<PAGE>
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-QSB
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended March 31, 2000
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number: 000-30382
TOPCLICK INTERNATIONAL, INC.
---------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-0755473
- ------------------ -----------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
Suite 200, 1636 West 2nd Avenue,
Vancouver, British Columbia, Canada V6J 1H4
-------------------------------------------
(Address of principal executive offices, including zip code)
Registrant's Telephone No., including area code: (604) 737-1127
---------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
As of March 31, 2000, there were 14,457,473 shares of the issuer's Common
Stock outstanding.
<PAGE>
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial statements
Unaudited Consolidated Balance Sheets - March 31, 2000 and June 30, 1999
Unaudited Consolidated Statement of Operations - Three and Nine Months
Ended March 31, 2000 and 1999 for the period from May 15, 1998
(Inception) to March 31, 2000
Unaudited Consolidated Statement of Cash Flows - Nine Months Ended March
31, 2000 and 1999 and for the period from May 15, 1998 (Inception) to
March 31, 2000
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Pending Legal Proceedings
Item 2. Changes in Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports Filed on Form 8-K
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TOPCLICK INTERNATIONAL, INC.
(A Development Stage Company)
Unaudited Consolidated Balance Sheet
As of March 31, 2000 and June 30, 1999
<TABLE>
<CAPTION>
March 31, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
Current assets
Cash $ 571,863 $ 1,702,291
Goods and Services Tax Receivable 52,512 16,414
Prepaid expenses 30,435 -
Due from director 11,287 -
------------- -------------
666,097 1,718,705
Property, plant and equipment 145,373 78,324
Software development costs - 149,032
------------- -------------
Total assets $ 811,470 $ 1,946,061
============= =============
Current Liabilities
Accounts payable $ 73,495 $ 23,569
Litigation settlement payable 34,483 -
Due to director - 450
------------- -------------
Total liabilities 107,978 24,019
------------- -------------
Stockholders' equity
Preferred stock - $0.001 per value, 20,000
shares authorized, none issued and
outstanding - -
Common shares - $0.001 par value, 99,980,000
shares authorized, 13,457,473 and
13,407,473 shares outstanding at
March 31, 2000, 1999 and June 30, 1999
respectively 13,456 13,407
Additional paid-in capital 2,659,245 2,465,714
Deferred compensation costs (52,195) -
Cumulative translation adjustment 37,581 17,922
Accumulated deficit (1,954,595) (572.263)
------------- -------------
Total stockholders' equity 703,492 1,922,042
------------- -------------
Total liabilities and stockholders'
equity $ 811,470 $ 1,946,061
============= =============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
<PAGE>
<PAGE>
TopClick International, Inc.
(A Development Stage Company)
Unaudited Consolidated Statement of Operations
For the Three and Nine Months Ended March 31, 2000 and 1999
And for the Period from May 15, 1998 (Inception) to March 31, 2000
<TABLE>
<CAPTION>
May 15, 1999
(inception)
Three Months Ended Nine Months Ended to
March 31, March 31, March 31, March 31, March 31,
2000 1999 2000 1999 2000
----------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Expenses
Contractor fees $ 45,943 $ 91,456 $ 252,083 $157,235 $ 540,984
Salaries & benefits 135,126 7,573 274,410 11,458 300,053
Accounting and legal 27,708 35,792 110,070 43,257 191,123
Investor relations 28,218 - 74,726 - 74,726
Travel 29,942 485 69,794 2,696 81,808
Insurance 9,524 197 16,632 1,302 18,214
Rent 23,107 6,285 54,465 14,943 76,592
Advertising and
promotion 11,776 - 33,038 - 37,641
Director fees - - 50,124 - 50,124
Internet services 23,065 1,155 41,887 4,123 57,882
Securities filings 4,968 - 12,576 - 12,576
Office expenses 23,340 4,232 37,503 15,346 59,677
Meals and entertain-
ment 6,586 4,585 16,888 9,931 31,391
Telephone 5,356 2,487 11,053 6,891 19,577
Recruitment fees 2,041 - 7,027 - 7,027
Education 8,811 - 13,723 - 19,762
