[Letterhead of STEPP & BEAUCHAMP LLP]
November 11, 1999
Securities and Exchange Commission
450 5th Street N.W.
Washington, DC 20549-0305
Mailstop 0305, SEC
Att: Bradley Kamlet, Esq./Letty Lynn, Esq.
Re: TopClick International, Inc. Registration Statement on Form 10-SB File No.
1-14955
Dear Mr. Kamlet and Ms. Lynn:
As you know, this law firm represents TopClick International, Inc., a Delaware
corporation ("Company"). Please address all future communications regarding the
Company to the undersigned.
Please be informed that the undersigned has received and read your letter dated
October 29, 1999, to Mr. Chris Lewis, President and Chief Executive Officer of
the Company, regarding the Company's Amendment No. 2 to the Registration
Statement on Form 10-SB ("Registration Statement") filed with the Securities and
Exchange Commission ("SEC") on October 19, 1999. The purpose of this letter is
to respond, in writing, to the questions, comments, and requests for information
specified in that letter, and to direct your attention to the amendments to the
Registration Statement specified in Amendment No. 3 to the Registration
Statement which is being filed concurrently herewith ("Amendment No. 3"). A
redlined copy of Amendment No. 3 and all exhibits thereto are enclosed herewith
for your convenience. The provisions of this letter which are numbered are
intended to correspond and respond to the order of paragraphs in your letter
dated October 29, 1999.
1. The Company contacted EDGAR filer support and arranged for its
registration number to be changed to specify that the Company is
registering its securities under Section 12(g) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"). The error arose
from the Company's EDGAR service. You will note that all filings on
EDGAR after April 1999 have correctly specified registration under
Section 12(g) of the Exchange Act.
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Securities and Exchange Commission
November 11, 1999
Page 2
2. The Company's October 1, 1999, press release is not inaccurate, in
that the Company filed a Registration Statement on Form 10-SB on April
23, 1999, which became effective 60 days after filing, or on June 22,
1999. However, the Company recognizes the distinction between an
effective registration statement and a registration statement which
has cleared comments from the SEC. The Company invites your
suggestions as to an appropriate means to clarify this representation.
3. The Company will delete references in its future press releases and
quarterly and annual reports referencing the Private Securities
Litigation Reform Act of 1995 and any of the provisions thereof.
4. The Company has examined the forward-looking information specified in
Amendment No. 3 to the Registration Statement on Form 10-SB and has
updated the forward-looking information relating to anticipated
revenues of the Company. Moreover, although the Company's Registration
Statement on Form 10-SB has not yet cleared comments, the Company
became a reporting company on June 22, 1999.
5. The Company has amended the portion of the Registration Statement
entitled Business of the Company to present in more detail each of the
four methods by which the Company proposes to generate revenues. As
disclosed in Amendment No. 3 to the Registration Statement, the
Company is reconsidering several of these methods of generating
revenue.
6. The Company has amended the portion of the Registration Statement
entitled Business of the Company to specify how the Company will
generate revenues from e-commerce. The Company has replaced the term
"e-commerce brokerage transactions" with the more specific term
"commission referral fees" and has provided a more detailed discussion
of its proposed e-commerce activities.
7. The Company has amended the portion of the Registration Statement
entitled Business of the Company to specify that the Company does not
presently have any paying subscribers and that, while the Company is
considering the possibility of generating revenues from subscription
fees for certain proposed Internet services, the Company does not
currently provide any specialized Internet services.
8. The Company has deleted the fifth sentence of the fourth paragraph on
Page 3 of Amendment No. 3 to the Registration Statement.
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Securities and Exchange Commission
November 11, 1999
Page 3
9. The Company has amended the portion of the Registration Statement
entitled Liquidity and Capital Resources to specify that the Company's
primary source of revenue at present is the sale of the Company's
common stock. The Company, however, has proven sources of liquidity
and capital (for example, the Financing Agreement to which reference
is made in Paragraph 10 below).
10. The Company has amended the portion of the Registration Statement
entitled Liquidity and Capital Resources to specify the material terms
of the Financing Agreement. The Company has also filed the Financing
Agreement as an exhibit to Amendment No. 3 to the Registration
Statement as a material contract.
11. The Company's Registration Statement has been signed by its President,
Chris Lewis, as have the previous Amendments to the Registration
Statement.
12. The Company has moved the signature page so that it appears after the
financial statements.
Hopefully, the information specified in this letter, and in Amendment No. 3 to
the Company's Registration Statement on Form 10-SB, responds completely to the
comments specified in your correspondence dated October 29, 1999. If not, please
do not hesitate to contact the undersigned.
Your assistance in this matter is appreciated. Thank you.
Sincerely,
STEPP & BEAUCHAMP LLP
/s/ Thomas E. Stepp, Jr.
By: Thomas E. Stepp, Jr.
Enclosures
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 3
To
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
TOPCLICK INTERNATIONAL, INC.,
a Delaware corporation
(Exact name of registrant as specified in its charter)
DELAWARE 330755473
-------- ---------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
Suite 200, 1636 West 2nd Street, Vancouver, British Columbia, Canada V6J 1H4
- --------------------------------------------------------------------------------
(Address of registrant's principal executive offices) (Zip Code)
(604) 737-1127
--------------
(Registrant's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of Each Exchange on which
to be so registered: each class is to be registered:
-------------------- -------------------------------
None None
---- ----
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par value $.001
-----------------------------
(Title of Class)
Copies to:
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
Page 1 of 27
Exhibit Index is specified on Page 10
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Item 1. Description of Business.
The Company was originally incorporated to engage in any lawful act or activity
for which corporations may be organized under the General corporation Law of
Delaware. The Company initially was involved in the development of oil and gas
properties. After the consummation of a series of corporate acquisitions
specified herein under the subheading entitled Development of the Company
immediately below, the nature of the Company's business changed from development
of oil and gas properties to the business of facilitating the consumption of
information, products and services via the Internet. To this end, the Company
currently provides Internet users with a one-stop information index to the top
Internet guides, which allows users to view and then quickly select the best
guide for their needs based on their choice of information subject. The
Company's services allow Internet users to locate their subject categories
easily and provides them with the freedom to roam back and forth from guide to
guide. For example, inside the Company's Internet golf environment, the Company
has packaged all of the top Internet guides to golf, such as Yahoo!, Excite and
Lycos.
Development of the Company. TopClick International, Inc., a Delaware corporation
formerly named Galveston Oil & Gas, Inc. ("Company"), was incorporated in the
State of Delaware on October 3, 1996. The Company changed its name to TopClick
International, Inc. on or about February 5, 1999 by filing an amendment to its
Certificate of Incorporation with the Delaware Secretary of State. Pursuant to
an Acquisition Agreement dated January 28, 1999, the Company acquired all of the
shares of TopClick Corporation, a Delaware corporation incorporated on July 8,
1998 (previously defined in this Prospectus as "TC") which, in turn, had
previously acquired certain assets from E.Z.P.C. Canada Inc., which was
incorporated on September 28, 1994, under the Canada Business Corporations Act
with one common share owned by Helpful By Design, Inc., a Canadian federal
jurisdiction corporation ("HBD"). The Acquisition Agreement was part of a
Financing Agreement specified more completely below. TC is now a wholly-owned
subsidiary of the Company.
As consideration for the exchange, assignment, transfer, conveyance, setting
over and delivery of the shares of TC, the Company issued 8 shares of its $.001
par value common stock for every 7 shares of TC $.001 par value common stock.
This exchange value was determined by negotiations between the Company, TC , and
Sonora Capital Corporation, a British Columbia corporation ("Sonora"), and was
approved by a majority of the shareholders of TC.
On or about July 14, 1998, the name of E.Z.P.C. Canada, Inc., was changed to
TopClick (Canada) Inc. In September, 1998, HBD sold the TopClick website (which
website is described more specifically below) and related assets, including the
one common share of TopClick (Canada) Inc., to TC for the issuance of 7,000,000
shares of $.001 par value common stock of TC to HBD and forgiveness of
indebtedness owed by HBD to TopClick (Canada) Inc. The TopClick website and
related assets were valued by the Board of Directors of HBD ("HBD Board") at
US$700,000 (all amounts are in United States currency unless otherwise
specified.) The HBD Board valued the forgiveness of a debt in the amount of
$480,000 in Canadian Dollars ("CDN$") at $315,789, at an exchange rate of
approximately 1.52 CDN$ to one United States dollar. The HBD Board believes that
total consideration for the sale of the TopClick website and related assets was,
therefore, approximately $1,015,789. As part of this transaction, TC agreed to
convert the shares of preferred stock held by shareholders of TopClick (Canada)
Inc. into shares of common stock of TC.
