THIS DOCUMENT IS A COPY OF THE FORM 10-KSB FILED ON MARCH 30, 2000
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
OMB APPROVAL
OMB Number: 3235-0420
Expires: May 31, 2000
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hours per response 3225.00
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FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
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[ } TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number
GLOBALNETCARE, INC.
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(Name of small business issuer in its charter)
FLORIDA 980215778
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(State or other jurisdiction of incorporation or organization) (I.R.S.
Employer Identification No.)
SUITE 950 - 2000 MCGILL COLLEGE
MONTREAL, QUEBEC, CANADA H3A 3H3
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (877) 288-4909
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
N/A N/A
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Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, PAR VALUE $0.001
------------------------------
(Title of class)
POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED
IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY
VALID OMB CONTROL NUMBER.
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
<PAGE>
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $620
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of
a specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)
9,106,627 common shares @$0.6355(1)= $5,696,195
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(1) Average of the bid and average closing prices on March 22, 2000.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
15,973,127 common shares, par value $0.001, issued and outstanding as at
March 22, 2000
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Transitional Small Business Disclosure Format (Check one): Yes [ ]No [X]
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Introduction
GlobalNetCare, Inc. (hereinafter referred to as the "Company" or
"GlobalNetCare") operates "GlobalNetCare.com", a health care oriented internet
website that provides medical information to both healthcare professionals and
individuals. The Company's corporate offices are located at GlobalNetCare,
Inc., Suite 950 - 2000 McGill College, Montreal, Quebec H3A 3H3. The telephone
number is (877) 288-4909 and the facsimile number is (514) 288-6309. As of
April 1, 2000, the Company's corporate offices will be located at Suite 204, 65
Brunswick, Dollard des Ormeaux, Quebec, Canada. The telephone number will be
(514) 421-2294 and the facsimile number will be (514) 421-6760.
The Company's consolidated financial statements are stated in United States
Dollars (US$) and are prepared in accordance with United States Generally
Accepted Accounting Principles.
In this Annual Statement, unless otherwise specified, all dollar amounts are
expressed in United States Dollars. Herein, all references to "CDN$" refer to
Canadian Dollars and all references to common shares refer to common shares in
the capital stock of the Company.
Business Development of Issuer During Last Three Years
GlobalNetCare, Inc. was incorporated under the laws of the State of Florida on
October 30, 1980 under the name "C.N.W. Corp." but was inactive and was not kept
in good standing with the Florida Department of State. The Company was
reinstated as active by the Florida Department of State on July 21, 1998. On
July 21, 1998, the name of the Company was changed to "C.N.W. of Orlando, Inc.".
On January 14, 1999, the Company's name was changed to "GlobalNetCare, Inc.".
On July 21, 1998, the Company filed restated Articles of Incorporation which
increased its authorized capital from 1,000 common shares to 50,000,000 common
shares, changed the par value of its common shares from $1.00 to $0.001 and also
forward split its common shares 1,000 to 1. After the stock split, the
Company's issued and outstanding common shares increased from 1,000 to
1,000,000. On March 17, 2000, the directors of the Company approved a
resolution increasing the Company's authorized capital from 50,000,000 common
shares to 100,000,000 common shares. The Company is in the process of filing
its restated Articles of Incorporation with the State of Florida.
The Company has one wholly owned subsidiary, 3423336 Canada Ltd. ("3423336"), a
corporation formed under the federal laws of Canada on February 3, 1998 and
registered as an extra-provincial company in Quebec on November 23, 1998. The
directors and officers of 3423336 are Harvey Lalach (Director and President),
Nick Pedafronimos (Director and Secretary) and Patrick Power (Director), all of
whom are also officers and/or directors of the Company.
Business of the Company
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 and operation of the Company, as described in its Form 10-SB (amended)
have not and will not be achieved or further
<PAGE>
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.
Virtual Medical Centers
Since the Company filed its 10-SB (amended) on October 19, 1999, it has not
added any further Virtual Medical Centres (the "Virtual Medical Centres" or the
"VMCs") to the Website, as revenues predicted in connection with various
activities on the Website were not realized. As the revenue streams failed to
materialize, a strain was put upon the Company's cash flow; and, as a result,
the Company decided to halt further development of the Virtual Medical Centres
and the Website. In addition, none of the existing VMCs have been updated since
the Company filed its 10-SB (amended) on October 19, 1999. At this time, Dr.
George Tsoukas and Dr. David Mulder continue to oversee the content of the
Virtual Medical Centres.
Doctor and Senior Doctor Consultations
As a result of the Company's inability to generate any revenue in connection
with the operation of the Website, it was unable to offer its Doctor and Senior
Doctor Consultation service, which was originally scheduled to begin on-line
consultations in the fall of 1999. The Company did not hire any doctors for the
Doctor and Senior Doctor Consultation service due to its lack of cash flow.
Virtual Surgical Centre
The Virtual Surgical Centre, which was under development in the fall of 1999,
was not completed, and the Company does not anticipate that it will be
completed.
Doctor Directory
The Doctor Directory was last updated in February, 2000. As of March 10, 2000,
the Doctor Directory had approximately 75 doctors and continues to operate as a
free service. Since the Doctor Directory did not attract a substantial number
of listings, the Company was not able to implement the fee to be listed on the
Doctor Directory and accordingly, no revenue was generated from the Doctor
Directory.
GlobalNetCare Pharmacy
The Company was unable to secure any contracts for the GlobalNetCare Pharmacy,
as a result of which, the Pharmacy was not implemented and no revenue was
generated.
Product Pages
The Company was unable to secure any paid advertising by medical related product
manufacturers, and therefore the Product Pages, which were anticipated to be a
major source of the Company's revenue, were not developed. The Company was not
able to provide direct links to websites of pharmaceutical companies as expected
and again no revenue was generated from the service as expected.
Research and Development
Since October, 1999, the Company has expended approximately $100,000 in an
effort to add two Virtual Medical Centres to the existing VMCs on the Website.
The Company does not anticipate that it will expend further money on research
and development in order to add further VMC's to the Website.
<PAGE>
Employees
As of March 22, 2000, the Company had 2 part-time employees, including a
nutritionist and an investor relations specialist. Both employees are currently
searching for employment elsewhere and the Company anticipates that both
employees will no longer be employed after March 31, 2000.
Risk Factors
Much of the information included in this Annual Report includes or is based upon
estimates, projections or other "forward-looking statements". Such forward
looking statements include any projections or estimates made by the Company and
its management in connection with its business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect the Company's current judgment regarding the
direction of its business, actual results will almost always vary, sometimes
materially, from any estimates, predictions, projections, assumptions, or other
future performance suggested herein. The Company undertakes no obligation to
update forward-looking statements to reflect events or circumstances occurring
after the date of such statements.
Such estimates, projections or other "forward-looking statements" involve
various risks and uncertainties as outlined below. The Company cautions the
readers that important factors in some cases have affected and, in the future,
could materially affect actual results and cause actual results to differ
materially from the results expressed in any such estimates, projections or
other "forward-looking statements". Readers should carefully consider the
following factors in evaluating the Company, its business and any investment in
the Company.
Penny Stock Rules
The Company's common shares are subject to rules promulgated by the SEC relating
to "penny stocks", which apply to companies whose shares are not traded on a
national stock exchange or on the NASDAQ system, trade at less than $5.00 per
share, or who do not meet certain other financial requirements specified by the
SEC. These rules require brokers who sell "penny stocks" to persons other than
established customers and "accredited investors" to complete certain
documentation, make suitability inquiries of investors, and provide investors
with certain information concerning the risks of trading in the such penny
stocks. These rules may discourage or restrict the ability of brokers to sell
the Company's common shares and may affect the secondary market for the
Company's common shares. These rules could also hamper the Company's ability to
raise funds in the primary market for the Company's common shares.
Limited Operating History
The Company initiated its operations in January, 1999, and was largely
unsuccessful in its endeavor to become a leading provider of medical and
health-related information via the Internet. As a result of the Company's lack
of success generally and to its inability to generate revenues, management of
the Company has determined that it is in the Company's best interest to pursue a
new line of business (see Item 6 Plan of Operation). As such, the Company's
prospects must be considered in light of the risks, uncertainties, expenses and
difficulties frequently encountered by companies seeking to identify and
capitalize on a new business opportunity.
History of Losses
The Company has not achieved profitability and expects to continue to incur net
losses for the foreseeable future and may never become profitable. The Company
has incurred net losses of approximately $2.8 million for the year ended
December 31, 1999.
The Company's ability to generate any or significant revenues as it currently
operates has proved to be unrealistic and impossible. The Company's short and
long-term prospects depend upon its ability to select and secure a suitable
business opportunity. In order for the Company to make a profit, it will need
to successfully acquire a new business opportunity in order to generate revenues
in an amount sufficient to cover any and all future costs and expenses in
connection with any such business opportunity. Even if it becomes profitable,
the Company may not sustain or increase its profits on a quarterly or annual
basis in the future.
<PAGE>
Limited History or Revenue and Minimal Assets
The Company has a limited operating history and has generated no revenues or
earnings from its operations as a provider of health and medical information via
the Website. The Company has no significant assets or financial resources, and
will, in all likelihood, sustain operating expenses without corresponding
revenues, at least until it completes a business combination or acquire a
business opportunity. This may result in the Company incurring a net operating
loss which will increase continuously until the Company completes a business
combination or acquire a business opportunity that can generate revenues that
result in a net profit to the Company. There is no assurance that the Company
will identify a suitable business opportunity or complete a business combination
Speculative Nature of Company's Proposed Operations
The success of the Company's proposed plan of operation will depend to a great
extent on the operations, financial condition, and management of any identified
business opportunity. While management intends to seek business opportunities
and/or business combinations with entities having established operating
histories, there is no assurance that the Company will successfully locate
business opportunities meeting such criteria. In the event that the Company
completes a business combination or otherwise acquires a business opportunity,
the success of the Company's operations may be dependent upon management of the
successor firm or venture partner firm, together with numerous other factors
beyond the Company's control.
Scarcity of and Competition for Business Opportunities and Combinations
The Company is, and will continue to be, an insignificant participant in the
business of seeking mergers and joint ventures with, and acquisitions of small
private entities. A large number of established and well-financed entities,
including venture capital firms, are active in mergers and acquisitions of
companies which may also be desirable target candidates for the Company.
Virtually all such entities have significantly greater financial resources,
technical expertise, and managerial capabilities than the Company. The Company
is, consequently, at a competitive disadvantage in identifying possible business
opportunities and successfully completing a business combination. Moreover, the
Company will also compete with numerous other small public companies in seeking
merger or acquisition candidates.
