U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3
to FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TOPCLICK INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7372 330755473
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification No.)
of incorporation or organization) Classification Code Number)
</TABLE>
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)
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each class Amount Proposed maximum Proposed maximum
of securities to be offering price aggregate Amount of
to be registered registered per share(1) offering price(1) registration fee
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 8,954,973 $0.4218 $3,777,879.20 $1,012.47
==============================================================================================================
</TABLE>
(1) Calculated pursuant to Rule 457(c) of Regulation C using the average of the
bid and ask prices per share of the Registrant's common stock, as reported on
the OTC Bulletin Board for December 28, 1999.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
1
<PAGE>
Preliminary Prospectus
TOPCLICK INTERNATIONAL, INC.,
a Delaware corporation
8,954,973 Shares of $.001 Par Value Common Stock
We currently provide Internet users with a one-stop information index to the top
Internet guides. Our common stock is quoted on the OTC Bulletin Board, an
electronic quotation medium for securities not traded on the Nasdaq Stock
Market, or any other securities exchange, under the trading symbol "TOCK". On
December 28, 1999, the closing bid and asked prices of our common stock as
reported on the OTC Bulletin Board were $0.375 and $0.46875, respectively. The
persons named in this Prospectus under the caption "Selling Stockholders" are
offering a total of 8,954,973 shares of our common stock for sale to the public.
We will receive no part of the proceeds of any sales by the Selling
Stockholders. All selling and other expenses incurred by the Selling
Stockholders will be paid by the Selling Stockholders.
The Selling Stockholders may from time to time sell the shares on the OTC
Bulletin Board, on any other national securities exchange or automated quotation
system on which our common stock may be listed or traded, in negotiated
transactions or otherwise, at prices then prevailing or related to the then
current market price, or at negotiated prices. The shares of our common stock
offered by the Selling Stockholders may be sold directly or through brokers or
dealers. The Selling Stockholders, and any broker-dealers participating in the
distribution of these shares, may be considered to be "underwriters" within the
meaning of the Securities Act of 1933, and any commissions or discounts given to
any such broker-dealer may be regarded as underwriting commissions or discounts.
The shares are not currently registered for sale by the Selling Stockholders
under the securities laws of any state. Brokers or dealers who desire to
participate in transactions regarding these shares should confirm that these
shares are registered under state and federal laws or, in the alternative,
should make sure that there are appropriate exemptions from registration.
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THEIR SHARES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SHARES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SHARES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED. THESE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PRELIMINARY PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PURCHASING OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE
5.
The date of this Preliminary Prospectus is December 28, 1999
3
<PAGE>
Item 3. Summary Information and Risk Factors.
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS, WHICH CONTAINS MORE DETAILED INFORMATION WITH RESPECT TO EACH OF THE
MATTERS SUMMARIZED IN THIS PROSPECTUS AS WELL AS OTHER MATTERS NOT SPECIFIED IN
THE SUMMARY. YOU SHOULD CAREFULLY REVIEW THE ENTIRE CONTENTS OF THE PROSPECTUS
AND THE EXHIBITS ATTACHED HERETO, INDIVIDUALLY AND WITH YOUR OWN TAX, LEGAL AND
BUSINESS ADVISORS.
Address and Telephone Our address is Suite 200, 1636 West 2nd Street,
Number of the Company: Vancouver, British Columbia, Canada V6J 1H4; our
telephone number is (604) 737-1127.
Business of the Our first business was the development of oil and gas
Company: properties. After a series of corporate acquisitions, we
stopped participating in that business. Instead, we are
now in the business of facilitating the consumption of
information, products and services via the Internet. We
currently provide Internet users with a one-stop
information index to the top Internet guides. We are
trying to develop increased traffic on our website. Once
traffic volume has been established, we believe that our
website will become a distribution point for
advertisers, and we will develop opportunities to
participate in sponsorship agreements, electronic
commerce agreements and joint marketing ventures. We
plan to create value measured by increased traffic (that
is, the number of times pages are viewed) and, as a
result, receive revenue as a method of access to various
viewers. We can provide no assurance, however, that we
will be successful enough to be considered a suitable
acquisition. Initially, we will offer our products and
services free to our customers and partners.
State and Date of The Company was incorporated pursuant to the provisions
Organization of the of the General Corporation Law of Delaware on October 3,
Company: 1996.
Risk A purchase of our common stock involves various risks
Factors: that must be considered carefully by any potential
purchaser. Because we have a limited operating history,
we may not be able to manage our business successfully,
or achieve profitability. We have significant
competition. The Internet market changes rapidly, and we
may not be successful in adapting to new technologies or
alternative systems. Because we will depend on other
companies for telecommunications products and services,
we may experience delays or increased costs if demand
for these items continues to increase. Substantially all
of our products and services will be offered on the
Internet, and, therefore, our ability to generate
significant revenues will depend upon, among other
things, the acceptance, by consumers and advertisers, of
the Internet. We may not be successful if we do not
attract a large number of users with characteristics
attractive to advertisers, which is subject to factors
beyond our control. We may be required to raise
substantial funds in order to implement our business
plans and objectives and those funds may not be
available on commercially acceptable terms, or at all.
Our communications providers, customers, or other third
parties may fail to become compliant with Year 2000
computer programming issues. Other risks are specified
below.
4
<PAGE>
The Shares: The shares offered by the Selling Stockholders have
already been issued by us, or will be acquired upon
exercise of options.
Estimated use of All of the shares of our common stock are being offered
proceeds: by the Selling Stockholders. We will not receive any of
the proceeds from the sale of those shares.
RISK FACTORS
In addition to the other information specified in this Prospectus, the following
risk factors should be considered carefully in evaluating our business before
purchasing any of our common stock. A purchase of our common stock is
speculative in nature and involves numerous risks. No purchase of our common
stock should be made by any person who cannot afford to lose his or her entire
investment.
THIS PROSPECTUS SPECIFIES FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY STATEMENTS AS A RESULT
OF CERTAIN FACTORS, INCLUDING THOSE SPECIFIED IN THE FOLLOWING RISK FACTORS AND
ELSEWHERE IN THIS PROSPECTUS. PROSPECTIVE PURCHASERS OF SHARES MUST BE PREPARED
FOR THE POSSIBLE LOSS OF THEIR ENTIRE INVESTMENTS. THE ORDER IN WHICH THE
FOLLOWING RISK FACTORS ARE PRESENTED IS ARBITRARY, AND PROSPECTIVE PURCHASERS OF
SHARES SHOULD NOT CONCLUDE, BECAUSE OF THE ORDER OF PRESENTATION OF THE
FOLLOWING RISK FACTORS, THAT ONE RISK FACTOR IS MORE SIGNIFICANT THAN THE OTHER
RISK FACTORS.
"Forward looking statements" can be identified by the use of forward-looking
terminology such as "believes", "could", "possibly", "probably", "anticipates",
"estimates", "projects", "expects", "may", "will", or "should". Such statements
are subject to certain risks, uncertainties and assumptions. No assurances can
be given that the future results anticipated by the forward looking statements
will be achieved. You should not place undue reliance on these forward looking
statements, which apply only as of the date of this Prospectus.
We Have a Limited Operating History. We have a very limited operating history
upon which an evaluation of our business can be made. Anyone who is considering
a purchase of our common stock must consider that our business is speculative.
We can give no assurance that unanticipated technical or other problems will not
occur which would result in material delays in accomplishing our business plan.
We can give no assurance that we will be able to achieve profitable operations.
Our Industry is Intensely Competitive. Competition to provide Internet Guides is
intense, and we expect the competition to increase. Our competitors may develop
technologies or services which would render our products obsolete and
noncompetitive. We have a lot of competition which includes, but is not limited
to, Browser companies; Internet Distribution Companies; existing, established
providers; Internet search and directory sites; broadband communications
companies; large media conglomerates; commercial and non-commercial computer
operating systems companies; software development companies; directory companies
(e.g. Yellow Pages); and Bookmark Managers.
Many of our existing competitors have longer operating histories in the Web
market, greater name recognition, larger customer bases and databases and
significantly greater financial, technical and marketing resources. Competitors
may be able to undertake more extensive marketing campaigns, adopt more
aggressive pricing policies and make more attractive offers to potential
employees, distribution partners, advertisers and content providers. We can give
no assurance that our competitors will not develop Web search and retrieval
services that are equal or superior to ours or that achieve greater market
acceptance than ours in the areas of name recognition, performance, and ease of
use. We can give no assurance that other Web content providers will not be
perceived by advertisers as having more desirable Web sites for placement of
advertisements. In addition, a number of our competitors have established
collaborative relationships with other Web content providers. Accordingly, we
can give no assurance that we will be able to retain advertisers or maintain or
increase users on our network or that competitors will not experience greater
growth in the number of users than we do. We can give no assurance that we will
be able to compete successfully against our current or future competitors.
5
<PAGE>
We Will Rely on Use of Computer and Telecommunications Infrastructure Provided
by Third Parties. Our success will depend on our continued investment in
sophisticated telecommunications and computer systems and computer software. We
anticipate making significant investments in the acquisition, development and
maintenance of such technologies and we believe that such expenditures will be
necessary on an on-going basis. Computer and telecommunication technologies are
evolving rapidly and are characterized by short product lifecycles, which
requires us to anticipate technological developments. We can give no assurance
that we will be successful in anticipating, managing or adopting such
technological changes on a timely basis or that we will have the resources
available to invest in new technologies. Our business is dependent on our
computer and telecommunications equipment and software systems, the temporary or
permanent loss of which, through physical damage or operating malfunction, could
have a material adverse effect on our business. Operating malfunctions in the
software systems of financial institutions, market makers and other parties
might have an adverse affect on our operations. We depend on service provided by
various local and long distance telephone companies. A significant increase in
the cost of telephone services that is not recoverable through an increase in
the price of our services, or any significant interruption in telephone
services, could have a material adverse effect on our business. Additionally, as
we continue to introduce new services that use new technologies, we may be
required to license technology from third parties. There can be no assurance
that these licenses will be available on commercially reasonable terms, if at
all. Our inability to obtain any of these licenses could result in delays or
reductions in the introduction of new services or could adversely affect our
existing business.
We Will Rely on Use of the Internet. If the Internet continues to experience
significant growth in the number of users, we can give no assurance that the
Internet will continue to be able to support the demands placed upon it or that
the performance or reliability of the Web will not be adversely affected by
continued growth. In addition, the Internet could lose its viability due to
delays in the development or adoption of new standards required to accommodate
increased Internet activity, or due to increased governmental regulation. If the
Internet infrastructure does not effectively support growth that may occur, our
business would be materially and adversely affected.
We are Subject to Regulatory and Related Influences. The Internet is subject to
changing political, economic and regulatory influences, any of which could have
a material adverse effect on our business. For example, during the past several
years, various Internet directory service and telecommunications industries have
been subject to an increase in governmental and international regulation.
Certain proposals to reform the telecommunications and Internet systems are
periodically considered by the appropriate regulators. These proposals could
increase government involvement in Internet services and otherwise change the
operating environment for our customers. We cannot predict what impact, if any,
such factors might have on our business.
We are Subject to Market Forces Beyond Our Control. Many Internet directory
service providers are consolidating to create Internet directory service
delivery systems with greater regional market power. As a result, these systems
could have greater bargaining power, which may result in lower prices for our
products. Our failure to maintain adequate prices would have a material adverse
effect on our business. Changes in current Internet directory service
reimbursement systems could result in the need for unplanned product
enhancements, in delays or cancellations, or in the revocation of endorsement of
our services. Our results of operations may vary from period to period due to a
variety of factors, including our research and development, our introduction of
new products or services, cost increases from third-party service providers,
changes in marketing and sales expenditures, acceptance of our products and
services, competitive pricing, unforeseen marketing and promotional expenses,
unforeseen negative publicity, competition and general economic and industry
conditions that affect demand.
Future Capital Needs and Uncertainty of Additional Funding. On or about January
30, 1999, we entered into a financing agreement which provided us with
approximately $2,000,000. We believe that we may be able to acquire additional
financing on acceptable terms; however, there can be no assurance that we will
be able to obtain additional financing on acceptable terms, or at all. We have
expended, and will continue to expend in the future, substantial funds on
research and development. If we fail to obtain additional financing, we will
have to limit or eliminate our research and development activities, or reduce or
eliminate our marketing programs, either of which would have a material adverse
effect on our ability to compete.
6
<PAGE>
Our Success Will Depend on Our Ability to Retain Key Personnel. Our success will
depend on our ability to retain our key personnel and identify, hire and retain
additional qualified personnel. There is intense competition for qualified
personnel in our industry, and there can be no assurance that we will be able to
continue to attract and retain such personnel necessary for the development of
our business. Because of the intense competition, we can give no assurance that
we will be successful in adding personnel as needed to satisfy our staffing
requirements.
Impact of the Year 2000. The Year 2000 (commonly referred to as "Y2K") issue
results from the fact that many computer programs were written using two, rather
than four, digits to identify the applicable year. As a result, computer
programs with time-sensitive software may recognize a two digit code for any
year in the next century as related to this century. For example, "00", entered
in a date-field for the year 2000, may be interpreted as the year 1900,
resulting in system failures or miscalculations and disruptions of operations,
including, among other things, a temporary inability to process transactions or
engage in other normal business activities.
In order to improve operating performance, we have undertaken a number of
significant systems initiatives. All our hardware, software and communication
systems have been analyzed by reviewing all relevant product and service
manuals, contacting vendors, and on-line research of relevant vendor websites.
