THIS DOCUMENT IS A COPY OF THE FORM 10-QSB QUARTERLY REPORT FILED ON AUGUST 14,
2000, PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 2000
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-27097
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GLOBALNETCARE, INC.
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(Exact name of small business issuer as specified in its charter)
FLORIDA 980215778
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
SUITE 204, 65 BRUNSWICK, DOLLARD DES ORMEAUX, QUEBEC, CANADA H9B 2N4
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(Address of principal executive offices)
(514) 421-2294
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(Issuer's telephone number)
not applicable
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(Former name, former address and former fiscal year, if changed since last
report)
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
16,283,127 common shares issued and outstanding as of July 21, 2000
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
GlobalNetCare, Inc.'s (the "Company") financial statements are stated in United
States Dollars (US$) and are prepared in accordance with United States Generally
Accepted Accounting Principles.
Consolidated Financial Statements of
(Unaudited)
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Six-month period ended June 30, 2000 and 1999 and
period from inception to June 30, 2000
<PAGE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Financial Statements
(Unaudited)
Six-month period ended June 30, 2000 and 1999
and period from inception to June 30, 2000
FINANCIAL STATEMENTS
Consolidated Balance Sheets 1
Consolidated Statements of Operations 2
Consolidated Statements of Cash Flows 3
Notes to Consolidated Financial Statements 4
<PAGE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Balance Sheets
(Unaudited)
June 30, 2000, with comparative figures as at December 31, 1999
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . $ 9,451 $ 4,284
Sales tax receivable . . . . . . . . . . . . . . . . . . . . 31,693 25,656
Prepaid. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,189 386
44,333 30,326
Property and equipment . . . . . . . . . . . . . . . . . . . 27,062 51,537
$ 71,395 $ 81,863
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . $ 25,654 $ 46,476
Payroll deductions payable . . . . . . . . . . . . . . . . . 74,307 101,782
Accrued liabilities. . . . . . . . . . . . . . . . . . . . . 47,673 41,596
Advances from a director, without interest and
no specific repayment terms. . . . . . . . . . . . . . . . . 63,901 451,891
211,535 641,745
Stockholders' equity:
Share capital (note 2) . . . . . . . . . . . . . . . . . . . 3,560 2,135
Additional paid-in capital . . . . . . . . . . . . . . . . . 2,914,014 2,314,440
Accumulated other comprehensive income . . . . . . . . . . . (3,165) (2,881)
Deficit accumulated during the development stage . . . . . . (3,054,549) (2,873,576)
(140,140) (559,882)
$ 71,395 $ 81,863
See accompanying note to consolidated financial statements.
On behalf of the Board:
/s/ signed Director
/s/ signed Director
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Operations
(Unaudited)
Six-month period ended June 30, 2000 and 1999 and period from inception to June 30,
2000
Six-month Six-month From
period ended period ended inception to
June 30, June 30, June 30,
2000 1999 2000
<S> <C> <C> <C>
General and administrative expenses:
Commissions, wages and subcontractors. . . $ 67,999 $ 418,794 $ 1,978,088
Compensation cost. . . . . . . . . . . . . 246,400 246,400
Professional fees. . . . . . . . . . . . . 36,063 34,930 204,693
Depreciation . . . . . . . . . . . . . . . 15,305 17,585 155,486
Rent and parking . . . . . . . . . . . . . 26,816 55,112 154,903
License fees . . . . . . . . . . . . . . . 67,925
Office . . . . . . . . . . . . . . . . . . 4,494 18,922 69,662
Advertising and promotion. . . . . . . . . 3,792 19,271 50,573
Communications . . . . . . . . . . . . . . 23,098 24,001 55,706
Travel . . . . . . . . . . . . . . . . . . 7,820 16,471 38,253