Automobile - 658 3,008 2,459 7,783
Interest & bank charges 563 95 1,332 168 1,669
Utilities 855 678 1,779 1,542 3,538
Software - - - - 8,941
Foreign exchange 6,791 - 6,333 - 6,333
Consulting services - 1,292 - 30,165 33,789
Investment referral
fees - 14,061 - 23,003 27,394
Litigation settlement 34,014 - 34,014 - 34,014
Depreciation 13,265 2,837 22,208 6,319 34,395
Fair value of options
granted to
consultants 116,385 - 116,385 - 116,385
----------- --------- ----------- --------- ----------
Loss from operations 557,384 173,868 1,261,058 330,838 1,853,398
Other items
Interest income 5,869 2,768 27,758 6,003 51,813
Write off development
costs (149,032) - (149,032) - (149,032)
Write off deferred
charges - - - (5,000) (3,978)
----------- --------- ----------- --------- ----------
(143,163) 2,768 (121,274) 1,003 (101,197)
----------- --------- ----------- --------- ----------
Net loss for the
period (700,547) (171,100) (1,382,332) (329,835) (1,954,595)
Accumulated deficit,
beginning of
period (1,254,048) (160,146) (572,263) (1,411) -
----------- --------- ----------- --------- ----------
Accumulated deficit,
end of period (1,954,595) (331,246) (1,954,595) (331,246) (1,954,595)
=========== ========= =========== ========= ==========
Weighted average
number of shares 13,457,47311,698,643 13,439,83711,398,460
Loss per share ($0.05) ($0.01) ($0.10) ($0.03)
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
<PAGE>
<PAGE>
TopClick International, Inc.
(A Development Stage Company)
Unaudited Consolidated Statement of Cash Flows
For the Nine Months Ended March 31, 2000 and 1999
And for the Period from May 15, 1998 (Inception) to March 31, 2000
<TABLE>
<CAPTION>
Period from
Nine Months Nine Months May 15, 1998
Ended Ended (inception)
March 31, March 31, to March 31,
2000 1999 2000
----------- ----------- ------------
<S> <C> <C> <C>
Cash provided by (used in)
Operating activities
Net (loss) for the period $(1,382,332) $ (329,835) $ (1,930,515)
Items not involving cash:
Write-off of deferred charges - - 3,978
Depreciation 22,208 8,869 39,308
Issuance of shares for services 25,000 20,000 45,000
Write-off of development cost 149,032 149,032
Fair value of options issued to
consultants 116,385 116,385
Changes in non-cash working capital
Goods and Services Tax receivable (35,462) (4,209) (51,576)
Prepaid expenses (30,021) - (30,021)
Accounts payable 49,045 92,113 72614
Litigation settlement payable 34,014 - 34,014
Due to director (11,132) - (11,132)
----------- ----------- ------------
(1,063,713) (213,062) (1,580,438)
----------- ----------- ------------
Financing activities
Proceeds from issuance of common
stock - 2,272,030 2,321,192
----------- ----------- ------------
Investing activities
Acquisition of property, plant and
equipment (87,652) (87,675) (193,151)
----------- ----------- ------------
Foreign exchange adjustment 20,937 - 20,937
----------- ----------- ------------
Increase (decrease) in cash (1,130,428) 1,971,293 568,540
Cash, beginning of period 1,702,291 - 3,323
----------- ----------- ------------
Cash, end of period $ 571,863 $1,971,293 $ 571,863
=========== =========== =============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
<PAGE>
<PAGE>
TOPCLICK INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
NOTE 1 BUSINESS DESCRIPTION
TopClick International, Inc. (a development stage company), "the
Company", was incorporated on October 3, 1996 as Galveston Oil & Gas,
Inc. under the laws of the state of Delaware in the United States of
America. Effective July 8, 1998, the Company had a change of control, and
the nature of the business was 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 BASIS OF PRESENTATION
These condensed consolidated financial statements are unaudited and
reflect all adjustments that, in our opinion, are necessary for a fair
presentation of the results for the interim period. All such adjustments
are of a normal recurring nature. The results of operations for the
current interim period are not necessarily indicative of results to be
expected for the current year or any other period. Certain amounts have
been reclassified to conform to the fiscal 2000 presentation. The
comparative results of operations are those for TopClick Corporation.