We telephoned our telephone systems provider, our alarm monitoring company, and
our website hosting provider to ensure Y2K compliance. We also conducted on-line
vendor reviews of our desktop Pentium computers and our Windows 95 and Microsoft
Office software. For other software, we contacted the providers, reviewed the
relevant manuals, and reviewed vendor websites to ensure Y2K compliance. We also
reviewed Y2K compliance of our power-backup systems suppliers.
A benefit of our systems review is that our systems are now Year 2000 compliant.
We have completed an assessment of each of our operations and their Year 2000
readiness and have determined that appropriate actions have been and are being
taken. Therefore, we believe that our Year 2000 remediation has been completed
and will not have any impact on our operations. However, although we have
communicated with a number of our significant suppliers to determine the extent
to which our systems are vulnerable to those third parties' failure to remediate
their own Year 2000 issues, we can give no guarantee that the systems of other
companies on which our systems rely will be timely converted.
In a worst case scenario, our primary service, an information retrieval guide
for Internet users, could be adversely affected by the non-compliance of banks,
communications providers, utilities, common carriers, our customers, potential
customers and other sources. Widespread breakdowns in the telecommunications
industry would have an adverse affect on our business. The ultimate impact of
the Y2K issue cannot be reasonably estimated at this time. Many Y2K problems
might not be readily apparent when they first occur, but instead could
imperceptibly degrade technology and corrupt information stored in computers, in
some cases before January 1, 2000.
Third-Party Y2K Risks to the Company. We believe that the most significant Y2K
risks to our continued operations are our dependence on (i) electrical power and
(ii) phone and data lines. Power failures or shortages resulting from British
Columbia Hydro's failure to become Y2K compliant would hinder our operations.
Moreover, system-wide failures in our telecommunications provider, BC Tel,
resulting from BC Tel's failure to become Y2K compliant, would similarly hinder
our operations. We might also lose data which we have stored.
Item 4. Use of Proceeds
All of our common stock is being offered by the Selling Stockholders. We will
not receive any of the proceeds from the sale of the common stock.
Item 5. Determination of Offering Price
Price Range of Common Stock. In or about December 1998, quotation of our common
stock began on the OTC Bulletin Board (trading symbol: TOCK). Prior to that
date, there was no public market for our common stock. Our common stock has
closed at a low of $0.21875 and a high of $8.125 for the 52-week period ending
November 29, 1999. On December 28,
7
<PAGE>
1999, the closing bid and asked prices of our common stock as reported on the
OTC Bulletin Board were $0.375 and $0.46875, respectively. This market is
extremely limited and the prices for our common stock quoted by brokers is not
necessarily a reliable indication of the value of our common stock.
The offering price of our common stock was calculated using the average of the
bid and asked price of our common stock, as reported on the OTC Bulletin Board
as of a specified date within 5 business days prior to the date of the filing of
this Registration Statement, specifically, as of December 28, 1999.
Item 6. Dilution
We became a reporting company on or about June 22, 1999, the effective date of
the Registration Statement on Form 10-SB which we filed with the Securities and
Exchange Commission on April 23, 1999. Our common stock offered by the Selling
Stockholders has already been issued by us, or will be outstanding after the
exercise of options. The Selling Stockholders may from time to time sell their
common stock on the OTC Bulletin Board, on any other national securities
exchange or automated quotation system on which our common stock may be listed
or traded, in negotiated transactions or otherwise, at prices then prevailing or
related to the then current market price or at negotiated prices. Our common
stock may be sold directly or through brokers or dealers. The purchase prices
paid by officers, directors, promoters and affiliated persons for our common
stock purchased by them, or which they have rights to purchase, or which they
acquired by means of related party transactions, are specified in this
Prospectus under the captions "Security Ownership of Certain Beneficial Owners
and Management", "Organization Within Last Five Years", and "Certain
Relationships and Related Transactions".
Item 7. Selling Stockholders
The following table sets forth the number of shares of our common stock which
may be offered for sale from time to time by the Selling Stockholders. The
shares offered for sale constitute all of the shares known to us to be
beneficially owned by the Selling Stockholders. None of the Selling Stockholders
has held any position or office with the Company, except as specified in the
following table. Other than the relationships described below, none of the
Selling Stockholders had or have any material relationship with the Company.
Simone Alten 2,871
Steve Beaton 3,445
Ronald Bernhardt 7,786
Martin Bodnar 4,594
Princina Bodnar 4,594
David and Yolanda Booth 2,297
Mike Brown 12,632
Mike Brown(7) 10,000
Jeffrey Budz 12,379
James T. Carroll 31,580
William Carter 574
John Cilmi 27,446
Vanna Colotti 4,459
Marilyn Cormier 384
Barbara Daidone 4,594
Mark Darling 3,445
John and Lee De Vuyst 11,484
De Vuyst Holdings 11,484
David DiBiase 22,968
Andrea Docherty 230
Benson Group Limited 117,709
8
<PAGE>
Robert Ellingson 5,742
Steven Elman 8,682
David Ezra 22,577
Helen Fadden 4,594
Dennis Paul Fecci 19,465
Christine Fornier 22,968
Kathy Fowler 2,871
Arthur Gee 1,148
Victor Golinsky 4,594
Richard Green 5,742
Ken Grundy 382
Neil Hamilton 28,709
Jim Hornell 1,148
Joan Jacobs 11,484
Marion Jenson 5,742
Dr. Fred Knelman 22,968
Karen Krawchuk 13,781
Ellen Laine 6,890
Yvan Lalonde 57,419
Carol Lalonde 57,419
Michael Lalonde 57,419
John Larsen 227,739
Frederick Ledetsch 4,594
Eunho Lee 4,594
Bruce Lemire-Elmore 15,503
Louise Lemire-Elmore 15,503
Chris Lewis (1) 5,302,071
Lester Licht 30,501
Terry Livingstone(2) 229,675
John Manville 5,742
Douglas Matthews 1,378
Jim McGuigan 5,742
James McLachlan 11,484
Robert McLachlan 16,077
Sandra McLachlan 5,742
Steven Meehan 2,871
MRA Engineering 14,355
Kevin Mularkey 1,148
Janet Neff (5) 4,594
Sabene Odonoghue 4,594
Andrew Opperman 22,968
Alastair Pirie 11,484
Wayne Pye 11,484
Merrill Lynch in Trust for Jalinder Rai 957
Rick and Mary Reynolds 152,160
Rodger Sarfi 1,914
Jeffrey Sawchuk 574
George Schellenberg 4,594
Hardip Singh 389,170
Richard Sommers 16,575
Jim Soukoreff (4) 71,774
9
<PAGE>
Greg Soukoreff (4) 21,744
Susan Soukoreff(4) 71,774
C. Cedric Steele 13,781
Bruce Steinke 1,914
Jojhar Takhar 957
Pardip Thind 957
RBC Dominion Securities Inc. in Trust for Mark Varley 57,419
Louis Vella 11,484
Tony Whitehorn 15,503
Henry and Marge Wiebe 11,484
Dorothy Armstrong 1,148
David and Yolanda Booth 3,785
Yolanda Booth 623
David Booth 1,334
Cary Chernoff 5,742
Iain Cleator 11,484
Catherine and Calvin Cook 5,472
Calvin Cook 270
Richard C. Cook 5,742
Wimborne Holdings 55,122
Laurie Dittrich 574
Ira Doering 11,484
Jeffrey Dubois 3,445
Wendy Dubois 10,335
Michael Durkin 11,484
Bob and Debbie Egglestone 17,226
Lars Engels 22,968
Dan Faminoff 5,156
Laurentian Bank of Canada in Trust for Dan Faminoff 2,500
John Faminoff 5,156
Laurentian Bank of Canada in Trust for John Faminoff 2,500
Scott Findlay 11,484
Mark Finger 22,853
Brad Glazer 1,378
Chris Goddard 5,742
Angeline E. Joss 50,000
Michael Lois Joss 25,000
Sidney S. Joss 77,629
Theresa Ann Joss 25,000
Dr. E. W. Kane Ltd. 11,484
Steve and Vanessa Keeler-Young 4,594
Brent and Jennifer Lee 26,000
Colin Lee 75,431
Grant Lee 44,000
Shirley Lee 60,000
Robert Leier 7,579
Heather MacDougall 1,148
Lynn Malcolm 2,297
Douglas Matthews 5,891
Harry McClelland 2,946
Ross McClelland 2,946
10
<PAGE>
Dan Menard 574
Daphne Menard 574
Jacquie Miller 1,148
Kailey Miller 1,148
Hal Neff(3) 22,968
Hal Neff(7) 10,000
Lori Neuen 2,946
Shawn and Elizabeth O'Hara 574
Thomas O'Hara 574
David Palm 8,039
Uwe Pause 5,742
Kathryn and Andre Pickersgill 11,484
Paul Branston 22,968
James Ryley 11,484
Peter Sauer 11,484
Ben Scheffer 1,148
Jamie Scheffer 1,148
Carole Small 1,148
Maureen Smith 5,742
Paul Soukoreff(4) 5,742
Esther Soukoreff(4) 5,742
Terrence L. Steinke 3,828
Eric Stephanson 22,968
James Dexter 11,484
Greenline Investor Services in Trust for John Suk 2,871
Nesbitt Burns Inc. in Trust for Candace Sikorski Acct. (John Suk) 2,871
Jennie Tong 37,873
Murray Van Laare 3,445
Hendrika Wall 1,148
Dr. G. W. Wilson 5,742
Bruno and Marianne Zilli 28,709
Allen Lees (6) (held in Trust by Law Offices of Fraser Milner) 571,428
Bruce McKay(7) 10,000
Grant Lee(7) 10,000
Gilmore Skeels(7) 10,000
(1) Mr. Lewis is the President, Chief Executive Officer and Chairman of the
Board of the Company.
(2) Mr. Livingstone is the Chief Operating Officer of the Company.
(3) Mr. Neff was a promoter of the Company's subsidiary, TopClick Corporation,
a Delaware corporation.
(4) Related to Gregory Soukoreff, a promoter of the Company's subsidiary,
TopClick Corporation, a Delaware corporation.
(5) Related to Hal Neff, a promoter of the Company's subsidiary, TopClick
Corporation, a Delaware corporation.
(6) Held in trust pending outcome of litigation. See portion of this Prospectus
entitled "Legal Proceedings" at Page 18.
(7) Shares issued when persons were directors of the Company's subsidiary,
TopClick Corporation, a Delaware corporation.
Pursuant to the agreements by which certain of the Selling Stockholders acquired
their common stock, we agreed to use our best efforts to file a registration
statement for the resale of those shares and to use our best efforts to cause
that registration statement to be declared effective. We will pay all expenses
in connection with the registration and sale of the shares, except any selling
commissions or discounts, fees and disbursements of counsel and other
representatives of the Selling Stockholders, and any stock transfer taxes
payable resulting from any such sale.
11
<PAGE>
Item 8. Plan of Distribution
The Selling Stockholders may, from time to time, sell all or a portion of their
common stock in the over-the-counter market, or on any other national securities
exchange on which our common stock is or becomes listed or traded, in negotiated
transactions or otherwise, at prices then prevailing or related to the then
current market price or at negotiated prices. The shares will not be sold in an
underwritten public offering. Their common stock may be sold directly or through
brokers or dealers. The methods by which the common stock may be sold include
(a) a block trade (which may involve crosses) in which the broker or dealer will
attempt to sell the common stock as agent but may buy and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) privately
negotiated transactions. Brokers and dealers engaged by Selling Stockholders may
arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from Selling Stockholders (or, if any such
broker-dealer acts as agent fr the purchaser of such shares, from such
purchaser) in amounts to be negotiated. Broker-dealers may agree with the
Selling Stockholders to sell a specified number of shares at a stipulated price
per share, and, to the extent such broker-dealer is unable to do so acting as
agent for a Selling Stockholder, to purchase as principal any unsold shares at
the price required to fulfill the broker-dealer commitment to the Selling
Stockholder. Broker-dealers who acquire shares as principal may thereafter
resell the shares from time to time in transactions (which may involve crosses
and block transactions and sales to and through other broker-dealers, including
transactions of the nature described above) in the over-the-counter market or
otherwise at prices and on terms then prevailing at the time of sale, at prices
then related to the then-current market price or in negotiated transactions and,
in connection with such resales, may pay to or receive commissions from the
purchasers.
In connection with the distribution of the common stock, the Selling
Stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
our common stock. The Selling Stockholders (except for officers and directors of
the Company) may also sell their common stock and redeliver their common stock
to close out their short positions. The Selling Stockholders may also enter into
option or other transactions with broker-dealers which require the delivery to
the broker-dealer of their common stock. The Selling Stockholders may also lend
or pledge their common stock to a broker-dealer and the broker-dealer may sell
their common stock so lent or, upon a default, the broker-dealer may sell the
pledged shares. In addition to the foregoing, the Selling Stockholders may enter
into, from time to time, other types of hedging transactions.
The Selling Stockholders and any broker-dealers participating in the
distributions of the our common stock may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act of 1933, and any profit on
the sale of our common stock by the Selling Stockholders, and any commissions or
discounts given to any such broker-dealer, may be deemed to be underwriting
commissions or discounts pursuant to the Securities Act of 1933.
Our common stock may also be sold pursuant to Rule 144 pursuant to the
Securities Act of 1933 beginning one year after the shares of our common stock
were issued, provided such date is at least 90 days after the date of this
Prospectus.
The Company has filed the Registration Statement, of which this Prospectus forms
a part, for the sale of the Selling Stockholders' shares of our common stock. We
can give no assurance that the Selling Stockholders will sell any or all of the
shares of our common stock.