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On or about January 28, 1999, TC entered into a Financing Agreement with the
Company, Sonora, HBD, and other parties whereby a group of investors represented
by Sonora provided $2,000,000 to the Company. As part of a series of related
transactions, HBD and the shareholders of TC transferred their shares of TC to
the Company so that TC became a wholly-owned subsidiary of the Company. A copy
of the Financing Agreement is attached as Exhibit 4 to this registration
statement. A copy of the Acquisition Agreement is attached to that Financing
Agreement as Exhibit B thereto.
Business of the Company. As set forth above, the Company owns and operates the
TopClick website, a unique information retrieval guide for Internet users. The
TopClick website contains the first comprehensive Internet "superguide" to the
major Internet guides, designed to help Internet users find the answers to their
searches more quickly and effectively than they can through conventional single
guides or search engines. TopClick makes it easy for Internet users to find
their subjects and move back and forth from guide to guide without having to
visit each guide's homepage and conduct individual searches. The TopClick
website is located at the Internet address www.topclick.com. The TopClick
website's features include "central keyword searching", which provides one-stop
keyword searching across the top portal sites, including Yahoo!, Excite, Lycos,
GoTo.com, Go Network, Ask Jeeves, Dogpile, Northern Light, Looksmart, Infoseek,
Snap!, Webcrawler, AOL Netfind, HotBot and Alta Vista. The TopClick website also
features top Internet brands across thousands of information subjects, organized
into 51 easy-to-use information categories. The website currently houses over
8,000 top sites and anticipates adding additional top sites.
The Company anticipates generating revenues from commission referral fees during
the next 12 months. The Company contemplates that it will direct Internet
traffic to e-commerce vendors; in return, the Company anticipates receiving a
commission referral fee ranging from 8% to 25%. The Company also anticipates
more direct involvement in e-commerce. For example, the Company has recently
opened a virtual bookstore by packaging approximately 300 books on privacy
issues. The Company intends to sell these books over the Internet and receive a
sales commission, similar to the operations of Amazon.com. The Company
anticipates deriving revenues from the virtual bookstore within the next 6
months.
While the Company is considering the possibility of generating revenues from
subscription fees from subscribers for certain proposed Internet services, the
Company does not currently provide any specialized services and does not
currently have any subscribers. The Company is considering providing
personalized information services to paid subscribers but has not yet determined
the scope of such services nor the subscription rates for such services.
The Company derives certain consumer data from customer profiles. During the
past 12 months, the Company contemplated generating revenues through the sale of
this consumer data to third parties. However, as specified above, the Company
recently opened a virtual bookstore relating to privacy issues, and Management
of the Company believes that selling research data (commonly referred to as
"aggregated data") to advertisers or market researches may not comport with the
Company's privacy-related businesses. While it is a common practice for entities
with high traffic volume websites to sell such aggregated data, this proposed
policy is currently under review by Management of the Company. Therefore, the
Company may elect to forego this potential revenue source.
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In the same way, websites with high traffic volumes typically generate
advertising fees through the sale of banner and other types of Internet
advertising. The Company has not yet determined whether it will sell such
advertising on its website. Moreover, in the event the Company elects to sell
such advertising, the Company's advertising revenues will depend, in part, on
the volume of traffic at the Company's website.
The Company has built and is continuing to develop a complex database of HTML
links arranged into predefined categories and subjects across the top guides on
the Internet. The TopClick guide currently includes links from Yahoo!, Excite,
Lycos, Infoseek, Looksmart, Webcrawler, AOL, Snap! and Magellan. There are two
principal ways to use the TopClick guide: (1) users can quickly click through
three levels of information: Group, Category, and Subject. Users can then "click
out" to any of the top Internet guides; or (2) alternatively, users can enter a
keyword into the search panel and then click out to their choice of the top 12
search engines on the Internet.
In April, 1999 the Company reported that the usage of its website had increased
significantly during the first period of 1999 and, in March alone, the Company
served close to one million page views. The term "page view" means the accessing
of a website page on the Internet. Often used by advertisers to gauge the
"traffic", or frequency of visitation, on a specific website, the term "page
view" differs from the Internet term "hit" in that a page view counts only the
number of times a page has been accessed, while a "hit" counts the number of
times that all the elements on a specific page, including graphics, have been
accessed.
In May, 1999 the Company began an e-commerce initiative with LinkShare
Corporation ("LinkShare"), whose software enables companies selling goods or
services on the Internet to establish business partnerships through
cross-selling and cross-referral agreements with other sites. In addition to
providing technology, LinkShare tracks and verifies customer referrals and
transactions and manages the related revenue structures. LinkShare currently
services more than 150 retailers and manages a network of tens of thousands of
affiliate sites. LinkShare is privately owned and headquartered in New York
City, with offices in San Francisco and Denver. Additional information can be
obtained at LinkShare's website at http://www.linkshare.com.
The Company believes that its participation in the LinkShare program will enable
it to establish e- commerce relationships with over 150 existing electronic
retailers, and to earn referral revenues through those relationships. In the
first phase of this program, the Company has been approved to integrate
e-commerce offerings from 1-800-Flowers, Borders.com, Cyberian Outpost,
Fashionmall, Florist.com, K-Tel, American Eagle Outfitters, and AudioBook.
The Company has not generated any revenues to date and has a comprehensive loss
for the year ended June 30, 1999 of US$444,681.00.
Transition of Website. In March, 1999 the Company entered into a nonexclusive,
nontransferable Master Service Agreement with Frontier GlobalCenter, Inc.
("Frontier") for Internet connectivity services, which obligated the Company to
pay monthly bandwith charges, to purchase software and hardware (specifically,
servers) to facilitate such services, and to lease monthly rack space to store
those servers, all of which allowed the Company to move its website to allow for
more rapid growth. Frontier specializes in scalable high-speed hosting services,
and hosts many of the world's busiest websites, including Yahoo!, Netscape,
Playboy, Pacific Bell, Quote.com, and USA Today. The Company has installed a
high-speed server and software system together with a leading statistical
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analysis and tracking software solution from Marketwave Corporation of Seattle,
Washington ("Marketwave"), all supported by a 12-month maintenance contract.
Marketwave is a leading innovator in real-time Internet data mining and traffic
analysis software, with more than 40,000 licensed corporate customers including
industry names like Intel, Dell, AT&T, Cox Communications, Volvo and NBC Europe.
The new hosting architecture incorporates a fully redundant system supported by
a "high-availability" load-balancing solution which distributes peak traffic
across the servers to improve performance.
Employees. The Company and its subsidiaries currently have eight employees, all
of which are full-time employees. Management of the Company anticipates using
consultants for business, accounting, engineering, and legal services on an
as-needed basis.
Key Employees. The Company's key employees are Chris Lewis, the President and
Chief Executive Officer; Terry Livingstone, the Chief Operating Officer; Jason
Wilkes, Vice President in charge of business development; and Rory Wadham, lead
programmer.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Information retrieval is already a significant market on the Internet, but the
growth of the Internet requires continued advances in Internet guide services.
Because of the expanding volume of information on the Internet, no single
company has been able to monopolize Internet guides and referencing indexes. The
Company believes that the continued rapid expansion of the Internet provides
opportunities for the Company's innovations and will further provide the Company
with markets which the major search engines and guides do not control or
dominate. The Company believes that there is a window of opportunity to
establish a package of the best Internet guides into one environment.
The Company's innovations include the packaging of top Internet destinations, a
simplified Internet navigation structure, and a fast, simple one-stop
information search interface to the top Internet information directories, search
engines and meta-search engines by the Company's "central keyword searching"
facility. This feature provides one-stop keyword searching across the top portal
sites including Yahoo!, Lycos, GoTo.com, Go Network, Ask Jeeves, Dogpile,
Northern Light, Looksmart, Infoseek, Snap!, Webcrawler, AOL Netfind, HotBot and
AltaVista.
Plans for Future Operations and Marketing Strategy. As set forth above, in May,
1999 the Company began an e-commerce initiative with LinkShare, which, the
Company believes, will enable the Company to establish various e-commerce
relationships. The Company anticipates that it will market itself to the
Internet community as a clearinghouse and an encyclopedia of quality Internet
guides. The Company believes that it will continue to develop increased. The
Company bases its belief that it will continue to increase monthly traffic
volumes, in part, on the increase of its website traffic by 1200 percent in the
first quarter of 1999, and the Company's belief that the Internet will continue
to grow at a significant rate, and the Company's plans to establish e-commerce
agreements with strategic partners. During the period April 1, 1999 through and
including June 30, 1999, the Company's website generated 1,117,880 page views
and 477,143 unique searches.