These financial statements have been prepared on the basis that the
Company is a going concern and is able to continue business and discharge
its obligations in the ordinary course. In view of the limited cash on
hand, it is possible that the Company will be unable to continue
operations past October 30, 2000. The primary non-cash assets at March
31, 2000 were prepaid directors and officers insurance and fixed assets.
In the opinion of management, there is not a material difference between
the going concern values and liquidation value and accordingly no
adjustment is required in these financial statements.
These consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in
our SB-2 registration statement as amended and filed with the Securities
and Exchange Commission.
NOTE 3 CONTINGENCIES
The Company was 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. There
was a share exchange between TopClick Corporation and the Company that
resulted in the Company legally controlling TopClick Corporation. The
lawsuit was settled in April 2000 with the result that in May 2000 the
Company will make a payment in respect of his legal fees of approximately
$34,000. The shares that formed the basis of the dispute were shown as
issued and outstanding at March 31, 2000 and the Company has accrued
obligation for the legal fees.
NOTE 4 STOCK OPTIONS
We have a 1999 Stock Option Plan (the "Plan") to provide incentives to
employees, directors and consultants. The maximum term of options granted
under the Plan is ten years. The Board of Directors has the exclusive
power over the granting of options and their vesting provisions. Stock
options for common stock comprise:
<TABLE>
<CAPTION>
Weighted Average
Shares Exercise Price
------ --------------
<S> <C> <C>
Outstanding - June 30, 1999 - $ -
Granted during the period 1,641,500 0.55
Exercised during the period - -
Canceled during the period - -
Outstanding - March 31, 2000 1,641,500 $ 0.55
Exercisable - March 31, 1999 773,000 $ 0.55
</TABLE>
The Company applies the provision of APB Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations to account for its
stock-based awards. Accordingly, costs for employee stock options or
issuance of shares is measured as the excess, if any, of the fair value
of the Company's common stock at the measurement date over the amount the
employee must pay to acquire the stock. The cost for the issuance of
options to non-employees is based on the fair value of the options
granted at the date the services were performed using the Black-Scholes
option pricing model. Compensation expense for the three and nine months
ended March 31, 2000 was $116,385.
SFAS No. 123, Accounting for Stock-Based Compensation, requires
disclosure of the pro forma effect of applying the fair value method of
accounting for stock options. For disclosure purposes, the Company uses
the Black-Scholes option-pricing model to compute estimated fair value,
based on the following assumptions:
<TABLE>
<CAPTION>
2000
----
<S> <C>
Risk-free interest rate 6.0%
Dividend yield rate - %
Price volatility 125%
Weighted average expected life of options 1 to 3 years
</TABLE>
In March 2000, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 44, Accounting for Certain Transactions Involving
Stock Compensation. FASB Interpretation No. 44 clarifies that non-
employee members of an entity's Board of Directors do not meet the
definition of an employee, in which case the requirements of SFAS No. 123
must be applied. However, an exception is made to require the
application of APB Opinion No. 25 to stock compensation granted to a non-
employee director for services provided as a director if the director was
(a) elected by stockholders or (b) appointed to a board position that
will be filled by stockholder election when the existing term expires.
Through March 31, 2000, the Company had recognized $116,385 of
compensation for options granted to non-employees. The pro forma effect
of applying the fair value method of accounting for options issued to
employees results in a $185,800 increase in net loss and a $0.01 increase
in net loss per share for the nine months ended March 31, 2000.
NOTE 5 COMMITMENTS
Future minimum lease payments required under the Company's leases,
excluding the Company's share of operating costs and property taxes, are
as follows:
<TABLE>
<CAPTION>
Year Ending June 30
-------------------
<S> <C>
2000 $ 31,300
2001 64,000
2002 29,000
2003 29,000
2004 4,800
----------
$ 158,100
</TABLE>
NOTE 6 SUBSEQUENT EVENTS
On April 28, 2000 as a result of the Company's limited cash resources, it
terminated 11 employees and incurred termination costs of approximately
$8,100 as a result. The Company plans to continue operations by
subcontracting services out to management companies until it is either
able to finance its operations or generate sufficient revenues to offset
its operating expenses.