Pursuant to the Securities Exchange Act of 1934, any person engaged in a
distribution of the common stock offered by this Prospectus may not
simultaneously engage in market making activities for our common stock during
the applicable "cooling off" periods prior to the commencement of such
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Securities Exchange Act of 1934 and the rules and
regulations thereunder.
The Company will pay all of the expenses incident to the offering and sale of
the Selling Stockholders' common stock, other than commissions, discounts and
fees of underwriters, dealers or agents.
12
<PAGE>
Item 9. Legal Proceedings
In March, 1999, we were informed that Allen Lees, a resident of British
Columbia, was claiming an ownership interest in certain shares of common stock
of Helpful By Design, Inc. ("HBD"). Mr. Lees claim to ownership of such HBD
shares arises from consulting services which Mr. Lees was engaged to perform on
behalf of HBD under its former name, Voxtech Communications, Inc. , beginning in
or about 1993. HBD disputes Mr. Lees' claim of ownership to those HBD shares. We
have become involved in this dispute because in September, 1998, HBD sold
certain assets, including a website, to one of our subsidiaries, TopClick
Corporation, for, among other consideration, the issuance of 7,000,000 shares of
$.001 par value common stock of TopClick Corporation. TopClick Corporation later
entered into a stock exchange agreement with us which provided, among other
things, that, as consideration for the exchange, assignment, transfer,
conveyance, setting over and delivery of the shares of TopClick Corporation to
us, we issued 8 shares of our common stock for every 7 shares of TopClick
Corporation's common stock.
Mr. Lees has filed a lawsuit in the Supreme Court of British Columbia seeking to
force conversion of approximately 500,000 HBD shares into shares of our common
stock. In addition to HBD, the Company and its Chief Executive Officer, Chris
Lewis, have also been named as defendants in this lawsuit. We intend to
vigorously defend this action. We have issued the disputed shares to Mr. Lees,
which shares are currently held in trust by the Law Offices of Fraser Milner
located in Vancouver, British Columbia, Canada, pending the outcome of this
litigation.
Item 10. Directors, Executive Officers, Promoters and Control Persons.
The directors and principal executive officers of the Company are as specified
on the following table:
================================================================================
Name Age Position
- --------------------------------------------------------------------------------
President, Chief Executive Officer, Chairman of the
Chris Lewis 42 Board of Directors.
- --------------------------------------------------------------------------------
Terry Livingstone 53 Chief Operating Officer
- --------------------------------------------------------------------------------
Biographical Information on Our Officers and Directors:
President, Chairman of the Board and Chief Executive Officer. Chris Lewis is the
Company's President and Chief Executive Officer, as well as Chairman of the
Board of Directors. Mr. Lewis developed the TopClick Guide concept and has
responsibility for the strategic planning relating to the products and services
currently under development by the Company. Mr. Lewis has significant experience
in business planning and marketing and has participated in the development and
commercial exploitation of 19 products, including the world's first alphanumeric
paging service. His marketing and communications experience includes small
regional direct mail advertising campaigns to full national television
advertising campaigns supported by print advertising, outdoor poster activities,
product design and packaging, 1-800 telephone response facilities and full media
launch presentations.
During the past 25 years Mr. Lewis has held sales and marketing management
positions in a number of industries, including men's fashion clothing, mobile
communications, telecommunications, computer software and Internet applications,
and the Do-It-Yourself handyman industry. In 1987 he was selected as one of
eight managers (in a company employing 185,000 people) to attend the Accelerated
Business Degree in Business Planning, International Marketing and Marketing
Communications (a sub-MBA program) from the Chartered Institute of Marketing. In
1989, working with Paul Fifield, a European marketing strategist (now a member
of the Company's advisory board), Mr. Lewis developed a new approach to market
segmentation called "Context Marketing" which British Telecom tested in a
customer research program and then implemented as a principal methodology in its
marketing approach.
13
<PAGE>
In 1992 Mr. Lewis emigrated from London, England to join his family in Western
Canada, leaving a position he had held for 6 years at British Telecom as a
strategic marketing manager for personal communications. At British Telecom he
served as the company representative on a multi-company and university
Pan-European Study of Global Social Change to identify the changing customer
attitudes, values and expectations that drive consumer purchase behavior. He
also worked on several corporate business initiatives as a Marketing Futurist
including personal communications, broadband networks, and other specialized
projects. From 1993 to 1998, Mr. Lewis was President of Helpful By Design, Inc.,
a Vancouver, British Columbia-based software and Internet design and development
firm. From June 1998 to date, Mr. Lewis was President and Chief Executive
Officer of TopClick Corporation, an Internet design and development firm also
located in Vancouver, British Columbia.
Chief Operating Officer. Terry Livingstone was recently appointed Chief
Operating Officer of the Company. Prior to this appointment, from June 1998 to
April 1999, Mr. Livingstone was the Western United States and Canada Project
Manager for Nortel Networks, and was responsible for managing complex
telecommunications and multiple Internet-related projects with up to 50 staff
under his co-ordination, including the areas of computer operations,
programming, systems analysis, design and project implementation. From September
1997 to May 1998 and prior to working for Nortel Networks, Mr. Livingstone was a
Senior Project Manager with MacDonald Dettwiler, where he oversaw projects in
Taiwan, Egypt, and north America for DGPS and radar surveillance systems. From
1993 to 1997, he held various project management and related positions with
various companies in Canada, including Helpful By Design, Inc. from June 1996 to
July 1997, and Nortel (Northern Telecom) from February 1996 to June 1996. Mr.
Livingstone was self-employed from 1994 through June 1996, worked with Glenayre
Electronics in Vancouver, British Columbia from 1992 to 1993, and with an IBM
business partner, GRSI, from 1989 through 1992. He also worked at Wang Canada
from 1986 to 1989, where he managed multiple development teams and projects in
Saudi Arabia and the Philippines in planning, organizing, controlling and
implementing turnkey nationwide systems.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of November 30, 1999 by (i) each person or
entity known by us to be the beneficial owner of more than 5% of the outstanding
shares of common stock, (ii) each of the Company's directors and named executive
officers, and (iii) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
Name and Address Amount and Nature
Title of Class of Beneficial Owner of Beneficial Owner Percent of Class
------------------- ------------------- ----------------
<S> <C> <C> <C>
$.001 Par Value Chris Lewis Officer and Director 40.27%
Common Stock 1636 W. 2nd St. 5,280,571 common shares
Vancouver, B.C. (also holds 225,000 options)
$.001 Par Value Terry Livingstone Chief Operating Officer; 1.75%
Common Stock 1636 W. 2nd St. 229,675 common shares
Vancouver, B.C. (also holds 25,000 options)
$.001 Par Value All directors and named 42.02%
Common Stock executive officers as a
group
</TABLE>
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the
14
<PAGE>
optionees. Subject to community property laws, where applicable, the persons or
entities named in the table above have sole voting and investment power with
respect to all shares of our common stock indicated as beneficially owned by
them.
Changes in Control. We are not aware of any arrangements which may result in
"changes in control" as that term is defined by the provisions of Item 403(c) of
Regulation S-B.
Item 12. Description of Securities
The Company is authorized to issue 100,000,000 shares of common stock, $.001 par
value, each share of common stock having equal rights and preferences, including
voting privileges. The Company is not authorized to issue shares of preferred
stock. As of November 30, 1999, 13,112,740 shares of our common stock were
issued and outstanding. The shares of our common stock constitute equity
interests entitling each shareholder to a pro rata share of cash distributions
made to shareholders, including dividend payments. The holders of our common
stock are entitled to one vote for each share of record on all matters to be
voted on by shareholders. There is no cumulative voting with respect to the
election of directors of the Company or any other matter, with the result that
the holders of more than 50% of the shares voted for the election of those
directors can elect all of the directors. The holders of our common stock are
entitled to receive dividends when, as and if declared by us from funds legally
available therefor; provided, however, that cash dividends are at our sole
discretion. In the event of liquidation, dissolution or winding up of the
Company, the holders of common stock are entitled to share ratably in all assets
remaining available for distribution to them after payment of our liabilities
and after provision has been made for each class of stock, if any, having
preference in relation to our common stock. Holders of our common stock have no
conversion, preemptive or other subscription rights, and there are no redemption
provisions applicable to our common stock.
Dividend Policy. We have never declared or paid a cash dividend on our capital
stock and we do not expect to pay cash dividends on our common stock in the
foreseeable future. We currently intend to retain our earnings, if any, for use
in our business. Any dividends declared in the future will be at our discretion
and subject to any restrictions that may be imposed by our lenders.
Item 13. Interest of Named Experts and Counsel.
No "expert", as that term is defined pursuant to Regulation Section 228.509(a)
of Regulation S-B, or our "counsel", as that term is defined pursuant to
Regulation Section 228.509(b) of Regulation S-B, was hired on a contingent
basis, or will receive a direct or indirect interest in the Company, or was a
promoter, underwriter, voting trustee, director, officer, or employee of the
Company, at any time prior to the filing of this Registration Statement.
Item 14. Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, INDEMNIFICATION FOR
LIABILITIES ARISING PURSUANT TO THE SECURITIES ACT OF 1933 IS CONTRARY TO PUBLIC
POLICY AND, THEREFORE, UNENFORCEABLE.
Item 15. Organization Within Last Five Years
Transactions with Promoters. The Company did not employ or contract with any
promoters. Our subsidiary, TopClick Corporation, a Delaware corporation
incorporated on July 8, 1998, had relationships with the following promoters:
Kili Nimani, Hal Neff, Gernot Doebelin, and Gregory Soukoreff. Each of these
promoters signed an "Investment Associate Agreement" with TopClick Corporation.
Mr. Neff is also a director of TopClick Corporation.
Each promoter is entitled to receive options to purchase shares of TopClick
Corporation's common stock in amounts equal to 10% of the number of shares sold
by that promoter. For example, if a particular promoter sells 100,000 shares of
TopClick Corporation's common stock, he is entitled to receive options to
purchase 10,000 shares of that stock for a purchase price to be set by the Board
of Directors. Those options shall vest during a 3 year period and expire after
an additional 3 years.
15
<PAGE>
As of November 30, 1999, options to purchase 25,000 shares of TopClick
Corporation's common stock had been issued to Kili Nimani at an option price of
$0.70 per share.
Item 16. Description of Business.
The Company was incorporated to engage in any lawful act or activity for which
corporations may be organized pursuant to the General Corporation Law of
Delaware. We were initially involved in the development of oil and gas
properties. After the consummation of a series of corporate acquisitions, the
nature of our business changed from development of oil and gas properties to the
business of facilitating the consumption of information, products and services
via the Internet. We currently provide 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
subject. Our services allow Internet users to locate their subject categories
easily and we provide them with the freedom to roam back and forth from guide to
guide. For example, inside our Internet golf environment, we have packaged all
of the top Internet guides to golf, such as Yahoo!, Excite and Lycos.
Development of the Company. The Company was originally incorporated in Delaware
under the name Galveston Oil & Gas, Inc. on October 3, 1996. We changed our name
to TopClick International, Inc. on or about February 5, 1999. Pursuant to an
Acquisition Agreement dated January 28, 1999, we acquired all of the shares of
TopClick Corporation, a Delaware corporation incorporated on July 8, 1998 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. TopClick Corporation is now
our wholly-owned subsidiary.
As consideration for the exchange of the shares of TopClick Corporation, we
issued 8 shares of our common stock for every 7 shares of TopClick Corporation
common stock. This exchange value was determined by our negotiations with
TopClick Corporation and Sonora Capital Corporation, a British Columbia
corporation, and was approved by a majority of the shareholders of TopClick
Corporation.
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 TopClick Corporation for the
issuance of 7,000,000 shares of common stock of TopClick Corporation 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 at
$700,000. 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 believed that
total consideration for the sale of the TopClick website and related assets was,
therefore, approximately $1,015,789. As part of this transaction, TopClick
Corporation agreed to convert the shares of preferred stock held by shareholders
of TopClick (Canada) Inc. into shares of common stock of TopClick Corporation.
On or about January 28, 1999, we entered into a Financing Agreement with
TopClick Corporation, Sonora, HBD, and other parties whereby certain investors
represented by Sonora provided $2,000,000 to us. As part of a series of related
transactions, HBD and the shareholders of TopClick Corporation transferred their
shares of TopClick Corporation to us so that TopClick Corporation became our
wholly-owned subsidiary. A copy of the Financing Agreement is attached as
Exhibit 10.1 to this registration statement. A copy of the Acquisition Agreement
is attached to that Financing Agreement as Exhibit B.
Business of the Company. We own and operate 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",
16
<PAGE>
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 more than 8,000 top sites and anticipates adding
additional top sites.
We hope to generate revenues from referral fees during the next 12 months by
directing Internet traffic to e-commerce vendors; provided, however, that we can
give no guarantee or assurance that we will be able to enter into contracts with
online vendors or that, if we enter into such contracts, the terms and
conditions of such contracts will be economically advantageous to us. If we
enter into contracts with online vendors, we anticipate receiving a referral fee
ranging from 8% to 25%. We also anticipate more direct involvement in
e-commerce. For example, we have recently opened a virtual bookstore by
packaging approximately 300 books on privacy issues. We intend to sell these
books over the Internet and receive sales commissions.
While we are also considering the possibility of generating revenues from
subscription fees from subscribers for certain proposed Internet services, we do
not currently provide any specialized services and do not currently have any
subscribers. We are considering providing personalized information services to
paying subscribers, but we have not yet determined the scope of such services
nor the subscription amounts for such services.
We derive certain consumer data from customer profiles. During the past 12
months, we considered generating revenues through the sale of this consumer data
to third parties. However, because we recently opened a virtual bookstore
relating to privacy issues, we believe that selling research data to advertisers
or market researchers may not be consistent with our privacy-related businesses.