No Agreement for Business Combination of Other Transaction/No Standards for
Business Combination
The Company has no arrangement, agreement, or understanding with respect to
engaging in a business combination with any private entity. There can be no
assurance the Company will successfully identify and evaluate suitable business
opportunities or conclude a business combination. There is no assurance the
Company will be able to negotiate a business combination on terms favorable to
the Company. The Company has not established a specific length of operating
history or a specified level of earnings, assets, net worth or other criteria
which it will require a target business opportunity to have achieved, and
without which the Company would not consider a business combination in any form
with such business opportunity. Accordingly, the Company may enter into a
business combination with a business opportunity having no significant operating
history, losses, limited or no potential for earnings, limited assets, negative
net worth, or other negative characteristics.
Continued Management Control/Limited Time Availability
While seeking to acquire a business opportunity or identity management
anticipates devoting up to 100 hours per month to the business of the Company.
The Company's officers have not entered into written employment agreements with
the Company with respect to its proposed plan of operation, and are not expected
to do so in the foreseeable future. The Company has not obtained key man life
insurance on its officers or directors. Notwithstanding the combined limited
experience and time commitment of management, loss of the services of any of
these individuals would adversely affect development of the Company's business
and its likelihood of continuing operations.
<PAGE>
Reporting Requirements May Delay or Preclude Acquisition
Companies subject to Section 13 of the Securities Exchange Act of 1934 (the
"1934 Act") must provide certain information about significant acquisitions,
including audited financial statements for the company acquired, covering one or
two years, depending on the relative size of the acquisition. The time and
additional costs that may be incurred by some target entities to prepare such
statements may significantly delay or even preclude the Company from completing
an otherwise desirable acquisition. Acquisition prospects that do not have or
are unable to obtain the required audited statements may not be appropriate for
acquisition so long as the reporting requirements of the 1934 Act are
applicable.
Lack of Market Research or Marketing Organization
The Company has not conducted or received results of market research indicating
that market demand exists for the transactions contemplated by the Company.
Moreover, the Company does not have, and does not plan to establish, a marketing
organization. Even if there is demand for a business combination as
contemplated by the Company, there is no assurance the Company will successfully
complete such a transaction.
Lack of Diversification
In all likelihood, the Company's proposed operations, even if successful, will
result in a business combination with only one entity. Consequently, the
resulting activities will be limited to that entity's business. The Company's
inability to diversify its activities into a number of areas may subject the
Company to economic fluctuations within a particular business or industry,
thereby increasing the risks associated with the Company's operations.
Regulation
Although the Company will be subject to regulation under the 1934 Act,
management believes the Company will not be subject to regulation under the
Investment Company Act of 1940, insofar as the Company will not be engaged in
the business of investing or trading in securities. In the event the Company
engages in business combinations which result in the Company holding passive
investment interests in a number of entities, the Company could be subject to
regulation under the Investment Company Act of 1940, meaning that the Company
would be required to register as an investment company and could be expected to
incur significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject the Company to material
adverse consequences.
Probable Change in Control and Management
A business combination or acquisition of a business opportunity involving the
issuance of the Company's common shares will, in all likelihood, result in
shareholders of a private company obtaining a controlling interest in the
Company. Any such business combination or acquisition of a business opportunity
may require management of the Company to sell or transfer all or a portion of
the Company's common shares held by them, or resign as members of the Board of
Directors of the Company. The resulting change in control of the Company could
result in removal of one or more present officers and directors of the Company
and a corresponding reduction in or elimination of their participation in the
future affairs of the Company.
Reduction of Percentage Share Ownership Following Business Combination
The Company's primary plan of operation is based upon the acquisition of a
business opportunity or a business combination with a private concern, which, in
all likelihood, would result in the Company issuing common shares to
shareholders of such private company. Issuing previously authorized and
unissued common shares of the Company will reduce the percentage of common
shares owned by present and prospective shareholders, and a change in the
Company's control and/or management.
<PAGE>
Disadvantages of "Blank Check" Offerings
The Company may enter into a business combination with an entity that desires to
establish a public trading market for its shares. A target company may attempt
to avoid what it deems to be adverse consequences of undertaking its own public
offering by seeking a business combination with the Company. The perceived
adverse consequences may include, but are not limited to, time delays of the
registration process, significant expenses to be incurred in such an offering,
loss of voting control to public shareholders, and the inability or
unwillingness to comply with various federal and state securities laws enacted
for the protection of investors. These securities laws primarily relate to
registering securities and full disclosure of the Company's business,
management, and financial statements.
Taxation
Federal and state tax consequences will, in all likelihood, be major
considerations in any business acquisition or combination the Company may
undertake. Typically, these transactions may be structured to result in
tax-free treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as to
minimize the federal and state tax consequences to both the Company and the
target entity. Management cannot ensure that a business combination will meet
the statutory requirements for a tax-free reorganization, or that the parties
will obtain the intended tax-free treatment upon a transfer of common shares or
assets. A non-qualifying reorganization could result in the imposition of both
federal and state taxes, which may have an adverse effect on both parties to the
transaction.
Requirement of Audited Financial Statements may Disqualify Business Opportunity
Management believes that any potential target company must provide audited
financial statements for review, and for the protection of all parties to the
business acquisition or combination. One or more attractive business
opportunities may forego a business combination with the Company, rather than
incur the expenses associated with preparing audited financial statements.
Blue Sky Considerations
Because the securities registered hereunder have not been registered for resale
under the blue sky laws of any state, and the Company has no current plans to
register or qualify its shares in any state, holders of these shares and persons
who desire to purchase them in any trading market that might develop in the
future, should be aware that there may be significant state blue sky
restrictions upon the ability of new investors to purchase the securities.
These restrictions could reduce the size of any potential market. As a result
of recent changes in federal law, non-issuer trading or resale of the Company's
securities is exempt from state registration or qualification requirements in
most states. However, some states may continue to restrict the trading or
resale of blind-pool or "blank-check" securities. Accordingly, investors should
consider any potential secondary market for the Company's securities to be a
limited one.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's principal executive and administrative offices are located at
Suite 950 - 2000 McGill College, Montreal, Quebec H3A 3H3. The Company leases
(the "Lease") a 5,948 square foot facility through the period ending June 14,
2002 at a rental of approximately CDN$3,965 (approximately $2,640) per month,
plus a pro-rated proportion of various operating expenses, utilities, real
estate, business and water taxes. This facility consists of the Company's
office and administration area and houses all of the Company's operations.
The Company anticipates that its space under the Lease will be taken over by
Rampart Securities on April 1, 2000 pursuant to a sublease (the "Sublease") to
be executed by the United Bank of Switzerland, the Company and Rampart
Securities. The Company will have no ongoing liability under the Lease;
however, it will become liable should Rampart Securities default under the terms
of the Sublease.
As of April 1, 2000, the Company's principal and administrative offices will be
located at Suite 204, 65 Brunswick, Dollard des Ormeaux, Quebec, Canada. The
Company will lease the premises on a month to month basis at a rate of $1,200
per month pursuant to a verbal agreement. The new offices will consist of
approximately 500 square feet in two offices.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Dr. Chris Kokkalis
Dr. Chris Kokkalis, a former director and officer of the Company, commenced a
lawsuit in the Quebec Superior Court on January 31, 2000 (the "Kokkalis Action")
against Nick Pedafronimos, George Tsoukas and the Company's subsidiary, 3423336
(collectively, the "Defendants"). In his declaration, Chris Kokkalis alleges
that on October 29, 1999, he was forced to resign due to a conflict with the
Defendants. Dr. Kokkalis further alleges that, pursuant to an agreement, dated
July 4, 1999, he is entitled to the transfer of 200,000 common shares from Nick
Pedafronimos and pursuant to an agreement, dated July 16, 1999, he is entitled
to the transfer of 200,000 common shares from George Tsoukas. He also claims he
is entitled to the amount of these shares as at the dates of these agreements.
As of March 10, 2000, the Kokkalis Action is still pending.
Dr. Fontini Sampalis and Dr. Ronald Denis
The Company anticipates that legal proceedings may be commenced against it by
Drs. Sampalis and Denis, with respect to employment agreements between Drs.
Sampali and Denis and the Company (the "Agreements"), although as of March 10,
2000, no action had been commenced. It is the Company's position that the
Agreements were improperly executed on the Company's behalf, and that in any
event, neither Dr. Sampalis nor Dr. Denis performed their respective obligations
under the Agreements, thereby relieving the Company of all of its obligations
under the Agreements.
The Company knows of no other material, active or pending legal proceedings
against it, nor is the Company involved as a plaintiff in any material
proceeding or pending litigation. There are no other proceedings in which any
director, officer of affiliate of the Company, or any registered or beneficial
shareholder is an adverse party or has a material interest adverse to the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common shares trade in the United States on the National
Association of Securities Dealers Over-the-Counter Bulletin Board (the "OTC
Bulletin Board") with the symbol "GBCR" and CUSIP# 37937Q-10-2.
The table set forth below lists the volume of trading and high and low bid
prices on the OTC Bulletin Board for the Company's common shares since December
9, 1998(1). The closing price on March 14, 1999 was $0.57.
<TABLE>
<CAPTION>
QUARTER ENDED VOLUME HIGH LOW
<S> <C> <C> <C>
Period ended March 14, 2000 8,492,000 $0.938 $ 0.25
December 31, 1999 . . . . . 1,604,600 $0.938 $0.313
September 30, 1999. . . . . 895,900 $ 2.25 $ 0.75
June 30, 1999 . . . . . . . 1,061,600 $3.130 $1.500
March 31, 1999. . . . . . . 332,900 $3.375 $2.250
- --------------------------- --------- ------ ------
December 9 to 31, 1998. . . 495,400 $3.875 $2.000
=========================== ========= ====== ======
<FN>
(1) The Company's common shares commenced trading on December 9, 1998. The
quotations above reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not represent actual transactions.
</TABLE>
<PAGE>
The Company's common shares are issued in registered form. Interwest Transfer
Co. Inc. (Suite 100, 1981 East 4800 South, Salt Lake City, Utah 84117) is the
registrar and transfer agent for the common shares.
On March 22, 2000, the shareholders' list for the Company's common shares showed
25 registered shareholders and 15,973,127 shares outstanding. The Company has
researched indirect holdings registered to the various depository institutions
and stock brokerage firms, and estimates that there were approximately 25
additional beneficial shareholders at the above date.
The Company has not declared any dividends since incorporation and does not
anticipate that it will do so in the foreseeable future. Although there are no
restrictions that limit the ability to pay dividends on the Company's common
shares, the intention of the Company is to retain future earnings for use in its
operations and the expansion of its business.
Recent Sales of Unregistered Securities
In the past fiscal year ended December 31, 1999, the Company has sold the
following common shares without registering such common shares under the
Securities Act of 1933:
On February 9, 1999, the Company sold to Vasiliki Kapantais a total of 82,087
common shares for total cash consideration of $236,000 relying on Rule 504 of
Regulation D under the Securities Act of 1933, as amended. This private
placement of shares issued to Mr. Kapantais were issued at a price of $2.875 per
common share, which was based on the ten day average trading price (for the ten
days proceeding the sale) of the stock at that time.
