughout the VBC News 1 broadcasts.
Hosting and Storage of Video Footage and Web Content
We intend to maintain archived video footage produced for our corporate
customers on our 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. We
propose to charge our customers a monthly fee for the maintenance and storage of
this footage. We propose to evaluate increases in the fee charged if demand for
our Internet broadcast services increases.
We are also intending to offer the service of hosting and updating our
customers' Web sites for a monthly fee.
OPERATIONS
We use independent Internet service providers to provide connectivity to
the Internet. We believe that these telecommunication and Internet service
facilities are essential to our operation and anticipate upgrading these
facilities in the future.
We produce our news coverage at our studio in Burnaby, British Columbia. We
also offer on-location services in Vancouver, British Columbia. If a customer
requests on-location services, a news crew will arrive at the customer's office,
or any other pre-arranged location, to video the customer's company officials
announcing their news. We will then immediately edit the video footage into a
streaming Internet video format and broadcast the video footage on our VBC News
1 Channel from our Web site. The video footage may also be broadcast from our
customer's own Web site and other strategic financial sites. All footage shown
outside of our VBC News 1 Channel will be clearly identified as our footage with
ties back to the VBC News 1 Channel. A fee will be charged to our customers for
the broadcast and dissemination of this information. We intend to re-evaluate
the fees charged if we are successful in achieving market acceptance for our
Internet broadcasting services and if demand for our Internet broadcast services
increases. We expect that each customer that broadcasts will bring its own
audience to our channel that we will attempt to retain through our daily
programming.
We focused our operations initially on public companies located in
Vancouver, British Columbia. We are able to provide services to companies
located in other markets, but our ability to provide on-location services has
been constrained by financial and manpower limitations. At present, we have
produced only a few events outside the Vancouver area. Our objective is to
expand our production of news and information throughout the United States and
Canada, as well as elsewhere. This sort of expansion, however, is subject to
available funding and our ability to
28
<PAGE>
market our services in diverse areas. There can be no assurance that we will be
successful in developing our business plan throughout these areas.
TECHNOLOGY
We license commercially available technology whenever possible instead of
purchasing custom-made software or developing our own software. We believe that
this strategy lowers operating costs and allows us to concentrate more fully on
creating content for the VBC News 1 Channel and developing new channels.
INTELLECTUAL PROPERTY
Our performance and ability to compete are dependent to a significant
degree on our proprietary intellectual property. We rely on a combination of
trademark, copyright and trade secret laws in order to protect our proprietary
rights. We also rely on confidentiality agreements and non-compete agreements
executed by employees and consultants.
We have applied to the United States Trademark office for registration of
"ViaVid" as a trademark in the United States. We have also applied to the Canada
Patent and Trademark Office for registration of "ViaVid" as a trademark in
Canada. No trademark has been issued to us for "ViaVid" in either the United
States or Canada. We are not aware of any other companies currently using the
name "ViaVid". We have conducted searches of trademark databases in both the
United States and Canada and have not found any registration of the name
"ViaVid" as a trademark. There is no assurance that we 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. Also, there can be no
assurance that we will obtain any significant commercial advantage from this
trademark if granted or that we will have the financial resources to protect our
rights in the name through legal proceedings or otherwise. It is also possible
that our competitors or others will adopt product or service names similar to
"ViaVid" or other similar service marks or trademarks, thereby impeding our
ability to build brand identity and possibly leading to customer confusion. Our
inability to protect the name "ViaVid" adequately could have a material adverse
effect on our business, results of operations and financial condition.
We also rely on a variety of technologies that we license from third
parties, including our Internet server software, which is used in our ViaVid Web
site to perform key functions. We can provide no assurance, however, that these
third-party technology licenses will continue to be available to us on
commercially reasonable terms. Our loss or inability 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 our 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 we have.
Competitors may target our business directly and may offer services comparable
to our services at prices below our cost. There is no assurance that we will
have the financial or technical resources to compete with such action or
competitors.
29
<PAGE>
The Internet news dissemination market is new, rapidly evolving and
intensely competitive. We expect competition to intensify in the future. We
currently or potentially compete with a variety of other companies. These
competitors include:
(i) Pseudo Programs, Inc., a private company located in New York, which
provides services and content similar to ours,
(ii) a number of indirect competitors that specialize in Internet news
broadcasting, Bloomberg and CNBC;
(iii)conventional news broadcasting and dissemination services, including
television, newspapers, and magazines;
(iv) a variety of other companies that offer services similar to our services.
We are aware of many competitors that provide both conventional and
Internet distribution of print-based news releases and corporate information for
small-cap public companies. One example of a competitor in our principal market
of Vancouver, British Columbia is Canada Stockwatch Inc., which provides news
dissemination services for small-cap public companies using both conventional
print media and electronic distribution. Public companies such as Yahoo, Inc.
and Microsoft Corporation also provide Internet access to news releases and
corporate information released by small-cap companies. We view our Internet
broadcast services as being distinct from these print based distribution media
sources. Our Internet broadcast service is intended to enable a small-cap
company to deliver multi-media presentations with audio and video streaming. We
believe these broadcasts have the potential to offer greater impact to the
public company's target audience by enabling the viewer to see representatives
of the small-cap company delivering a news release or corporate information. Any
presentation can be coupled with video images of a customer's business
operations and products. The presentation can also be integrated with a
customer's marketing information and corporate information, thereby reinforcing
the customer's corporate image. We are also able to broadcast events such as
shareholder meetings and press interviews that are not typically published in a
print-based format.
EMPLOYEES
We have ten (10) full-time employees, including Mr. Brian Kathler, our
President, and Ms. Cheryl Watkins, our Secretary and Treasurer. We have no
part-time employees. We conduct our business primarily through agreements with
our consultants and arms-length third parties.
The services of Mr. Brian Kathler, our President, are provided through a
consulting agreement with Kathler Holdings Inc., a private company controlled by
Mr. Kathler. The services of Mr. Paul Watkins, a Director, are provided through
a consulting agreement with Watkins Communications, 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.
The services of Mr. Robert Gamon, a Director, are provided through a
consulting agreement with 595871 B.C. Ltd., a private company controlled by Mr.
Gamon.