While it is a common practice for entities with high traffic volume websites to
sell research data, we are currently reviewing this policy. Therefore, we may
elect to forego this potential revenue source.
In the same way, websites with a lot of users typically generate advertising
fees through the sale of banner and other types of Internet advertising. We have
not yet determined whether we will sell advertising on our website. If we elect
to sell advertising, our advertising revenues will depend, in part, on the
number of users of our website.
We have built and are continuing to develop a complex database of 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, we reported that the usage of our website had increased
significantly during the first part of 1999 and, in March alone, we served
almost 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, we 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 websites. 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
websites. 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.
We believe that our participation in the LinkShare program will enable us to
establish e-commerce relationships with more than 150 existing electronic
retailers, and to earn revenues from those relationships. In the first phase of
this program, we
17
<PAGE>
have 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.
We have not generated any revenues to date and we had a comprehensive loss for
the year ended June 30, 1999, of $444,681.00.
Transition of Website. In March, 1999, we entered into a nonexclusive,
nontransferable Master Service Agreement with Frontier GlobalCenter, Inc.
("Frontier") for Internet connectivity services, which obligates us 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 us to move our website to allow for more
rapid growth. Frontier specializes in high-speed hosting services, and hosts
many of the world's busiest websites, including Yahoo!, Netscape, Playboy,
Pacific Bell, Quote.com, and USA Today. We have installed a high-speed server
and software system together with leading statistical analysis and tracking
software from Marketwave Corporation of Seattle, all supported by a 12-month
maintenance contract. Marketwave Corporation is a leading innovator in real-time
Internet data and traffic analysis software, with more than 40,000 licensed
corporate customers, including Intell, Dell, AT&T, Cox Communications, Volvo and
NBC Europe.
Employees. The Company and its subsidiaries currently have 8 employees, all of
which are full-time employees. We anticipate using consultants for business,
accounting, engineering and legal services on an as-needed basis.
Key Employees. Our key employees are Chris Lewis, the President and Chief
Executive Officer; Terry Livingstone, the Chief Operating Officer; and Rory
Wadham, lead programmer.
Item 17. 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 indices. We
believe that the continued rapid expansion of the Internet provides
opportunities for our innovations and will further provide us with markets which
the major search engines and guides do not control or dominate. We believe that
there is an opportunity to present the best Internet guides in one environment.
Our innovations include the packaging of top Internet destinations, a simplified
Internet navigation structure, and a fast, simple one-stop information search
system to the top Internet information directories and 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. In May, 1999, we began an
e-commerce initiative with LinkShare, which we believe will enable us to
establish various e-commerce relationships. We anticipate that we will market
our services to the Internet community as a clearinghouse and an encyclopedia of
quality Internet guides. We believe that monthly use of our website will
continue to increase. Our website traffic increased by 1200 percent in the first
quarter of 1999, and, during the period April 1, 1999 through and including June
30, 1999, our website generated 1,117,880 page views and 477,143 unique
searches.
Our overall marketing plan is based on two separate promotional phases: (1) the
Initial Site Launch Plan and (2) the Market Development Plan.
Initial Site Launch Plan. We anticipate that we will launch multiple online
tactical programs to create awareness of our websites and services with the goal
of inducing potential clients to visit our websites, where demonstrations of our
products and services will be displayed. We believe that by keeping the
information current, subscribers will return to our websites, the ultimate goal
being increased usage over time.
18
<PAGE>
We believe that more than 80% of all Internet searches originate through the top
8 guides. We intend to submit our 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. Our objective is to build our website and brands into
well-known Internet properties.
We intend to submit Topclick.com to the top 10 site award businesses on the
Internet through the use of electronic press releases. We intend 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. We anticipate that we 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 such as
PointCast. We also plan to provide automated announcements to specific interest
groups at Internet chat environments and present our guide to mass community
sites, such as Geocites, as a complimentary service which we believe will
enhance the value of our products. We will concentrate on disseminating
information about our 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, we plan to 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. We anticipate
that we will seek logo and linking arrangements with targeted sites. We intend
to develop "tell-a-friend" extensions to the TopClick site to make it easy for
existing users to electronically tell friends about our services.
Developing Site Traffic. We believe that we must develop volume traffic on our
site in order to be successful. Once traffic volume has been established, we
will become a distribution point for advertisers and will develop opportunities
to participate in sponsorship agreements, electronic commerce agreements and
joint marketing ventures. We intend to create our value by increasing the number
of users to our website. We can give no assurance, however, that we will ever be
valuable enough to be considered for acquisition. Initially, we will offer our
products and services free to our customers, strategic partners and media
partners.
In keeping with this strategy, we will concentrate our marketing efforts on
increasing site traffic. Promotional space and other content on the site will be
provided free to increase traffic. We intend to form 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, we intend to encourage advertising contacts, media contacts and
Internet guide contacts.
Name Identification. We have purchased additional domain names and will attempt
to prevent third parties from adopting names similar to TopClick. We have
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 of the domain name record pending a final or
temporary decision of the 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.
19
<PAGE>
We believe that this revision to NSI's domain name dispute policy will
discourage frivolous claims against the domain names we hold. Domain name
registrations are effective for 2 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. We anticipate that we may benefit from that growth; however, we can
provide no guaranty 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. We
should benefit from such growth; however, we can give no guaranty that we will
so benefit.
State of Readiness for Y2K. We have performed an assessment of our information
technology ("IT") systems as well as our non-IT systems relating to the Y2K
problem. We 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, we reviewed
product documentation for Y2K compliance where such was available.
The workstations of our employees and subcontractors are Pentium Personal
Computers, which utilize Windows 95 and Office 97+ software. We believe that our
software is Y2K compliant. We have one additional workstation, which is also Y2K
compliant.
Built on a UNIX platform, the server hardware and software for the webserver
used to host and serve the TopClick website are also Y2K compliant. After
conducting testing and evaluation, the we believe that our telephone system, our
Network Hub, our power backup systems and our security system are all Y2K
compliant. We replaced our facsimile machine, which was not Y2K compliant.
Cost to Address the Company's Y2K Issues. The only significant equipment
replacement cost to the Company to become Y2K compliant was the cost of
replacing the Company's facsimile machine, which cost approximately $400.00. We
do not anticipate any additional upgrade, replacement, or equipment servicing
charges to become Y2K compliant. We will monitor external service providers
through the Year 2000 at a cost of approximately $85.00. Therefore, based on
current estimates, the costs of addressing this issue are not expected to have a
material adverse effect on our operations. We can not estimate the potential
impact of the Y2K issue on our significant customers, vendors and suppliers at
this time.
The Company's Contingency Plans. To prevent electrical failures from adversely
affecting our operations, we perform regularly scheduled data backups and we
have connected our computer system to backup power systems. Through the Year
2000, we will continue to communicate with our electrical and telecommunications
providers to remain informed about (1) the status of such suppliers' Y2K
compliance, and (2) the potential impact that the failure of these suppliers to
become Y2K compliant will have on our operations.
Liquidity and Capital Resources. On or about January 28, 1999, we entered into a
Financing Agreement with certain 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 our wholly- owned subsidiary. The investors
represented by Sonora provided us with $2,000,000. Pursuant to the Financing
Agreement, we acquired all of the shares of TopClick Corporation 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 HBD.
20
<PAGE>
As consideration for the exchange of the shares of TopClick Corporation, we
issued 8 shares of our common stock for every 7 shares of TopClick Corporation's
common stock. This exchange value was determined by negotiations with TopClick
Corporation and Sonora, and was approved by a majority of the shareholders of
TopClick Corporation. 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 SB-2.
We believe we may be able to acquire additional financing at commercially
reasonable rates; however, there can be no assurance that we will be able to
obtain additional financing at commercially reasonable rates, or at all. We have
expended, and will continue to expend in the future, substantial funds on the
research and development of our products and services. Our failure to obtain
additional financing, or to generate revenues from our Internet products and
services, would significantly limit or eliminate our ability to fund our
research and development, which would have a material adverse effect on our
ability to continue to compete in our industry. Moreover, although we have
significant cash reserves, we cannot continue to operate indefinitely without
generating revenues. At present, our primary source of revenue is the sale of
our securities.
Results of Operations. We have not yet realized any revenue from operations. In
the year ended June 30, 1999, we expended $260,019 in software development
costs, which represent costs relating to the development of our Internet
website. We anticipate that these costs will be amortized upon the commercial
exploitation of our Internet website. During the year ended June 30, 1999, we
capitalized $10,075 of depreciation of our computer equipment as software
development costs.
We experienced a net loss from our 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, we had cash of approximately $1,667,370 deposited with RBC
Dominion Securities Ltd. ("RBCDS"), earning interest at 3.75% per annum. RBCDS
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, we announced that we had added 20 Internet
retailers to our e-commerce services in preparation for the TopClick
Marketplace, a packaged e-commerce shopping service that will be offered on our
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, we announced that we had added Dell and
Amazon.com to our e-commerce service. We recently joined the Amazon.com
Associates Program, a leading selling program on the Internet, which we believe
has more than 260,000 members. We are continuing discussions with additional
Internet retailers and anticipate continuing to add established Internet
retailers to our e-commerce shopping service.
Item 18. Description of Property
Property held by the Company. As of the dates specified in the following table,
the Company held the following property:
================================================================================
Property September 30, 1999
Cash $1,398,427
================================================================================
Intellectual Property-software development $303,521
- --------------------------------------------------------------------------------
Property and Equipment $118,469
- --------------------------------------------------------------------------------
21
<PAGE>
We own the TopClick website and all proprietary software incidental to the
operation thereof. We have purchased additional domain names similar to TopClick
in an attempt to prevent third parties from exploiting the TopClick brand name.
On or about August 3, 1998, TopClick Corporation purchased office furniture and
communications systems to furnish our offices located at Suite 200, 1636 West
2nd Avenue, Vancouver, British Columbia, Canada V6J 1H4. TopClick Corporation
acquired office workstations and fixtures with an inventory value on that date
of $74,000 for the actual purchase price of $22,000; a Telecomms System for
$14,000; 10 personal computers, a laptop computer, and servers, for $23,700;
software and databases for $29,000; 3 printers and personal computer accessories
for $6,500; and an office security system for $1,700. As of March 31, 1999,
after deducting accumulated depreciation, we assigned a net book value of
$54,285 to our computer equipment and $24,521 to our furniture and other office
equipment.
We have become the successor-in-interest to TopClick (Canada) Inc.'s commercial
lease for the premises located at Suite 200-1636 W. Second Avenue, Vancouver,
British Columbia. That lease commenced August 1, 1998 and expires July 31, 2001,
and consists of approximately 3,500 square feet designated for use as Internet
software and related business offices. The annual base rental is approximately
$29,000, paid in monthly installments and subject to typical common area charges
and pro rata tax charges. We shall have the right to renew the lease for an
additional 3 year period if the Company is not in default under the lease at the
date of expiration.
Intellectual Property Strategy. We will attempt to protect our proprietary
technology and domain names. We own any and all software that we develop and we
retain the right to license our products to third parties. We may rely on a
combination of copyright, NIS registration, trademark and trade secrecy laws,
and confidentiality agreements with our employees and subcontractors, to protect
our intellectual property rights.
We have a challenge unique to the software and computing industry. While it is
possible to protect a product's "look and feel", it is almost impossible for a
company to protect its Internet and software features and functions. This means
that another organization may elect to use our products as prototypes or guides
for their own development. This can drastically shorten a competitor's product
development cycle. We intend to remain among the top innovators and most
customer-focused providers of Internet information retrieval systems. This will
require us to spend significant funds for continuing research and development.
We regard our technology as proprietary and may attempt to protect it with
copyrights, trademarks, trade secret laws, restrictions on disclosure and
transferring title and other methods, and we plan to seek a patent with respect
to certain aspects of our searching and indexing technology. We can give no
assurance that any patents that may issue from these applications will be
sufficiently broad to protect our technology. In addition, we can give no
assurance that any patents that may be issued will not be challenged,
invalidated or circumvented, or that any rights granted would provide us with
proprietary protection. Failure of any patents to provide protection of our
technology may make it easier for our competitors to offer technology equivalent
to or superior to our technology.
We also anticipate entering into confidentiality or license agreements with our
employees and consultants and controlling access to and distribution of our
proprietary information. Despite these precautions, it may be possible for a
third party to copy or otherwise obtain and use our technology without
authorization, or to develop similar technology independently. In addition,
effective copyright, trademark and trade secret protection may be unavailable or
limited in certain foreign countries, and the global nature of the Web makes it
virtually impossible to control the ultimate destination of our services.
Policing unauthorized use of our technology is difficult. There can be no
assurance that the steps we take will prevent misappropriation or infringement
of our technology. In addition, litigation may be necessary in the future to
enforce our intellectual property rights, to protect our trade secrets or to
determine the validity and scope of the proprietary rights of others. Litigation
could result in substantial costs and diversion of resources and could have a
material and adverse effect on our business.
We may receive notice of claims of infringement of other parties' proprietary
rights, including claims for infringement resulting from the downloading of
materials by the online services we operate. Although we will investigate and
respond to such claims, we can give no assurance that infringement or invalidity
claims (or claims for indemnification resulting from infringement claims) will
not be asserted or prosecuted against us. Irrespective of the validity or the
successful assertion of such claims, we will incur significant costs and
attorney's fees.
22
<PAGE>
Item 19. Certain Relationships and Related Transactions
Related Party Transactions. Pursuant to a Financing Agreement dated January 28,
1999, we acquired all of the shares of TopClick Corporation, a Delaware
corporation 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"). Chris Lewis, the
Chief Executive Officer of the Company, was a significant shareholder of HBD.