On June 25, 1999, the Company sold to Tomlen, a Greek corporation, a total of
115,384 common shares for total cash consideration of $300,000 relying on Rule
504 of Regulation D under the Securities Act of 1933, as amended. The shares
issued to Tomlen were issued at a price of $2.60 per common share, which was
based on the ten day average trading price (for the ten days proceeding the
sale) of the stock at that time.
On November 17, 1999, pursuant to an agreement between the Company and Leo
Valkanas with respect to a finders fee, the Company issued 24,908 shares (the
equivalent to 7.5% of the gross proceeds of all the above-noted private
placements). The shares were issued to Mr. Valkanas for a cash value of $64,738
representing 7.5% of $836,500, the gross proceeds of all the private placements
in which Mr. Valkanas was involved. The shares were issued to Mr. Valkanas
relying on Regulation S under the Securities Act of 1933, as amended.
On November 18, 1999, the Company issued 35,750 common shares to Eve Lowry, at a
price of $2.80 per common share, in consideration of an exclusive license
granted to the Company, which allows the Company to use certain photographic
slide programs regarding food, nutrition and general health on the Website. The
shares were issued pursuant to Rule 504 of Regulation D of the 1933 Act.
On December 8, 1999, the Company issued 500,000 common shares to Jimmy Foussekis
at a deemed price of $0.56 per share, pursuant to an employment agreement
between the Company and Mr. Foussekis, dated November 1,
<PAGE>
1999. The shares were issued to Mr. Foussekis relying on Regulation S under the
Securities Act of 1933, as amended.
On December 8, 1999, the Company issued 500,000 common shares to Harvey Lalach
at a deemed price of $0.56 per share, pursuant to an employment agreement
between the Company and Mr. Lalach, dated November 1, 1999. The shares were
issued to Mr. Lalach relying on Regulation S under the Securities Act of 1933,
as amended.
On February 7, 2000, the Company granted Mr. Foussekis options to acquire
300,000 common shares in the capital stock of the Company at a price of $0.50
per share, exercisable by Mr. Foussekis and vested in accordance with the
vesting schedule specified in the incentive stock option agreement, up to and
including February 7, 2005. The Company and Mr. Foussekis have agreed to cancel
these options.
On February 7, 2000, the Company granted Harvey Lalach 300,000 common shares in
the capital stock of the Company at a price of $0.50 per share, exercisable by
Mr. Lalach and vested in accordance with the vesting schedule specified in the
incentive stock option agreement, up to and including February 7, 2005. The
Company and Mr. Lalach have agreed to cancel these options.
ITEM 6. PLAN OF OPERATION
PLAN OF OPERATION
- -------------------
The Website did not attract the number of users and paying advertisers as the
Company had anticipated. As a result, the Company failed to generate any
revenues and, in light of the foregoing, has elected to identify and pursue a
new business opportunity.
The Company's plan is to seek, investigate, and if such investigations warrant,
acquire an interest in one or more business opportunities presented to it by
persons or firms desiring the perceived advantages of a publicly held
corporation. At this time, 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. 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 Annual 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 will 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.
<PAGE>
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 will
ordinarily be 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
will offer 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 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
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, while not especially experienced in matters relating to the new
business of the Company, will 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 effectuate its business purposes described herein.
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 obligation.
<PAGE>
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 never 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 it acquires the rights to a product, rather than entering into a
merger or acquisition, it most likely would 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 new business opportunities will be undertaken by or under the
supervision of the officers and directors of the Company. 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:
- - 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.
<PAGE>
Management will meet personally with 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 participates 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
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;
<PAGE>
- - 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 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.
ITEM 7. FINANCIAL STATEMENTS
The Company's consolidated financial statements are stated in United States
Dollars (US$) and are prepared in accordance with United States Generally
Accepted Accounting Principles.
The consolidated financial statements are attached hereto and found immediately
following the text of this Annual Report. The Auditor's Report of KPMG LLP,
Chartered Accountants, for the audited consolidated financial statements for the
fiscal year ended December 31, 1999 is included herein immediately preceding the
audited consolidated financial statements.
Audited Consolidated Financial Statements and Financial Statement Schedules by
KPMG LLP:
Auditor's Report, dated March 20, 2000.
Consolidated Balance Sheet at December 31, 1999 and 1998.
Consolidated Statements of Operations and Deficit for the Years Ended
December 31, 1999 and 1998.
Consolidated Statement of Cash Flows for the Years Ended December 31, 1999
and 1998.
Notes to Consolidated Financial Statements.
<PAGE>
Consolidated Financial Statements of
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Years ended December 31, 1999 and 1998 and
period from inception to December 31, 1999
<PAGE>
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the consolidated balance sheet of GlobalNetCare, Inc. (the
"Corporation") as at December 31, 1999 and the consolidated statements of
operations, cash flows and stockholders' equity for the year ended December 31,
1999 and for the period from inception to December 31, 1999. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The consolidated financial statements of the Corporation as of
December 31, 1998, were audited by other auditors whose report dated June 30,
1999, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Corporation as
at December 31, 1999 and the results of its operations and cash flows for the
year ended December 31, 1999 and for the period from inception to December 31,
1999, in conformity with generally accepted accounting principles in the United
States.
The accompanying financial statements have been prepared assuming the
Corporation will continue as a going concern. As discussed in note 1 to the
financial statements, the Corporation has no established source of revenue.
This raises substantial doubt about its ability to continue as a going concern.
Management's plan in regard to these matters are also described in note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
KPMG LLP (signed)
Chartered Accountants
Montreal, Canada
March 20, 2000
<PAGE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Financial Statements
Years ended December 31, 1999 and 1998 and period from inception of the
development stage
to December 31, 1999
FINANCIAL STATEMENTS
Consolidated Balance Sheets 1
Consolidated Statements of Operations 2
Consolidated Statements of Cash Flows 3
Consolidated Statements of Stockholders' Equity 4
Notes to Consolidated Financial Statements 5
<PAGE>
<TABLE>
<CAPTION>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Balance Sheets
December 31, 1999 and December 31, 1998
December 31, December 31,
1999 1998
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 4,284 $232,877
Sales tax receivable. . . . . . . . . . . . . . . . . . . . . 25,656 11,527
Deposit on computer equipment . . . . . . . . . . . . . . . . - 23,971
Prepaid . . . . . . . . . . . . . . . . . . . . . . . . . . . 386 38,436
- --------------------------------------------------------------------------------------------------------
30,326 306,811
Property and equipment (note 3) . . . . . . . . . . . . . . . 51,537 61,414
- --------------------------------------------------------------------------------------------------------
$ 81,863 $368,225
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 46,476 $ 25,353
Payroll deductions payable. . . . . . . . . . . . . . . . . . 101,782 -
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . 41,596 -
Advances from a director, without interest and
no specific repayment terms . . . . . . . . . . . . . . . . . 451,891 74,973
- --------------------------------------------------------------------------------------------------------
641,745 100,326
Stockholders' equity:
Share capital (note 4). . . . . . . . . . . . . . . . . . . . 2,135 329
Additional paid-in capital. . . . . . . . . . . . . . . . . . 2,314,440 328,171
Accumulated other comprehensive income. . . . . . . . . . . . (2,881) 324
Deficit accumulated during the
development stage . . . . . . . . . . . . . . . . . . . . . . (2,873,576) (60,925)
- --------------------------------------------------------------------------------------------------------
(559,882) 267,899
Commitments (note 5)
Contingency (note 8)
Subsequent events (note 10)
- --------------------------------------------------------------------------------------------------------
$ 81,863 $368,225
============ ==========
See accompanying notes to consolidated financial statements.
</TABLE>
On behalf of the Board:
/s/ Harvey Lalach, Director
/s/ Nick Pedafronimos, Director
<PAGE>
<TABLE>
<CAPTION>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Operations
- ---------------------------------------------------------------------------------------------------------
From
Year ended Year ended inception to
December 31, December 31, December 31,
1999 1998 1999
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues - interest . . . . . . . . . . . . . . . . . . . . . $ 620 $ 245 $ 865
General and administrative expenses:
Commissions, wages and subcontractors . . . . . . . . . . . . 1,896,407 13,682 1,910,089
Compensation cost (note 4 (b)). . . . . . . . . . . . . . . . 246,400 - 246,400
Professional fees . . . . . . . . . . . . . . . . . . . . . . 145,397 23,233 168,630
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . 137,272 2,909 140,181
Rent and parking. . . . . . . . . . . . . . . . . . . . . . . 121,404 6,683 128,087
License fees. . . . . . . . . . . . . . . . . . . . . . . . . 67,925 - 67,925
Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,639 4,529 65,168
Advertising and promotion . . . . . . . . . . . . . . . . . . 46,279 502 46,781
Communications. . . . . . . . . . . . . . . . . . . . . . . . 30,577 2,031 32,608
Travel. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,414 19 30,433
Taxes, insurance and licenses . . . . . . . . . . . . . . . . 12,644 1,297 13,941
Interest and bank charges . . . . . . . . . . . . . . . . . . 12,226 127 12,353
Subscriptions and memberships . . . . . . . . . . . . . . . . 3,229 746 3,975
Registration fees . . . . . . . . . . . . . . . . . . . . . . 1,416 4,409 5,825
Maintenance and repairs . . . . . . . . . . . . . . . . . . . 1,042 1,003 2,045
2,813,271 61,170 2,874,441
- ----------------------------------------------------------------------------------------------------------
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,812,651 $ 60,925 $ 2,873,576
- ----------------------------------------------------------------------------------------------------------
Net loss per share - basic and diluted. . . . . . . . . . . . $ 0.208 $ 0.020
- ----------------------------------------------------------------------------------------------------------
Weighted average number
of shares outstanding . . . . . . . . . . . . . . . . . . . . 13,496,845 2,991,290
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Cash Flows
- --------------------------------------------------------------------------------------------------------------
From
Year ended Year ended inception to
December 31, December 31, December 31,
1999 1998 1999
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,812,651) $ (60,925) $ (2,873,576)
Adjustments for items not involving cash:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . 137,272 2,909 140,181
Employees, subcontractors and
license fees compensated by
issuance of shares. . . . . . . . . . . . . . . . . . . . . . 1,205,675 - 1,205,675
Compensation cost (note 4 (b)). . . . . . . . . . . . . . . . 246,400 - 246,400
Change in operating assets and liabilities:
Sales tax receivable. . . . . . . . . . . . . . . . . . . . . (14,129) (11,527) (25,656)
Deposit on computer equipment . . . . . . . . . . . . . . . . 23,971 (23,971) -
Prepaid . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,050 (38,436) (386)
Accounts payable and accrued liabilities. . . . . . . . . . . 164,501 25,353 189,854
- --------------------------------------------------------------------------------------------------------------
(1,010,911) (106,597) (1,117,508)
Cash flows from financing activities:
Proceeds from issuance of common shares . . . . . . . . . . . 536,000 328,500 864,500
Proceeds from advances from a director. . . . . . . . . . . . 376,918 74,973 451,891
912,918 403,473 1,316,391
- --------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property and equipment . . . . . . . . . . . . . (127,395) (64,323) (191,718)
Effect of exchange rate changes on cash . . . . . . . . . . . (3,205) 324 (2,881)
- --------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and
cash equivalents. . . . . . . . . . . . . . . . . . . . . . . (228,593) 232,877 4,284
Cash and cash equivalents, beginning of year. . . . . . . . . 232,877 - -
- --------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year. . . . . . . . . . . . $ 4,284 $ 232,877 $ 4,284
- --------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
See note 4 (a) for non-cash transactions.