Taxes, insurance and licenses. . . . . . . 3,096 11,636 17,037
Interest and bank charges. . . . . . . . . 194 1,626 12,547
Subscriptions and memberships. . . . . . . - 3,275 3,974
Registration fees. . . . . . . . . . . . . - 1,036 5,825
Maintenance and repairs. . . . . . . . . . - 732 2,045
188,677 869,791 3,063,117
Other
Interest . . . . . . . . . . . . . . . . . - 474 865
Gain on disposal of property and equipment 7,703 - 7,703
------------------------------------------
7,703 474 8,568
Net loss . . . . . . . . . . . . . . . . . $ 180,974 $ 869,317 $ 3,054,549
Net loss per share - basic and diluted . . $ 0.01 $ 0.07
Weighted average number
of shares outstanding. . . . . . . . . . . 15,853,128 13,193,604
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Cash Flows
(Unaudited)
Six-month period ended June 30, 2000 and 1999 and period from inception to June 30, 2000
Six-month Six-month From
period ended period ended inception to
June 30, June 30, June 30,
2000 1999 2000
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . $ (180,974) $ (869,791) $ (3,054,549)
Adjustments for items not involving cash:
Depreciation . . . . . . . . . . . . . . . . . 15,305 17,585 155,486
Gain on disposal of property and equipment . . (7,703) - (7,703)
Employees, subcontractors and
license fees compensated by
issuance of shares . . . . . . . . . . . . . . - - 1,205,675
Compensation cost. . . . . . . . . . . . . . . - 246,400 246,400
Change in operating assets and liabilities:
Sales tax receivable . . . . . . . . . . . . . (6,037) (10,129) (31,693)
Prepaid. . . . . . . . . . . . . . . . . . . . (2,803) 38,436 (3,189)
Deposit. . . . . . . . . . . . . . . . . . . . - 12,247
Accounts payable and accrued liabilities . . . (41,056) 44,679 150,662
(223,268) (520,573) (1,338,911)
Cash flows from financing activities:
Proceeds from issuance of common shares. . . . - 536,000 864,500
Proceeds from advances from a director . . . . 213,009 1,588 663,038
213,009 537,588 1,527,538
Cash flows from investing activities:
Additions to property and equipment. . . . . . - (124,807) (191,718)
Proceeds of disposal of property and equipment 15,707 - 15,707
15,707 (124,807) (176,011)
Effect of exchange rate changes on cash. . . . (281) 16,221 (3,165)
Net (decrease) increase in cash and
cash equivalents . . . . . . . . . . . . . . . 5,167 (91,571) 9,451
Cash and cash equivalents, beginning of period 4,284 232,877 -
Cash and cash equivalents, end of period . . . $ 9,451 $ 141,306 $ 9,451
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
- 5 -
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements
Six-month period ended June 30, 2000 and 1999 and period from inception to June
30, 2000
1. ORGANIZATION AND BUSINESS ACTIVITIES:
The Corporation was organized on October 30, 1980, under the laws of the State
of Florida as C.N.W. Corp. On February 1, 1981, the Corporation issued 1,000
shares of its $1 par value common stock for services of $1,000. The Corporation
did not have any activity before 1998 and, accordingly, commencement of the
development stage is considered to be at the beginning of 1998.
On July 21, 1998, the State of Florida approved the Corporation's restated
Articles of Incorporation, which increased its capitalization from 1,000 common
shares to 50,000,000 common shares. The par value was changed from $1 to
$0.001.
On July 21, 1998, the Corporation changed its name to C.N.W of Orlando Inc. and
on December 28, 1998 changed to GlobalNetCare, Inc.
On February 3, 1998, the Corporation incorporated its wholly-owned subsidiary,
3423336 Canada Ltd., a Canadian company, to develop medical web sites. However,
the anticipated plans and operations of the Corporation have not and will not be
achieved or further pursued. Due to its inability to generate sufficient
revenues to continue operations, the Corporation has decided to pursue a
different line of business which has not been determined yet. The Corporation
continues to operate the website on a scaled down basis. As the Corporation has
not commenced principal operations for accounting purposes, it is considered to
be a development stage enterprise.