The overall marketing plan for the Company's products and services is based on
two separate promotional phases: (1) the Initial Site Launch Plan and (2) the
Market Development Plan.
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Initial Site Launch Plan. The Company anticipates that it will launch multiple
online tactical programs to create awareness of the Company's websites and
services with the goal of inducing potential clients to visit the Company's
websites, where demonstrations of the Company's products and services will be
displayed. The Company believes that by keeping the information current,
subscribers will return to the Company's websites, the ultimate goal being
increased usage over time.
The Company believes that over 80% of all Internet searches originate through
the top 8 guides. The Company intends to submit its website to those top 8
guides and to use an automated software package to submit the TopClick website
to the other 1,000 guides on the Internet. The Company's objective is to build
the Company's websites and brands into well-known Internet properties.
The Company intends to submit Topclick.com to the top 10 site award businesses
on the Internet through the use of electronic press releases. The Company
intends to use the same methods to submit Topclick.com to the Top 10 Cool
Sites/What's New Sites website to gain further recognition with Internet
customers. The Company anticipates that it will send out press releases to the
principal media groups that cover the Internet such as ABC, CNN, and CBS, as
well as to technology news suppliers like PointCast. The Company also
anticipates that it will provide automated announcements to specific interest
groups at Internet chat environments and present its guide to mass community
sites, such as Geocites, as a complimentary service which the Company believes
will enhance the value of its core products. The Company will concentrate on
disseminating information about its products and services to specific
opinion-forming communities, such as teachers and marketing professionals via
e-mail announcements.
Market Development Plan. For new Internet customers, the Company contemplates
that it will establish channel development programs to Internet service
providers, cable companies, telephone companies, satellite companies and web
television businesses, with the intention of placing a link to TopClick in their
software, as a starting point for those new Internet users.
A "link" is a selectable connection from one word, picture, or information
object to another on the Internet. The most common form of link is the
highlighted word or picture that can be selected by the user (with a mouse or in
some other fashion), resulting in the immediate delivery and view of another
file. The highlighted object is often referred to as an "anchor". The anchor
reference and the object referred to constitute a hypertext link. The Company
anticipates that it will seek logo and URL linking arrangements with targeted
sites. The Company intends to develop "tell-a-friend" extensions to the TopClick
site to make it easy for existing users to electronically tell friends about the
Company's services.
Developing Site Traffic. The Company believes that it must develop volume
traffic on its site in order to be successful. Once traffic volume has been
established, the Company believes that it will become a distribution point for
advertisers and will develop opportunities to participate in sponsorship
agreements, electronic commerce agreements and joint marketing ventures. The
Company intends to build its initial equity value measured by traffic (that is,
page views) and then intends to develop multiple revenue streams as a broker of
diverse audience interests. There is no assurance, however, that the Company
will build an equity base which will be considered worth acquiring. Initially,
the Company will offer its products and services free to its customers,
strategic partners and media partners.
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In keeping with this strategy, the Company will concentrate its marketing
efforts on increasing site traffic. Promotional space and other content on the
site will be provided free to content partners, to increase traffic. The Company
intends to form strategic relationships with the existing top Internet guides,
including providing free content links to areas of their sites that those guides
want to promote (for example, by providing free content links to the Yahoo Golf
Guide). Through the use of free space inside the TopClick guide, the Company
intends to develop a database of advertising contacts, media contacts, and
Internet guide contacts. At the same time, the Company will attempt to increase
volume to the Company's site using an integrated marketing communications
program to existing and new Internet users. The Company further intends to
develop piggy-back marketing programs and cross-promotional opportunities with
other online media. The TopClick guide will be offered free to users, strategic
partners (such as existing Internet guides) and other media partners.
Name Identification. The Company has purchased additional domain names and will
attempt to prevent third parties from adopting names similar to TopClick. The
Company has entered into various domain name registration agreements for
Topsearches.com, Mytopclick.com, Topclicking.com, Topclick-Inc.com,
Topclickinc.com, Top-Clicks.net, Topclick.net, Topclicks.net, Topclicks.com,
Top-click.com, Top-clicks.com, Top-click.net, Lookmarks.com with Network
Solutions, Inc. ("NSI"). NSI is responsible for the registration of second-level
Internet domain names in the top level COM, ORG, NET, and EDU domains. NSI
registers these second-level domain names on a first come, first served basis.
By registering a domain name, NSI does not determine the legality of the domain
name registration, or otherwise evaluate whether that registration or use may
infringe upon the rights of a third party. Effective February 25, 1998, NSI
revised its domain name dispute policy which provides, among other things, that
if a registrant files a civil action related to the registration and use of a
domain name, and provides NSI with a copy of the file-stamped complaint, NSI
will maintain the status quo ante of the domain name record pending a final or
temporary decision of that court. In such cases, NSI will deposit control of the
domain name into the registry of the court by supplying the registrant with the
registry certificate for deposit. While the domain name is in the registry of
the court, NSI will not make any changes to the domain name record unless
ordered by the court.
The Company believes that this revision to NSI's domain name dispute policy will
discourage frivolous claims against the domain names held by the Company. Domain
name registrations are effective for two years and may be renewed year-to-year
thereafter.
Expanding Internet Markets. Nua, one of Europe's leading online consultants and
developers, estimates that there were approximately 100 million Internet users
worldwide in January, 1998. According to a recent report in Computer
Intelligence, the growth rate of Internet users may have increased by as much as
30% in 1998. The Company anticipates that it may benefit from that growth;
however, no guaranty can be provided that such will occur.
North American Internet users represent more than 80% of all users. Until a year
ago, almost 99% of the 13 million servers hooked to the Internet were
distributed throughout North America, Western Europe and Japan. Internet
advertising revenue has grown significantly since 1996, and, in 1998, approached
the total advertising revenue for all domestic national newspaper revenues. Most
analysts predict that this significant growth rate will continue through the
year 2000. Netscape World recently predicted that Internet advertising revenues
will surpass those of all domestic national newspaper revenues by this year. The
Company should benefit from such growth; however, no guaranty can be provided
that the Company will so benefit.
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State of Readiness for Y2K. The Company has performed an assessment of the
Company's information technology ("IT") systems as well as its non-IT systems
(such as embedded technology in manufacturing or process control equipment
containing microprocessors or other similar circuitry) relating to the Y2K
problems previously referenced herein. The Company evaluated all hardware and
software for Y2K compliance by using sources from the Internet, by contacting
manufacturers, and by contacting third party suppliers of phone systems and
security systems. Additionally, the Company reviewed product documentation for
Y2K compliance where such was available.
The in-house workstations of Company employees and subcontractors are Pentium
Personal Computers which utilize Windows 95 and Office 97+ software. The Company
believes that all critical applications of that software are Y2K compliant. The
Company has one additional workstation which is also Y2K compliant.
Built on a UNIX platform, the server hardware and software for the webserver
environments used to host and serve the TopClick website are also Y2K compliant.
After conducting testing and evaluation, the Company believes that its phone
system, its Network Hub, its power backup systems and its security system are
all Y2K compliant. The Company's facsimile machine, however, is not Y2K
compliant.
Cost to Address the Company's Y2K Issues. The only significant equipment
replacement cost the Company anticipates is approximately CDN$600 (at May 24,
1999, the exchange rate was US$1.00 to CDN$1.53, so as of that date CDN$600 was
approximately US$392.16) to replace the Company's facsimile machine. The Company
does not anticipate any additional upgrade, replacement, or equipment servicing
charges to become Y2K compliant. The Company will monitor external service
providers through the Year 2000 at a cost of approximately CDN$125.00
(approximately US$81.70). Therefore, based on current estimates, the costs of
addressing this issue are not expected to have a material adverse effect on the
Company's financial position, results of operations or cash flows. The potential
impact of the Y2K issue on significant customers, vendors and suppliers of the
Company cannot be reasonably estimated at this time.
The Company's Contingency Plans. To prevent electrical failures from adversely
affecting the Company's operations, the Company performs regularly scheduled
data backups and connects its computer system to backup power systems. Through
the Year 2000, the Company will continue to communicate with its electrical and
telecommunications providers to remain informed about (I) the status of such
suppliers' Y2K compliance, and (ii) the potential impact that the failure of
these suppliers to become Y2K compliant will have on the Company.