30
<PAGE>
The terms and conditions of these consulting agreements are summarized in
the section entitled "Executive Compensation".
We have no written employment or consulting agreements with any of the
above-named persons. None of our employees are represented by a labor union.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have spent the following amounts on start-up and development expenses
since the commencement of our business in January, 1999:
January 20,1999 to March 31, 1999
March 31, 1999 to June 30, 1999
------------------ ------------------
$75,104 $106,511
Start-up and development expenses have consisted of expenses associated with
product development, including development of our Web site and the VBC News 1
Channel, business development and market development. We have paid for all
start-up and development expenses that we have incurred.
GOVERNMENT REGULATION
Our subsidiary, ViaVid Broadcasting Corp., is presently qualified to carry
on business in the Province of British Columbia, Canada. We may have to qualify
to do business in other jurisdictions as our business expands. As our broadcasts
will be available over the Internet in multiple states and foreign countries,
additional jurisdictions may claim we are required to qualify to do business as
a foreign company in each such state or foreign country. Failure to qualify as a
foreign company in a jurisdiction where required to do so could subject us to
taxes and penalties.
Our ability to carry on business and expand may be impacted by new
government regulation. Due to the increasing popularity and use of the Internet,
new 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 and may increase our cost of
doing business or otherwise have a harmful effect on our business.
We believe that acceptance of our business format may increase as more
Internet users are able to get high speed access to the Internet as the
functionality of our Web site is enhanced using high speed Internet access over
conventional access. Government regulation may impact on the timing and rate of
introduction of high speed Internet access to consumers. The delay of the wide
spread introduction of high speed Internet access may detrimentally impact on
our business.
31
<PAGE>
There are no material environmental protection laws that will apply to or
effect our business.
LEGAL PROCEEDINGS
We are not currently a party to any material legal proceedings.
DESCRIPTION OF PROPERTY
Our primary business activities are carried on at leased premises located
at 3955 Graveley Street, Burnaby, British Columbia V5C 3T4. These premises are
comprised of approximately 3,000 square feet and are leased for a term of eight
(8) months expiring on June 30, 2000. We have the option to extend the term of
the lease for one additional year expiring June 30, 2001. We believe these
facilities are adequate for our current operations.
DIRECTORS, EXECUTIVE OFFICERS AND PROMOTERS
Our executive officers and directors, their respective ages as of January
26, 2000 and the positions they hold with us are as follows:
NAME AGE POSITION
Brian Kathler 36 President and Director
Paul Watkins 36 Director
Robert Gamon 52 Director
David Formosa 42 Director
James King 55 Director
Cheryl Watkins 31 Secretary and Treasurer
Set forth below is a brief description of the background and business
experience of each of our executive officers and directors for the past five
years.
Brian Kathler has been our President and a Director since January, 1999.
Mr. Kathler has served as the President and a director of our subsidiary, ViaVid
Broadcasting Corp. since October 31, 1998. Prior to joining us, Mr. Kathler was
a self-employed computer consultant from July, 1997 to November, 1998. Mr.
Kathler 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, a company
involved in the business of software consulting, from 1996 to July, 1997. Mr.
Kathler was employed as a senior software engineer by MPR Teltech, a company
involved in the business of telephone research from 1994 to 1996. Mr. Kathler
possesses more than fourteen years of experience in the computer software
development, consulting and management industry. Over this fourteen year period,
Mr. Kathler has worked in a number of areas of the software development industry
ranging from programming to assisting companies in getting started.
32
<PAGE>
Paul Watkins has been a Director since January, 1999. Mr. Watkins has also
served as a director of our subsidiary, ViaVid Broadcasting Corp., since October
31, 1998. Mr. Watkins founded Watkins Communications Inc., an Internet marketing
and news dissemination company with clients in the financial industry, in 1994.
Mr. Watkins has been the president and director of Watkins Communications Inc.
from 1994 to the present. Watkins Communications Inc. has 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 computer sciences and has over 10
years experience in the business of investor communications. Paul Watkins and
Cheryl Watkins are husband and wife.
Robert Gamon joined our board of directors on November 23, 1999. Mr. Gamon
has been a director of our subsidiary, ViaVid Broadcasting Corp. since November,
1998. Mr. Gamon was an investment advisor with Pacific International Securities
of Vancouver, British Columbia from November, 1997 to November, 1999. Mr. Gamon
was an investment advisor with Georgia Pacific Securities of Vancouver, British
Columbia from 1991 to November, 1997.
David Formosa joined our board of directors on November 24, 1999. Mr.
Formosa is the owner and operator of a number of private companies located in
Powell River, British Columbia, including the Shingle Mill Pub & Restaurant, the
Powell Lake Marina, the Top of Hill Grocery Store and Gas Bar. Mr. Formosa is
also a part-owner of the Lund Hotel and Resort and the Lund R.V. Park, each of
which is a privately owned business located in British Columbia. Mr. Formosa is
presently the president and a director of RDB Enterprises, Inc., a public
company which is traded on the Vancouver Stock Exchange. Mr. Formosa is also a
director of Gainey Resources Ltd., a public company which is traded on the
Vancouver Stock Exchange. Both RBD Enterprises, Inc. and Gainey Resources Ltd.
are presently inactive.
James King has worked in the video industry since 1990. From February of
1992 to June 1999, Mr. King was President of VTR Video. VTR manufactured and
distributed video products in Canada for major Hollywood studios. In June 1999,
Technicolor, a manufacturer of video and optical products, purchased VTR Video.
Mr. King continues as the head of Technicolor Canada. Mr. King is a graduate of
The University of British Columbia, and is a registered Professional Engineer.
Prior to 1990 Mr. King worked in management roles with Union Carbide, Gas
Products Division. He was a senior consultant with Roy Jorgensen Associates, a
firm specializing in Maintenance Management systems for Cities, Municipalities
and Provincial Governments.
Cheryl Watkins has been our Secretary and Treasurer since January, 1999.