The Corporation's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Corporation has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Corporation to
continue as a going concern. It is management's plan to seek additional capital
in connection with any business opportunities including business combination.
2. SHARE CAPITAL:
During the six-month period ended June 30, 2000, the Corporation issued
1,424,998 common shares in connection with the conversion of advances from a
director into equity.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
GENERAL
The Company currently offers health and medical information via its information
website, GlobalNetCare.com (the "Website"). The Website consists of several
"Virtual Medical Centers" that provide health care professionals and people
seeking information with an easy-to-use, interactive experience designed to
address their subjects of concern and to create individual virtual medical
records.
Despite the efforts of the Company's management, the Website did not attract the
number of users or advertisers the Company anticipated, and accordingly did not
generate the revenue required for the continued operation and maintenance of the
Website. The Website has not been updated since October, 1999. The anticipated
plans for the operation of the Website by the Company, as described in its Form
10-SB Registration Statement (as amended), have not and will not be achieved or
further pursued further by the Company. Due to its inability to generate
sufficient revenues to continue operations, the Company has decided to seek and
identify a different line of business. To date, the Company has not effected a
change of business, and continues to operate the Website on a scaled down basis.
SHARE EXCHANGE AGREEMENT - BUSINESSWAY COMPUTER CENTRE INC. AND COR-BIT
PERIPHERALS INC.
On April 4, 2000, the Company signed a Letter of Intent, pursuant to which it
agreed to acquire (the "Acquisition") all of the issued and outstanding shares
of BusinessWay Computer Centre Inc. ("BusinessWay") and Cor-Bit Peripherals Inc.
("Cor-Bit"), both of which are private companies incorporated under the laws of
the province of Quebec. Cor-Bit is a manufacturer of computers, and has
developed internet software including a new business-to-business model, data
base search software, and an access-based inventory management software link.
Cor-Bit is the exclusive supplier of computers to the BusinessWay franchise
operations. BusinessWay operates a website "www.businessway.com" (the
"BusinessWay Website"), which will exist as a multiple e-business site and will
<PAGE>
incorporate the operations of Cor-Bit, as well as market the Cor-Bit line of
computers. The principals of BusinessWay will retain BusinessWay's franchise
retail operations, and as a result, the retail operations will not form part of
the Acquisition.
The Company entered into a Share Exchange Agreement dated for reference June 30,
2000 (the "Share Exchange Agreement") with respect to the Acquisition, to which
the Company, 3739007 Canada Ltd. (the Company's wholly owned subsidiary),
Cor-Bit, BusinessWay, Faris Heddo and Michele Scott (the "Majority Vendors"),
the shareholders of Cor-Bit (the "Cor-Bit Shareholders") and the shareholders of
BusinessWay (the "BusinessWay Shareholders") are parties.
Pursuant to the Share Exchange Agreement, the Company agreed to cause 3739007
Canada Ltd. to issue 40,000,000 Class "A" Preference Shares (the "Preferred
Shares") in the capital of 3739007 Canada Ltd. to the Cor-Bit Shareholders and
the BusinessWay Shareholders (collectively, the "Vendors"), as consideration for
the exchange of the Cor-Bit Shares and the BusinessWay shares. The Company
agreed to issue 37,923,891 Special Voting Shares in the capital of the Company
(the "Special Voting Shares"), which are to be issued to the Majority Vendors,
and the FONDACTION CSN Pour La Coop ration et L'Emploi, in the course of a
reorganization of the capital of Cor-Bit and BusinessWay, as contemplated by
section 85 of the Income Tax Act (Canada).
Pursuant to the terms of the Share Exchange Agreement and a Call Option
Agreement (to be entered into by each one of the Vendors and the Company), each
of the Vendors granted an option to the Company to acquire the Preferred Shares
and the Special Voting Shares, if applicable, in exchange for an equal number of
common shares in the capital of the Company. Also pursuant to the Share
Exchange Agreement, the Vendors respectively agreed to exchange the Cor-Bit
Shares and the BusinessWay Shares for the Preferred Shares and the Special
Voting Shares.