</TABLE>
<PAGE>
INSERT FINANCIALS
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Statements of Stockholders' Equity
Periods from inception (October 30, 1980) to December 31, 1999
<TABLE>
<CAPTION>
Other
Additional compre-
paid-in Accumulated hensive
Shares Par value capital deficit income
<S> <C> <C> <C> <C> <C>
Issue of common
shares in 1981 . . . . . . . . . . . . . . . . . . . . . . . 1,000 $ 1 $ 999 $ - $ -
Stock split - July 21,
1998 999,000 - - -
Issue of common
shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,100,000 328 327,172 - -
Loss for the period. . . . . . . . . . . . . . . . . . . . . - - - (60,925) -
Foreign currency
adjustment . . . . . . . . . . . . . . . . . . . . . . . . . - - - - 324
Balance as at
December 31,
1998 13,100,000 329 328,171 (60,925) 324
Issue of common
shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,758,129 1,806 1,804,630 - -
Compensation cost. . . . . . . . . . . . . . . . . . . . . . - - 246,400 - -
Share issue expenses . . . . . . . . . . . . . . . . . . . . - - (64,761) - -
Loss for the period. . . . . . . . . . . . . . . . . . . . . - - - (2,812,651) -
Foreign currency
adjustment . . . . . . . . . . . . . . . . . . . . . . . . . - - - - (3,205)
Balance as at
December 31,
1999 14,858,129 $ 2,135 $ 2,314,440 $(2,873,576) $(2,881)
See accompanying notes to consolidated financial statements.
Total
<S> <C>
Issue of common
shares in 1981 . . . . . . . . . . . . . . . . . . . . . . . $ 1,000
Stock split - July 21,
-
Issue of common
shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 327,500
Loss for the period (609,925)
Foreign currency
adjustment . . . . . . . . . . . . . . . . . . . . . . . . . 324
Balance as at
December 31,
267,899
Issue of common
shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,806,436
Compensation cost. . . . . . . . . . . . . . . . . . . . . . 246,400
Share issue expenses . . . . . . . . . . . . . . . . . . . . (64,761)
Loss for the period. . . . . . . . . . . . . . . . . . . . . (2,812,651)
Foreign currency
adjustment . . . . . . . . . . . . . . . . . . . . . . . . . (3,205)
Balance as at
December 31,
$(559,882)
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements
Years ended December 31, 1999 and 1998 and period from inception to December 31,
1999
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. SIGNIFICANT ACCOUNTING POLICIES:
These financial statements have been prepared by management in accordance with
accounting principles generally accepted in the United States. The significant
accounting principles are as follows:
(a) Consolidated financial statements and basis of presentation:
The consolidated financial statements include the accounts of GlobalNetCare,
Inc. and the accounts of 3423336 Canada Ltd. All intercompany transactions and
balances have been eliminated.
(b) Cash and cash equivalents:
The Corporation considers all investments that are highly liquid with an
original maturity of three months or less and readily convertible into cash to
be cash equivalents.
<PAGE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1999 and 1998 and period from inception to December 31,
1999
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(c) Property and equipment:
Property and equipment are stated at cost. Depreciation is provided using the
straight-line method and the following annual periods:
Assets Period
Furniture and equipment 5 years
Computer equipment 3 years
Computer software 3 years
(d) Research and development expenditures:
Research and development expenditures, if any, are expensed as incurred.
(e) Foreign exchange:
Foreign denominated assets and liabilities of the foreign subsidiary are
translated at the rate of exchange prevailing at the balance sheet date whereas
its revenues and expenses are translated at the monthly average exchange rate
prevailing during the period. Translation adjustments that result from
translating foreign currency financial statements are included in a separate
component of stockholders' equity. Other foreign exchange gains and losses are
included in the determination of net earnings.
(f) Income taxes:
The Corporation uses the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. This method
also requires the recognition of future tax benefits such as net operating loss
carryforwards, to the extent that realization of such benefits is more likely
than not. To the extent that management does not consider their realizability
to be more likely than not, a valuation allowance is provided for the
difference. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
<PAGE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1999 and 1998 and period from inception to December 31,
1999
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(g) Comprehensive income:
Effective January 1, 1998, the Corporation adopted Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income, which establishes
new rules for the reporting and display of comprehensive income and its
components.
(h) Stock issued to employees:
The Corporation applies the intrinsic value-based method of accounting
prescribed by Accounting Principles Board ("APB") Opinion no. 25, Accounting for
Stock Issued to Employees, and related interpretations, in accounting for stock
option agreements. As such, compensation expense would be recorded on the date
of grant only if the then current market price of the underlying stock exceeded
the exercise price.
(i) Impairment of long-lived assets and long-lived assets to be disposed of:
The Corporation accounts for long-lived assets in accordance with the provisions
of SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of. This statement requires that long-lived
assets and certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to future net cash
flows expected to be generated by the asset. If such assets are considered to
be impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceed the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or fair value
less costs to sell.
(j) Net loss per share:
Net loss per share is computed using the weighted average number of shares
outstanding during the period. The fully diluted loss per share has not been
disclosed because the effect of common shares issuable upon the exercise of
options and warrants is antidilutive.
(k) Dividends:
The Corporation has not yet adopted any policy regarding payment of dividends.
No dividends have been paid since inception.
<PAGE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1999 and 1998 and period from inception to December 31,
1999
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(l) Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Actual results
could differ from those estimates.
<TABLE>
<CAPTION>
3. PROPERTY AND EQUIPMENT:
December 31,
1999
Accumulated . . Net book
Cost . depreciation value
<S> <C> <C> <C>
Furniture and equipment $ 32,334 $ 22,633 $ 9,701
Computer equipment. . . 132,819 92,974 39,845
Computer software . . . 30,806 28,815 1,991
$ 195,959 $144,422 $51,537
December 31,
1998
Accumulated . . Net book
Cost . depreciation value
Furniture and equipment $ 18,455 $ 615 $17,840
Computer equipment. . . 36,725 1,836 34,889
Computer software . . . 9,142 457 8,685
$ 64,322 $ 2,908 $61,414
</TABLE>
With respect to change in plans and operations referred to in note 1, the
Corporation recorded an amount of $97,918 as additional depreciation in order to
reflect estimated recoverable value of property and equipment which is based on
market for used equipment. Decision to dispose of any property and equipment is
dependent on the management plan mentioned in note 1.
<PAGE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1999 and 1998 and period from inception to December 31,
1999
4. SHARE CAPITAL:
1999 1998
Authorized:
50,000,000 common shares, par value of
US$0.001 per share
Issued and outstanding:
14,858,129 common shares (1998 - 13,100,000) $ 2,135 $ 329
(a) Issue of shares:
As indicated in note 1, the Corporation effected a thousand-for-one split of its
common stock during 1998. In addition, the par value of the Corporation's
common stock was changed from $1.00 to $0.001 per share and authorized shares of
common stock were increased from 1,000 to 50,000,000 shares.
In 1999, the Corporation issued 197,471 common shares for a cash consideration
of $536,000. In addition, 24,908 common shares were issued as share issuance
costs for an amount of $64,761.
The Corporation also issued 1,500,000 common shares to employees and
subcontractors for services rendered and license fees totalling $1,205,675.
(b) Stock options:
(i) Options granted:
The Corporation granted options to employees and certain service providers under
the terms of agreements entered into. In the opinion of management, certain
options were cancelled in accordance with termination clauses of such
agreements. Changes in outstanding options were as follows:
<TABLE>
<CAPTION>
Exercise price
Number per share
<S> <C> <C>
Options outstanding, January 1, 1999 . - $ -
Granted. . . . . . . . . . . . . . . . 735,000 2.00
Granted. . . . . . . . . . . . . . . . 300,000 3.00
Granted. . . . . . . . . . . . . . . . 50,000 6.00
Cancelled. . . . . . . . . . . . . . . (236,667) 3.00
Cancelled. . . . . . . . . . . . . . . (50,000) 6.00
Cancelled. . . . . . . . . . . . . . . (455,000) 2.00
Options outstanding, December 31, 1999 343,333
</TABLE>
<PAGE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1999 and 1998 and period from inception to December 31,
1999
4. SHARE CAPITAL (CONTINUED):
(b) Stock options (continued):
(i) Options granted (continued):
Options granted have to be exercised over a period not exceeding five years. At
December 31, 1999, 323,833 outstanding options are exercisable and 19,500
outstanding options vest over a period of 4 years.
(ii) Stock-based compensation:
The Corporation applies APB Opinion 25, Accounting for Stock Issue to Employees,
in accounting for stock option granted. Compensation cost of $246,400 (1998 -
nil) for stock options granted to employees has been recognized in the financial
statements for 1999.
In addition, had compensation cost for stock option granted to employees been
determined based on the fair value at the grant dates consistent with the method
of FASB Statement 123, Accounting for Stock-Based Compensation ("SFAS 123"), the
Corporation's net loss would have been adjusted to the pro-forma amounts
indicated below:
<TABLE>
<CAPTION>
From
Year ended Year ended inception to
December 31, December 31, December 31,
1999 1998 1999
<S> <C> <C> <C> <C>
Net loss. . . As reported $ 2,812,651 $ 60,925 $2,873,576
Pro-forma 3,498,890 60,925 3,559,815
</TABLE>
The fair value of each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions. 1999 - risk-free interest rate of 5.7%, dividend yield of 0%,
expected volatility of 373%, and expected life of 3 years. The per share
weighted average fair value of stock options granted during 1999 was $2.88 (1998
- - nil).
The effects of applying SFAS 123 for the pro-forma disclosures are not
representative of the effects on reported net earnings in future years since
valuations are based on highly subjective assumptions about the future,
including stock price volatility and exercise patterns.
<PAGE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1999 and 1998 and period from inception to December 31,
1999
4. SHARE CAPITAL (CONTINUED):
(c) Warrants:
In connection with issuance of shares, the Corporation issued warrants to
purchase 115,384 common shares at a price of $3 per share, expiring on June 26,
2000.
5. COMMITMENTS:
(a) The Corporation leases its office space under a lease expiring in 2002.
At December 31, 1999, future minimum rental payments required under the terms of
the operating lease that have initial or remaining terms in excess of one year
are as follows:
2000 $ 47,584
2001 47,584
2002 21,809
$ 116,977
(b) Under the terms of an employment agreement, the Corporation is committed
to issue 200,000 common shares in 2000 to an employee for services to be
rendered. The amount to be recorded will be determined based on the average
market price per share for the period in which the services will be rendered.