Ms. Watkins has over 10 years of experience as a legal assistant in the area of
securities and corporate commercial work. She co-founded Watkins Communications
Inc. with her husband, Paul Watkins, in 1994. Ms. Watkins worked with Watkins
Communications Inc. from October, 1997 to present as corporate secretary and as
an administrative consultant to publicly traded companies. Ms. Watkins provided
administration and legal assistant services to Princeton Financial Services from
March, 1997 to July, 1998. Ms. Watkins was employed by Gerald J. Shields Law
Corp. from March 1996 to March, 1997 where she provided administration and legal
assistant and accounting services. Ms. Watkins was employed by Strategic Capital
from February, 1994 to March, 1996 where she provided administration and legal
assistant and accounting services.
Our Directors are elected for terms of one year to hold office until the
next annual meeting of the holders of our common stock, as provided by the
Nevada Revised Statutes, or until removed
33
<PAGE>
from office in accordance with our bylaws. Our officers are appointed by our
board of directors and hold office until removed by the board.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
During the fiscal year ended March 31, 1999 and the six months ended
September 30, 1999, no officer or Director received compensation from us in
excess of $100,000.
The following table sets forth the compensation paid or awarded to our
President during the fiscal year ended March 31, 1999 for all services rendered
to us in that year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------- ------------------------------
BONUS/ANNUAL SECURITIES LONG-TERM
NAME AND INCENTIVE UNDERLYING INCENTIVE ALL OTHER
PRINCIPAL POSITION YEAR SALARY AWARD OPTIONS PAYOUTS COMPENSATION
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Brian Kathler 1999 $10,037 -0- (1) -0- -0-
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options granted to Mr. Kathler in 1999 were cancelled in January 2000.
EMPLOYMENT AGREEMENTS
The services of Brian Kathler, our President, are provided pursuant to a
consulting contract dated February 1, 1999 between Kathler Holdings Ltd and us.
The following services of Mr. Kathler are provided pursuant to this agreement:
(1) general direction and supervision of our business and financial affairs; (2)
overall direction to our management; (3) management of our day to day
operations; and (4) performing such other duties and observing such instructions
as may be reasonably assigned to Mr. Kathler by our Board of Directors. The
agreement has a term of one year. The compensation we pay to Kathler Holdings
Inc. was increased from $3,500 per month to $5,000 per month effective August
31, 1999 in accordance with the terms of the agreement that provided for a
compensation review after six months from commencement of the agreement. The
services of Mr. Kathler under this agreement are on a full time basis.
The services of Paul Watkins, a director, are provided pursuant to a
consulting agreement between Watkins Communications Inc and us. The following
services of Mr. Watkins are provided to us pursuant to this agreement: (1) the
exercise of general direction and supervision over the marketing and development
of our business; (2) providing direction to our management; (3) assisting with
our day to day operations; and (4) performing such other duties and observing
such instructions as may be reasonably assigned by our Board of Directors. The
agreement is for a term
34
<PAGE>
of one year. The compensation that we pay to Watkins Communications Inc. was
increased from $3,500 per month to $5,000 per month effective August 31, 1999 in
accordance with the terms of the agreement which provided for a compensation
review after six months from commencement of the agreement. The services of Mr.
Watkins under this agreement are on a full time basis
We employ Cheryl Watkins, our Secretary and Treasurer, to provide
administrative, accounting and corporate services. Ms. Watkins is an employee at
will without a written employment agreement, and is paid $2,800 per month for
her services.
The services of Robert Gamon, a director, are provided pursuant to a
consulting agreement between us, Mr. Gamon and 595871 B.C. Ltd. dated November
1, 1999. The following services of Mr. Gamon are provided to us pursuant to this
agreement: (1) supervising the financing activities of the Company; (2) advising
the Company on its capital structure and the structure of future financings; and
(3) performing such other duties and observing such instructions as may be
reasonably assigned by our Board of Directors. The agreement is for a term of
one year commencing November 1, 1999. The compensation that we pay to 595871
B.C. Ltd. is $5,000 per month. The services of Mr. Gamon under this agreement
are on a full time basis.
We believe that the compensation paid to Kathler Holdings Inc., Watkins
Communications Inc., 595871 B.C. Ltd. and Ms. Cheryl Watkins is below market
compensation rates for companies in our industry. The consultant fees paid to
Kathler Holdings Inc. and Watkins Communications Inc. were increased effective
August 31, 1999 to bring these rates of remuneration closer to market rates. We
believe that the terms of the agreements with Kathler Holdings Inc., Watkins
Communications Inc., 595871 B.C. Ltd. and Ms. Cheryl Watkins are at least as
fair to us as would have been obtained from an unrelated third party in an
arms-length negotiation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
We acquired our subsidiary, ViaVid Broadcasting Corp., from Paul Watkins,
Cheryl Watkins, 549419 BC Ltd. and Kathler Holdings Inc. in consideration for
the issue of 5,100,000 shares of our common stock issued as follows:
- - Kathler Holdings Inc. was issued 1,700,000 shares. Kathler Holdings Inc. is
a private company controlled by Brian Kathler, our President and a
Director.
- - Paul Watkins, a Director, was issued 850,000 shares.
- - Cheryl Watkins, our Secretary and Treasurer, was issued 850,000 shares.
- - 549419 BC Ltd. was issued 1,700,000 shares. 549419 BC Ltd. is a private
company controlled by Robert Gamon, a Director.
We have entered into a consulting contract with Kathler Holdings Inc. for
the services of Brian Kathler, our President and a Director. We have also
entered into a consulting contract with Watkins Communications Inc. for the
services of Mr. Paul Watkins, a Director.
35
<PAGE>
We have also repaid the following loans to our shareholders and directors:
Shareholder/Director Loan Repayment
-------------------- --------------
Kathler Holdings Inc. $3,240.56
549519 B.C. Ltd. $4,520.00
Paul Watkins $4,790.39
We have no other loans outstanding to any of our officers, Directors or
principal shareholders. The loans were repaid out of the proceeds from the sale
of our securities.
SELLING SHAREHOLDERS
The following table sets forth the aggregate numbers of securities
beneficially owned by each Selling Shareholder as of January 26, 2000 and the
aggregate number of securities registered hereby that each Selling Shareholder
may offer and sell pursuant to this Prospectus. Because the Selling Shareholders
may sell all or a portion of the securities at any time and from time to time
after the date hereof, no estimate can be made of the number of shares of Common
Stock that each Selling Shareholder may retain upon the completion of the
Offering. The shares of Common Stock have been included in this Prospectus
pursuant to contractual rights granted to the Selling Shareholders to have their
shares of Common Stock registered under the Securities Act.