The completion of the Acquisition is subject to a number of conditions,
including the following:
- on or before the Closing Date (as defined in the Share Exchange
Agreement), counsel for 3739007 Canada Ltd. and the Company shall have performed
a due diligence review of Cor-Bit and BusinessWay and their affairs, and 3739007
Canada Ltd. and the Company shall be satisfied in their discretion as to the
operations of Cor-Bit and BusinessWay after completion of its due diligence
investigation thereof;
- Cor-Bit and BusinessWay shall have completed financing by way of a private
placement pursuant to which a minimum of CDN$1,000,000 will have been raised;
and
- on or before the Closing Date (as defined in the Share Exchange
Agreement), counsel for Majority Vendors, Cor-Bit and BusinessWay shall have
performed a due diligence review of the 3739007 Canada Ltd. and the Company, and
the Majority Vendors, Cor-Bit and BusinessWay shall be satisfied in their
discretion as to the state of the business assets and the operations of 3739007
Canada Ltd. after completion of their due diligence investigation thereof.
As of July 31, 2000, the Acquisition had not been completed. On July 31, 2000,
the Company filed a Definitive Information Statement on Schedule 14C with the
United States Securities and Exchange Commission, following which the Company
was deemed to have shareholder consent to effect the amendments to its Articles,
which amendments are required to complete the Acquisition. The Company is in
the process of mailing the Schedule 14C to its shareholders. Twenty days after
the date the mailing is made, the amendments to the Company's Articles will be
effective; once the amendments are effective, the Acquisition will be completed
(see "Item 5: Other Information" for more information with respect to the
amendments to the Company's Articles).
Business Opportunities Generally
In the event that the Acquisition is not completed, the Company will continue to
seek, investigate, and if such investigations warrant, acquire an interest in
one or more other business opportunities presented to it by persons or firms
desiring the perceived advantages of a publicly held corporation. Other than
the Acquisition, the Company has no plan, proposal, agreement, understanding, or
arrangement to acquire or merge with any specific business or company, and the
Company has not identified any specific business or company for investigation
and evaluation.
<PAGE>
The Company will not restrict its search to any specific business, industry, or
geographical location, and may participate in business ventures of virtually any
kind or nature. Discussion of the proposed business under this caption and
throughout this Quarterly Report is purposefully general and is not meant to
restrict the Company's virtually unlimited discretion to search for and enter
into a business combination. The Company may seek a business combination with a
firm which only recently commenced operations, or a developing company in need
of additional funds to expand into new products or markets or seeking to develop
a new product or service, or an established business which may be experiencing
financial or operating difficulties and needs additional capital which is
perceived to be easier to raise by a public company. In some instances, a
business opportunity may involve acquiring or merging with a corporation which
does not need substantial additional cash but which desires to establish a
public trading market for its common stock. The Company may purchase assets and
establish wholly-owned subsidiaries in various businesses or purchase existing
businesses as subsidiaries.
Selecting a business opportunity would be complex and extremely risky. Because
of general economic conditions, rapid technological advances being made in some
industries, and shortages of available capital, management believes that there
are numerous firms seeking the benefits of a publicly-traded corporation. Such
perceived benefits of a publicly traded corporation may include:
- facilitating or improving the terms on which additional equity financing
may be sought;
- providing liquidity for the principals of a business;
- creating a means for providing incentive stock options or similar benefits
to key employees; or
- providing liquidity (subject to restrictions of applicable statutes) for
all shareholders.
Potentially available business opportunities and/or business combination may
occur in many different industries and at various stages of development, all of
which will make the task of comparative investigation and analysis of such
business opportunities extremely difficult and complex.