Liquidity and Capital Resources. As set forth above, on or about January 28,
1999, the Company entered into a Financing Agreement with a group of investors
represented by Sonora Capital Corporation, a British Columbia corporation
("Sonora"). Other parties to the Financing Agreement were Peter Hough, Clive
Barwin and James Decker, British Columbia residents; and Helpful By Design,
Inc., a Canadian federal jurisdiction corporation ("HBD"). Chris Lewis, the
Chief Executive Officer of the Company, was a significant shareholder of HBD,
and Mr. Lewis was also a party to the Financing Agreement. TC is now a
wholly-owned subsidiary of the Company. The group of investors represented by
Sonora provided the Company with $2,000,000. Pursuant to the Financing
Agreement, the Company acquired all of the shares of TopClick Corporation, a
Delaware corporation incorporated on July 8, 1998 ("TC") which, in turn, had
previously acquired certain
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assets from E.Z.P.C. Canada Inc., which was incorporated on September 28, 1994,
under the Canada Business Corporations Act with one common share owned by HBD.
As consideration for the exchange, assignment, transfer, conveyance, setting
over and delivery of the shares of TC, the Company issued 8 shares of its $.001
par value common stock for every 7 shares of TC $.001 par value common stock.
This exchange value was determined by negotiations between the Company, TC, and
Sonora, and was approved by a majority of the shareholders of TC. A copy of the
Financing Agreement is filed as a material contract as Exhibit 10.1 to this
Amendment No. 3 to the Company's Registration Statement on Form 10-SB.
The Company believes that it may be able to acquire additional financing at
commercially reasonable rates; however, there can be no assurance that the
Company will be able to obtain additional financing at commercially reasonable
rates, or at all. The Company has expended, and will continue to expend in the
future, substantial funds on the research and development of its products and
services. The failure of the Company to obtain additional financing, or to
generate revenues from its Internet products and services, would significantly
limit or eliminate the Company's ability to fund its research and development
activities, which would have a material adverse effect on the Company's ability
to continue to compete with other Internet directory service providers.
Moreover, although the Company has significant cash reserves, it cannot continue
to operate indefinitely without generating revenues. At present, the Company's
primary source of revenue is the sale of its securities.
Results of Operations. The Company has not yet realized any revenue from
operations. In the year ended June 30, 1999, the Company expended $260,019 in
software development costs, which represent costs relating to the development of
the Company's Internet website. The Company anticipates that these costs will be
amortized upon the commercial exploitation of the Company's Internet website.
During the year ended June 30, 1999, the Company capitalized $10,075 of
depreciation of its computer equipment as software development costs.
The Company experienced a net loss from its operating activities of $482,680 for
the year ended June 30, 1999 and a net loss, after interest income and write-off
of deferred charges, of $462,603, resulting in a loss per share of $0.04. This
loss was further offset by foreign currency translation adjustments of $17,922,
resulting in a comprehensive loss of $444,681 at June 30, 1999.
At June 30, 1999, the Company had cash of approximately $1,667,370 deposited
with RBC Dominion Securities Ltd. ("RBC"), earning interest at 3.75% per annum.
RBC is a leading debt and equity underwriter in Canada and a member of the Royal
Bank Financial Group, a global financial services group.
Recent Developments. On June 4, 1999, the Company announced that it had added
twenty high profile Internet retailers to the development of its e-commerce
environment in preparation for the launch of the TopClick Marketplace, a
packaged e-commerce shopping environment that will be offered on the Company's
homepage. Retail brands include Ameritech, Travelocity, Barnsandnoble.com,
Priceline, and Reel.com, which have been made available through the affiliate
network Be Free, Inc. On June 9, 1999, the Company announced that it had added
Dell and Amazon.com to its e-commerce package. The Company recently joined the
Amazon.com Associates Program, a leading selling program on the Internet, which
the Company believes has more than 260,000 members. The Company is continuing
discussions with additional Internet retailers and
9
<PAGE>
anticipates continuing to add established Internet retailers to its packaged
e-commerce shopping environment.
Item 15. Financial Statements and Exhibits
(a) Index to Financial Statements.
Interim unaudited financial statements through September 30, 1999 were filed
with the Company's quarterly report on Form 10-QSB on October 12, 1999.
(b) Index to Exhibits.
Copies of the following documents are filed with this Amendment No. 3 to the
Registration Statement, Form 10-SB as exhibits:
Index to Exhibits Page
- ----------------- ----
10.1 Financing Agreement E-1 through E-17
(material contract)
SIGNATURES
In accordance with the provisions of Section 12 of the Securities Exchange Act
of 1934, the Company has duly caused this Amendment No. 3 to the Registration
Statement on Form 10-SB to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vancouver, British Columbia, on November 11,
1999.
TopClick International, Inc.,
a Delaware corporation
By: /s/ Chris Lewis
Its: President
10
FINANCING AGREEMENT
THIS AGREEMENT dated for reference January 28, 1999, is among Sonora Capital
Corp., a British Columbia company of 1000-355 Burrard Street, Vancouver, B.C.,
V6C 2G8, and fax (604) 737-1157 ("Sonora"); and Peter Hough, Clive Barwin and
James Decker, all of 1000 - 355 Burrard Street, Vancouver, B.C., V6C 2G8, and
fax (604) 737-1157 and Helpful By Design, Inc., a Canadian company of 388-916
West Broadway, Vancouver, B.C., V5Z 1K7 ("HBD"); and Chris Lewis, of Suite 200,
1636 West 2nd Street, Vancouver, B.C., V6J 1H4, and fax 737-1157 (the
"Principal"); and Topclick Corporation, a Delaware corporation of Suite 200,
1636 West 2nd Street, Vancouver, B.C., V6J IH4, and fax (604) 737-1157
("Topclick").
WHEREAS the Financing Group has agreed to organize a $2-million financing of
Topclick through a company trading publicly on the NASD OTC Electronic Bulletin
Board and the shareholders of Topclick have agreed to exchange all of their
shares in Topclick for shares in the public company, FOR VALUABLE CONSIDERATION,
the receipt and sufficiency of which are acknowledged, the parties agree that:
INTERPRETATION
1. The definitions in the recitals are part of this agreement.
2. In this agreement:
a. "Advance" means an advance of funds by the Financing Group to Topclick of
$150,000, bearing interest at the rate of 10 per cent per year, calculated
and compounded monthly from the date of advance.
b. "Business Plan" means the business plan of Topclick delivered to the
Financing Group in January, 1999.
c. "Closing" means a date no later than 14 days from the Date of Discovery.
d. "Company" means the Parent and Topclick jointly.
e. "Date of Discovery" means the date on which Topclick's legal representative
receives the corporate records of the Parent in order to conduct Due
Diligence.
f. "Due Diligence" means Topclick's review of the Parent
g. "Effective Date" means the day on which Topclick signs this agreement.
h. "Escrow Agent" means Jeffs & Company Law Corporation, 1090 West Pender
Street, Suite 420, Vancouver, BC.
j. "Financial Statements" means Topclick's financial statements made up to the
most recent month end in accordance with accounting principles generally
accepted in the United States.
k. "Financing means $2 million for the development of Topclick as described in
the Business Plan.
l. "Financing Group" means a group of investors represented by Sonora.
m. "Financing Period" means the period of time between the date of this
agreement and the day on which the Financing is completed.
n. "Founders" means HBD and the Principal.
o. "Founders' Shares" means all of the shares of Topclick that are owned by
the Founders.
p. "NASD OTC BB" means the over-the-counter electronic bulletin board of NASD
Regulations, Inc.
q. "Parent" means a company whose shares are quoted on the NASD OTC BB.
<PAGE>
PAGE 2
r. "Reg. S Offering" means a share offering of 400,000 shares of the Parent at
$2.50 per share under the Regulation S prospectus exemption of the United
States Securities Act of 1933.
s. "Reg. S Shares" means the shares issued under the Reg. S Offering.
t. "Rule 504 Offering" means a share offering of 3,857,500 shares of the
Parent at $0.25469 per share under Rule 504 of the United States Securities
Act of 1933.
u. "Stock Exchange Agreement" means the stock exchange agreement attached as
exhibit B.
v. "S" means United States dollars.
TERMS AND CONDITIONS OF THE FINANCING
The Parent
3. The Financing Group will identify and organize the Parent for the purpose
of this agreement and will ensure that the Parent is in good standing in,
and complies with the laws of, its incorporating jurisdiction.
Advancing the Financing
4. The Financing Group will provide the Financing according to the schedule
set out in Table 1. If the Parent fails the due diligence test and an
alternative parent is accepted, then each date of advance is extended by
thirty days.