<TABLE>
<CAPTION>
TOTAL NUMBER OF SHARES TO BE OFFERED
NAME OF SELLING SHAREHOLDER SHARES OWNED PRIOR TO THIS OFFERING(1) FOR SELLING SHAREHOLDERS ACCOUNT(2)
- --------------------------- -------------------------------------- -------------------------------------
<S> <C> <C>
David Jones 90,000 90,000
Susan Winkler 132,500 100,000
Ross Johl 15,000 10,000
Mario Barche 100,000 100,000
Marose Holdings Ltd. 20,000 20,000
Andreas Linz 50,000 50,000
Tri-Star Management Ltd. 10,000 10,000
Fidra Holdings Ltd. 287,000 287,000
Bank Von Ernst & Co. Ltd. 30,000 30,000
David Redick 5,000 5,000
Keith Burechailo 15,000 15,000
Adrian O. Watson 15,000 15,000
Roy Bennett 5,000 5,000
Ronald Jones 300,000 300,000
</TABLE>
(1)Except as otherwise noted, the named party beneficially owns and has sole
voting and investment power over all shares or rights to these shares.
(2)Assumes that none of the selling shareholders sells shares of common stock
not being offered hereunder or purchases additional shares of common stock.
36
<PAGE>
PLAN OF DISTRIBUTION
The Selling Securityholders may sell or distribute some or all of the
Common Stock from time to time through underwriters or dealers or brokers or
other agents or directly to one or more purchasers, including pledgees, in
transactions (which may involve block transactions) on the OTC Bulletin Board(R)
or in privately negotiated transactions (including sales pursuant to pledges),
or in a combination of such transactions. Such transactions may be effected by
the Selling Securityholders at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices, or at
fixed prices, which may be changed. Brokers, dealers, agents or underwriters
participating in such transactions as agent may receive compensation in the form
of discounts, concessions or commissions from the Selling Securityholders (and,
if they act as agent for the purchaser of such shares, from such purchaser).
Such discounts, concessions or commissions as to a particular broker, dealer,
agent or underwriter might be in excess of those customary in the type of
transaction involved.
The Selling Securityholders and any such underwriters, brokers, dealers or
agents that participate in such distribution may be deemed to be "underwriters"
within the meaning of the Securities Act, and any discounts, commissions or
concessions received by any such underwriters, brokers, dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.
Neither we nor the Selling Securityholders can presently estimate the amount of
such compensation. We do not know of any existing arrangements between the
Selling Securityholders and any underwriter, broker, dealer or other agent
relating to the sale or distribution of the Selling Securityholders' Securities.
Under applicable rules and regulations currently in effect under the
Exchange Act, any person engaged in a distribution of any of the shares of
Common Stock may not simultaneously engage in market activities with respect to
the Common Stock for a period of five business days prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Securityholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including without limitation Regulation M
thereunder, which provisions may limit the timing of purchases and sales of any
of the shares of Common Stock by the Selling Securityholders. All of the
foregoing may affect the marketability of the Common Stock.
We will pay substantially all of the expenses incident to this offering of
the Securities to the public other than commissions and discounts of
underwriters, brokers, dealers or agents. The Selling Securityholders may
indemnify any broker, dealer, agent or underwriter that participates in
transactions involving sales of the securities against certain liabilities,
including liabilities arising under the Securities Act.
37
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person known
to us to own more than 5% of our outstanding common stock as of January 26,
2000, and by the officers and directors, individually and as a group. Except as
otherwise indicated, all shares are owned directly.
NAME AND ADDRESS AMOUNT PERCENT
OF BENEFICIAL OWNER OF CLASS(1)
- ------------------- -----------
Brian Kathler (2) 1,700,000 shares 25.0%
Director, President
40 - 16061 85th Avenue
Surrey, BC V4N 4Y5
Paul Watkins 850,000 shares 12.5%
Director
187 East Braemar Road
North Vancouver, BC V7N 1P7
Cheryl Watkins 850,000 shares 12.5%
Secretary and Treasurer
187 East Braemar Road
North Vancouver, BC V7N 1P7
Robert Gamon (3) 1,700,000 shares 25.0%
Director
4768 Woodgreen
West Vancouver, BC
David Formosa 210,000 shares(4) 3.0%
Director
3307 Hernando Ave.
Powell River, BC
James King 55,000 shares(5) 1.0%
Director
34 Kern Road
Don Mills, Ont. M3B 1T1
All Officers and Directors 5,135,000 shares 79.0%
as a Group (6 persons)
- --------------------------------------------------------------------------------
(1) Under Rule 13d-3, certain shares may be deemed to be beneficially owned by
more than one person (if, for example, persons share the power to vote or
the power to dispose of the shares). In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire the
shares (for example, upon exercise of an option) within 60 days of the date
as of
38
<PAGE>
which the information is provided. In computing the percentage ownership of
any person, the amount of shares outstanding is deemed to include the
amount of shares beneficially owned by such person (and only such person)
by reason of these acquisition rights. As a result, the percentage of
outstanding shares of any person as shown in this table does not
necessarily reflect the person's actual ownership or voting power with
respect to the number of shares of Common Stock actually outstanding at
January 26, 2000. As of January 26, 2000, there were 6,546,000 shares of
the Company's common stock issued and outstanding. In addition, there were
230,000 shares subject to options exercisable within 60 days of the date of
this registration statement.
(2) The 1,700,000 shares of common stock beneficially owned by Brian Kathler
are registered in the name of Kathler Holdings Inc., a private company
controlled by Mr. Kathler.
(3) The 1,700,000 shares of common stock beneficially owned by Robert Gamon are
registered in the name of 549419 BC Ltd., a private company controlled by
Mr. Gamon.
(4) Includes 180,000 shares issuable on exercise of an option at $1.00 per
share. Also includes 10,000 shares held by Mr. Formosa's wife, as to which
he disclaims a beneficial interest.