TopClick Corporation is now our wholly-owned subsidiary.
As consideration for the exchange of the shares of TopClick Corporation, we
issued 8 shares of our common stock for every 7 shares of TopClick Corporation's
common stock. This exchange value was determined by negotiations with TopClick
Corporation and Sonora Capital Corporation, and was approved by a majority of
the shareholders of TopClick Corporation.
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 and
related assets, including the one common share of TopClick (Canada) Inc., to
TopClick Corporation for the issuance of 7,000,000 shares of common stock of
TopClick Corporation 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 $700,000. 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 believed that total consideration for the sale of the
TopClick website and related assets was, therefore, approximately $1,015,789. As
part of this transaction, TopClick Corporation agreed to convert the shares of
preferred stock held by shareholders of TopClick (Canada) Inc. into shares of
common stock of TopClick Corporation.
The September, 1998 transaction between the Company's wholly-owned subsidiary,
TopClick Corporation, and HBD was not the result of arm's-length negotiations.
However, the real cost to HBD of designing, developing and building the TopClick
website, assembling the development personnel, and developing a business plan
and strategy for the TopClick website, during a period of approximately 18
months, was approximately CDN$1,000,000. Therefore, the sale resulted in a
profit of approximately 50% to HBD. As specified previously herein, a
significant number of shares of HBD were owned by Chris Lewis, the Chief
Executive Officer of the Company.
Item 20. Market for Common Equity and Related Stockholder Matters
We participate in the OTC Bulletin Board, an electronic quotation system for
securities not traded on a securities exchange. Our common stock trades on the
OTC Bulletin Board under the trading symbol "TOCK". This market is extremely
limited and the prices for our common stock quoted by brokers is not necessarily
a reliable indication of the value of our common stock.
The following table sets forth the high and low bid prices for shares of our
common stock for the periods noted, as reported by the National Daily Quotation
Services and the NASD Non-NASDAQ Bulletin Board. Quotations indicate
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.
Year Period High Low
1998 Fourth Quarter $0.2969 $0.25
1999 First Quarter $5.375 $0.2969
Second Quarter $4.500 $1.8125
Third Quarter $2.0625 $0.4062
After consummation of the financing transaction with Sonora and other parties,
as specified at length herein in the section entitled Development of the Company
and Related Party Transactions, Sonora conducted a six-week investor relations
23
<PAGE>
promotional campaign which increased our visibility to the retail investment
community, resulting in increased sales of our common stock. There are now
approximately 2,000 holders of our common stock. There have been no cash
dividends declared on our common stock since the Company's inception. Dividends
will be declared at our sole discretion.
Item 21. Executive Compensation - Remuneration of Directors and Officers.
Any compensation received by officers, directors, and management personnel of
the Company will be determined from time to time by our Board of Directors.
Officers, directors, and management personnel of the Company will be reimbursed
for any out-of-pocket expenses incurred on behalf of the Company.
Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to the Company payable to
the Chief Executive Officer of the Company and the other executive officers of
the Company whose total annual salary and bonus is anticipated to exceed $50,000
during the year ending December 31, 1999. Our Board of Directors has adopted an
incentive stock option plan for its executive officers which may result in
additional compensation.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
---------------------------------------
<TABLE>
<CAPTION>
Name Other Annual All Other
and Principal Position Year Salary($) Bonus($) Compensation($) Compensation($)
---------------------- ---- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Chris Lewis, 1999 $144,000 None None Stock options*
President and Chief Executive
Officer
Terry Livingstone 1999 $100,000 None None Stock options*
Chief Operating Officer
</TABLE>
*Chris Lewis has been granted options to acquire 225,000 shares of our common
stock and Terry Livingstone has been granted options to acquire 25,000 shares of
our common stock at $1.00 per share.
Compensation of Directors. Our Board of Directors has approved a stock option
and compensation plan for non-employee directors (that is, directors who do not
also serve as executive officers of the Company). We anticipate that those non-
employee directors shall receive shares of our common stock worth $5,000 each
quarter, and an additional $1,250 per quarter designated as a "meeting
attendance fee". Therefore, the total compensation paid to each non-employee
director shall be equivalent to $25,000 annually. We do not presently have any
non-employee directors.
Beginning in the first quarter of 1999, Chris Lewis, the President and a
director of the Company, has received $12,000 per month as compensation for his
services as a director and executive officer, and Mr. Livingstone has received
approximately $8,350 per month as compensation for his services as an executive
officer.
24
<PAGE>
Item 22. Financial Statements
TOPCLICK INTERNATIONAL, INC.
(Formerly Galveston Oil & Gas, Inc.)
(A Development Stage Company)
CONSOLIDATED FINANCIAL SHEETS
AS OF JUNE 30, 1999 AND 1998, AND FOR THE YEAR ENDED
JUNE 30, 1999 AND THE PERIOD FROM MAY 15, 1998
(INCEPTION) TO JUNE 30, 1998
(UNITED STATES DOLLARS)
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(Formerly Galveston Oil & Gas, Inc.)
(A Development Stage Company)
CONSOLIDATED FINANCIAL SHEETS
AS OF JUNE 30, 1999 AND 1998, AND FOR THE YEAR ENDED
JUNE 30, 1999 AND THE PERIOD FROM MAY 15, 1998
(INCEPTION) TO JUNE 30, 1998
(UNITED STATES DOLLARS)
PAGE
REPORT OF INDEPENDENT AUDITORS
CONSOLIDATED BALANCE SHEETS 1
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 2
CONSOLIDATED STATEMENTS OF OPERATIONS 3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS 4
CONSOLIDATED STATEMENTS OF CASH FLOWS 5-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7-13
<PAGE>
[LETTERHEAD OF BUCKLEY DODDS]
================================================================================
Chartered Accountants
REPORT OF INDEPENDENT AUDITORS
To The Board of Directors and Shareholders
Of Topclick International, Inc.
We have audited the accompanying consolidated balance sheet of Topclick
International, Inc. (Formerly Galveston Oil & Gas, Inc.) (a development stage
company) as at June 30, 1999 and 1998 and the related consolidated statements of
operations, shareholders' equity and cash flows for the year ended June 30, 1999
and for the period from May 15, 1998 (inception) to June 30, 1998. These
consolidated financial statements are the responsibility on the Company's
management. Our responsibility is to express an opinion on theses consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
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 consolidated financial position of the
Company as at June 30, 1999 and 1998 and the consolidated results of its
operations, shareholders' equity and cash flows for the year ended June 30, 1999
and for the period from May 15, 1998 (inception) to June 30, 1998, in conformity
with generally accepted accounting principles in the United States of America.
Vancouver, BC /s/ Buckley Dodds
September 1, 1999 Chartered Accountants
<PAGE>
1
TOPCLICK INTERNATIONAL, INC.
(Formerly Galveston Oil & Gas, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
AS AT JUNE 30, 1999 AND 1998
ASSETS
<TABLE>
<CAPTION>
June 30, June 30,
1999 1998
CURRENT
<S> <C> <C>
Cash (Note 4) $ 1,702,291 $ 55,737
Goods and Services Tax Receivable 16,414 --
----------- -----------
1,718,705 55,737
PROPERTY, PLANT AND EQUIPMENT ( Note 3) 78,324 --
SOFTWARE DEVELOPMENT COSTS (Note 5) 260,019 --
----------- -----------
$ 2,057,048 $ 55,737
=========== ===========
LIABILITIES
CURRENT
Accounts payable $ 23,569 $ 2,100
Due to director 450 100
----------- -----------
$ 24,019 $ 2,200
----------- -----------
SHAREHOLDERS' EQUITY
Preferred shares, $.001 par value, 20,000 shares
authorized, none issued and outstanding
Common shares, $.001 par value, 99,980,000 shares
authorized, 13,407,473 and 2,450,000 issued and outstanding 13,407 2,502
Additional paid - in capital 2,465,714 69,029
Cumulative translation adjustment 17,922 --
Deficit accumulated during development stage (464,014) (17,994)
----------- -----------
2,033,029 53,537
----------- -----------
$ 2,057,048 $ 55,737
=========== ===========
</TABLE>
<PAGE>
2
TOPCLICK INTERNATIONAL, INC.
(Formerly Galveston Oil and Gas, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED JUNE 30, 1999
AND FOR THE PERIOD FROM MAY 15, 1998 (INCEPTION) TO JUNE 30, 1998
<TABLE>
<CAPTION>
TOPCLICK INTERNATIONAL, INC.
(Formerly Galveston
TOPCLICK CORPORATION Oil & Gas, Inc.)
Common Common Common Common
Shares Stock Shares Stock
--------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, May 15, 1998 (inception) -- -- 2,450,000 $ 2,450
Net loss for the period -- -- -- --
--------------------------------------------------------
Balance, June 30, 1998 -- -- 2,450,000 2,450
Issued for acquisition of internet
Property 6,972,774 148,550 -- --
Issued for acquisition of Topclick
(Canada) Inc. 514,929 51,758 -- --
Issued for services rendered 20,000 20,000 -- --
Issued for cash 192,297 255,490 -- --
Issued and surrendered in
Acquisition of Topclick
International, Inc. (reverse merger) (7,700,000) (475,798) 8,800,000 8,800
Issued for cash -- -- 2,157,473 2,157
Cumulative translation adjustment -- -- -- --
Net loss for the period -- -- -- --
--------------------------------------------------------
Balance, June 30, 1999 -- $ -- 13,407,473 $ 13,407
--------------------------------------------------------
<CAPTION>
DEFICIT
ACCUMULATED TOTAL
ADDITIONAL CUMULATIVE DURING THE SHAREHOLDERS'
PAID-IN TRANSLATION DEVELOPMENT EQUITY
CAPITAL ADJUSTMENT STAGE (DEFICIT)
-------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, May 15, 1998 (inception) $ 17,456 -- (16,583) 3,323
Net loss for the period -- -- (1,411) (1,411)
-------------------------------------------------------
Balance, June 30, 1998 17,456 -- (17,994) 1,912
Issued for acquisition of internet
Property -- -- -- 148,550
Issued for acquisition of Topclick
(Canada) Inc. -- -- -- 51,758
Issued for services rendered -- -- -- 20,000
Issued for cash -- -- -- 255,490
Issued and surrendered in
Acquisition of Topclick
International, Inc. (reverse merger) 450,415 -- 16,583 --
Issued for cash 1,997,843 -- -- 2,000,000
Cumulative translation adjustment -- 17,922 -- 17,922
Net loss for the period -- -- (462,603) (462,603)
-------------------------------------------------------
Balance, June 30, 1999 $ 2,465,714 $ 17,992 $ (464,014) $ 2,330,029
-------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements
<PAGE>
3
TOPCLICK INTERNATIONAL, INC.
(Formerly Galveston Oil & Gas, Inc.)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1999 AND FOR THE PERIOD
FROM MAY 15, 1998 (INCEPTION) TO JUNE 30, 1998
Period from
May 15,1998
Year ended (Inception)
June 30, to June 30,
1999 1998
EXPENSES
Contract fees $ 193,264 $ --
Accounting and legal 79,674 1,379
Consulting fees 33,789 --
Investment referral fees 27,394 --
Wages and benefits 25,643 --
Office expenses 22,174 --
Rent 22,127 --
Meals and entertainment 14,503 --
Internet services 13,210 --
Travel 12,014 --
Software 8,941 --
Telephone 8,524 --
Education 6,039 --
Automobile 4,775 --
Advertising 4,603 --
Depreciation 2,360 --
Utilities 1,759 --
Insurance 1,582 --
Interest and bank charges 305 32
- --------------------------------------------------------------------------------
482,680 1,411
LOSS FROM OPERATIONS (482,680) (1,411)
- --------------------------------------------------------------------------------
OTHER ITEMS
Interest income 24,055 --
Write-off deferred charges (3,978) --
- --------------------------------------------------------------------------------
20,077 --
NET LOSS FOR THE PERIOD $ (462,603) $ (1,411)
- --------------------------------------------------------------------------------
LOSS PER SHARE $ (0.04) $ (0.00)
- --------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES 12,000,682 2,450,000
============ ============
<PAGE>
4
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
FOR THE YEAR ENDED JUNE 30, 1999 AND FOR THE PERIOD
FROM MAY 15, 1998 (INCEPTION) TO JUNE 30, 1998
Period from
May 15, 1998
Year ended (Inception)
June 30, to June 30,
1999 1998
NET LOSS FOR THE PERIOD $(462,603) $ (1,411)
OTHER COMPREHENSVIE INCOME (LOSS) , Net of tax:
Foreign currency translation adjustments 17,922 --
- --------------------------------------------------------------------------------
COMPREHENSIVE LOSS FOR THE PERIOD $(444,681) $ (1,411)
========= =========
<PAGE>
5
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 1999 AND FOR THE PERIOD
FROM MAY 15, 1998 (INCEPTION) TO JUNE 30, 1998
<TABLE>
<CAPTION>
Period from
May 15, 1998
Year ended (Inception)
June 30, to June 30,
1999 1998
<S> <C> <C>
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES
Net (loss) for the period $ (462,603) $ (1,411)
Items not involving cash:
Write-off of deferred charges 3,978 --
Depreciation 2,360 --
Issuance of shares for contract fees 20,000 --
Changes in non-cash working capital --
Accounts payable 21,469 2,100
Goods and Services Tax receivable (16,414) --
Due to director 350 100
- ----------------------------------------------------------------------------------------------------------
(430,860) 789
FINANCING ACTIVITIES
Proceeds from Issuance of common stock 2,269,567 51,625
- ----------------------------------------------------------------------------------------------------------
2,269,567 --
INVESTING ACTIVITIES
Acquisition of property, plant and equipment (90,759) --
Software development costs (101,394) --
- ----------------------------------------------------------------------------------------------------------
(192,153) --
INCREASE IN CASH 1,646,554 52,414
--------- -----------
CASH, BEGINNING OF PERIOD 55,737 3,323
--------- -----------
CASH, END OF PERIOD $ 1,702,291 $ 55,737
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
6
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 1999
AND FOR THE PERIOD
FROM MAY 15, 1998 (INCEPTION) TO JUNE 30, 1998
<TABLE>
<CAPTION>
Period from
May 15, 1998
Year ended (Inception)
June 30, to June 30,
1999 1998
<S> <C> <C>
Interest Paid $ -- $ --
Income taxes paid -- --
- ---------------------------------------------------------------------------------------------------------------
$ -- $ --
- ---------------------------------------------------------------------------------------------------------------
Supplemental Disclosure of Non-Cash Investing and Financing Information
Acquisition of assets for issuance of common stock:
Software development costs $ 148,550 $ --
Topclick (Canada) Inc. 51,758 --
Issuance of common stock (200,308) --
- ---------------------------------------------------------------------------------------------------------------
$ -- $ --
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
7
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 1 BUSINESS DESCRIPTION
Topclick International, Inc. (formerly Galveston Oil & Gas, Inc. ) (a
development stage company), "the Company", was incorporated on October
3, 1996 under the laws of the state of Delaware in United States of
America. Pursuant to the agreement described in Note 7, the Company
had a change of control, as such, the nature of the business is
changed from development of oil and gas properties to the business of
operating an Internet Website.