<TABLE>
<CAPTION>
Table 1
Financing schedule
- ------------------------------------------------------------------------------------------------------------------------------------
Date (approx) Amount Notes
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
a. Effective Date $ 150,000 The Advance
- ------------------------------------------------------------------------------------------------------------------------------------
b. February 17, 1999 1,000,000 Proceeds of the Rule 504 Offering to the Parent
Escrow Shares placed in escrow
- ------------------------------------------------------------------------------------------------------------------------------------
c. February 28, 1999 Exchange of shares of Topclick for shares of the Parent
- ------------------------------------------------------------------------------------------------------------------------------------
d. February 28, 1999 1,000,000 Proceeds of the Reg. S Offering to the Parent and Escrow Shares released
- ------------------------------------------------------------------------------------------------------------------------------------
e. February 28, 1999 (150,000) Repayment of Advanced
- ------------------------------------------------------------------------------------------------------------------------------------
Total Financing $ 2,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. The Financing Group may accelerate the Financing schedule set out in Table
1.
The Advance
6. If Topclick discovers a material deficiency with their Due Diligence, they
must:
a. provide written notice to the Financing Group on Closing; and
b. allow Financing Group fourteen days to find an alternative parent,
which will be subject to Due Diligence that must be completed within
ten days and, if a material deficience is discovered, Topclick can
decide not to proceed with the Financing and convert the Advance and
any accrued interest into shares of common stock at a price of $1.00
per share.
and this agreement terminates.
7. If Topclick decides to proceed with the Financing, the Parent will repay
the Advance and any accrued interest on February 28, 1999 from the proceeds
of the Reg. S. Offering.
<PAGE>
PAGE 3
8. If Topclick decides not to proceed with the Financing after having accepted
the Parent, then Topclick must repay the Advance and accrued interest
within fourteen days of Topclick's notifying the Financing Group that it
does not intend to complete the Financing.
9. The Advance must be secured by a promissory note in the form attached as
exhibit A.
10. The shareholders of Topclick are not personally liable for repaying the
Advance.
Right of first refusal on additional financing
11. The Company will give the Financing Group the right of first refusal for
the twelve months following Closing to provide additional financing by
giving the Financing Group a written notice of the terms and conditions of
its requirements and its proposed use of proceeds at least one month before
it requires the financing. The Financing Group must notify the Company in
writing within ten days of its receiving the Company's notice whether it
intends to exercise its right to provide the additional financing. If the
Financing Group refuses to provide the additional financing, the Company
may complete the additional financing with another party. This right of
first refusal ends if the Financing Group refuses to provide the additional
financing.
Investor Relations
12. The Financing Group at its own cost will conduct all of the Parent's
investor relations during the Financing Period or for six months, whichever
ends later, and at the end of every month will deliver to the Parent a
report of the previous month's investor relations activities and its
proposal for the next month's activities so that the Parent and the
Principal can be prepared to participate in or respond to inquiries arising
from the investor relations activities. The Financing Group may retain the
services of a firm of its choosing and approved by the Parent to provide
the investor relation services. All investor relations services will comply
with all applicable laws and regulations. All public and investor relations
releases will be submitted to the Parent for approval before they are
distributed.
13. The Principal will make himself available to appear on reasonable notice
before investment groups in North America and Europe and will provide the
information and material that the Financing Group requests during the
Financing Period. The Parent will pay the reasonable travel and
accommodation costs for both the Principal and the Financing Group for
their appearances at investor relations events, provided those costs have
been approved by the Parent.
Directors and Officers of the Parent
14. The Principal, if he is not already, will become a director of the Parent
on Closing.
15. The Financing Group may nominate a person to attend all meetings of the
Parent's board of directors for the period of one year from Closing. The
Parent may, however, exclude the nominees from any confidential or
privileged portions of each meeting.
Escrow Shares
Reg. S Offering
18. The Reg. S Shares will be subject to the provisions of Rule 144 of the
Securities Act of 1933, and will be subject to a 12 month hold period from
the date of Closing.
19. The Financing Group will ensure that the subscribers to the Reg. S Offering
agree to the following provisions:
<PAGE>
PAGE 4
a. The Parent will have the option to buy the Reg S. Shares at any time
during the twenty-four months following the Closing at a price per
share that is equal to the average closing price of the Parent's
shares for the ten trading days preceding the day on which the option
is exercised. To exercise this option, the Parent must deliver a
written notice to the shareholders setting out the place and time for
the Reg S. Shares to be exchanged for payment. This option may be
exercised in whole or in part and from time to time.
b. From the expiry of the hold period to the end of the option, the Reg
S. shareholders may sell their shares but must give the Parent thirty
days' written notice of their intention. The Parent may buy the
offered shares at the exercise price in the foregoing paragraph within
thirty days of the date of the shareholder's written notice. If the
Parent does not exercise this option, the shareholder may sell the
shares elsewhere.
CONDITIONS PRECEDENT
20. As conditions precedent to the advancing of the Financing other than the
Advance, as set out in table 1:
a. Topclick will deliver to the Financing Group the Financial Statements
and true copies of any of its material contracts and its charter
documents.
b. The Founders and Topclick will sign the Stock Exchange Agreement and
the Founders will deliver their Founders shares to the Escrow Agent
duly endorsed for transfer to the Parent in accordance with the terms
of the Stock Exchange Agreement.
c. The shareholders of Topclick will sign the Stock Exchange Agreement
and tender their shares on Closing.
d. The representations and warranties of the Principal and Topclick must
be true and correct in all material respects.
21. Any or all of these conditions precedent may be waived by the Financing
Group in its sole discretion.
POSITIVE COVENANTS
The Company
22. During the Term, the Parent and Topclick will:
a. maintain their corporate existence;
b. assume and take an assignment of any outstanding options to purchase
their shares by February 15, 1999.
c. carry on their business in a proper and businesslike manner in
accordance with good business practices, prudently manage their cash
resources, and keep proper books of account in accordance with
generally accepted accounting principles; and
d. deliver to the Financing Group any other information, excluding
confidential and insider information, that the Financing Group
reasonably requests.
The Principal
23. The Principal will, at all times during the currency of this agreement:
a. devote his best effort to the business of Topclick and the Parent;
b. ensure that all of Topclick's assets and liabilities are limited to
Topclick and that the Parent has no liabilities or potential
liabilities except those that relate to the Parent's own
administration and the liabilities that the Parent must assume under
this agreement;
c. as directors of the Parent, ensure that the Parent does everything
that it must do under this agreement; and
<PAGE>
PAGE 5
d. ensure that the remaining shareholders of Topclick tender their shares
by Closing in response to an offer to purchase to be submitted by the
Parent.
NEGATIVE COVENANTS
24. Neither Topclick nor the Parent during the Financing period, without the
written consent of the Financing Group, will:
a. authorize the issuance of or issue any of its shares or other
securities except those authorized by this agreement;
b. authorize any changes to their respective charter documents;
c. cause any of its assets to be encumbered; or
d. grant any options to directors, officers and employees that may be
exercised during the 12 months from February 12, 1999.
REPRESENTATIONS AND WARRANTIES
The Financing Group
25. The Financing Group represents and warrants that each of them has the
experience and expertise required to negotiate and finalize the Financing
and to conduct an investor relations program.
The Principal
26. The Principal represents and warrants that:
a. Nothing in the Business Plan is proprietary to his employers or former
employers, and his providing his expertise and services to Topclick is
not an infringement of intellectual property rights owned by any
person or company.
b. The Business Plan truly and accurately reflects the business of
Topclick and the intentions of the Principal.
The Founders
27. The Founders represent and warrant that:
a. They own the Founders's Shares free of any claim or potential claim by
any person and have the right to transfer them as described in this
agreement.
b. They have no rights to acquire additional shares of Topclick.
Topclick
28. Topclick represents and warrants that:
a. It is a corporation incorporated and in good standing under the laws
of Delaware.
b. Its authorized capital is 50 million common shares with par value of
$0.001, and 5 million preferred shares with par value $0.001.
c. It will have 7,700,000 fully paid and non-assessable shares in its
capital stock issued and outstanding by February 14, 1999, and any
shares issued between January 28, 1999 and February 14, 1999 were
issued at a price of not less than $1.00 per share.