(5) Includes 50,000 shares issuable on exercise of an option at $3.50 per
share. Also includes 5,000 shares held by Mr. King's wife, as to which he
disclaims a beneficial interest.
DESCRIPTION OF SECURITIES
GENERAL
Our authorized capital stock consists of 25,000,000 shares of common stock
at a par value of $0.001 per share.
The following description of our capital stock does not purport to be
complete and is subject to and qualified in its entirety by our articles of
incorporation and bylaws, which are included as exhibits to the registration
statement of which this prospectus forms a part, and by the provisions of
applicable Nevada law.
COMMON STOCK
As of January 26, 2000, there were 6,546,000 shares of our common stock
issued and outstanding that were held by approximately 40 stockholders of
record.
Holders of our common stock are entitled to one vote for each share on all
matters submitted to a stockholder vote. Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of
common stock voting for the election of directors can elect all of the
directors. Holders of our common stock representing a majority of the voting
power of our capital stock issued and outstanding and entitled to vote,
represented in person or by proxy, are necessary to constitute a quorum at any
meeting of our stockholders. A vote by the holders of a majority of our
outstanding shares is required to effectuate certain fundamental corporate
changes such as a liquidation, merger or an amendment to our Articles of
Incorporation.
Holders of common stock are entitled to share in all dividends that the
board of directors, in its discretion, declares from legally available funds. In
the event of a liquidation, dissolution or winding up, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of stock, if any,
having preference over the common stock. Holders of our common stock have no
conversion, preemptive or other subscription rights, and there are no redemption
provisions applicable to our common stock.
39
<PAGE>
All shares offered by the selling stockholders are validly issued, fully
paid and non-assessable shares of our capital stock.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Our directors and officers are indemnified as provided by the Nevada
Revised Statutes (the "NRS") and our Bylaws. We have been advised that in the
opinion of the Securities and Exchange Commission indemnification for
liabilities arising under the Securities Act is against public policy as
expressed in the Securities Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities is asserted by one of
our directors, officers, or controlling persons in connection with the
securities being registered, we will, unless in the opinion of our legal counsel
the matter has been settled by controlling precedent, submit the question of
whether such indemnification is against public policy to a court of appropriate
jurisdiction. We will then be governed by the court's decision.
LEGAL MATTERS
Certain legal matters relating to the Common Stock offered hereby have been
passed upon for us by William S. Clarke, P.A., Princeton, New Jersey.
INDEPENDENT PUBLIC ACCOUNTANTS
Our consolidated balance sheet as of March 31, 1999 and the related
consolidated statements of operations, changes in stockholders' equity (deficit)
and cash flows for the period ended March 31, 1999, appearing elsewhere in this
Prospectus, have been included herein in reliance on the report of Davidson &
Company, chartered accountants, given on the authority of said firm as experts
in accounting and auditing.
40
<PAGE>
INDEX TO FINANCIAL STATEMENTS
1. Report of Independent Accountants
2. Audited Financial Statements:
a. Consolidated Balance Sheet as of March 31, 1999
b. Consolidated Statements of Operations for the period ending March 31,
1999
c. Consolidated Statements of Stockholders Equity for the period ending
March 31,1999
d. Consolidated Statements of Cash Flows for the period ending March 31,
1999
e. Notes to Audited Financial Statements
3. Unaudited Financial Statements:
a. Consolidated Balance Sheet as of September 30, 1999
b. Consolidated Statement of Operations for the six months ended September
30, 1999
c. Consolidated Statement of Stockholders Equity for the six months ended
September 30, 1999
d. Consolidated Statements of Cash Flows for the six months ended September
30, 1999
e. Notes to Unaudited Financial Statements
F-1
<PAGE>
VIAVID BROADCASTING INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
<PAGE>
- --------------------------------------------------------------------------------
DAVIDSON & COMPANY Chartered Accountants A Partnership of Incorporated
Professionals
- --------------------------------------------------------------------------------
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>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
AS AT MARCH 31, 1999
<TABLE>
<CAPTION>
============================================================================================= ===============
<S> <C>
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
============================================================================================= ===============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD FROM INCORPORATION ON JANUARY 20, 1999 TO MARCH 31, 1999
<TABLE>
<CAPTION>
============================================================================================= ===============
<S> <C>
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)
============================================================================================= ===============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
PERIOD FROM INCORPORATION ON JANUARY 20, 1999 TO MARCH 31, 1999
<TABLE>
<CAPTION>
=============================================== ============================== =============== =============== ===============
Common Stock Deficit
------------------------------ Accumulated
Additional During the
Number Paid-in Development
of Shares Amount Capital Stage Total
- ----------------------------------------------- --------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
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
=============================================== =============== ============== =============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM INCORPORATION ON JANUARY 20, 1999 TO MARCH 31, 1999
<TABLE>
<CAPTION>
============================================================================================== ============== ===============
<S> <C>
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 -
============================================================================================== ============== ===============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
VIAVID BROADCASTING INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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>
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>
4. CAPITAL ASSETS
<TABLE>
<CAPTION>
========================================== =============== ============== ===============
Accumulated Net
Cost Depreciation Book Value
- ------------------------------------------ --------------- -------------- ---------------
<S> <C> <C> <C>
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
========================================== =============== ============== ===============
</TABLE>
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
totaling $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>
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>
VIAVID BROADCASTING INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1999
<PAGE>
VIAVID BROADCASTING INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Unaudited at September 30, 1999)
<TABLE>
<CAPTION>
=========================================================================================== ================= ===============
September 30, March 31,
1999 1999
- ------------------------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
ASSETS
CURRENT
Cash $ 187,007 $ 163,406
Accounts receivable 19,945 6,841
-------------- --------------
206,952 170,247
CAPITAL ASSETS (Note 4) 129,605 17,510
-------------- --------------
$ 336,557 $ 187,757
=========================================================================================== ================= ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 4,469 $ 6,866
Due to related parties 3,918 8,459
-------------- --------------
8,387 15,325
-------------- --------------
SHAREHOLDERS' EQUITY
Capital stock
Authorized
25,000,000 common shares with a par value of $0.001 per share
Issued
6,284,000 common shares (5,884,000 at March 31, 1999) 6,284 5,884
Additional paid-in capital 637,816 238,216
Deficit accumulated during the development stage (315,930) (71,668)
-------------- --------------
328,170 172,432
-------------- --------------
$ 336,557 $ 187,757
=========================================================================================== ================= ===============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
VIAVID BROADCASTING INC.