Topclick International, Inc. purchased 100% of Topclick Corporation
pursuant to the stock exchange agreement dated February 10, 1999. This
has been accounted for as a reverse acquisition of the Company by
Topclick Corporation.
Topclick Corporation was incorporated under the laws of Delaware on
July 8, 1998. Effective July 8, 1998, Topclick Corporation acquired
100% of Topclick (Canada) Inc. which is a company under common control
and as such the business combination has been accounted for at
historical costs in a manner similar to that in a pooling of
interests.
Topclick (Canada) Inc. was incorporated under the laws of the Canada
Business Corporation Act and commenced operations (deemed date of
inception) on May 15, 1998.
In addition, Topclick Corporation purchased certain Internet assets
from Helpful by Design Inc. which is also under common control. This
has been accounted for at predecessor historical costs.
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements are expressed in U.S. Dollars,
have been prepared in accordance with accounting principles generally
accepted in United States and include the following significant
accounting policies:
Consolidation
The consolidated financial statements of the Company include the
accounts of the Company and the consolidated accounts of its
wholly-owned subsidiary Topclick Corporation. The consolidated
financial statements of Topclick Corporation also include accounts of
its wholly-owned subsidiary, Topclick (Canada) Inc. All significant
inter-company transactions have been eliminated.
As described in Note 7, Topclick International, Inc. acquired all of
the outstanding common shares of Topclick Corporation. For accounting
purposes, the acquisition has been treated as the acquisition of
Topclick International, Inc. with Topclick Corporation as the acquiror
(reverse acquisition). The historical financial statements prior to
February 10, 1999 are those of Topclick Corporation consolidated.
Pro-forma information giving effect to the acquisition as if the
acquisition took place May 15, 1998 is not presented as the effects
are immaterial.
i) The consolidated financial statements of the combined entities
are issued under the name of the legal parent (Topclick
International, Inc.) but are considered a continuation of the
financial statements of the legal subsidiary (Topclick
Corporation).
<PAGE>
8
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
ii) As Topclick Corporation is deemed to be the acquiror for
accounting purposes, its assets and liabilities are included in
the consolidated financial statements at their historical
carrying values in the accounts of Topclick International Inc.
Accounting Estimates
The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles of United States of
America requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilites and disclosures
in the consolidated financial statements and the accompanying notes.
Actual results could differ from those estimates.
Property, plant and equipment
Property, plant and equipment are recorded at costs and are amortized
in the following manner:
Computers 30% declining balance
Furniture and equipment 20% declining balance
In the year of acquisition, depreciation is calculated at one-half of
the above-noted rates.
Software Development Costs
Software development costs represent costs relating to the development
of the Internet website. These costs will be amortized upon the
commercialization of the Internet website, over three years due to the
nature of business in the of software technology industry.
Loss Per Share
Loss per share is provided in accordance with the Statement of
Financial Accounting Standards No. 128 (SFAS), "Earnings Per Share".
Due to the Company's simple capital structure, only basic loss per
share is presented. Basic loss per share is computed by dividing loss
available to common shareholders by weighted average number of common
shares outstanding for the period.
Foreign currency translation
The Company uses the local currency (Canadian Dollars) as the
functional currency. Assets and liabilities dominated in the foreign
functional currency are translated at the exchange rate of the balance
sheet date. Translation adjustments are recorded as a separate
component of the shareholders' equity. Revenues and expenses
demoninated in foreign currency are translated at the weighted average
exchange for the period.
<PAGE>
9
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Company accounts for income taxes using the liability method.
Under this method deferred income tax liabilities and assets are
computed based on the tax liability or benefit in future years of the
reversal of temporary differences in the recognition of income or
reduction of expenses between financial and tax reporting. Deferred
tax assets and/or liabilities are classified as current and noncurrent
based on the classification of the related asset or liability for
financial reporting purposes, or based on the expected reversal date
for deferred taxes that are not related to an asset or liability.
Valuation allowances are established, when necessary, to reduce
deferred tax assets to the amount expected to be realized.
NOTE 3 PROPERTY, PLANT AND EQUIPMENT
Accumulated Net Book
Cost Depreciation Value Depreciation
---------------------------------------------------------
Computer $67,166 $10,075 $57,091 $10,075
Furniture and
Equipment 23,593 2,360 21,233 2,360
-------------------------------------------------------
$90,759 $12,435 $78,324 $12,435
-------------------------------------------------------
During the year ended June 30, 1999, $10,075 of depreciation of the
computer was capitialized as software development costs.
NOTE 4 CASH
At June 30, 1999, approximately $1,667,370 of the total cash is
deposited with RBC Dominion Securities Limited (RBC). It carries
interest at 3 3/4 per annum. It is management's intention to utilize
this account as part of its operating bank account. RBC is Canada's
leader in the investment industry. It is the leading debt and equity
underwriter in Canada and is a member of the Royal Bank Financial
Group. The Royal Bank is Canada's premier global financial services
group with leading market share in personal and business banking,
corporate and investment banking, and wealth management.
<PAGE>
10
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 5 ACQUISITION OF SOFTWARE DEVELOPMENT COSTS (Continued)
a) Effective July 8, 1998 and pursuant to the terms of the
acquisition agreement dated September 15, 1998, Topclick
Corporation (the legal subsidiary) acquired the Internet property
from Helpful By Design Inc., a company under common control of a
controlling shareholder of Topclick Corporation. The
consideration given was 6,972,774 common shares. The software
development costs acquired by Topclick Corporation from Helpful
By Design Inc. are recorded at processor's costs of $148,550.
b) Pursuant to the same agreement as above, Topclick Corporation
acquired 100% of the outstanding shares of Topclick (Canada) Inc.
from Helpful by Design Inc. for the issuance of 514,929 common
shares of Topclick Corporation. The shares issued have been
recorded at the amount of the net assets of Topclick (Canada)
Inc. at the date of acquisition.
The net assets of Topclick (Canada) Inc. at date of acquisition
consists of the following:
Cash $ 37,158
Receivable 16,000
Accounts payable (1,400)
--------
$ 51,758
--------
The above transaction between entities under common control has
been accounted for at historical cost in a manner similar to that
in a pooling of interests.
NOTE 6 REVERSE MERGER
Pursuant to the stock exchange agreement dated February 10, 1999,
the Company issued eight common shares in exchange for every
seven common shares of Topclick Corporation. Therefore, at
February 23, 1999 (closing date), a total of 8,800,000 common
shares were issued by the Company in exchange for 7,700,000
outstanding common shares if Topclick Corporation.
As a result of the above transactions, the Company legally
controls Topclick Corporation. However, in substance, the
shareholders of Topclick Corporation control the Company with an
ownership of approximately 71% of its outstanding common shares.
NOTE 7 SHARES ISSUED FOR SERVICES RENDERED
During the year, Topclick Corporation (legal subsidiary) issued
20,000 common shares to an individual for the fair value of
services rendered in connection with conducting quality controls
to the internet website of Topclick (Canada) Inc. (its
wholly-owned subsidiary). The shares issued been recorded at the
value of the services rendered.
<PAGE>
11
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 8 FINANCIAL INSTRUMENTS
The Company's financial assets and liabilities consist of cash, Goods
Services Tax receivable, accounts payable, the terms and conditions of
which have been described in the preceding notes.
Credit risk arises from the potential that a debtor will fail to
perform its obligations. The Company is subject to credit risk through
its cash deposits. However, these cash deposits are placed in a
well-capitalized, high quality financial institution (Note 4).
Accordingly, concentrations of credit risk are considered to be
minimal.
Interest rate risk is the risk to the Company's earnings that would
arise from fluctuations in interest rates, and would depend of the
volatility of these rates. The Company's borrowings from external
parties is not substantial. Accordingly, its interest rate risk is
considered to be minimal.
Financial risk is the risk to the Company's earnings that would arise
from fluctuations in interest rates and foreign exchange rates, and
would depend on the volatility of these rates. The Company does not
use derivative instruments to reduce its exposure to interest and
foreign currency risk on its cash deposits held in Canadian funds.
NOTE 9 UNCERTAINTY DUE TO THE YEAR 2000 ISSUE (Unaudited)
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in
errors when information using year 2000 dates is processed. In
addition, similar problems may be experienced before, on, or after
January 1, 2000, and if not addressed, the impact on operations and
financial reporting may range from minor error to significant system
failure which could affect an entity's ability to conduct normal
business operations. Management believes they have taken appropriate
course of action to ensure that the Company's technologies are Year
2000 compliant. However, it is not possible to be certain that all
aspects of the Year 2000 issue effecting the entity, including those
related to the efforts of customers, suppliers, or other third
parties, will be fully resolved.
<PAGE>
12
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 10 DEFERRED INCOME TAXES
Significant components of the Company's deferred income taxes and
liabilities at June 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Deferred income tax asset
Net operating loss $(482,680) $ --
Other 20,077 --
--------- -----
462,603 --
Total deferred income tax asset
valuation allowance 462,603 --
--------- -----
Net deferred income tax liability $ -- $ --
--------- -----
Reconciliation's of the effective tax rate to the Canadian
statutory rate is as follows:
Tax expense at Canadian statutory rate 45.6% 45.6%
Change in valuation allowance (45.6%) (45.6%)
--------- -----
Effective income tax rate - % - %
--------- -----
</TABLE>
The company has Canadian net operating loss carryforwards of
approximately $462,603 that expire in 2006.
The Company operates its business in its Canadian subsidiary Topclick
(Canada) Inc. and as such has losses carried forward for Canadian
income tax purposes.
NOTE 11 CONTINGENCIES
The Company is the subject of a lawsuit by an individual who is
claiming ownership interest in common stock of Helpful By Design Inc.
(HBD). HBD sold certain assets, including a website to Topclick
Corporation. As described in note 6 there was a share exchange between
Topclick Corporation and the Company that resulted in the Company
legally controlling Topclick Corporation.
The individual has filed a lawsuit in the Supreme Court of British
Columbia seeking the force conversion of approximately 500,000 HBD
shares of its .001 par value common stock into shares of the Company's
.001 par value common stock.
It is not possible to estimate the amount of a contingent loss in
respect of this legal action. The impact on earnings per share is not
material.
<PAGE>
13
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 12 COMMITMENTS
The Company has commitments under certain contracts of employment and
consulting agreements as follows:
2000 $ 88,970
Further, contracts of employment and consulting agreements call for
the granting of stock options to the individuals under contract. The
option agreement have not been formally prepared and signed at June
30, 1999 as management is in the process of creating a formal Stock
Option Plan.
Options for the issuance of 776,000 shares of the company are
committed to be granted upon the creation of the Stock Option Plan at
a price less than $1.00 per share to be determined at the time of the
granting of the options.
NOTE 13 COMPARATIVE FIGURES
The comparative figures have been reclassified to conform with the
presentation adopted in the current period.
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(Formerly Galveston Oil & Gas, Inc.)
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1999 AND 1998, AND FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 AND THE PERIOD FROM MAY 15, 1998
(INCEPTION) TO SEPTEMBER 30, 1999
(UNITED STATES DOLLARS)
Unaudited
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(Formerly Galveston Oil & Gas, Inc.)
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1999 AND 1998, AND FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 AND THE PERIOD FROM MAY 15, 1998
(INCEPTION) TO SEPTEMBER 30, 1999
(UNITED STATES DOLLARS)
Unaudited
NOTICE TO READER
CONSOLIDATED BALANCE SHEET PAGE 1
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY 2
CONSOLIDATED STATEMENT OF OPERATIONS 3
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS 4
CONSOLIDATED STATEMENT OF CASH FLOWS 5-6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 7-13
<PAGE>
NOTICE TO READER
We have compiled the consolidated balance sheet of Topclick International, Inc.
as at September 30, 1999 and 1998 and the consolidated statements of operations,
deficit and cash flows for the three months then ended, as well as the period
from May 15, 1998 (Inception) to September 30, 1999, from information provided
by management. We have not audited, reviewed or otherwise attempted to verify
the accuracy or completeness of such information. Readers are cautioned that
these statements may not be appropriate for their purposes.