<PAGE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1999 and 1998 and period from inception to December 31,
1999
6. INCOME TAXES:
Details of the components of income taxes are as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
<S> <C> <C>
Net loss . . . . . . . . . . . . . . . . . . . . . $ 2,812,651 $ 60,925
Basic income tax rate. . . . . . . . . . . . . . . 38% 17%
Computed income tax recovery . . . . . . . . . . . 1,068,807 10,231
Adjustment in income taxes resulting from:
Losses carry forward and unclaimed
deductions not recognized. . . . . . . . . . . . . 517,175 10,231
Compensation cost, not deductible for tax purposes 93,632 -
Services compensated by issuance of shares, not
deductible for tax purposes 458,000 -
- ----------------------------------------------------------------------------------
$ - $ -
</TABLE>
Losses carry forward amounting to $29,000 and $1,361,000 expire in 2005 and
2006, respectively for the Canadian operations and losses carry forward
amounting to $32,000 expire in 2018 for the US operations.
In accordance with Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, the income tax effect of temporary differences that
give rise to the net deferred tax assets are presented below:
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
<S> <C> <C>
Non-capital losses . . . $ 527,406 $ 10,231
Less valuation allowance (527,406) (10,231)
$ - $ -
</TABLE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1999 and 1998 and period from inception to December 31,
1999
6. INCOME TAXES (CONTINUED):
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income and tax planning
strategies in making this assessment. Since the Corporation is a development
stage corporation, the generation of future taxable income is dependent on the
successful commercialization of its products and technologies.
7. FINANCIAL INSTRUMENTS:
(a) Foreign currency risk management:
Options are exercisable in US dollars. Ultimate proceeds upon exercise of
options may vary due to fluctuations in the value of the Canadian dollar
relative to the US currency.
(b) Credit risk:
Financial instruments that potentially subject the Corporation to significant
concentrations of credit risk consist principally of short-term investments and
accounts receivable.
The Corporation has investment policies that require placement of short-term
investments in financial institutions evaluated as highly creditworthy.
In the normal course of business, the Corporation evaluates the financial
condition of the parties with which it contracts on a continuing basis and
reviews the credit worthiness of all new parties. The Corporation determines an
allowance for doubtful accounts to reflect specific risks.
(c) Fair values:
The following table presents the carrying amounts and estimated fair values of
the Corporation's financial instruments at December 31, 1999 and December 31,
1998. The fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing parties.
Fair value estimates are made as of a specific point in time using available
information about the financial instrument. These estimates are subjective in
nature and often cannot be determined with precision.
<PAGE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1999 and 1998 and period from inception to December 31,
1999
7. FINANCIAL INSTRUMENTS (CONTINUED):
(c) Fair values (continued):
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
Carrying Fair Carrying Fair
amount value amount value
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 4,284 $ 4,284 $232,877 $232,877
Sales tax receivable. . . 25,656 25,656 11,527 11,527
Financial liabilities:
Accounts payable. . . . . 189,854 189,854 25,353 25,353
Advances from a director. 451,891 451,891 74,973 74,973
</TABLE>
- - 3 -
The carrying amounts shown in the table are included in the consolidated balance
sheet under the indicated captions.
The following method and assumption were used to estimate the fair value of each
class of financial instruments:
Cash and cash equivalents, sales tax receivable, accounts payable, accrued
liabilities and advances from a director. The carrying amounts approximate fair
value because of the short maturity of these instruments.
8. CONTINGENCY:
The Corporation is facing a pending action from a former director for damages.
No amount related to such action has been determined.
9. RELATED PARTY TRANSACTIONS:
During 1999, the Corporation purchased computer and software equipment totalling
$111,000 from a company held by a director.
<PAGE>
GLOBALNETCARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1999 and 1998 and period from inception to December 31,
1999
10. SUBSEQUENT EVENTS:
(a) In February 2000, the Corporation issued 1,114,998 common shares for a
cash consideration of $445,999.
(b) The Corporation has established a stock option plan whereby the
Corporation may grant options to purchase common shares to key employees,
directors, officers as well as service providers. The plan contemplates that a
maximum of 1,000,000 common shares may be optioned under the stock option plan.
In addition, no optionee shall hold options to purchase more than 5% of the
number of shares issued and outstanding at any time. The subscription price for
each share covered by an option shall be established by the Board of Directors
but such price shall not be lower than the fair market value at the date of
grant.
In February 2000, 600,000 options have been granted to employees to acquire
600,000 common shares of the Corporation at a price of $0.50 per share. The
options expire on February 7, 2005 and vest over a period of four years.
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On February 22, 2000, the Company engaged KPMG LLP, Chartered Accountants, to
prepare the audited consolidated financial statements for the fiscal year ended
December 31, 1999. Prior to engaging KPMG LLP, the Company did not consult KPMG
LLP regarding the application of accounting principles to any specific completed
or contemplated transaction or the type of audit opinion that might be rendered
on the Company's financial statements. There were no disagreements with the
Company's former auditor, Councilor, Buchanan & Mitchell, P.C., Certified Public
Accountants, regarding any matter of accounting principles or practices,
financial statement disclosure, auditing scope or procedure, or any other
matter.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The following table and text sets forth the names and ages of all directors,
executive officers and significant employees of the Company as of March 22,
2000. All of the directors serve until the next Annual General Meeting of
shareholders and until their successors are elected and qualified, or until
their earlier death, retirement, resignation or removal. Subject to any
applicable employment agreement, executive officers serve at the discretion of
the Board of Directors, and are appointed to serve until the first Board of
Directors meeting following the annual meeting of shareholders. Also provided
is a brief description of the business experience of each director, executive
officer and significant employee during the past five years and an indication of
directorships held by each director in other companies subject to the reporting
requirements under the federal securities laws.
<TABLE>
<CAPTION>
Directors, executive officers and other significant employees:
DATE FIRST ELECTED OR
NAME POSITION HELD WITH THE COMPANY AGE APPOINTED
- ----------------- --------------------------------- --- ----------------------
<S> <C> <C> <C>
Director, Treasurer and Chief
Nick Pedafronimos Financial Officer 43 November 4, 1998
- ----------------- --------------------------------- --- ----------------------
November 1, 1999
Harvey Lalach Chief Operating Officer 34 (COO)
- ----------------- --------------------------------- --- ----------------------
Patrick Power Director, President and Secretary 37 November 4, 1998
- ----------------- --------------------------------- --- ----------------------
David Mulder Director 61 July 8, 1999
- ----------------- --------------------------------- --- ----------------------
George Tsoukas Director, Chairman and CEO 57 November 4, 1998
================= ================================= === ======================
</TABLE>
The backgrounds and experience of the Company's directors, executive officers
and other significant employees are as follows:
Nick Pedafronimos
In the past, Mr. Pedafronimos has acted as an advisor to management and has been
responsible for corporate finance as a director for a number of small publicly
trading companies. Since April, 1998, he has been a director of Cantex Mine
Development Corp. Mr. Pedafronimos was the founder and a director of Canadian
Mountain Minerals (August 1995 to April 1998) and he was the founder and
director of Goldtex Resources (June 1995 to April 1998). Mr. Pedafronimos is
responsible for the Company's equity financing. Mr. Pedafronomis became
involved with the Company through personal contact with Dr. George Tsoukas.
Although he does not have any medical or internet experience, he has
considerable experience with the financing and operation of public companies and
was therefore asked to join the Company's Board of Directors.
<PAGE>
Harvey Lalach
Mr. Lalach has been employed by the Company since 1998. Pursuant to an
employment agreement between the Company and Mr. Lalach dated November 1, 1999,
Mr. Lalach was appointed Chief Operating Officer. Between 1997 and 1998, Mr.
Lalach acted as Manager, Corporate Finance at Goldtex Resources, a company
listed on the Alberta Stock Exchange (now the Canadian Venture Exchange). From
1992 to 1997, Mr. Lalach was employed as a Branch Manager at TD Greenline
Investor Services. Mr. Lalach earned his Diploma in Natural Resource Management
from the British Columbia Institute of Technology in 1985.
Patrick Power
Mr. Power has extensive experience in the operation and management of public
companies and since November of 1995, has acted as the President and a director
for Everest Mines and Minerals. In the past, Mr. Power has obtained
considerable experience in marketing and business development by serving as
director for numerous public companies including Goldtex Resources (December
1996 to July 1998), Montello Resources Ltd. (November 1993 to present), Sentinel
Resources Ltd. (August 1993 to January 1995), Golden Rainbow Resources Inc.
(September 1993 to December 1993) and Calco Resources Ltd. (January 1992 to
October 1994). Mr. Power is responsible for the Company's general
administration. Mr. Power became involved with the Company through personal
contact with Dr. George Tsoukas. Although he does not have any medical or
internet experience, Mr. Power has considerable experience with the financing
and operation of public companies and was therefore asked to join the Company's
Board of Directors. The above public companies that Mr. Power was involved were
or are listed on the Vancouver or Alberta Stock Exchange.
David S. Mulder, OC, MD, FRCS(C) FACS
Dr. David Mulder, medical doctor (MD), Fellow of the Royal College of Surgeons
of Canada (FRCS(C)), Fellow of the American College of Surgeons (FACS), is a
highly respected and qualified doctor who obtained the Order of Canada (OC) in
1997 for his contributions to the advancement of medical science. Dr. Mulder
has received numerous academic awards, has held numerous professorships and
teaching positions at various hospitals and universities around the world (from
1980 to the present) and has been appointed to the committees and boards of
various medical associations. Dr. Mulder is world-renowned in the Presently,
he is the Chief of Thoracic Surgery and a Surgical Consultant to the Division of
Cardiovascular and Thoracic Surgery at the Sir Mortimer B. Davis Jewish General
Hospital. He is also the Medical Director at the McGill Sports Medicine Centre.
From 1993 to 1998, he was the Chairman of McGill University, Department of
Surgery and as well, he held the position of Professor of Surgery, Faculty of
Medicine at the McGill Cancer Center. Dr. Mulder was Surgeon-in-Chief and
Director of the University Surgical Clinics for twenty-one years. He is now a
Senior Reviewer for the American College of Surgeons Committee on Trauma and has
been instrumental in training new site reviewers since 1990. Dr. Mulder is a
member of the Board of Governors of the American College of Surgeons as a
Specialty Society Governor from the Royal College of Physicians and Surgeons of
Canada, Chair of the Credentials Committee for the Royal College of Physicians
and Surgeons of Canada and is the President-Elect for the U.S. Central Surgical
Association. Dr. Mulder was also the first President of the Canadian
Association of Thoracic Surgery. The combination of Dr. Mulder's experience,
professorships, other teaching positions, and medical association and other
professional appointments make him a world-renowned doctor in the fields of
cardiovascular and thoracic surgery, surgical intensive care, trauma and sports
medicine.