(A Development Stage Company) CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited at
September 30, 1999)
<TABLE>
<CAPTION>
======================================================================= ================== ================== ===============
Period From
Cumulative Incorporation
From Six Month on January
Incorporation Period Ended 20, 1999 to
to September 30, September March 31,
1999 30, 1999 1999
- ----------------------------------------------------------------------- ------------------ ------------------ ---------------
<S> <C> <C> <C>
REVENUE $ 18,989 $ 15,553 $ 3,436
------------- -------------- --------------
EXPENSES
Consulting 123,972 87,158 36,814
Depreciation 28,227 20,178 8,049
Internet, website and graphics 39,644 39,644 -
Office and miscellaneous 40,437 33,328 7,109
Professional fees 36,236 26,305 9,931
Rent 24,796 16,998 7,798
Salary and benefits 24,669 20,380 4,289
Telephone 5,153 4,039 1,114
Travel and entertainment 11,785 11,785 -
------------- -------------- -------------
334,919 259,815 75,104
------------- -------------- --------------
LOSS FOR THE PERIOD $ (315,930) $ (244,262) $ (71,668)
======================================================================= ================== =============== ===============
LOSS PER SHARE $ (0.05) $ (0.04) $ (0.01)
======================================================================= ================== =============== ===============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
VIAVID BROADCASTING INC.
(A Development Stage Company) CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited at September 30, 1999)
<TABLE>
<CAPTION>
========================================== =================================== =============== ================== ===============
Deficit
Common Stock Accumulated
----------------------------------- Additional During the
Number Paid-in Development
of Shares Amount Capital Stage Total
- ------------------------------------------ -------------------- -------------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
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 105,000 105 104,895 - 105,000
Loss for the period - - - (244,262) (244,262)
-------------- ------------- -------------- -------------- --------------
Balance at September 30, 1999 6,284,000 $ 6,284 $ 637,816 $ (315,930) $ 328,170
========================================= ============== ============= ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
VIAVID BROADCASTING INC.
(A Development Stage Company) CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited at
September 30, 1999)
<TABLE>
<CAPTION>
======================================================================= =================== ================= ===================
Period From
Cumulative Six Month Incorporation
From Period Ended on January
Incorporation September 20, 1999 to
to September 30, 1999 March 31,
30,1999 1999
- ----------------------------------------------------------------------- ------------------- ----------------- -------------------
<S> <C> <C> <C>
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Loss for the period $ (315,930) $ (244,262) $ (71,668)
Items not affecting cash
Depreciation 22,792 20,178 2,614
Write-down of goodwill 5,435 - 5,435
Changes in non-cash working capital items
Increase in accounts receivable (19,945) (13,104) (6,841)
Increase in accounts payable 4,469 (2,397) 6,866
--------------- ---------------- ---------------
Net cash used in operating activities (303,179) (239,585) (63,594)
--------------- --------------- ---------------
INVESTING ACTIVITIES
Acquisition of capital assets (152,397) (132,273) (20,124)
Acquisition of subsidiary (335) - (335)
--------------- --------------- ---------------
Net cash used in investing activities (152,732) (132,273) (20,459)
--------------- --------------- ---------------
FINANCING ACTIVITIES
Proceeds from common shares 639,000 400,000 239,000
Loans from related parties 3,918 (4,541) 8,459
--------------- ----------------- ---------------
Net cash provided by financing activities 642,918 395,459 247,459
--------------- --------------- ---------------
CHANGE IN CASH FOR THE PERIOD 187,007 23,601 163,406
CASH, BEGINNING OF PERIOD 163,406 -
--------------- --------------- ---------------
CASH, END OF PERIOD $ 187,007 $ 187,007 $ 163,406
======================================================================= =============== =============== ===============
SUPPLEMENTAL DISCLOSURE FOR NON-CASH OPERATING, INVESTING, AND
Shares for purchase of subsidiary $ - $ - $ 5,100
Cash paid during the period for interest 222 222 -
Cash paid during the period for income taxes - - -
======================================================================= =============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
VIAVID BROADCASTING INC.
(A Development Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited at September 30, 1999)
================================================================================
1. NATURE AND CONTINUANCE OF OPERATIONS
ViaVid Broadcasting Inc., a Nevada corporation, was incorporated on January
20, 1999. On January 27, 1999, the Company completed the acquisition of
ViaVid Broadcasting Corp., a Canadian company operating in Vancouver,
British Columbia, Canada.
The Company was incorporated in order to create a global internet video
broadcasting company that offers a network of video services utilizing
streaming video technology. The Company has developed the ViaVid Investment
News Channel, a site geared to take maximum advantage of advertising
revenue while broadcasting its news.
The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
incurred a loss of $315,875 for the period from inception to September 30,
1999. The Company anticipates expending approximately $1,000,000 over the
next twelve month period in pursuing its anticipated plan of operations.
The Company anticipates covering these costs by operating revenues and
additional equity financing. The Company completed an offering of 497,000
common shares of the Company at $1.00 per share to persons who are "Non
U.S. Persons" in accordance with Regulation S of the United States
Securities Act of 1933 during the period from May 15, 1999 to October 7,
1999. The Company also completed an offering of 35,000 shares of its common
stock pursuant to Regulation D of the Securities Act of 1933 on November 8,
1999. The Company requires additional financing in order to enable the
Company to complete its anticipated plan of operations. If the Company is
unable to complete its financing requirements or achieve revenue as
projected, it will then modify its expenditures and plan of operations to
coincide with the actual financing completed and actual operating revenues.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts
and classification of liabilities that might be necessary should the
Company be unable to continue in existence.
The Company is currently receiving revenues for video production and
hosting services. The Company anticipates an increase in revenue for
production, advertising and hosting video footage and web content if the
Company is successful in increasing its viewership over the next twelve
months.