<PAGE>
<PAGE>
Item 2. Plan of Operation
THIS REPORT SPECIFIES FORWARD-LOOKING STATEMENTS OF MANAGEMENT OF THE
COMPANY INCLUDING, WITHOUT LIMITATION, FORWARD-LOOKING STATEMENTS REGARDING
THE COMPANY'S EXPECTATIONS, BELIEFS, INTENTIONS AND FUTURE STRATEGIES.
FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT ESTIMATE THE HAPPENING OF
FUTURE EVENTS AND ARE NOT BASED ON HISTORICAL FACTS. FORWARD-LOOKING
STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, SUCH
AS "COULD", "MAY","WILL", "EXPECT", "SHALL", "ESTIMATE", "ANTICIPATE",
"PROBABLE", "POSSIBLE","SHOULD", "CONTINUE", "INTEND" OR SIMILAR TERMS,
VARIATIONS OF THOSE TERMS OR THE NEGATIVE OF THOSE TERMS. THE FORWARD-LOOKING
STATEMENTS SPECIFIED IN THIS REPORT HAVE BEEN COMPILED BY MANAGEMENT OF THE
COMPANY ON THE BASIS OF ASSUMPTIONS MADE BY MANAGEMENT AND CONSIDERED BY
MANAGEMENT TO BE REASONABLE. FUTURE OPERATING RESULTS OF THE COMPANY,
HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION, GUARANTY, OR
WARRANTY IS TO BE INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS.
THE ASSUMPTIONS USED FOR PURPOSES OF THE FORWARD-LOOKING STATEMENTS
SPECIFIED IN THIS REPORT REPRESENT ESTIMATES OF FUTURE EVENTS AND ARE SUBJECT
TO UNCERTAINTY AS TO POSSIBLE CHANGES IN ECONOMIC, LEGISLATIVE, INDUSTRY, AND
OTHER CIRCUMSTANCES. AS A RESULT, THE IDENTIFICATION AND INTERPRETATION OF
DATA AND OTHER INFORMATION AND THEIR USE IN DEVELOPING AND SELECTING
ASSUMPTIONS FROM AND AMONG REASONABLE ALTERNATIVES REQUIRE THE EXERCISE OF
JUDGMENT. TO THE EXTENT THAT THE ASSUMED EVENTS DO NOT OCCUR, THE OUTCOME MAY
VARY SUBSTANTIALLY FROM ANTICIPATED OR PROJECTED RESULTS, AND, ACCORDINGLY, NO
OPINION IS EXPRESSED ON THE ACHIEVABILITY OF THOSE FORWARD-LOOKING STATEMENTS.
IN ADDITION, THOSE FORWARD-LOOKING STATEMENTS HAVE BEEN COMPILED AS OF THE
DATE OF THIS REPORT AND SHOULD BE EVALUATED WITH CONSIDERATION OF ANY CHANGES
OCCURRING AFTER THE DATE OF THIS REPORT. NO ASSURANCE CAN BE GIVEN THAT ANY OF
THE ASSUMPTIONS RELATING TO THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THIS
REPORT ARE ACCURATE, AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY SUCH
FORWARD-LOOKING STATEMENTS.
Sources of Cash
The Company's primary source of cash is from the issuance of the
Company's securities. In January 1999, the Company entered into a Financing
Agreement which provided the Company with $2,000,000. The Company has
attempted to obtain additional financing at commercially reasonable rates but
has not closed a financing since February 1999. There can be no assurance that
the Company will be able to obtain additional financing at commercially
reasonable rates, or at all. The Company has expended, and will continue to
expend in the future to the extent possible, substantial funds on the research
and development of its products and services.
At March 31, 2000 the Company had cash reserves sufficient to fund
operations until June 30, 2000 based on its plan of operations at that date.
Subsequently, on April 27, 2000, the Company undertook a plan of
reorganization (see "Company's Plan of Operation for the Next 12 Months"
below) which the Company believes will allow it to continue operations until
October 31, 2000.