Management believes that the Company may be able to benefit from the use of
"leverage" to acquire a target company. Leveraging a transaction involves
acquiring a business while incurring significant indebtedness for a large
percentage of the purchase price of that business. Through leveraged
transactions, the Company would be required to use less of its available funds
to acquire a target company and, therefore, could commit those funds to the
operations of the business, to combinations with other target companies, or to
other activities. The borrowing involved in a leveraged transaction is
ordinarily secured by the assets of the acquired business. If that business is
not able to generate sufficient revenues to make payments on the debt incurred
by the Company to acquire that business, the lender would be able to exercise
the remedies provided by law or by contract. These leveraging techniques, while
reducing the amount of funds that the Company must commit to acquire a business,
may correspondingly increase the risk of loss to the Company.
No assurance can be given as to the terms or availability of financing for any
acquisition of a business opportunity or business combination by the Company.
During periods when interest rates are relatively high, the benefits of
leveraging are not as great as during periods of lower interest rates, because
the investment in the business held on a leveraged basis will only be profitable
if it generates sufficient revenues to cover the related debt and other costs of
the financing. Lenders from which the Company may obtain funds for purposes of
a leveraged buy-out may impose restrictions on the future borrowing,
distribution, and operating policies of the Company. It is not possible at this
time to predict the restrictions, if any, which lenders may impose, or the
impact thereof on the Company.
The Company has insufficient capital with which to provide the owners of
businesses significant cash or other assets. Management believes the Company
offers owners of businesses the opportunity to acquire a controlling ownership
interest in a public company at a substantially lower cost than is required to
conduct an initial public offering. The owners of the businesses will, however,
incur significant post-merger or acquisition registration costs in the event
they wish to register a portion of their common shares for subsequent sale. The
Company will also incur significant legal and accounting costs in connection
with the acquisition of a business opportunity or business combination,
including the costs of preparing post-effective amendments, Form 8-Ks,
agreements, and related
<PAGE>
reports and documents. Nevertheless, the officers and directors of the Company
have not conducted market research and are not aware of statistical data which
would support the perceived benefits of a merger or acquisition transaction for
the owners of a businesses. The Company does not intend to make any loans to
any prospective merger or acquisition candidates or to unaffiliated third
parties.
The Company will not restrict its search for any specific kind of firms, but may
acquire a venture which is in its preliminary or development stage, which is
already in operation, or in essentially any stage of its corporate life. It is
impossible to predict at this time the status of any business in which the
Company may become engaged, in that such business may need to seek additional
capital, may desire to have its common shares publicly traded, or may seek other
perceived advantages which the Company may offer. However, the Company does not
intend to obtain funds in one or more private placements to finance the
operation of any acquired business opportunity until such time as the Company
has successfully consummated such a merger or acquisition.
Sources of Opportunities
In the event that the Acquisition is not successful, the Company will seek a
potential business opportunity from all known sources, but will rely principally
on personal contacts of its officers and directors, as well as indirect
associations between them and other business and professional people. It is not
presently anticipated that the Company will engage professional firms
specializing in business acquisitions or reorganizations. Management may not be
especially experienced in matters relating to the new business of the Company,
and will therefore rely upon their own efforts and, to a much lesser extent, the
efforts of the Company's shareholders, in accomplishing the business purposes of
the Company. It is not anticipated that any outside consultants or advisors,
other than the Company's legal counsel and accountants, will be utilized by the
Company to effect the business purposes described in this Quarterly Report.
However, if the Company does retain such an outside consultant or advisor, any
cash fee earned by such party will need to be paid by the prospective
merger/acquisition candidate, as the Company has no cash assets with which to
pay such an obligation.
There have been no discussions, understandings, contracts or agreements with any
outside consultants and none are anticipated in the future. In the past, the
Company's management has not used outside consultants or advisors in connection
with a merger or acquisition. As is customary in the industry, the Company may
pay a finder's fee for the location of an appropriate business opportunity or
business combination. If any such fee is paid, it will be approved by the
Company's Board of Directors and will be in accordance with the industry
standards. Such fees are customarily between 1% and 5% of the size of the
transaction, based upon a sliding scale of the amount involved. Such fees are
typically in the range of 5% on a $1,000,000 transaction rateably down to 1% in
a $4,000,000 transaction. Management has adopted a policy that such a finder's
fee could, in certain circumstances, be paid to any employee, officer, director
or 5% shareholder of the Company, if such person plays a material role in
bringing a transaction to the Company.