2. SIGNIFICANT ACCOUNTING POLICIES
In preparing these financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and revenues and expenses
for the period. Actual results in future periods
<PAGE>
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.
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.
<PAGE>
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.
4. CAPITAL ASSETS
<TABLE>
<CAPTION>
================================= =============== =============== ================================
Net Book Value
--------------------------------
Accumulated September 30, March 31,
Cost Depreciation 1999 1999
- --------------------------------- --------------- --------------- ----------------- --------------
<S> <C> <C> <C> <C>
Computer equipment $ 104,701 $ 17,287 $ 87,414 $ 10,229
Office furniture 7,989 1,297 6,692 4,953
Telephone equipment 2,180 403 1,777 1,834
Video equipment 37,527 3,805 33,722 494
-------------- -------------- -------------- --------------
$ 152,397 $ 22,792 $ 129,605 $ 17,510
================================= =============== =============== ================= ==============
</TABLE>
5. CAPITAL STOCK
The Company completed an offering of 497,000 common shares at $1.00 per
share to persons who are "Non-U.S. Persons" in accordance with regulation S
of the United States Securities Act of 1933 during the period from May 15,
1999 to October 7, 1999. The Company has received $400,000 and subsequent
to September 30, 1999, it received a further $97,000 pursuant to this
offering.
<PAGE>
The Company completed an offering of 35,000 shares of the common stock to
accredited investors pursuant to Regulation D of the United States
Securities Act of 1933 subsequent to September 30, 1999 on November 8,
1999.
6. RELATED PARTY TRANSACTIONS
During the period, the Company entered into the following transactions with
related parties:
a) Paid consulting fees as follows:
- $47,381 (March 31, 1999 - $20,074) to two directors of the
Company
- $Nil (March 31, 1999 - $6,574) to an officer of the Company
- $Nil (March 31, 1999 - $1,673) to a director of the subsidiary
b) Paid salary of $17,406 (March 31, 1999 - $4,015) to an officer of the
Company.
7. INCOME TAXES
The Canadian operating loss for the period to date of $315,875, may be
carried forward and applied against taxable income in future years. Future
tax benefits which may arise as a result of these losses have not been
recognized in these financial statements. The Company has not commenced
operations in the U.S.A., therefore, there is no income or loss to report.
8. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may incorrectly
recognize the year 2000 as some other date, resulting in errors. The
effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000 and, if not addressed, the impact on operations and
financial reporting may range from minor errors to significant systems
failure which could affect an entity's ability to conduct normal business
operations. It is not possible to be certain that all aspects of the Year
2000 Issue affecting the Company, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.7502 of the Nevada General Corporation Law and Article XI,
Section 43 of the Registrant's By-Laws provide for indemnification of present
and former officers, directors, employees and agents.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the issuance and distribution of the
securities being registered hereunder, other than underwriting commissions and
expenses, are estimated to be as follows:
<TABLE>
<S> <C>
Registration Fee $ 1,027.00
Printing Expenses $ 3,500.00
Accounting Fees and Expenses $ 1,500.00
Legal Fees and Expenses $ 20,000.00
Transfer Agent and Registrar Fees and Expenses $ 500.00
Miscellaneous Expenses $ 473.00
TOTAL $ 27,000.00
=============
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Registrant has issued the following
unregistered securities.
1. On January 27, 1999, the Registrant issued 5,100,000 shares of common
stock pursuant to the Acquisition Agreement dated January 26, 1999 between the
Registrant and Paul Watkins, Cheryl Watkins, Kathler Holdings, Inc. and 549419
B.C. Ltd. in exchange for all of the outstanding capital stock of ViaVid
Broadcasting Corp., a British Columbia corporation. These shares were issued
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "Act").
2. On February 2, 1999, the Registrant completed the sale of 500,000 shares
of common stock to two (2) purchasers at a price of $0.01 per share. The shares
were sold to O.
PART II - 1
<PAGE>
Ronald Jones, then the Vice President-Finance of the Registrant and Mr. Jones'
son. The shares were offered and sold pursuant to Rule 504 of Regulation D of
the Act.
3. On February 12, 1999, the Registrant completed the sale of 100,000
shares of common stock to eight (8) purchasers at a price of $0.50 per share.
The shares were offered and sold pursuant to Rule 504 of Regulation D of the Act
to persons known to the Registrant's officers and directors None of the
securities were sold through an underwriter and, accordingly, there were no
underwriting discounts or commissions involved.
4. On April 5, 1999, the Registrant completed the sale of 184,000 shares of
common stock to twelve (12) purchasers at a price of $1.00 per share. The shares
were offered and sold pursuant to Rule 504 of Regulation D of the Act to persons
known to the Registrant's officers and directors. None of the securities were
sold through an underwriter and, accordingly, there were no underwriting
discounts or commissions involved.
5. During the period from May 15, 1999 to October 7, 1999, the Registrant
completed the sale of 497,000 shares of common stock to a total of nine (9)
purchasers pursuant to Regulation S under the Act. Each purchaser represented to
the Registrant that the purchaser was a "Non-U.S. Person". Each purchaser
represented his intention to acquire the securities for investment only and not
with a view to distribution. Legends were affixed to the stock certificates.
None of the securities were sold through an underwriter and, accordingly, there
were no underwriting discounts or commissions involved.
6. During November, 1999, the Registrant completed the sale of 40,000
shares of common stock to a total of four (4) purchasers pursuant to Rule 506 of
Regulation D of the Act. Each purchaser represented to the Registrant that the
purchaser was an "accredited investor," as defined in Rule 501 of Regulation D
of the Act. Each purchaser represented his intention to acquire the securities
for investment only and not with a view to their distribution. Legends were
affixed to the stock certificates. None of the securities were sold through an
underwriter and, accordingly, there were no underwriting discounts or
commissions involved.