The failure of the Company to obtain additional financing will
significantly limit or eliminate the Company's ability to fund its research
and development activities, which will have a materially adverse effect on the
Company's ability to continue its operations.
Operating Results
In the three months ended March 31, 2000, total expenses increased from
$443,200 recorded in the first fiscal quarter to $557,000. The increase in
expenses was primarily due to the fair value of options granted to non-
employees which was $116,400. Expenses for the nine months ended March 31,
2000 increased from $493,300 in comparable period last year to $1.26 million.
The increase in overall expenses is due to the increase in the number of
employees and contractors and the general scale of operations.
Contractor fees fell from $79,600 in the second fiscal quarter to $45,900
in the third fiscal quarter ended March 31, 2000 as the Company moved more of
its personnel from contractor to full-time employee status. As a corollary,
salaries and benefits increased from $119,600 in the first second fiscal
quarter to $135,100 in the third fiscal quarter. Total salaries for the nine
months ended March 31, 2000 were $274,400 compared to $11,500 in the
corresponding period in the prior year. Rent and travel increased after the
Company's San Diego sales office was opened in October. Office expenses
increased in the third quarter due to the cost of the Company's annual general
meeting. Most other expenses were broadly comparable from with the second
quarter with the exception of directors fees which were paid in the second
quarter but which are not currently being accrued and investor relations
expenses which declined due to reduced investor relations activity.
The Company's loss from operations increased from $1.25 million during
the period from inception (May 15, 1998) through December 31, 1999 to $1.85
million for the period from inception to March 31, 2000. The Company's net
loss for the three and nine month period ended March 31, 2000 was $700,500 and
$1.38 million respectively compared to $154,700 and $487,200 in the
corresponding periods in the prior fiscal year. The increase in the net loss
was largely due to the increase in the operating loss, but in addition, the
Company wrote off capitalized development costs of $149,000 as there is
considerable uncertainty regarding the Company's ability to profit from these
development costs.
At March 31, 2000, the Company had approximately $452,000 in certificates
of deposit. Management of the Company intends to utilize these funds to
finance operations. Management of the Company believes that the Company can
satisfy its cash requirements until June 30, 1999 without raising any
additional funds, and subsequent to the restructuring in April, until October
30 2000.
The Company uses the local currency, which is the Canadian dollar, as its
functional currency. Assets and liabilities denominated 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. Interest income and expenses denominated in foreign
currency are translated at the weighted average exchange rate for the period.
At March 31, 2000, most of the Company's financial instruments were
denominated in United States dollars.
Company's Plan of Operation for Next 12 Months
The Company has developed and launched a substantial privacy-based
information site with thousands of links to privacy issues, news, books and
organizations. The company is constantly updating and improving this site. The
company believes that it can generate a number of revenue streams from a
privacy site. For example, the Company has opened a virtual bookstore by
packaging approximately 300 books on privacy issues. The Company intends to
sell these books over the Internet and receive sales commissions. The Company
expects to derive revenues from the virtual bookstore within the next nine
months. While the Company is considering the possibility of generating
revenues from subscription fees from subscribers for certain proposed privacy-
based Internet services, the Company does not currently provide any
specialized services and does not currently have any subscribers.
The Company is also reviewing the possibility of selling sponsorship
links on its site in the future, in particular related to other Internet
privacy based businesses, and to charge those companies for providing this
service. A charging schedule for providing sponsorship services has not yet
been established by the Company.
A "link" is a selectable connection from one word, picture, or
information object to another on the Internet. The most common form of link is
the highlighted word or picture that can be selected by the user (with a mouse
or in some other fashion), resulting in the immediate delivery and view of
another file. The highlighted object is often referred to as an "anchor". The
anchor reference and the object referred to constitute a hypertext link. The
Company anticipates that it will seek logo and URL linking arrangements with
targeted sites. The Company intends to develop "tell-a-friend" extensions to
the TopClick site to make it easy for existing users to electronically tell
friends about the Company's services.