<PAGE>
PAGE 6
d. No person will have an outstanding right to acquire any shares of
Topclick after February 15, 1999.
e. It has the legal capacity and its directors' authority to make and
perform this agreement.
f. The Financial Statements fairly and correctly disclose in all material
respects the financial position of Topclick at the end of the period
to which they are made up.
g. It has incurred no liabilities and entered into no contracts since the
date of the Financial Statements that are not disclosed in writing to
the Financing Group.
h. It has conducted no business except the business that is described in
the Business Plan.
i. No claims against it or any of its current or former directors or
officers are before any court or regulatory authority or are pending
or threatened, and it is not aware of any ground for any claim that
might succeed.
OTHER PROVISIONS
29. The Founders and Topclick acknowledge that this agreement was prepared for
the Financing Group by Jeffs & Company Law Corporation and that it may
contain terms and conditions onerous to them. They expressly acknowledge
that the Financing Group has given them adequate time to review this
agreement and to seek and obtain independent legal advice, and they
represent to the Financing Group that they have in fact sought and obtained
independent legal advice and are satisfied with all the terms and
conditions of this agreement.
30. This is the entire agreement among the parties and replaces any earlier
understandings and agreements, whether written or oral.
31. Time is of the essence of this agreement.
32. This agreement is governed by the laws of British Columbia and must be
litigated in the courts of British Columbia. The relationships and
transactions contemplated by this agreement must comply with the laws and
regulations applicable to the relationships and transactions.
33. Any notice that must be given or delivered under this agreement must be in
writing and delivered by hand or transmitted by fax to the address or fax
number given for the party on page 1 and is deemed to have been received
when it is delivered by hand or transmitted by fax unless the delivery or
transmission is made after 4:00 p.m., or on a non-business day where it is
received, in which case it is deemed to have been delivered or transmitted
on the next business day. Any payments of money must be delivered by hand
or wired as instructed in writing by the receiving party. Any delivery of a
thing other than a written notice or money must be delivered by hand to the
receiving party's address.
34. None of the parties may assign this agreement or any part of it to another
party.
35. Any amendment of this agreement must be in writing and signed by the
parties.
36. This agreement enures to the benefit of and binds the parties and their
respective successors, heirs and permitted assignees.
37. No failure or delay of the Financing Group in exercising any right under
this agreement operates as a waiver of the right. The Financing Group's
rights under this agreement are cumulative and do not preclude the
Financing Group from relying on or enforcing any legal or equitable right
or remedy.
38. If any provision of this agreement is, illegal or unenforceable under any
law, the remaining provisions remain legal and enforceable.
39. This agreement may be signed in counterparts and delivered to the parties
by fax, and the counterparts together are deemed to be one original
document.
<PAGE>
PAGE 7
THE PARTIES' SIGNATURES below are evidence of their agreement.
Sonora Capital Corp. by its authorized signatory:
/s/ [ILLEGIBLE] /s/ Chris Lewis
- --------------------------------- ---------------------------------
Authorized signatory Chris Lewis
Helpful By Design, Inc. by its authorized signatory:
/s/ [ILLEGIBLE] /s/ Peter Hough
- --------------------------------- ---------------------------------
Peter Hough
Authorized signatory
Topclick Corporation by its authorized /s/ Clive Barwin
signatory: ---------------------------------
Clive Barwin
/s/ [ILLEGIBLE]
- --------------------------------- /s/ James Decker
---------------------------------
James Decker
<PAGE>
Exhibit A
To the Financing Agreement dated for reference January 28, 1999
Between Topclick and Sonora
(the "Financing Agreement")
PROMISSORY NOTE
Principal amount: $150,000
FOR VALUED RECEIVED from Aero Atlantic Ltd., Topclick Corporation, a Delaware
corporation with a business address at Suite 200, 1636 West 2nd Street,
Vancouver, B.C. V6J 1H4, and fax (604) 737-1157 ("Borrower"), promises to pay to
Jeffs & Company Law Corporation in trust at Suite 420, 1090 West Pender Street,
Vancouver, B.C., V6E 2N7, from the proceeds of the Reg. S Offering ("Maturity")
the sum of $150,000 of lawful money of the United States (the "Principal Sum")
together with interest calculated on the Principal Sum at the rate of 10 per
cent per year from February 5, 1999, before and after Maturity, default and
judgment.
Interest must be calculated and is payable at the Maturity.
The Principal Sum outstanding together with all accrued and unpaid interest is
due and payable immediately according to paragraph 8 of the Financing
Agreement.
The Borrower waives presentment, protest, notice of protest and notice of
dishonour of this promissory note.
THIS REPLACES THE PROMISSORY NOTE PURSUANT TO CANCELLED AGREEMENT DATED FEBRUARY
4, 1997 AND THE TIME 16:40:27.
Topclick Corporation
/s/ [ILLEGIBLE]
- --------------------------------
Authorized signatory
<PAGE>
ADDENDUM TO THE FINANCING AGREEMENT
THIS AGREEMENT dated for reference February 17, 1999, is among Sonora Capital
Corp., a British Columbia company of 1000-355 Burrard Street, Vancouver, B.C.,
V6C 2G8, and fax (604) 737-1157 ("Sonora"); and Peter Hough, Clive Barwin and
James Decker, all of 1000-355 Burrard Street, Vancouver, B.C., V6C 2G8, and fax
(604) 737-1157; and Helpful By Design, Inc., a Canadian company of 388-916 West
Broadway, Vancouver, B.C. V5Z 1K7 ("HBD"); and Chris Lewis, of Suite 200, 1636
West 2nd Street, Vancouver, B.C., V61 1H4, and fax (604) 737-1157 (the
"Principal"); and Topclick Corporation, a Delaware corporation of Suite 200,
1636 West 2nd Street, Vancouver, B.C., V6J 1H4, and fax (604) 737-1157
("Topclick").
WHEREAS the parties executed a financing agreement dated for reference January
28, 1999 (the "Financing Agreement") and have agreed to modify certain terms,
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
acknowledged, the parties agree that:
1. The definition in the recitals and in the Financing Agreement and are part
of this agreement.
2. Where any provisions of this addendum conflict with the provisions of the
Financing Agreement, the provisions of this addendum prevail.
3. The parties will use their best efforts in good faith to implement the
terms of the Financing Agreement and this addendum.
Escrow Shares
4. The Financing Group will deliver share certificates for 742,000 shares from
the Rule 504 Offering (the "504 Escrow Shares") to the Escrow Agent to be
held in escrow.
5. The Parent will comply with the new listing requirements of the OTC
Bulletin Board issued on or about January 6, 1999, by the NASD, by filing
the appropriate document and must notify the Escrow Agent in writing of the
filing, both within 60 days of the Closing. If the Parent does not deliver
the written notice within the time specified, then the Escrow Agent will
release the 504 Escrow Shares to the Financing Group. If the Parent
provides the written notice within the time specified, the Escrow Agent
will release the 504 Escrow Shares to the Financing Group on the earlier of
a. the date on which the SEC approves the Documents, and
b. 120 days from Closing.
The Financing
6. The Financing must be completed according to the terms of this addendum.
7. The Rule 504 Offering is reduced to $982,500. The Parent has completed the
504 Offering and deposited the proceeds in trust with the Escrow Agent who
will pay them to the order of the Parent when Chris Lewis becomes the
director of the Parent.
8. The Reg. S Offering is increased to an offering of 400,000 common shares of
the Parent for $1,017,500 and must be completed on or by the Closing.
9. Topclick must repay the Advance on Closing from the proceeds of the Reg S
Offering.
THE PARTIES' SIGNATURE on page 2 are evidence of their agreement.
<PAGE>
PAGE 2 OF 2
ADDENDUM TO THE FINANCING AGREEMENT
Sonora Capital Corp. by its authorized signatory:
/s/ [ILLEGIBLE] /s/ Chris Lewis
- --------------------------------- ---------------------------------
Authorized signatory Chris Lewis
Topclick Corporation by its authorized
signatory: /s/ Peter Hough
---------------------------------
Peter Hough
/s/ [ILLEGIBLE]
- --------------------------------- /s/ Clive Barwin
Authorized signatory ---------------------------------
Clive Barwin
Helpful By Design, Inc. its authorized signatory:
/s/ James Decker
/s/ [ILLEGIBLE] ---------------------------------
- --------------------------------- James Decker
Authorized signatory
<PAGE>
EXHIBIT "B"
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT ("Agreement") is made and entered into in
counterparts effective the 10th day of February, 1999, by and between TopClick
Corporation, a Delaware corporation ("TopClick"); Sonora Capital Corp., a
British Columbia corporation ("Sonora"); TopClick International, Inc., a
Delaware corporation ("Parent Corporation"); and the shareholders of the issued
and outstanding shares of the $.001 par value common stock of TopClick
(collectively, the "TopClick Shareholders").