PART II - 2
<PAGE>
ITEM 27. EXHIBITS
EXHIBIT NUMBER DESCRIPTION
-------------- ------------------------------------------------------------
3.1 Articles of Incorporation(1)
3.2 By-Laws(1)
4.1 Stock Option Plan dated October 20, 1999(2)
5.1 Opinion of William S. Clarke, P.A.(3)
10.1 Acquisition Agreement dated January 26, 1999 between the
Company and Paul Watkins, Cheryl Watkins, Kathler Holdings
Inc. and 59419 B.C. Ltd(1)
10.2 Consulting Contract with Kathler Holdings Inc.(1)
10.3 Consulting Contract with Watkins Communications Inc.(1)
10.4 Lease Agreement dated November 1, 1999 between the Company
and Greenhouse Studios(1)
10.5 Consulting Contract with 549419 B.C. Ltd.(1)
21 Subsidiaries of the Registrant
Name State of Incorporation
---- ----------------------
ViaVid Broadcasting Corp. British Columbia
23.1 Consent of Davidson & Company to use its Report on Audited
Financial Statements(3)
23.2 Consent of William S. Clarke, P.A. (included in Exhibit 5.1)
24 Power of Attorney (included in the Signature Pages of this
Registration Statement)
- ----------
(1) Incorporated by reference from registration statement on Form 10-SB12G (File
No.0-26535)
(2) Incorporated by reference from registration statement on Form S-8 filed with
the commission on December 29, 1999 (File No.333-93821)
(3) Filed herewith
PART II - 3
<PAGE>
ITEM 28. UNDERTAKINGS
A. The undersigned Registrant hereunder undertakes:
(1) to file, during any period in which it offers or sells securities,
a post-effective amendment to this Registration Statement to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act");
(ii) reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement; and
(iii) include any additional or changed material information on
the plan of distribution.
(2) That, for the purpose of determining liability under the Act, to
treat each such post-effective amendment as a new Registration Statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(4) For purposes of determining any liability under the Act, to treat
the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act as part of this registration statement as of the time the
Commission declared it effective.
(5) For determining any liability under the Act, to treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
B. Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Small Business
Issuer pursuant to the foregoing provisions, or otherwise, the Small Business
Issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Small Business Issuer of
expenses incurred or paid by a director, officer or controlling person of the
Small Business Issuer in the successful defense
PART II - 4
<PAGE>
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the Small
Business Issuer will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
PART II - 5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2, and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Burnaby,
Province of British Columbia, on January 31, 2000.
VIAVID BROADCASTING, INC.
By: /s/ Brian Kathler
-------------------------
Brian Kathler, President,
In accordance with the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<S> <C> <C>
/s/ Brian Kathler Director and President, January 31, 2000
- ---------------------------------------- (Principal Executive Officer and
Brian Kathler Principal Financial and Accounting Officer)
Paul Watkins
/s/ Brian Kathler
(pursuant to power of attorney) Director January 31, 2000
- ----------------------------------------
Robert Gamon
/s/ Brian Kathler
(pursuant to power of attorney) Director January 31, 2000
- ----------------------------------------
David Formosa
/s/ Brian Kathler
(pursuant to power of attorney) Director January 31, 2000
- ----------------------------------------
James King
/s/ Brian Kathler
(pursuant to power of attorney) Director January 31, 2000
- -----------------------------------------
</TABLE>
<PAGE>
VIAVID BROADCASTING, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned directors and
officers of ViaVid Broadcasting, Inc. a Nevada corporation, which is filing a
Registration Statement on Form SB-2 with the Securities and Exchange Commission,
Washington, D.C. 20549 under the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), hereby constitutes and appoints Brian Kathler
and Paul Watkins, and each of them, the individual's true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the person and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments,
including post-effective amendments, to the Registration Statement, including a
Prospectus or an amended Prospectus therein and any registration statement for
the same offering that is to be effective upon filing pursuant to Rule 462(b)
under the Securities Act, and all other documents in connection therewith to be
filed with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact as agents or any of them, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Brian Kathler Director and President, January 31, 2000
- --------------------------------- (Principal Executive Officer and
Brian Kathler Principal Financial and Accounting Officer)
/s/ Paul Watkins Director January 31, 2000
- ---------------------------------
Paul Watkins
/s/ Robert Gamon Director January 31, 2000
- ------------------------------------
Robert Gamon
/s/ David Formosa Director January 31, 2000
- ---------------------------------
David Formosa
/s/ James King Director January 31, 2000
- ---------------------------------
James King
</TABLE>
EXHIBIT 5.1
WILLIAM S. CLARKE, P.A.
ATTORNEY-AT-LAW
457 NORTH HARRISON STREET - SUITE 103
PRINCETON, NEW JERSEY 08540
----------
TELEPHONE: (609) 921-3663
FAX: (609) 921-3933
February 2, 2000
ViaVid Broadcasting, Inc.
3955 Graveley Street
Burnaby, BC, Canada V5C 3T4
Gentlemen:
I have acted as counsel for ViaVid Broadcasting, Inc. (the "Company") in
connection with the preparation of a Registration Statement filed by the Company
under the Securities Act of 1933, as amended (File No. 333-______), relating to
a proposed public offering by certain holders thereof of 1,037,000 shares of
Common Stock, $.001 par value (the "Stock").
In my capacity as counsel to you, I have examined the original, certified,
conformed photostats or Xerox copies of all such agreements, certificates of
public officials, certificates and correspondence of officers, representatives
of the Company and others and such other documents as I have deemed necessary or
relevant as a basis for the opinions herein expressed. In all such examinations,
I have assumed the genuineness of all signatures on original and certified
documents and the conformity to original and certified documents of all copies
submitted to me as conformed, photostat or duplicate copies. As to various
questions of fact material to such opinions, I have relied upon statements or
certificates of officials and representatives of the Company and others.
On the basis of such examination, I advise you that, in my opinion, the
issued and outstanding shares of Stock are legally issued, fully paid and
non-assessable.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference of my firm in the prospectus forming a part of
such Registration Statement.
Very truly yours,
William S. Clarke, P.A.
By: /s/ William S. Clarke
---------------------------
William S. Clarke
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in the Prospectus constituting part of this
Registration Statement on Form SB-2 (File No. 333-__________) of our report
dated May 3, 1999 (except as to Notes 1 and 8 which are as of August 18, 1999),
on our audits of the consolidated financial statements of ViaVid Broadcasting,
Inc. and Subsidiary.
Davidson & Company (signed)
VANCOUVER, B.C. CHARTERED ACCOUNTANTS
February 2, 2000