George Tsoukas, MD, FRCP(C)
Dr. Tsoukas holds a Bachelor of Science (Honours Biochemistry) from McGill
University, Montreal, Quebec, and a Medical Degree from McGill Medical School,
Montreal, Quebec. He is a certified specialist in internal medicine and
endocrinology as certified by the Royal College of Physicians and Surgeons
(Canada), Professional Corporation of Physicians (Quebec) and the American Board
of Internal Medicine. He has 25 years of experience in health sciences
including work in computer related medicine. He is an Associate Physician at
McGill University Health Center, an Assistant Professor of Medicine at McGill
University, a Fellow of the Royal College of Physicians, and a member of the
American Heart Association, the American Society for Bone and Mineral Research,
Canadian Medical Association and the Quebec Society of Endocrinologists. He is
currently conducting clinical research on metabolic bone diseases. For the past
ten years, Dr. Tsoukas was involved in the production of medical CD-ROMs, has
wide experience in medical education, and produced and directed a popular
television program explaining medical conditions to the public. Dr. Tsoukas is
responsible for medical content on the Company's website.
<PAGE>
There are no arrangements or understandings between any two or more directors or
executive officers, pursuant to which he/she was selected to be a director or
executive officer.
None of the Company's directors, executive officers, promoters or control
persons have been involved in any of the following events during the past five
years:
1. any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
3. being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
4. being found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
Section 16(a) Beneficial Ownership Reporting Compliance
<TABLE>
<CAPTION>
The following officers or directors of the Company who beneficially owned more
than 10% of the Company's common shares made the following late filings:
NUMBER OF
TRANSACTIONS NOT
REPORTED ON A FAILURE TO FILE
NAME NUMBER OF LATE REPORTS TIMELY BASIS REQUESTED FORMS
- ----------------- ---------------------- ---------------- ---------------
<S> <C> <C> <C>
Patrick Power 1 1 Nil
- ----------------- ---------------------- ---------------- ---------------
Harvey Lalach 1 4 Nil
---------------------- ---------------- ---------------
Nick Pedafronimos 1 5 Nil
---------------------- ---------------- ---------------
George Tsoukas 1 9 Nil
---------------------- ---------------- ---------------
Chris Kokkalis 1 1 Nil
---------------------- ---------------- ---------------
David Mulder 1 1 Nil
- ----------------- ---------------------- ---------------- ---------------
</TABLE>
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation
The Company's chief executive officer did not receive any cash or other
compensation during the fiscal years ended December 31, 1999, 1998 and 1997.
During the fiscal year ended December 31, 1999, the Company's Chief Operating
Officer, Harvey Lalach, received an annual salary of CDN$48,000, pursuant to an
agreement dated November 1, 1999 between the Company and Mr. Lalach (the "Lalach
Agreement"). In addition, and also pursuant to the Lalach Agreement, Mr. Lalach
was compensated by the issuance of 500,000 common shares in the capital of the
Company, at a deemed price of $0.56.
Options/SAR Grants
The Company did not grant any options during the fiscal years ended 1999, 1998
and 1997, nor were there any freestanding Stock Appreciation Rights.
On February 7, 2000, the directors of the Company adopted the Company's 2000
Stock Option Plan, pursuant to which the Plan Administrator is authorized to
grant up to a total of 1,000,000 common shares.
On February 7, 2000, the Company granted Jimmy Foussekis options to acquire
300,000 common shares in the capital stock of the Company at a price of $0.50
per share, exercisable by Mr. Foussekis and vested in accordance with the
vesting schedule specified in the incentive stock option agreement, up to and
including February 7, 2005. The Company and Mr. Foussekis have agreed to cancel
these options.
On February 7, 2000, the Company granted Harvey Lalach 300,000 common shares in
the capital stock of the Company at a price of $0.50 per share, exercisable by
Mr. Lalach and vested in accordance with the vesting schedule specified in the
incentive stock option agreement, up to and including February 7, 2005. The
Company and Mr. Lalach have agreed to cancel these options.
To date, the Company has granted a total of 600,000 stock options to its
employees and consultants, at a price of $0.50 per share, expiring February 7,
2005. The Company and the employees to whom the stock options were granted have
agreed to cancel these options.
There were no exercises of stock options or freestanding Stock Appreciation
Rights during the fiscal year ended December 31, 1999 by any of the Company's
officers or directors.
The Company does not have a Long-Term Incentive Plan.
Compensation of Directors
The Company has no formal plan for compensating its directors for their service
in their capacity as directors although such directors have received from time
to time and are expected to receive in the future options to purchase common
shares as awarded by the Board of Directors or (as to future options) a
Compensation Committee which may be established. Directors are entitled to
reimbursement for reasonable travel and other out-of-pocket expenses incurred in
connection with attendance at meetings of the Board of Directors. The Board of
Directors may award special remuneration to any director undertaking any special
services on behalf of the Company other than services ordinarily required of a
director. Other than indicated below, no director received and/or accrued any
compensation for his services as a director, including committee participation
and/or special assignments.
The Company has no other arrangements with any director of the Company in
respect of any other type of compensation.
Employment Contracts
There are no management agreements with any of the Company's directors or
executive officers. The Company entered into the following employment contracts
during the fiscal year ended December 31, 1999:
<PAGE>
Dr. David Mulder
On November 16, 1999, the Company issued 500,000 common shares to Dr. David
Mulder at a deemed price of $2.13 per share, pursuant to the employment
agreement dated July 8, 1999 between Dr. Mulder and the Company. The shares
were issued to Dr. Mulder relying on Regulation S under the Securities Act of
1933, as amended.
Harvey Lalach
Pursuant to the Lalach Agreement, Mr. Lalach is paid an annual salary of
CDN$48,000 in his position as Chief Operating Officer. In addition to his
salary, on December 10, 1999, the Company issued 500,000 common shares to Harvey
Lalach at a deemed price of $0.56 per share, pursuant to the Lalach Agreement.
The shares were issued to Mr. Lalach relying on Regulation S under the
Securities Act of 1933, as amended.
Other than as discussed above, the Company has no plans or arrangements in
respect of remuneration received or that may be received by executive officers
of the Company to compensate such officers in the event of termination of
employment (as a result of resignation, retirement, change of control) or a
change of responsibilities following a change of control, where the value of
such compensation exceeds US$60,000 per executive officer.
There are no arrangements or plans in which the Company provides pension,
retirement or similar benefits for directors or executive officers. Other than
the management agreements and advisory agreements discussed herein, the Company
has no material bonus or profit sharing plans pursuant to which cash or non-cash
compensation is or may be paid to the Company's directors or executive officers,
except that stock options have been and may be granted at the discretion of the
Board of Directors or a committee thereof.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial Ownership
As used in this section, the term "beneficial ownership" with respect to a
security is defined by Regulation 228.403 under the Securities Exchange Act of
1934, as amended, as consisting of: (1) any person who, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise has
or shares voting power (which includes the power to vote, or to direct the
voting of such security) or investment power (which includes the power to
dispose, or to direct the disposition of, such security); and (2) any person
who, directly or indirectly, creates or uses a trust, proxy, power of attorney,
pooling arrangement or any other contract, arrangement or device with the
purpose or effect of divesting such person of beneficial ownership of a security
or preventing the vesting of such beneficial ownership.
Each person has sole voting and investment power with respect to the common
shares, except as otherwise indicated. Beneficial ownership consists of a
direct interest in the common shares, except as otherwise indicated.
As of March 22, 2000, the Company had a total of 15,973,127 common shares
($0.001 par value per common share) issued and outstanding.
<TABLE>
<CAPTION>
As of March 22, 2000, no person known to the Company was the beneficial owner of more
than five percent (5%) of the outstanding common shares of the Company except the
following:
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENTAGE OF CLASS(1)
<S> <C> <C>
Cede & Co.
P.O. Box 222, Bowling Street Station
New York, New York 10274 . . . . . . 7,115,687 common shares 44.5%
======================= ======================
George Tsoukas
26 Sunnyside Avenue,
Westmount, Quebec H3Y 1C2 . . . . . 4,895,000 common shares 30.6%
======================= ======================
Nick Pedafronimos
209A Lakeshore
Pointe Claire, Quebec H9S 4K3 . . . 959,500 common shares 6.0%
==================================== ======================= ======================
<FN>
(1) Based on 15,973,217 common shares outstanding as of March 22, 2000.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The following table lists, as of March 22, 2000, the number of common shares
beneficially owned, and the percentage of the Company's common shares so owned,
by each director and by all directors and executive officers as a group.
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENTAGE OF CLASS(1)
================================ ==================== ======================
<S> <C> <C>
Nick Pedafronimos 959,500 6.0%
Patrick Power 13,500 .08%
Harvey Lalach 512,000 3.2%
- -------------------------------- -------------------- ----------------------
David Mulder 500,000 3.1%
-------------------- ----------------------
George Tsoukas 4,895,000 30.6%
Directors and Officer as a group 6,880,000 43.1%
================================ ==================== ======================
<FN>
(1) Based on 15,973,127 shares outstanding as of March 22, 2000 and, as to a
specific person, shares issuable pursuant to the conversion or exercise, as the
case may be, of currently exercisable or convertible debentures, share purchase
warrants and stock options.
</TABLE>
Changes in Control
The Company is unaware of any contract or other arrangement, the operation of
which may at a subsequent date result in a change of control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than as disclosed above, there have been no transactions, or proposed
transactions, which have materially affected or will materially affect the
Company in which any director, executive officer, or beneficial holder of more
than 10% of the outstanding common stock, or any of their respective relatives,
spouses, associates or affiliates has had or will have any direct or material
indirect interest.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
(3) Articles of Incorporation and Bylaws
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 Employment agreement between the Company and Jimmy Foussekis,
dated November 1, 1999
10.2 Employment agreement between the Company and Harvey Lalach, dated
November 1, 1999
(21) Name of Subsidiary
21.1 3423336 Canada Ltd. (incorporated under the federal laws of Canada
on February 3, 1998)
(27) Financial Data Schedule
REPORTS ON FORM 8-K
The Company filed a Form 8-K on November 1, 1999 in connection with the
resignation, effective October 29, 1999, of Dr. Chris Kokkalis as the Company's
Chief Technology Officer and Director.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) 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
Date: March 30, 2000
----------------
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By: /s/ Nick Pedafronimos
-----------------------
NICK PEDAFRONIMOS, DIRECTOR
Date: March 30, 2000
----------------
By: /s/ David Mulder
------------------
DAVID MULDER, DIRECTOR
Date: March 30, 2000
---------------
By: /s/ Harvey Lalach
-------------------
HARVEY LALACH, C.O.O.
Date: March 30, 2000
----------------
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT effective as of November 1, 1999.