The Company's working capital position has diminished to a point at which
the existing development plan would result in cash resources being exhausted
by June 30, 2000. The Company has therefore developed a revised operating plan
to extend the life of its cash resources. As part of this plan, TopClick
terminated 11 of its 15 employees and consultants on April 28, 2000 and
incurred severance costs of approximately $8,100. The Company has retained the
services of certain key former employees through a management services company
owned and operated by a former employee that will take responsibility for day
to day management and marketing of the web site. TopClick intends to
compensate this management company through a combination of cash and stock and
to qualify that stock for trading at the earliest opportunity. It is planned
that following this restructuring, the Company will have enough working
capital to continue operations until October 31, 2000. This period is expected
to be long enough for the Company to generate sufficient revenues to offset
its operating expenses.
This operating plan is subject to a number of material risks.
Inadequate Working Capital - There can be no assurance that the Company's
cash resources will last until October 31, 2000. Unless the Company can raise
additional funds, it will have to cease operations.
Commitment of Key Employees and Contractors - There can be no assurance
that the revised arrangement will ensure the continued commitment of key
individuals. If these individuals were to cease working for the Company it is
possible that the Company would be unable to complete development of products
services currently being developed. If any of the contractors were to cease
working for the Company, there could be a materially adverse impact on the
operations of the Company.
Ability of Contractors to Sell the Company's Stock - The success of the
revised operating plan is likely to depend on the contractors' ability to sell
their stock. In the event that the Company is unable to register the stock,
that there is insufficient liquidity to allow the contractors to sell their
stock or that there are other barriers to issuing or selling stock, there is a
material risk that the contractors may cease working for the company or that
they may demand cash compensation. Either of these outcomes would cause a
materially adverse impact on the operations of the Company.
Ability to Generate Revenues - The Company does not currently generate
revenues and there can be no assurance that the Company will be able to
generate sufficient, or any, revenues within the planned six months or at all.
Failure to generate sufficient revenues to cover operating expenses would have
a materially adverse effect on the operations of the Company.
Developing Site Traffic
The company has been in discussions with several other leading privacy-
based web sites and is in the process of developing Affiliate programs for
such sites which will encourage them to link to the TopClick privacy site and
in turn drive their existing audiences to the site. Activities to date have
yielded approximately 350,000 search requested per month with this number
increasing since the relaunch of the site in February 2000. There is no
assurance, however, that the Company will build an equity base that will be
considered worth acquiring.
Name Identification
The Company has purchased additional domain names and will attempt to
prevent third parties from adopting names similar to TopClick. The Company has
entered into various domain name registration agreements for Topsearches.com,
Mytopclick.com, TopClicking.com, TopClick-Inc.com, TopClickinc.com, Top-
Clicks.net, TopClick.net, TopClicks.net, TopClicks.com, Top-click.com, Top-
clicks.com, Top-click.net, Lookmarks.com with Network Solutions, Inc. ("NSI").
NSI is responsible for the registration of second-level Internet domain names
in the top level COM, ORG, NET, and EDU domains. NSI registers these second-
level domain names on a first come, first served basis. By registering a
domain name, NSI does not determine the legality of the domain name
registration, or otherwise evaluate whether that registration or use may
infringe upon the rights of a third party. Effective February 25, 1998, NSI
revised its domain name dispute policy which provides, among other things,
that if a registrant files a civil action related to the registration and use
of a domain name, and provides NSI with a copy of the file-stamped complaint,
NSI will maintain the status quo ante of the domain name record pending a
final or temporary decision of that court. In such cases, NSI will deposit
control of the domain name into the registry of the court by supplying the
registrant with the registry certificate for deposit. While the domain name is
in the registry of the court, NSI will not make any changes to the domain name
record unless ordered by the court.
The Company believes that this revision to NSI's domain name dispute
policy will discourage frivolous claims against the domain names held by the
Company. Domain name registrations are effective for two years and may be
renewed year-to-year thereafter.
Expanding Internet Markets
Nua, one of Europe's leading online consultants and developers, estimates
that there were approximately 100 million Internet users worldwide in January,
1998. According to a recent report in Computer Intelligence, the growth rate
of Internet users may have increased by as much as 30% in 1998. The Company
plans to benefit from that growth; however, no guaranty can be provided that
such benefit will occur.