RECITALS
A. TopClick is a corporation recently formed, duly organized, validly
existing, and in good standing pursuant to the laws of the State of Delaware.
TopClick owns and operates the TopClick website, a unique information retrieval
guide for Internet users. The TopClick website contains the first comprehensive
Internet "superguide" to the major Internet guides, designed to help Internet
users find the answers to their searches more quickly and effectively than they
can through conventional single guides or search engines.
B. The Parent Corporation is a corporation duly organized, validly
existing, and in good standing pursuant to the laws of the State of Delaware.
The Parent Corporation participates in the Over-The-Counter Bulletin Board
electronic quotation service ("OTC Bulletin Board"), which is an electronic
quotation medium for securities traded outside of the Nasdaq Stock Market.
C. TopClick Shareholders own of record and beneficially all of the shares
of the issued and outstanding capital stock of TopClick as specified on Exhibit
"A" attached hereto and incorporated herein by this reference as though
specified completely at length herein.
D. Sonora Capital Corp., a British Columbia corporation; Peter Hough; Clive
Barwin; James Decker; Helpful by Design, Inc., a Canadian corporation; and
TopClick have entered into a Financing Agreement dated, for reference, January
28, 1999 ("Financing Agreement"). This Agreement contemplates the exchange of
consideration by and between the parties to the Financing Agreement.
E. The TopClick Shareholders, and each of them, desire to assign, transfer,
convey, deliver and set over to the Parent Corporation all of the right, title
and interest of the TopClick Shareholders in and to their shares of TopClick's
$.001 par value common stock (the "TopClick Shares") in exchange for certain
shares of the Parent Corporations's $.001 par value common stock ("the Parent
Corporation Shares"), as specified on Exhibit "B" attached hereto and
incorporated herein by this reference as though specified completely at length
herein.
F. The Parent Corporation desires to acquire from the TopClick Shareholders
all of their right, title and interest in and to the TopClick Shares in exchange
for the issuance by the Parent Corporation to the TopClick Shareholders of the
Parent Corporation Shares, as specified herein.
G. The parties believe that the transaction contemplated by the provisions
of this Agreement will enhance and improve their respective business objectives
and opportunities.
NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE THAT SHALL BE
DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT, AND THE MUTUAL COVENANTS,
PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES SPECIFIED IN
THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY.
1
<PAGE>
THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT AND WARRANT AS
FOLLOWS:
1. Exchange Transaction.
1.1 Exchange of TopClick Shares. Upon the terms and subject to all of the
conditions specified by the provisions of this Agreement and upon the
performance by the parties of their obligations specified by the provisions
of this Agreements and the Financing Agreement, the TopClick Shareholders,
and each of them, shall assign, transfer, convey, exchange, set over, and
deliver to the Parent Corporation on and as of the Closing Date of this
Agreement, all of the TopClick Shares, by delivering and surrendering to
the Parent Corporation at the Closing the certificates evidencing and
representing ownership of the TopClick Shares, duly endorsed for transfer
or accompanied by stock powers duly executed by the TopClick Shareholders,
and each of them.
1.2 Issuance of Parent Corporation Shares for TopClick Shares. As
consideration for the exchange, assignment, transfer, conveyance, setting
over, and delivery by the TopClick Shareholders of the TopClick Shares, the
Parent Corporation shall issue and deliver to each TopClick Shareholder, on
and as of the Closing Date, that number of Parent Corporation Shares which
is appropriate for such TopClick Shareholder, which number shall be
determined as follows:
1.2.1 For every seven (7) shares of his or her TopClick $.001 par
value common stock, each TopClick Shareholder shall receive eight
shares of Parent Corporation $.001 par value common stock issued
pursuant to an exemption from registration provided for in Section
3(b) of the Securities Act of 1933, as amended, and Rule 504 of
Regulation D promulgated thereunder (the "Rule 504 Shares"); and
No fractional shares shall be issued as a result of this Agreement; Shares
to be issued pursuant to the 7:1 ratio provided herein shall be rounded to the
nearest whole share.
The Parent Corporation contemplates the preparation and filing of a
Registration Statement with the Securities and Exchange Commission and other
appropriate regulators and associations, and further contemplates that the
Parent Corporation's $.001 par value common stock shall become "unrestricted"
for trading purposes.
Accordingly, the TopClick Shareholders, who will, pursuant to this
Agreement, become the shareholders of the Parent Corporation, agree that the
Rule 144 Shares shall be subject to the following restriction: 5% of the shares
will become tradeable every month for 20 months on the later of (1) the date
that such shares have become "unrestricted" for trading purposes, or (2) the
121st day following the Closing Date of this Agreement.
1.3 The Closing. The closing of the transaction contemplated by the
provisions of this Agreement ("Closing") shall occur and take at the
offices of TopClick commencing at 10:00 A.M. local time on February 10,
1999 ("Closing Date").
1.4 Delivery of Certificates to TopClick Shareholders. The Parent
Corporation shall deliver to the TopClick Shareholders the certificates
evidencing the Rule 144 Shares as soon as practicable after the Closing.
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2. Restrictive Legend. Each certificate evidencing or representing the
Parent Corporation Shares issued to the TopClick Shareholders shall have
displayed prominently on the face thereof the appropriate restrictive legend.
3. Publicity. All notices, releases, and other forms of publicity or
disclosure regarding the transaction contemplated by the provisions of this
Agreement shall be planned, coordinated, drafted, and prepared by and between
TopClick and the Parent Corporation jointly. No party shall act unilaterally in
the preparation or dissemination of any notices, releases, or other forms of
publicity or disclosure without the prior written approval of the other parties.
4. Further Assurances. Each party shall take any and all action necessary,
appropriate, or advisable to (i) execute and discharge such party's
responsibilities and obligations created by the provisions of this Agreement or
(ii) further effectuate, perform, and carry out the intents and purposes of this
Agreement and the transaction contemplated by the provisions of this Agreement
and the Financing Agreement.
5. Expenses. Each party shall pay any and all costs and expenses incurred
or to be incurred by such party in negotiating and preparing this Agreement and
carrying out the intents and purposes of and consummating and closing the
transaction contemplated by the provisions of this Agreement.
6. Assignment. No party shall have the right, without the consent of all
the other parties, to assign, transfer, sell, pledge, hypothecate, delegate, or
otherwise transfer, whether voluntarily, involuntarily or by operation of law,
any of such party's right or obligations created by the provisions of this
Agreement, nor shall the parties' rights be subject to encumbrance or the claim
of creditors. Any such purported assignment, transfer, or delegation shall be
null and void.
7. Successors in Interest. This Agreement shall obligate and inure to the
benefit of each party, its representatives, successors, assigns, partners,
agents, employees, directors, officers, shareholders, attorneys, subsidiaries,
affiliates, and all persons acting by, through, under, or in concert with any of
them, and each of them. Whenever, in this Agreement, a reference to any party is
made, such reference shall be deemed to include the representatives, successors,
assigns, partners, agents, employees, directors, officers, shareholders,
attorneys, subsidiaries, affiliates, and all persons acting by, through, under
or in concert with such party.
8. Third Party Beneficiaries. Except as expressly specified by the
provisions of this Agreement, this Agreement shall not be construed to confer
upon or give to any person, other than the parties hereto, any right, remedy or
claim pursuant to, or by reason of, this Agreement or of any term or condition
of this Agreement.
9. Execution in Counterparts. This Agreement may be prepared in multiple
copies and forwarded to each of the parties for execution, and, for purposes of
executing this Agreement, facsimile signature are as valid as original
signatures.
10. Captions and Interpretations. Captions of the articles, sections, and
paragraphs of this Agreement are for convenience and reference only, and the
words specified in those captions shall in no way be held to explain, modify,
amplify, or aid in the interpretation, construction, or meaning of the
provisions of this Agreement. The language in all parts to this Agreement, in
all cases, shall be construed in accordance with fair meaning of that language,
as if that language was prepared by all parties and not strictly for or against
any party. Each party and counsel for such party have reviewed this Agreement.
The rule of construction, which requires a court to resolve any ambiguities
against the drafting party, shall not apply in interpreting the provisions of
this Agreement.