The Company will not have sufficient funds to undertake any significant
development, marketing, and manufacturing of any products which may be acquired
instead of the acquisition of a business opportunity or business combination.
Accordingly, if the Company acquires the rights to a product, rather than
entering into a merger or acquisition, it would most likely need to seek debt or
equity financing or obtain funding from third parties, in exchange for which the
Company would probably be required to give up a substantial portion of its
interest in any acquired product. There is no assurance that the Company will
be able either to obtain additional financing or to interest third parties in
providing funding for the further development, marketing and manufacturing of
any products acquired.
Evaluation of Opportunities
The analysis of any new business opportunity will be undertaken by or under the
supervision of the officers and directors of the Company. In the event that the
Acquisition is not successful, management intends to concentrate on identifying
prospective business opportunities which may be brought to its attention through
present associations with management. In analyzing prospective business
opportunities, management will consider, among other factors, such matters as:
<PAGE>
- the available technical, financial and managerial resources;
- working capital and other financial requirements;
- history of operation, if any;
- prospects for the future;
- present and expected competition;
- the quality and experience of management services which may be available
and the depth of that management;
- the potential for further research, development or exploration;
- specific risk factors not now foreseeable but which then may be
anticipated to impact the proposed activities of the Company;
- the potential for growth or expansion;
- the potential for profit;
- the perceived public recognition or acceptance of products, services or
trades; and
- name identification.
Management will meet personally with the management and key personnel of the
firm sponsoring the business opportunity as part of their investigation. To the
extent possible, the Company intends to utilize written reports and personal
investigation to evaluate the above factors. The Company will not acquire or
merge with any company for which audited financial statements cannot be
obtained.
Opportunities in which the Company may participate will present certain risks,
many of which cannot be identified adequately prior to selecting a specific
opportunity. The Company's shareholders must, therefore, depend on management
to identify and evaluate such risks. Promoters of some opportunities may have
been unable to develop a going concern or may present a business in its
development stage (in that it has not generated significant revenues from its
principal business activities prior to the Company's participation). Even after
the Company's participation, there is a risk that the combined enterprise may
not become a going concern or advance beyond the development stage. Other
opportunities may involve new and untested products, processes, or market
strategies which may not succeed. Such risks will be assumed by the Company
and, therefore, its shareholders.
The investigation of specific business opportunities and the negotiation,
drafting, and execution of relevant agreements, disclosure documents, and other
instruments will require substantial management time and attention as well as
substantial costs for accountants, attorneys, and others. If a decision is made
not to participate in a specific business opportunity the costs incurred in the
related investigation would not be recoverable. Furthermore, even if an
agreement is reached for the participation in a specific business opportunity,
the failure to consummate that transaction may result in the loss by the Company
of the related costs incurred. There is the additional risk that the Company
will not find a suitable target. Management does not believe the Company will
generate revenue without finding and completing the acquisition of a suitable
business opportunity or a transaction with a suitable target company. If no such
business opportunity target is found, therefore, no return on an investment in
the Company will be realized, and there will not, most likely, be a market for
the Company's common shares.
Acquisition of Opportunities
<PAGE>
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, reorganization, joint venture,
franchise, or licensing agreement with another corporation or entity. It may
also purchase stock or assets of an existing business. Once a transaction is
complete, it is possible that the present management and shareholders of the
Company will not be in control of the Company. In addition, a majority or all
of the Company's officers and directors may, as part of the terms of the
transaction, resign and be replaced by new officers and directors without a vote
of the Company's shareholders.