BETWEEN:
GLOBALNETCARE, INC., of Suite 950, 2000 McGill College, Montreal, Quebec, H3A
3H3
(the "Company")
OF THE FIRST PART
AND:
JIMMY FOUSSEKIS, of Block A, Apt. 1414, La Cite, 3600 Park Avenue,
Montreal, Quebec H2X 3R2
(the "Employee")
OF THE SECOND PART
WITNESSES THAT WHEREAS:
A. The Employee has certain skills and expertise required by the
Company for its operations;
B. The Company wishes to obtain and the Employee wishes to provide
certain services to the Company on the terms and conditions contained herein;
THEREFORE in consideration of the premises and of the covenants and
agreements of the parties hereinafter set forth, the parties hereto covenant and
agree each with the other as follows:
1. EMPLOYMENT, TERM, POSITIONS AND DUTIES
1.1 Employment The Company hereby employs the Employee and the Employee
hereby accepts employment upon the terms and conditions herein set forth.
1.2 Term Employment of the Employee by the Company shall be effective
November 1, 1999 and shall continue until such time as this Agreement is
terminated as hereinafter set out in Section 1.3 or 4 herein.
<PAGE>
1.3 Resignation Nothing in this Agreement shall prohibit the Employee from
resigning from the Company at any time on one (1) month written notice to the
Company, which notice may be waived by the Company in its sole discretion and,
upon such resignation taking effect, the Employee's employment shall terminate
and neither party hereto shall have any rights or obligations hereunder, except
those specifically set out in Section 2.2 hereof.
1.4 Position The Employee shall serve as Communications Representative for
the Company.
1.5 Duties The Employee shall carry out such duties as would customarily be
carried out by a Communications Representative in the e-commerce and
telecommunications industry.
1.6 Reporting The Employee shall report to the President of the Company and
take direction from the President of the Company.
2. OBLIGATIONS
2.1 Full Time and Efforts During the term of his employment pursuant to
this Agreement, the Employee shall devote his full time and effort and attention
to his duties as set out in this Agreement and shall not be engaged, employed or
associated with any other business venture without the written consent of the
President of the Company.
2.2 Fiduciary Duty, Confidentiality and Non-Competition The Employee
recognizes and understands that in performing the duties and responsibilities of
his employment as provided in this Agreement, he will occupy a position of high
fiduciary trust and confidence, pursuant to which he will develop and acquire
wide experience and knowledge with respect to all aspects of the manner in which
the Company's business is conducted. It is the intent and Agreement of the
Employee and of the Company that such knowledge and experience shall be used
solely and exclusively in furtherance of the business interests of the Company
and not in any manner which would be detrimental to it. The Employee agrees
that following the termination of his employment for any reason whatsoever, he
shall not, without the consent of the Board of Directors of the Company by
resolution, engage in any solicitation of the clients, customers or any
individuals or firms with respect to which the Company has had dealings (and
whether or not any contractual arrangements have been concluded as between the
Company and any such individuals or firms) which might benefit any competitor of
the Company.
3. COMPENSATION
3.1 Common Shares The Employee shall be compensated by issuance to the
Employee of Five Hundred (500,000) common shares (the "Shares") in the capital
stock of the Company, at a deemed price of $0.56. If eligible, the Shares shall
be registered by the Company on a Form S-8 and such Shares will be subject to
the resale restrictions set forth in the rules and regulations enacted under the
Securities Act of 1933, as amended.
3.2 Salary. In consideration of the Employee providing the serviced
referred to herein, the Company agrees to pay the Employee a bi-weekly salary of
two thousand Canadian dollars ($2,000 Cdn.), subject to increase as from time to
time approved by the Board of Directors.
3.3. Expenses The Employee shall be responsible for paying all
expenses related to his employment with the Company without reimbursement, with
the exception of those expenses which, prior to such expenses having being
incurred, the President has agreed to reimburse to the Employee.
<PAGE>
3.4 No Other Compensation Except as set out in this Agreement, the
Employee shall not be entitled to any other compensation or benefits.
4. TERMINATION
4.1 Company's Right to Terminate Notwithstanding any other provision in
this Agreement, the Company may terminate the employment of the Employee at any
time for just cause or because of permanent disability by giving written notice
to the Employee of its intention to terminate this Agreement on the date
specified in such notice. The Company may also terminate the employment of the
Employee without cause at any time upon thirty (30) days written notice.
4.2 Definition Where used herein, "permanent disability" means any physical
or mental incapacity, disease or affliction, as determined by a legally
qualified medical practitioner selected by the Company and the Employee, acting
reasonably, which prevents the Employee to a substantial degree from performing
his obligations as Communications Representative.
5. MISCELLANEOUS
5.1 Modification and Waiver No provision of this Agreement shall be
modified or amended unless such modification or amendment is authorized by the
President and is agreed to in writing, signed by the Employee and by the
Company.
5.2 Law Governing This Agreement shall be subject to and governed by the
laws of the State of California.
5.3 Invalidity The invalidity, illegality or unenforceability of any
provision hereof, shall not in any way affect or impair the validity, legality
or enforceability of the remaining provisions hereof.
5.4 Headings The headings contained herein are for reference purposes only
and shall not in any way affect the construction or interpretation of this
Agreement.
<PAGE>
5.5 Execution in Counterparts and by Facsimile This Agreement may executed
in counterparts in as many copies as may be necessary. Delivery of an executed
copy of this Agreement by electronic facsimile transmission or other means of
electronic communication producing a printed copy will be deemed to be execution
and delivery of this Agreement on the date of such communication by the party so
delivering such copy.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
1st day of November, 1999.
GLOBALNETCARE, INC.
Per: /s/ Nick Pedafronimos
- ------------------------------
Authorized Signatory
SIGNED, SEALED and DELIVERED by )
JIMMY FOUSSEKIS in the presence of: )
)
Harvey Lalach )
- ------------------------------------- )
Print Name )
265 Alice Carriere )
- ------------------------------------- )
Address )
Beaconsfield, Quebec )
- ------------------------------------- )
Businessman ) /s/ Harvey Lalach
- ------------------------------------- ) -------------------
Occupation ) HARVEY LALACH
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT effective as of November 1, 1999.
BETWEEN:
GLOBALNETCARE, INC., of Suite 950, 2000 McGill College, Montreal, Quebec, H3A
3H3
(the "Company")
OF THE FIRST PART
AND:
HARVEY LALACH of 265 Alice Carriere, Beasconsfield, Quebec, H9W 6E6
(the "Employee")
OF THE SECOND PART
RECITALS:
WHEREAS the Company has requested the assistance of the Employee as the "Chief
Operating Officer" and in providing certain services, as hereinafter described;
WHEREAS the Employee has agreed to provide such assistance and services to the
Company in accordance with the terms and conditions herein set forth;
NOW THEREFORE, in consideration of the foregoing recitals and the mutual
covenants set forth below, the parties hereto agree as follows:
1. DUTIES AND DEVOTION OF TIME
-------------------------------
1.1 Duties. During the terms of this Agreement the Employee shall be
------
responsible for the duties contained in Schedule "A" attached hereto and
incorporated herein by this reference (the "Duties").
1.2 Devotion of Time. The parties hereto acknowledge and agree that the
------------------
work of the Employee is and shall be of such a nature that regular hours are
insufficient and impractical and occasions may arise whereby the Employee shall
be required to work other than eight (8) hours per day and/or five (5) days per
week. It is also anticipated that the Employee may be required to work during
evenings, Saturdays, Sundays and Public Holidays. The Employee agrees that
<PAGE>
the consideration set forth herein shall be in full and complete satisfaction
for such work and services, regardless of when and where such work and services
are performed. The Employee further releases the Company from any claims for
overtime pay or other such compensation which may accrue to the Employee by
reason of any existing or future legislation or otherwise. Notwithstanding the
foregoing, the Company agrees that so long as the Employee properly discharges
his duties hereunder, the Employee may devote the remainder of his time and
attention to other non-competing business pursuits.
1.3 Business Opportunities the Property of the Company. The Employee agrees
--------------------------------------------------
to communicate immediately to the Company all business opportunities, inventions
and improvements in the nature of the business of the Company which, during the
term of this Agreement, the Employee may conceive, make or discover, become
aware of, directly or indirectly, or have presented to him in any manner which
relates in any way to the Company, either as it is now or as it may develop, and
such business opportunities, inventions or improvements shall become the
exclusive property of the Company without any obligation on the part of the
Company to make any payments therefor in addition to the salary and benefits
herein described to the Employee.
1.4 No Personal Use. The Employee shall not use any of the work the
-----------------
Employee shall perform for the Company for any personal purposes without first
obtaining the prior written consent of the Company.
2. SALARY, BONUSES AND BENEFITS
-------------------------------
2.1 Common Shares. The Employee shall be compensated by the issuance to the
-------------
Employee of Five Hundred Thousand (500,000) common shares (the "Shares") in the
capital stock of the Company, at a deemed price of $0.56. If eligible, the
Shares shall be registered by the Company on a Form S-8 and such shares will be
subject to the resale restrictions set forth in the rules and regulations
enacted under the Securities Act of 1933, as amended.
2.2 Salary. In consideration of the Employee providing the services
------
referred to herein, the Company agrees to pay the Employee a by-weekly salary of
two thousand Canadian dollars ($2,000 Cdn.), subject to increase as from time to
time approved by the Board of Directors of the Company.
3. REIMBURSEMENT OF EXPENSES
---------------------------
3.1 Reimbursement of Expenses. The Employee shall be responsible for paying
-------------------------
all expenses relating to his employment with the Company without reimbursement,
with the exception of those expenses which, prior to such expense having being
incurred, the President has agreed to reimburse to the Employee.
<PAGE>
4. CONFIDENTIAL INFORMATION
-------------------------
4.1 Confidential Information. The Employee shall not, either during the
-------------------------
term of this Agreement or for three (3) years thereafter, without specific
consent in writing, disclose or reveal in any manner whatsoever to any other
person, firm or corporation, nor will he use, directly or indirectly, for any
purpose other than the purposes of the Company, the private affairs of the
Company or any confidential information which he may acquire during the term of
this Agreement with relation to the business and affairs of the directors and
shareholders of the Company, unless the Employee is ordered to do so by a court
of competent jurisdiction or unless required by any statutory authority.
4.2 Non-Disclosure Provisions. Paragraph 4.1 herein shall be subject to the
-------------------------
further non-disclosure provisions contained in Schedule "B" attached hereto and
incorporated hereinafter by this reference.
4.3 Provisions Survive Termination. The provisions of this section shall
--------------------------------
survive the termination of this Agreement.
5. TERM
----
5.1 Term. This Agreement shall remain in effect until terminated in
----
accordance with any of the provisions contained in this Agreement.
6. TERMINATION
-----------
6.1 Termination by Employee. Notwithstanding any other provision contained
------------------------
herein, the parties hereto agree that the Employee may terminate this Agreement,
with or without cause, by giving thirty (30) days written notice of such
intention to terminate.