These consolidated financial statements reflect all adjustments which management
considers necessary in order to make the financial statements not misleading.
Vancouver, BC. "BUCKLEY DODDS"
November 4, 1999 Chartered Accountants
1.
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(Formerly Galveston Oil & Gas, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999 AND 1998
(Unaudited - See Notice to Reader)
<TABLE>
<CAPTION>
ASSETS
September 30, September 30,
1999 1998
CURRENT
<S> <C> <C>
Cash (Note 4) $ 1,398,427 $ 19,099
Goods and Services Tax Receivable 25,029 4,280
Prepaid rent 4,815 --
----------- -----------
1,428,271 23,379
PROPERTY, PLANT AND EQUIPMENT ( Note 3) 118,469 29,642
SOFTWARE DEVELOPMENT COSTS (Note 5) 303,521 --
----------- -----------
$ 1,850,261 $ 53,021
=========== ===========
LIABILITIES
CURRENT
Accounts payable $ 12,579 $ 4,453
----------- -----------
SHAREHOLDERS' EQUITY
Preferred shares, $.001 par value, 20,000 shares
authorized, none issued and outstanding
Common shares, $.001 par value, 99,980,000 shares
authorized, 13,407,473 and 2,450,000 issued and outstanding 13,407 2,450
Additional paid - in capital 2,465,714 66,198
Cumulative translation adjustment 27,562 --
Deficit accumulated during development stage (669,001) (20,080)
----------- -----------
1,837,682 48,568
----------- -----------
$ 1,850,261 $ 53,021
=========== ===========
</TABLE>
3.
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(Formerly Galveston Oil & Gas, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 AND THE PERIOD FROM MAY 15, 1998 (INCEPTION)
TO SEPTEMBER 30, 1999
(Unaudited - See Notice to Reader)
<TABLE>
<CAPTION>
Period from
Three months Three months May 15, 1998
Ended ended (Inception)
September 30, September 30, to September 30,
1999 1998 1999
<S> <C> <C> <C>
EXPENSES
Contract fees $ 71,920 $ -- $ 265,184
Accounting and legal 26,726 3,519 107,779
Travel 21,691 -- 33,705
Advertising 20,001 -- 24,604
Wages and benefits 19,687 -- 45,330
Internet services 10,692 -- 23,902
Rent 10,152 -- 32,279
Securities filing fees 6,176 -- 6,176
Office expenses 5,813 -- 27,987
Meals and entertainment 3,254 -- 17,757
Telephone 2,166 -- 10,690
Consulting fees 2,007 -- 35,796
Depreciation 1,582 -- 3,942
Automobile 1,295 -- 6,070
Insurance 799 --
2,381
Interest and bank charges 370 57 707
Utilities 271 -- 2,030
Software 252 -- 9,193
Education 157 -- 6,196
------------
Investment referral fees -- -- 27,394
- ------------------------------------------------------------------------------------------------
205,011 3,576 689,103
LOSS FROM OPERATIONS (205,011) (3,576) (689,103)
- ------------------------------------------------------------------------------------------------
OTHER ITEMS
Interest income 24 79 24,080
Write-off deferred changes -- -- (3,978)
- ------------------------------------------------------------------------------------------------
24 3,497 20,102
NET LOSS FOR THE PERIOD $ (204,987) $ (3,497) (669,001)
- ------------------------------------------------------------------------------------------------
LOSS PER SHARE $ (0.01) $ (0.00)
------------
WEIGHTED AVERAGE SHARES 13,407,473 2,450,000
============ ============
</TABLE>
4.
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 AND THE PERIOD FROM MAY 15, 1998 (INCEPTION)
TO SEPTEMBER 30, 1999
(Unaudited - See Notice to Reader)
<TABLE>
<CAPTION>
Period from
Three months Three months May 15, 1998
Ended ended (Inception)
September 30, September 30, to September 30,
1999 1998 1999
<S> <C> <C> <C>
NET LOSS FOR THE PERIOD $(204,987) $ (3,497) $(669,001)
OTHER COMPREHENSVIE INCOME (LOSS) , Net of tax:
Foreign currency translation adjustments 27,692 -- 27,692
- --------------------------------------------------------------------------------------------------------
COMPREHENSIVE LOSS FOR THE PERIOD $(177,295) $ (3,497) $(641,309)
========= ========= =========
</TABLE>
5.
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 AND THE PERIOD FROM MAY 15, 1998 (INCEPTION)
TO SEPTEMBER 30, 1999
(Unaudited - See Notice to Reader)
<TABLE>
<CAPTION>
Period from
Three months Three months May 15, 1998
Ended ended (Inception)
September 30, September 30, to September 30,
1999 1998 1999
<S> <C> <C> <C>
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES
Net (loss) for the period $ (204,987) $ (3,497) $ (669,001)
Items not involving cash:
Depreciation 1,582 -- 3,942
Write-off of deferred charges -- -- 3,978
Issuance of shares for contract fees -- -- 20,000
Changes in non-cash working capital --
Accounts payable 10,990 4,453 12,579
Goods and Services Tax receivable (8,615) -- (25,029)
Due to director (450) 100 --
Paid rent (4,815) -- (4,815)
- --------------------------------------------------------------------------------------------------------------------
(206,295) 1,056 (658,346)
FINANCING ACTIVITIES
Proceeds from issuance of common stock -- 44,362 2,343,172
- --------------------------------------------------------------------------------------------------------------------
-- 44,362 2,343,172
INVESTING ACTIVITIES
Acquisition of property, plant
and equipment (47,183) (29,642) (137,942)
Software development costs (50,386) -- (151,780)
- --------------------------------------------------------------------------------------------------------------------
(97,569) (29,642) (289,722)
(DECREASE) INCREASE IN CASH (303,864) 15,776 1,395,104
CASH, BEGINNING OF PERIOD 1,702,291 3,323 3,323
----------- ----------- -----------
CASH, END OF PERIOD $ 1,398,427 $ 19,099 $ 1,398,427
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
6.
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998 AND THE PERIOD FROM MAY 15, 1998 (INCEPTION)
TO SEPTEMBER 30, 1999
(Unaudited - See Notice to Reader)
<TABLE>
<CAPTION>
Period from
Three months Three months May 15, 1998
Ended ended (Inception)
September 30, September 30, to September 30,
1999 1998 1999
<S> <C> <C> <C>
Interest Paid $ -- $ -- $ --
Income taxes paid -- -- --
$ -- $ -- $ --
- --------------------------------------------------------------------------------------------------------------
Supplemental Disclosure of Non--Cash Investing and Financing Information
Acquisition of assets for issuance of common stock:
Software development costs $ -- $ -- $ 148,550
Topclick (Canada) Inc. -- -- 51,758
Issuance of common stock -- -- (200,308)
- --------------------------------------------------------------------------------------------------------------
$ -- $ -- $ --
</TABLE>
7.
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
(Unaudited - See Notice to Reader)
NOTE 1 BUSINESS DESCRIPTION
Topclick International, Inc. (formerly Galveston Oil & Gas, Inc. ) (a
development stage company), "the Company", was incorporated on October
3, 1996 under the laws of the state of Delaware in United States of
America. Pursuant to the agreement described in Note 7, the Company
had a change of control, as such, the nature of the business is
changed from development of oil and gas properties to the business of
operating an Internet Website.
Topclick International, Inc. purchased 100% of Topclick Corporation
pursuant to the stock exchange agreement dated February 10, 1999. This
has been accounted for as a reverse acquisition of the Company by
Topclick Corporation.
Topclick Corporation was incorporated under the laws of Delaware on
July 8, 1998. Effective July 8, 1998, Topclick Corporation acquired
100% of Topclick (Canada) Inc. which is a company under common control
and as such the business combination has been accounted for at
historical costs in a manner similar to that in a pooling of
interests.
Topclick (Canada) Inc. was incorporated under the laws of the Canada
Business Corporation Act and commenced operations (deemed date of
inception) on May 15, 1998.
In addition, Topclick Corporation purchased certain Internet assets
from Helpful by Design Inc. which is also under common control. This
has been accounted for at predecessor historical costs.
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements are expressed in U.S. Dollars,
have been prepared in accordance with accounting principles generally
accepted in United States and include the following significant
accounting policies:
Consolidation
The consolidated financial statements of the Company include the
accounts of the Company and the consolidated accounts of its
wholly-owned subsidiary Topclick Corporation. The consolidated
financial statements of Topclick Corporation also include accounts of
its wholly-owned subsidiary, Topclick (Canada) Inc. All significant
inter-company transactions have been eliminated.
As described in Note 7, Topclick International, Inc. acquired all of
the outstanding common shares of Topclick Corporation. For accounting
purposes, the acquisition has been treated as the acquisition of
Topclick International, Inc. with Topclick Corporation as the acquiror
(reverse acquisition). The historical financial statements prior to
February 10, 1999 are those of Topclick Corporation consolidated.
Pro-forma information giving effect to the acquisition as if the
acquisition took place May 15, 1998 is not presented as the effects
are immaterial.
i) The consolidated financial statements of the combined entities
are issued under the name of the legal parent (Topclick
International, Inc.) but are considered a continuation of the
financial statements of the legal subsidiary (Topclick
Corporation).
8.
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
(Unaudited - See Notice to reader)
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
ii) As Topclick Corporation is deemed to be the acquiror for
accounting purposes, its assets and liabilities are included in
the consolidated financial statements at their historical
carrying values in the accounts of Topclick International Inc.
Accounting Estimates
The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles of United States of
America requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilites and disclosures
in the consolidated financial statements and the accompanying notes.
Actual results could differ from those estimates.
Property, plant and equipment Property, plant and equipment are
recorded at costs and are amortized in the following manner:
Computers 30% declining balance
Furniture and equipment 20% declining balance
In the year of acquisition, depreciation is calculated at one-half of
the above-noted rates.
Software Development
Costs Software development costs represent costs relating to the
development of the Internet website. These costs will be amortized
upon the commercialization of the Internet website, over three years
due to the nature of business in the of software technology industry.
Loss Per Share
Loss per share is provided in accordance with the Statement of
Financial Accounting Standards No. 128 (SFAS), "Earnings Per Share".
Due to the Company's simple capital structure, only basic loss per
share is presented. Basic loss per share is computed by dividing loss
available to common shareholders by weighted average number of common
shares outstanding for the period.
Foreign currency translation
The Company uses the local currency (Canadian Dollars) as the
functional currency. Assets and liabilities dominated in the foreign
functional currency are translated at the exchange rate of the balance
sheet date. Translation adjustments are recorded as a separate
component of the shareholders' equity. Revenues and expenses
demoninated in foreign currency are translated at the weighted average
exchange for the period.
9.
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
(Unaudited - See Notice To Reader)
NOTE 2 SIGNIFICANT ACCOUTING POLICIES (Continued)
Income Taxes
The Company accounts for income taxes using the liability method.
Under this method deferred income tax liabilities and assets are
computed based on the tax liability or benefit in future years of the
reversal of temporary differences in the recognition of income or
reduction of expenses between financial and tax reporting. Deferred
tax assets and/or liabilities are classified as current and noncurrent
based on the classification of the related asset or liability for
financial reporting purposes, or based on the expected reversal date
for deferred taxes that are not related to an asset or liability.
Valuation allowances are established, when necessary, to reduce
deferred tax assets to the amount expected to be realized.
NOTE 3 PROPERTY, PLANT AND EQUIPMENT
Accumulated Net Book
Cost Depreciation Value Depreciation
---- ------------ ----- ------------
Computer $ 93,765 $ 15,502 $ 78,263 $ 1,281
Furniture and
Equipment 30,815 3,637 27,178 301
Leasehold 13,362 334 13,028 --
-------- -------- ----------------------
$137,942 $ 19,473 $118,469 $ 1,582
-------- -------- -------- --------
During the three months ended September 30, 1999, $1,281 of
depreciation of the computer was capitialized as software development
costs.
NOTE 4 CASH
At September 30, 1999, approximately $1,398,427 of the total cash is
deposited with RBC Dominion Securities Limited (RBC). It carries
interest at 3 3/4 per annum. It is management's intention to utilize
this account as part of its operating bank account. RBC is Canada's
leader in the investment industry. It is the leading debt and equity
underwriter in Canada and is a member of the Royal Bank Financial
Group. The Royal Bank is Canada's premier global financial services
group with leading market share in personal and business banking,
corporate and investment banking, and wealth management.
10.
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
(Unaudited - See Notice to Reader)
NOTE 5 ACQUISITION OF SOFTWARE DEVELOPMENT COSTS (Continued)
a) Effective July 8, 1998 and pursuant to the terms of the
acquisition agreement dated September 15, 1998, Topclick
Corporation (the legal subsidiary) acquired the Internet property
from Helpful By Design Inc., a company under common control of a
controlling shareholder of Topclick Corporation. The
consideration given was 6,972,774 common shares. The software
development costs acquired by Topclick Corporation from Helpful
By Design Inc. are recorded at processor's costs of $148,550.
b) Pursuant to the same agreement as above, Topclick Corporation
acquired 100% of the outstanding shares of Topclick (Canada) Inc.
from Helpful by Design Inc. for the issuance of 514,929 common
shares of Topclick Corporation. The shares issued have been
recorded at the amount of the net assets of Topclick (Canada)
Inc. at the date of acquisition.
The net assets of Topclick (Canada) Inc. at date of acquisition
consists of the following:
Cash $ 37,158
Receivable 16,000
Accounts payable (1,400)
--------
$ 51,758
--------
The above transaction between entities under common control has
been accounted for at historical cost in a manner similar to that
in a pooling of interests.