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11. Entire Agreement. This Agreement and the exhibits to this Agreement are
the final written expression and the complete and exclusive statement of all the
agreements, conditions promises, representations, warranties, and covenants
between the parties with respect to the subject matter of this Agreement, and
this Agreement supersedes all prior or contemporaneous agreements, negotiations,
representations, warranties, covenants, understandings, and discussions by,
between and among the parties, their respective representatives, and any other
person, with respect to the subject matter specified in this Agreement. This
Agreement may be amended only by an instrument in writing which expressly refers
to this Agreement and specifically states that such instrument is intended to
amend this Agreement and is signed by each of the parties. Each of the parties
represents, warrants, and covenants that, in executing this Agreement, such
party has relied solely on the terms, conditions, and provisions specified in
this Agreement. Each of the parties additionally represents, warrants, and
covenants that in executing and delivering this Agreement, such party has placed
no reliance whatsoever on any statement, representation, warranty, covenant, or
promise of any other party, or any other person, not specified expressly in this
Agreement, or upon the failure of any party or any other person to make any
statement, representation, warranty, covenant, or disclosure of any nature
whatsoever. The parties have included this section to preclude (i) any claim
that any party was in any manner whatsoever induced fraudulently to enter into,
execute, and deliver this Agreement, and (ii) the introduction of parol evidence
to vary, interpret, supersede, modify, amend, annul, supplement, or contradict
the terms, conditions, and provisions of this Agreement. The provisions of each
of the schedules to this Agreement, by this reference, are made a part of this
Agreement as though specified completely and specifically at length in this
Agreement. No provision of any schedule to this Agreement shall supersede or
annul the terms, conditions, and provisions of this Agreement, unless the matter
specified in any such schedule shall explicitly so provide to the contrary. In
the event of any ambiguity or uncertainty in meaning or understanding between
the provisions of this Agreement proper and any schedule to this Agreement, the
terms, conditions, and provisions of this Agreement shall prevail and control in
all respects.
12. Severability. In the event any part of this Agreement, for any reason,
is determined by a court of competent jurisdiction to be invalid, such
determination shall not affect the validity of any remaining portion of this
Agreement, which remaining portion shall remain in complete force and effect as
if this Agreement had been executed with the invalid portion thereof eliminated.
It is hereby declared the intention of the parties that they would have executed
the remaining portion of this Agreement without including any such part, parts,
or portion which, for any reason, may be hereafter determined to be invalid.
13. Waiver. No waiver of any covenant, condition, or limitation specified
in this Agreement shall be valid unless such waiver is made in writing and duly
executed by the party making such waiver. No waiver of any provision of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision
of this Agreement, whether or not similar, nor shall any waiver constitute a
continuing waiver.
14. Governmental Rules and Regulations. The transaction and relationship
contemplated by the provisions of this Agreement are, and shall remain, subject
to any and all present and future orders, rules, and regulations of each duly
constituted authority and agency which has or acquires jurisdiction of that
transaction and relationship.
15. Number and Gender. Whenever the singular number is used in this
Agreement and, when required by the context, the same shall include the plural,
and vice versa; the masculine gender shall include the feminine and the neuter
genders, and vice versa. As used in this Agreement, the word "person" shall
include individual, company, sole proprietorship, corporation, joint venture,
association, joint stock company, fraternal order, cooperative, league, club,
society, organization, trust, estate, governmental agency, political subdivision
or authority, firm, municipality, congregation, partnership, or other form of
entity. As used in this Agreement, the word "affiliate," as it relates to a
person, shall be
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defined as and mean a parent, spouse, brother or sister, or natural or adopted
lineal descendent or spouse of such descendent of such person, and any
proprietorship, corporation, partnership, congregation, organization, firm,
estate, association, league, club, society, joint venture, trust or other form
of entity in which such person or parent, spouse, brother or sister, or natural
or adopted lineal descendent or spouse of such descendent or such person may
have an equity or beneficial interest or in which such person or parent, spouse,
brother or sister, or natural or adopted lineal descendent or spouse of such
descendent of such person is a proprietor, partner, officer, director,
shareholder, employee, consultant, independent contractor, owner, co-venturer,
employer, agent, representative, settlor, or beneficiary.
15. Reservation of Rights. The failure of any party at any time or times
hereafter to require strict performance by any other party of any of the
warranties, representations, covenants, terms, conditions, and provisions
specified in this Agreement shall not waive, affect of diminish any rights of
such party failing to require strict performance to demand strict compliance and
performance therewith and with respect to any other provisions, warranties,
representations, covenants, terms, and conditions specified in this Agreement.
16. Survival of Covenants, Representations and Warranties. All covenants,
representations, and warranties made by each party to this Agreement shall be
deemed made for the purpose of inducing the other parties to enter into,
execute, and deliver this Agreement. The representations, warranties, and
covenants specified in this Agreement shall survive the Closing and shall
survive any investigation by any party whether before or after the execution of
this Agreement.
17. Concurrent Remedies. No right or remedy specified in this Agreement
conferred on or reserved to the parties is exclusive of any other right or
remedy specified in this Agreement or by law or equity provided or permitted;
but each such right and remedy shall be cumulative of, and in addition to, every
other right and remedy specified in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise, and each such right and remedy
may be enforced concurrently therewith or from time to time. The termination of
this Agreement for any reason whatsoever shall not prejudice any right or remedy
which any party may have, either at law, in equity or pursuant to the provisions
of this Agreement.
18. Force Majeure. If any party to this Agreement is rendered unable,
completely or partially, by the occurrence of an event of "force majeure"
(hereafter defined) to perform such party's obligations created by the
provisions of this Agreement, such party shall give to the other parties to this
Agreement prompt written notice of the event of "force majeure" with reasonably
complete particulars concerning such event; thereupon, the obligations of the
party giving such notice, so far as those obligations are affected by the event
of "force majeure," shall be suspended during, but no longer than, the
continuance of the event of "force majeure." The term "force majeure," as
contemplated by the provisions of this Section 31, is defined as and means any
act of nature, strike, lockout or other industrial disturbance, act of the
public enemy, war, blockage, public, riot, civil disturbance, lightening, fire,
storm, flood, explosion, governmental action, earthquake, governmental delay,
restraint or inaction, unavailability of equipment, and any other cause or
event, whether of the nature enumerated specifically in this Section 31, or
otherwise, which is not within the control of the party claiming such
suspension. The party affected by such event of "force majeure" shall use all
reasonable diligence to resolve, eliminate, and terminate the event of "force
majeure" as quickly as practicable.
19. Consent to Agreement. By executing this Agreement, each party, for
himself, represents that such party has read or caused to be read this Agreement
in all particulars and consents to the rights, conditions, duties, and
responsibilities imposed upon such party pursuant to the provisions of this
Agreement. Each party represents, warrants, and covenants that such party enters
into, executes, and delivers this Agreement of his free will and with no threat,
undue influence, menace, coercion, or duress,
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whether economic or physical. Moreover, each party represents, warrants, and
covenants that such party executes this Agreement acting on such party's own
independent judgment and upon the advice of such party's counsel.
20. Conditions Precedent. This Agreement contemplates the effectuation of
all the terms and conditions of the Financing Agreement by all the parties
thereto. The parties hereto acknowledge that TopClick is currently performing
due diligence relating to the Parent Corporation. The representations and
warranties of all parties to the Financing Agreement must be true and correct in
all material respects as conditions precedent to this Agreement. The positive
and negative covenants of all parties to the Financing Agreement must be true
and correct in all material respects as conditions precedent to this Agreement.
IN WITNESS WHEREOF the parties have executed this Stock Exchange Agreement
effective the date specified in the preamble of this Agreement.
TopClick Corporation, Shareholder:
a Delaware Corporation
By:
------------------------- ------------------------------
Its:
------------------------- ------------------------------
Sonora Capital Corp., TopClick International, Inc.,
a British Columbia corporation a Delaware corporation
By: By:
------------------------- -------------------------
Its: Its:
------------------------- -------------------------
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CANCELLATION OF AGREEMENT
The undersigned, being the parties to a financing agreement dated for reference
January 28, 1999 and footnoted with the date of February 4, 1999 and the time
16:40:27, agree to cancel that agreement effective immediately.
Dated February 17, 1999.
Sonora Capital Corp. by its authorized
signatory:
/s/ Chris Lewis
/s/ [ILLEGIBLE] ------------------------------
- ------------------------------ Chris Lewis
Helpful By Design, Inc. by its authorized
signatory:
/s/ Peter Hough
/s/ [ILLEGIBLE] ------------------------------
- ------------------------------ Peter Hough
Authorized signatory
/s/ Clive Barwin
TopClick Corporation by its authorized ------------------------------
signatory: Clive Barwin
- ------------------------------ /s/ James Decker
Authorized signatory ------------------------------
James Decker