Year 2000
To the date of this report, the Company has not experienced any Year
2000-related problems. The Company continues to make appropriate backups of
data and remains informed about Y2K compliance issues.
Employees
As of March 31, 2000 the company retained the services of 15 employees
and contractors however 11 of these employees and contractors were terminated
on April 28, 2000. During the next 12 months, depending on the success of the
Company's market expansion plan, the Company may be required to hire
additional employees; however, the Company is not able to provide a reasonable
estimate of the number of such additional employees which may be required at
this time.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Except as specified below, there are no legal actions pending against the
Company nor are any such legal actions contemplated.
In March, 1999, the Company was 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. The Company has
become involved in this dispute because in September, 1998, HBD sold certain
assets, including a website, to one of the Company's subsidiaries, TopClick
Corporation ("TC"), for, among other consideration, the issuance of 7,000,000
shares of $.001 par value common stock of TC. TC later entered into a stock
exchange agreement with the Company which provided, among other things, that,
as consideration for the exchange, assignment, transfer, conveyance, setting
over and delivery of the shares of TC to the Company, the Company issued 8
shares of its $.001 par value common stock for every 7 shares of TC $.001 par
value common stock.
The lawsuit was settled in April 2000 with the result that in May 2000
the Company will make a settlement in respect of his legal fees of
approximately $34,000. The shares that were at the center of the dispute were
already shown as issued and outstanding and accordingly no further shares will
be issued.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual general meeting on February 24, 2000. At that
time the shareholders appointed a new board of directors and approved certain
changes to the certificate of incorporation. We disclosed full particulars of
the matters subject to vote in our January 24, 2000 proxy statement as
circulated to stockholders and filed with the Securities and Exchange
Commission. The results of the votes held at the annual general meeting were
as follows:
<TABLE>
<CAPTION>
Item For Against Abstain
- ---- --- ------- -------
<S> <C> <C> <C>
1. a. To appoint Chris Lewis to the
Board of Directors 10,953,385 0 96,267
1. b. To appoint John Jennings to
the Board of Directors 10,651,504 0 26,664
1. c. To appoint Bruce McKay to the
Board of Directors 10,651,504 0 26,664
2. To approve and adopt the
Company's Stock Option Plan 7,956,091 77,385 44,372
3. To approve, adopt and ratify
the actions taken by the
Company's officers and directors
during the last fiscal year 10,557,989 207,308 53,918
4. To approve the selection of
Buckley Dodds to audit the
consolidated financial statements
of the Company for the fiscal
year ended June 30, 1999 10,755,097 26,521 57,378
5. To approve the selection of
PriceWaterhouse Coopers
to audit the consolidated
financial statements of the
Company for the fiscal year
beginning July 1, 1999 10,790,845 19,289 22,862
6. To amend the Certificate of
Incorporation of the Company
to require a special vote
providing for an affirmative
vote of two-thirds of the common
stockholders in the event a
person becomes a "controlling
person" and seeks to implement
a "business combination" of the
Company with such person 7,500,932 22,939 205,411
7. To amend the Certificate of
Incorporation of the Company to
require a two-thirds majority of
the common stockholders for a
significant merger or consolidation
or disposition of assets 7,665,811 26,975 25,012
</TABLE>
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
The Company has not filed any reports on Form 8-K with the Commission
during the three-month period ending March 31, 2000.
<PAGE>
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the San Diego, California, on May 22, 2000.
TOPCLICK INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Chris Lewis
------------------------------
Chris Lewis, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS FOUND ON
PAGES 3 AND 4 OF THE COMPANY'S FORM 10-QSB FOR THE THREE MONTHS ENDED MARCH 31,
2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> MAR-31-2000
<CASH> 571,863
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 666,097
<PP&E> 183,912
<DEPRECIATION> (38,539)
<TOTAL-ASSETS> 811,470
<CURRENT-LIABILITIES> 107,978
<BONDS> 0
0
0
<COMMON> 13,456
<OTHER-SE> 690,036
<TOTAL-LIABILITY-AND-EQUITY> 811,470
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,261,058
<OTHER-EXPENSES> 149,032
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,382,332)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,382,332)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,382,332)
<EPS-BASIC> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