It is anticipated that securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of this transaction, the Company may agree to register such securities either at
the time the transaction is consummated, under certain conditions, or at a
specified time thereafter. The issuance of substantial additional securities
and their potential sale into any trading market which may develop in the
Company's common shares may have a depressive effect on such market.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so called "tax free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code of 1986, as amended (the
"Code"). In order to obtain tax free treatment under the Code, it may be
necessary for the owners of the acquired business to own 80% or more of the
voting stock of the surviving entity. In such event, the shareholders of the
Company, would retain less than 20% of the issued and outstanding common shares
of the surviving entity, which could result in significant dilution in the
equity of such shareholders.
As part of the Company's investigation, officers and directors of the Company
may:
- meet personally with management and key personnel;
- visit and inspect material facilities;
- obtain independent analysis or verification of certain information
provided;
- check references of management and key personnel, and
- take other reasonable investigative measures, to the extent of the
Company's limited financial resources and management expertise.
The manner in which the Company participates in an opportunity with a target
company will depend on the nature of the opportunity, the respective needs and
desires of the Company and other parties, the management of the opportunity, and
the relative negotiating strength of the Company and such other management.
With respect to any mergers or acquisitions, negotiations with target company
management will be expected to focus on the percentage of the Company which the
target company's shareholders would acquire in exchange for their shareholdings
in the target company. Depending upon, among other things, the target company's
assets and liabilities, the Company's shareholders will, in all likelihood, hold
a lesser percentage ownership interest in the Company following any merger or
acquisition. The percentage ownership may be subject to significant reduction in
the event the Company acquires a target company with substantial assets. Any
merger or acquisition effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held by the Company's
then shareholders.
Management has advanced, and in the event that the Acquisition is not
successful, will continue to advance, funds which shall be used by the Company
in identifying and pursuing agreements with target companies. Management
anticipates that these funds will be repaid from the proceeds of any agreement
with the target company, and that any such agreement may, in fact, be contingent
upon there payment of those funds.
Cash Requirements
The Company anticipates that upon completion of the Acquisition, it will require
funds in the amount of $300,000 through June 30, 2001, which additional funds
would likely be raised through a Private Placement. In the event that the
<PAGE>
Acquisition is not successful, the Company does not anticipate that it will
require additional funds over the next 12 months.
Product Research and Development
Until the Acquisition is complete, the Company is unable to determine the type
of product research and development that it may perform over the 12 months
ending June 30, 2001. If the Acquisition is not successful, it is not likely
that the Company will perform any product research and development as it
searches for a new business opportunity.
Purchases or Sales (Equipment)
At this time, the Company does not anticipate that it will purchase or sell any
significant equipment over the 12 months ending June 30, 2001.
Changes in Employees
Upon completion of the Acquisition, the Company expects that it will assume some
or all of the employees of both BusinessWay and Cor-bit. In the event that the
Acquisition is not successful, the Company does not anticipate a change in its
current number of employees.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
During the quarter ended June 30, 2000, there were no new legal proceedings
commenced against the Company or to which the Company was a party. During the
quarter ended June 30, 2000, there were no material developments in the legal
proceedings which were described in the Company's Form 10-KSB filed on March 31,
2000.
ITEM 2. CHANGES IN SECURITIES.
Recent Sales of Unregistered Securities
On April 3, 2000, the Company issued 310,000 common shares to Jimmy Foussekis at
a price of US$0.50 per common share, for aggregate gross proceeds of US$155,000,
in an "offshore transaction", relying on Regulation S of the Securities Act of
1933. The Company reported this sale in its Form 10-QSB for the quarter ending
March 31, 2000, as having occurred on March 27, 2000. The 310,000 common shares
to Jimmy Foussekis were not in fact issued by the transfer agent until April 3,
2000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
On May 4, 2000, the Board of Directors of the Company approved an amendment to
the Company's Articles of Incorporation to increase the authorized shares in the
capital of the Company from 20,000,000 to 100,000,000. On June 1, 2000, the
Board of Directors of the Company approved a further amendment to the Company's
Articles of Incorporation to create 40,000,000 Class A Special Voting Shares in
the capital of the Company (the two amendments are collectively referred to as
the "Amendments"). On July 31, 2000, the Company filed a Definitive Information
Statement on Schedule 14C with the United States Securities and Exchange
Commission with respect to the Amendments. The Company is currently in the
process of mailing a copy of the Schedule 14C to its
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shareholders. Twenty days after the date the Schedule 14C is mailed to the
Company's shareholders, the Amendments will be deemed effective, following
which, the Acquisition will be completed. The Company anticipates that it will
file the Amendments with the Secretary of State for Florida during the third
quarter of 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Reports of Form 8-K
On April 5, 2000, the Company filed a current report on Form 8-K announcing the
resignation of David Mulder as a director of the Company, and the appointment of
Harvey Lalach as a director of the Company.