NOTE 6 REVERSE MERGER
Pursuant to the stock exchange agreement dated February 10, 1999, the
Company issued eight common sharesin exchange for every seven common
shares of Topclick Corporation. Therefore, at February 23, 1999
(closing date), a total of 8,800,000 common shares were issued by the
Company in exchange for 7,700,000 outstanding common shares if
Topclick Corporation.
As a result of the above transactions, the Company legally controls
Topclick Corporation. However, in substance, the shareholders of
Topclick Corporation control the Company with an ownership of
approximately 71% of its outstanding common shares.
11.
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
(Unaudited - See Notice to Reader)
NOTE 7 FINANCIAL INSTRUMENTS
The Company's financial assets and liabilities consist of cash, Goods
Services Tax receivable, accounts payable, the terms and conditions of
which have been described in the preceding notes.
Credit risk arises from the potential that a debtor will fail to
perform its obligations. The Company is subject to credit risk through
its cash deposits. However, these cash deposits are placed in a
well-capitalized, high quality financial institution (Note 4).
Accordingly, concentrations of credit risk are considered to be
minimal.
Interest rate risk is the risk to the Company's earnings that would
arise from fluctuations in interest rates, and would depend of the
volatility of these rates. The Company's borrowings from external
parties is not substantial. Accordingly, its interest rate risk is
considered to be minimal.
Financial risk is the risk to the Company's earnings that would arise
from fluctuations in interest rates and foreign exchange rates, and
would depend on the volatility of these rates. The Company does not
use derivative instruments to reduce its exposure to interest and
foreign currency risk on its cash deposits held in Canadian funds.
NOTE 8 UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in
errors when information using year 2000 dates is processed. In
addition, similar problems may be experienced before, on, or after
January 1, 2000, and if not addressed, the impact on operations and
financial reporting may range from minor error to significant system
failure which could affect an entity's ability to conduct normal
business operations. Management believes they have taken appropriate
course of action to ensure that the Company's technologies are Year
2000 compliant. However, it is not possible to be certain that all
aspects of the Year 2000 issue effecting the entity, including those
related to the efforts of customers, suppliers, or other third
parties, will be fully resolved.
12.
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
(Unaudited - See Notice to reader)
NOTE 9 DEFERRED INCOME TAXES
Significant components of the Company's deferred income taxes and liabilities at
September 30, 1999 and 1998 are as follows:
September 30, September 30,
1999 1998
Deferred income tax asset
Net operating loss $(687,691) $ --
Other 18,690 --
--------- ---------
Total deferred income tax asset (669,001) --
valuation allowance 669,001 --
--------- ---------
Net deferred income tax liability $ -- $ --
--------- ---------
Reconciliation's of the effective tax rate to the Canadian
statutory rate is as follows:
Tax expense at Canadian statutory rate 45.6% 45.6%
Change in valuation allowance (45.6%) (45.6%)
--------- ---------
Effective income tax rate -- % -- %
--------- ---------
The company has Canadian net operating loss carryforwards of
approximately $462,603 that expire in 2006.
The Company operates its business in its Canadian subsidiary Topclick
(Canada) Inc. and as such has losses carried forward for Canadian
income tax purposes.
NOTE 10 CONTINGENCIES
The Company is the subject of a lawsuit by an individual who is
claiming ownership interest in common stock of Helpful By Design Inc.
(HBD). HBD sold certain assets, including a website to Topclick
Corporation. As described in note 6 there was a share exchange between
Topclick Corporation and the Company that resulted in the Company
legally controlling Topclick Corporation.
The individual has filed a lawsuit in the Supreme Court of British
Columbia seeking the force conversion of approximately 500,000 HBD
shares of its .001 par value common stock into shares of the Company's
.001 par value common stock.
It is not possible to estimate the amount of a contingent loss in
respect of this legal action. The impact on earnings per share is not
material.
13.
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(formerly Galveston Oil & Gas, Inc.)
( A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
(Unaudited - See Notice to reader)
NOTE 11 COMMITMENTS
The Company has commitments under certain contracts of employment and
consulting agreements as follows:
2000 $ 88,970
Further, contracts of employment and consulting agreements call for
the granting of stock options to the individuals under contract. The
option agreement have not been formally prepared and signed at
September 30, 1999 as management is in the process of creating a
formal Stock Option Plan.
Options for the issuance of 776,000 shares of the company are
committed to be granted upon the creation of the Stock Option Plan at
a price less than $1.00 per share to be determined at the time of the
granting of the options.
NOTE 12 COMPARATIVE FIGURES
The comparative figures have been reclassified to conform with the
presentation adopted in the current period.
14.
<PAGE>
Item 23. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with our accountants since the
formation of the Company required to be disclosed pursuant to Item 304 of
Regulation S-B.
LEGAL MATTERS
The validity of the issuance of the shares of our common stock offered by the
Selling Stockholders has been passed upon by Stepp & Beauchamp LLP, located in
Newport Beach, California.
EXPERTS
The financial statements of the Company at December 31, 1998, and 1997, and for
the years then ended, and for the period from incorporation to December 31,
1998, and for the interim period through September 30, 1999, appearing in this
Prospectus and Registration Statement have been audited by Buckley Dodds,
Chartered Accountants, and are included in reliance upon such reports given upon
the authority of Buckley Dodds as experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed a Registration Statement on Form SB-2 with the Securities and
Exchange Commission pursuant to the Securities Act of 1933 Act with respect to
the common stock offered by the Selling Stockholders. This Prospectus does not
contain all of the information set forth in the Registration Statement on Form
SB-2 and the exhibits and schedules to the Registration Statement on Form SB-2.
For further information with respect to the Company and our common stock,
reference is made to the Registration Statement on Form SB-2 and the exhibits
and schedules filed as a part of the Registration Statement on Form SB-2.
Statements contained in this Prospectus concerning the contents of any contract
or any other document referred to are not necessarily complete, and reference is
made in each instance to the copy of such contract or document filed as an
exhibit to the Registration Statement on Form SB-2. Each such statement is
qualified in all respects by such reference to such exhibit.
On or about June 22, 1999, the Company became a reporting company with the
Securities and Exchange Commission, and will hereafter provide an annual report
to its security holders, which will include audited financial statements. The
public may read and copy any materials filed with the Securities and Exchange
Commission, including the Company's Registration Statement on Form SB-2, and all
exhibits and schedules thereto, at the Securities and Exchange Commission's
Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. Copies
of all or any part thereof may be obtained from such office after payment of
fees prescribed by the Securities and Exchange Commission. The public may also
obtain information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800- SEC-0330. The Securities and
Exchange Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Securities and Exchange Commission. The address of that
site is http://www.sec.gov. The Company currently maintains its own Internet
address at www.topclick.com.
25
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item
Number Caption Page
- ------ ------- ----
<S> <C> <C>
3. Summary Information......................................................................4
Risk Factors.............................................................................5
We Have a Limited Operating History.............................................5
Our Industry is Intensely Competitive...........................................5
We Will Rely on the Use of Computer and Telecommunications
Infrastructure Provided by Third Parties...............................6
We Will Rely on the Use of the Internet.........................................6
We Are Subject to Regulatory and Related Influences.............................6
We Are Subject to Market Forces Beyond Our Control..............................6
Future Capital Needs and Uncertainty of Additional Funding......................6
Our Success Depends on Our Ability to Retain Key Personnel......................7
Impact of the Year 2000 (Y2K Issues)............................................7
Third Party Y2K Risks to the Company............................................7
4. Use of Proceeds......................................................................... 7
5. Determination of Offering Price..........................................................7
6. Dilution.................................................................................8
7. Selling Security Holders.................................................................8
8. Plan of Distribution....................................................................12
9. Legal Proceedings.......................................................................13
10. Directors, Executive Officers, Promoters and Control Persons............................13
11. Security Ownership of Certain Beneficial Owners and Management..........................14
12. Description of Securities...............................................................15
13. Interest of Named Experts and Counsel...................................................15
14. Disclosure of Commission Position on Indemnification for Securities Act Liabilities.....15
15. Organization Within Last Five Years.....................................................15
16. Description of Business.................................................................16
17. Management's Discussion and Analysis of Financial Condition
and Results of Operations...............................................................18
18. Description of Property.................................................................21
19. Certain Relationships and Related Transactions ...................................23
20. Market for Common Equity and Related Stockholder Matters................................23
21. Executive Compensation..................................................................24
22. Financial Statements....................................................................24
23. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................................................................50
Legal Matters...........................................................................50
Experts.................................................................................50
Additional Information..................................................................50
</TABLE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Article Seventh of the Certificate of Incorporation of the Company provides,
among other things, that directors of the Company shall not be personally liable
to the Company or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of such director's
duty of loyalty to the Company or its stockholders; (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law; (iii) liability
26
<PAGE>
for unlawful payments of dividends or unlawful stock purchase or redemption by
the Company; or (iv) for any transaction from which such director derived any
improper personal benefit. Accordingly, our directors may have no liability to
our shareholders for any mistakes or errors of judgment or for any act of
omission, unless such act or omission involves intentional misconduct, fraud, or
a knowing violation of law or results in unlawful distributions to our
shareholders.
There are no indemnification provisions in the Company's Certificate of
Incorporation regarding officers of the Company. However, we anticipate that we
will enter into indemnification agreements with each of its executive officers
pursuant to which we will agree to indemnify each such person for all expenses
and liabilities, including criminal monetary judgments, penalties and fines,
incurred by such person in connection with any criminal or civil action brought
or threatened against such person by reason of such person being or having been
an officer or director or employee of the Company. In order to be entitled to
indemnification by the us, such person must have acted in good faith and in a
manner such person believed to be in our best interests and, with respect to
criminal actions, such person must have had no reasonable cause to believe his
or her conduct was unlawful.
Item 25. Other Expenses of Issuance and Distribution
We will pay all expenses in connection with the registration and sale of the
Selling Stockholders' common stock, except any selling commissions or discounts
allocable to sales of those shares, fees and disbursements of counsel and other
representatives of the Selling Stockholders, and any stock transfer taxes
payable by reason of any such sale. The estimated expenses of issuance and
distribution are set forth below.
Registration Fees Approximately $4,633.41
Transfer Agent Fees Approximately $2,500.00
Costs of Printing and Engraving Approximately $300.00
Legal Fees Approximately $25,000.00
Accounting Fees Approximately $7,500.00
Item 26. Recent Sales of Unregistered Securities
There have been no sales of unregistered securities within the last three (3)
years which would be required to be disclosed pursuant to Item 701 of Regulation
S-B, except for the following:
On or about January 30, 1999, the Company sold 4,912,500 shares of its common
stock for $0.20 per share. The shares were issued in reliance upon the exemption
from the registration and prospectus delivery requirements of the Securities Act
of 1933 specified in Section 3(b) of that Act and Rule 504 of Regulation D
promulgated by the Securities and Exchange Commission. The offering price for
the shares was arbitrarily set by us and had no relationship to assets, book
value, revenues or other established criteria of value. The gross proceeds to us
were $982,500. We used $150,000 of these funds to repay an outstanding loan of
$150,000 from certain of investors represented by Sonora Capital Corporation, a
British Columbia corporation.
On or about March 28, 1999, we sold 400,000 shares of our common stock for $2.50
per share. The shares were issued in reliance upon the exemption from the
registration and prospectus delivery requirements of the Securities Act of 1933
set forth in Regulation S promulgated by the Securities and Exchange Commission.
Specifically, the offer was made to "non U.S. persons outside the United States
of America", as that term is defined by Regulation S. The offering price for the
shares was arbitrarily set by us and had no relationship to assets, book value,
revenues or other established criteria of value. The net proceeds to us were
$1,000,000.
27
<PAGE>
Item 27. Exhibits.
Copies of the following documents are filed with this Amendment No. 3 to our
Registration Statement on Form SB-2, as exhibits:
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Incorporation*
(Charter Document)
3.2 Amendment to Certificate of Incorporation*
(Charter Document)
3.3 Bylaws*
5. Opinion Re: Legality*
8. Opinion Re: Tax Matters (not applicable)*
10.1 Financing Agreement*
(material contract)
10.2 Frontier GlobalCenter, Inc. Agreement*
(material contract)
11. Statement Re: Computation of Per Share Earnings*
15. Letter on Unaudited Interim Financial Information*
21. Subsidiaries of the Registrant*
23.1 Consent of Auditors*
23.2 Consent of Counsel*
24. Power of Attorney*
27. Financial Data Schedule*
*Previously filed as exhibits to Registration Statement on Form SB-2.
28
<PAGE>
Item 28. Undertakings.
A. Insofar as indemnification for liabilities arising pursuant to the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, we will,
unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the
Securities Act of 1933 and we will be governed by the final adjudication of such
issue.
B. We hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To indicate in the prospectus any facts or events arising after
the effective date of the Registration Statement (or most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) (Section 230.424(b) of
Regulation S-B) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) To include any additional or changed material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended,
we certify that we have reasonable grounds to believe that we meet all of the
requirements of filing on Form SB-2 and authorized this Amendment No. 3 to the
Registration Statement on Form SB-2 to be signed on our behalf by the
undersigned, in the City of Vancouver, British Columbia, on December 28, 1999.
TopClick International, Inc.,
a Delaware corporation
By: /s/
---------------------------------
Chris Lewis
Its: President
29
<PAGE>
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
By: /s/
----------------------------
Terry Livingstone
Its: Chief Operating Officer
Date: December 28, 1999
By: /s/
----------------------------
Chris Lewis
Its: Director
Date: December 28, 1999
30