6.2 Resignation or Cessation of Duties. In the event that the Employee
--------------------------------------
ceases to perform all of the Duties, other than by reason of the Employee's
death or disability, or if the Employee resigns unilaterally and on his own
initiative from all of his positions, this Agreement shall be deemed to be
terminated by the Employee as of the date of such cessation of the Duties or
such resignation, and the Company shall have no further obligations hereunder.
6.3 Termination by Company . Notwithstanding any other provision contained
-----------------------
in this Agreement, the Company may terminate the employment of the Employee at
any time for just cause by giving written notice to the Employee of its
intention to terminate this Agreement on the date specified in such notice. The
Company may also terminate the employment of the Employee without cause at any
time upon thirty (30) days written notice.
7. RIGHTS AND OBLIGATIONS UPON TERMINATION
-------------------------------------------
7.1 Rights and Obligations. Upon termination of this Agreement, the
------------------------
Employee shall deliver up to the Company all documents, papers, plans, materials
and other property of or relating to the
<PAGE>
affairs of the Company, other than the Employee's personal papers in regard to
his role in the Company, which may then be in its or the Employee's possession
or under his control.
8. CLOSING
-------
8.1 Closing Date. This Agreement shall be effective as of November 1, 1999.
------------
8.2 Conditions of Closing. The parties hereto agree that it shall be a
-----------------------
condition of the execution of this Agreement that prior to or contemporaneously
with the execution of this Agreement:
(a) this Agreement shall be approved by the Board of Directors of the
Company;
(b) the Employee shall terminate any previously existing employment
contracts or terms; and
(c) this Agreement is subject to the approval of the Quebec Securities
Commission.
9. NOTICES AND REQUESTS
----------------------
9.1 Notices and Requests. All notices and requests in connection with this
---------------------
Agreement shall be deemed given as of the day they are received either by
messenger, delivery service, or mailed by registered or certified mail with
postage prepaid and return receipt requested and addressed as follows:
(a) if to the Company:
GlobalNetCare, Inc.
Suite 950
2000 McGill College
Montreal, Quebec
H3A 3H3
with a copy to:
CLARK, WILSON
Barristers & Solicitors
Suite 800
885 West Georgia Street
Vancouver, British Columbia
V6C 3H1
Attention: Mr. Bernard Pinsky
<PAGE>
(b) If to the Employee:
Mr. Harvey Lalach
265 Alice Carriere
Beaconsfield, Quebec
H9W 6E6
or to such other address as the party to receive notice or request so designates
by written notice to the other.
10. INDEPENDENT PARTIES
--------------------
10.1 Independent Parties. This Agreement is intended solely as an
--------------------
employment agreement and no partnership, agency, joint venture, distributorship
or other form of agreement is intended.
11. AGREEMENT VOLUNTARY AND EQUITABLE
------------------------------------
11.1 Agreement Voluntary. The parties acknowledge and declare that in
--------------------
executing this Agreement they are each relying wholly on their own judgment and
knowledge and have not been influenced to any extent whatsoever by any
representations or statements made by or on behalf of the other party regarding
any matters dealt with herein or incidental thereto.
11.2 Agreement Equitable. The parties further acknowledge and declare that
--------------------
they each have carefully considered and understand the provisions contained
herein, including, without limitation, the Employee's rights upon termination
and the restrictions on the Employee after termination and agree that the said
provisions are mutually fair and equitable, and that they executed this
Agreement voluntarily and of their own free will.
12. CONTRACT NON-ASSIGNABLE; INUREMENT
------------------------------------
12.1 Contract Non-Assignable. This Agreement and all other rights, benefits
-----------------------
and privileges contained herein may not be assigned by the Employee.
12.2 Inurement. The rights, benefits and privileges contained herein, shall
---------
inure to the benefit of and be binding upon the respective parties hereto, their
heirs, executors, administrators and successors.
13. ENTIRE AGREEMENT
-----------------
13.1 Entire Agreement. This Agreement represents the entire agreement
-----------------
between the parties and supersedes any and all prior agreements and
understandings, whether written or oral, between the parties. The Employee
acknowledges that it was not induced to enter into this Agreement by any
representation, warranty, promise or other statement, except as contained
herein.
<PAGE>
13.2 Previous Agreements Cancelled. Save and except for the express
-------------------------------
provisions of this Agreement, any and all previous agreements, written or oral,
between the parties hereto or on their behalf relating to the services of the
Employee for the Company are hereby terminated and cancelled and each of the
parties hereby releases and further discharges the other of and from all manner
of actions, causes of action, claims and demands whatsoever under or in respect
of any such Agreement.
14. WAIVER
------
14.1 Waiver. No consent or waiver, express or implied, by either party to
------
or of any breach or default by the other party in the performance by the other
of its obligations herein shall be deemed or construed to be a consent or waiver
to or of any breach or default of the same or any other obligation of such
party. Failure on the part of any party to complain of any act or failure to
act, or to declare either party in default irrespective of how long such failure
continues, shall not constitute a waiver by such party of its rights herein or
of the right to then or subsequently declare a default.
15. SEVERABILITY
------------
15.1 Severability. If any provision contained herein is determined to be
------------
void or unenforceable in whole or in part, it is to that extent deemed omitted.
The remaining provisions shall not be affected in any way.
16. AMENDMENT
---------
16.1 Amendment. This Agreement shall not be amended or otherwise modified
---------
except by a written notice of even date herewith or subsequent hereto signed by
both parties.
17. HEADINGS
--------
17.1 Headings. The headings of the sections and subsections herein are for
--------
convenience only and shall not control or affect the meaning or construction of
any provisions of this Agreement.
18. GOVERNING LAW
--------------
18.1 Governing Law. This Agreement shall be subject to the laws of the
--------------
State of Florida, the federal laws of the United States applicable herein and
the laws of the Province of Quebec.
19. EXECUTION
---------
19.1 Execution in Several Counterparts. This Agreement may be executed by
-----------------------------------
facsimile and in several counterparts, each of which shall be deemed to be an
original and all of which shall together constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
1st day of November, 1999.
GLOBALNETCARE, INC.
Per: /s/ Nick Pedafronimos
- ------------------------------
Authorized Signatory
SIGNED, SEALED and DELIVERED by )
HARVEY LALACH in the presence of: )
)
Jimmy D. Foussekis )
- ------------------------------------- )
Print Name )
A-1806-3600 Ave du Park )
- ------------------------------------- )
Address )
Montreal, Quebec )
- ------------------------------------- )
Businessman ) /s/ Harvey Lalach
- ------------------------------------- ) -------------------
Occupation ) HARVEY LALACH
<PAGE>
SCHEDULE "A"
EMPLOYEE'S DUTIES
-----------------
The Chief Financial Officer is a key member of the management team and is
responsible for the administration and management of the Company's financial
resources, financial planning, corporate finance, treasury, tax, budgeting,
accounting records and reports, administrative services and information
technology.
<PAGE>
SCHEDULE "B"
NON-DISCLOSURE PROVISIONS
-------------------------
1. CONFIDENTIAL INFORMATION AND MATERIALS
-----------------------------------------
(a) "Confidential Information" shall mean, for the purposes of this
Employment Agreement, non-public information which the Company designates as
being confidential or which, under the circumstances surrounding disclosure
ought reasonably to be treated as confidential. Confidential Information
includes, without limitation, information, whether written, oral or communicated
by any other means, relating to released or unreleased software or, hardware
products of the Company, the marketing or promotion of any product of the
Company, the Company's business policies or practices, and information received
from others which the Company is obliged to treat as confidential. Confidential
Information disclosed to the Employee and/or agents of the Company is covered by
this Agreement.
(b) Confidential Information shall not include that information defined
as Confidential Information hereinabove which the Employee can conclusively
establish:
(i) is or subsequently becomes publicly available without breach of any
obligation of confidentiality owed by the Company;
(ii) became known to the Employee prior to disclosure by the Company to the
Employee;
(iii) became known to the Employee from a source other than the Company
other than by the breach of any obligations of confidentiality owed to the
Company; or
(iv) is independently developed by the Employee.
(c) "Confidential Materials" shall include all tangible materials
containing Confidential Information, including, without limitation, written or
printed documents and computer disks or tapes, whether machine or user readable.
2. RESTRICTIONS
------------
(a) The Employee shall not disclose any Confidential Information
to third parties for a period of three (3) years following the termination of
this Agreement, except as provided herein. However, the Employee may disclose
Confidential Information during bona fide execution of the Duties or in
accordance with judicial or other governmental order, provided that the Employee
shall give reasonable notice to the Company prior to such disclosure and shall
comply with any applicable protective order or equivalent.
(b) The Employee shall take reasonable security precautions, at least
as great as the precautions it takes to protect his own confidential
information, to keep confidential the Confidential Information.
(c) Confidential Information and Confidential Materials may be
disclosed, reproduced, summarized or distributed only in pursuance of the
business relationship of the Employee with the Company, and only as provided
hereunder. The Employee agrees to segregate all such Confidential Materials
from the materials of others in order to prevent co-mingling.
3. RIGHTS AND REMEDIES
---------------------
(a) The Employee shall notify the Company immediately upon discovery of
any unauthorized use or disclosure of Confidential Information or Confidential
Materials, or any other breach of this Agreement by the Employee, and shall
co-operate with the Company in every reasonable manner to aid the Company to
regain possession of the Confidential Information or Confidential Materials and
prevent all such further unauthorized use.
(b) The Employee shall return all originals, copies, reproductions and
summaries of or relating to the Confidential Information and all Confidential
Materials at the request of the Company or, at the option of the Company,
certify destruction of the same.
(c) The parties hereto recognize that a breach by the Employee of any
of the provisions contained herein would result in damages to the Company and
that the Company could not be compensated adequately for such damages by
monetary award. Accordingly, the Employee agrees that in the event of any such
breach, in addition to all other remedies available to the Company at law or in
equity, the Company shall be entitled as a matter of right to apply to a court
of competent jurisdiction for such relief by way of restraining order,
injunction, decree or otherwise, as may be appropriate to ensure compliance with
the provisions of this Agreement.
4. MISCELLANEOUS
-------------
(a) All Confidential Information and Confidential Materials are and
shall remain the property of the Company. By disclosing information to the
Employee, the Company does not grant any express or implied right to the
Employee to or under any and all patents, copyrights, trademarks, or trade
secret information belonging to the Company.
(b) All obligations created herein shall survive change or termination
of any and all business relationships between the parties.
(c) The Company may from time to time request suggestions, feedback or
other information from the Employee on Confidential Information or on released
or unreleased software belonging to the Company. Any suggestions, feedback or
other disclosures made by the Employee are and shall be entirely voluntary on
the part of the Employee and shall not create any obligations on the part of the
Company or a confidential agreement between the Employee and the Company.
Instead, the Company shall be free to disclose and use any suggestions, feedback
or other information from the Employee as the Company sees fit, entirely without
obligation of any kind whatsoever to the Employee.
3423336 Canada Ltd. (incorporated under the federal laws of Canada on
February 3, 1998)
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