On April 6, 2000, the Company filed a current report on Form 8-K/A with respect
to the change in its independent accountants. The Company's Board of Directors
approved the change of accountants to KPMG LLP on March 22, 2000. During the
Company's two most recent fiscal years, and any subsequent interim periods
preceding the change in accountants, there were no disagreements with Councilor,
Buchanan & Mitchell, P.C. on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope procedure. The report on the
financial statements prepared by Councilor, Buchanan & Mitchell, P.C. for either
of the last two years did not contain an adverse opinion or a disclaimer of
opinion, nor was it qualified or modified as to uncertainty, audit scope or
accounting principals. The decision to change accountants was based on the
appointment of new directors to the Company's Board of Directors. Councilor,
Buchanan & Mitchell, P.C. provided the Company with a letter addressed to the
SEC stating that he agreed with the statements made in the Form 8-K/A. The
Company has engaged the firm of KPMG LLP as of February 22, 2000. KPMG LLP was
not consulted on any matter relating to accounting principles to a specific
transaction, either completed or proposed or the type of audit opinion that
might be rendered on the Company's financial statements.
On April 12, 2000, the Company filed a current report on Form 8-K announcing the
resignation of George Tsoukas as a director and as the Chief Executive Officer
of the Company.
Financial Statements Filed as a Part of the Quarterly Report
The Company's unaudited financial statements include:
Consolidated Balance Sheet as of June 30, 2000
Consolidated Statements of Operations for the six months ended June 30,
1999 and 2000
Consolidated Statements of Cash Flows for the six months ended June 30,
1999 and 2000
Notes to Consolidated Financial Statements.
Exhibits Required by Item 601 of Regulation S-B
(3) Articles of Incorporation and By-laws:
3.1 Articles of Amendment effective January 14, 1999 (incorporated by
reference from the Company's Form 10-SB (amended), filed October
19, 1999)
3.2 Articles of Amendment effective July 21, 1998 (incorporated by
reference from the Company's Form 10-SB (amended), filed October
19, 1999)
3.3 Articles of Incorporation effective October 30, 1980 (incorporated
by reference from the Company's Form 10-SB (amended), filed October
19, 1999)
3.4 By-laws effective October 30, 1980 (incorporated by reference from
the Company's Form 10-SB (amended), filed October 19, 1999)
(10) Material Contracts
10.1 Share Exchange Agreement between the Company, 3739007 Canada Ltd.,
BusinessWay Computer Centre Inc., Cor-Bit Peripherals Inc., Faris
Heddo, Michele Scott, the Shareholders of Cor-Bit Peripherals
Inc. and the Shareholders of BusinessWay Computer Centre Inc.,
dated for reference June 30, 2000
(21) Name of Subsidiary
21.1 3423336 Canada Ltd. (incorporated under the federal laws of Canada
on February 3, 1998)
21.2 3739007 Canada Ltd. (incorporated under the federal laws of Canada
on April 4, 2000)
(27) Financial Data Schedule
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GLOBALNETCARE, INC.
By: /s/ Patrick Power
Patrick Power, President/Director
Date: August 11, 2000
By: /s/ Harvey Lalach
Harvey Lalach, C.O.O./Director
Date: August 10, 2000
By: /s/ Nick Pedafronimos
Nick Pedafronimos, Director
Date: August 10, 2000
