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SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D.C. 20549
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AMENDMENT NO. 3 TO THE
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) and (g) of the Securities Exchange Act of 1934
VERIDA INTERNET CORP.
(Name of Small Business Issuer in its charter)
STATE OF NEVADA 98-0164651
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 California Street
Suite 1500
San Francisco, California 94111
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number, including area code: (415)-439-5395
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of class)
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
A. BUSINESS DEVELOPMENT
Verida Internet Corp. (the "Registrant") was incorporated under
the laws of the State of Nevada on November 1, 1996 as Austral Pacific
Energy Corporation. On November 8, 1996, Austral Pacific Energy
Corporation changed its name to Austral Pacific Energy Corp. The common
shares of the Registrant commenced trading in January 1997 on the OTC
Bulletin Board ("OTCBB") as operated by the National Association of
Securities Dealers Inc. under the symbol "APCE". The head office of the
Registrant was relocated in March 1999 to Suite 1500, 50 California
Street, San Francisco, California 94111. On March 11, 1999, the
Registrant changed its name to Verida Internet Corp. The Registrant's
Internet web site address is www.verida.com.
From inception through to February 1999, the Registrant was
engaged in the business of oil and gas exploration. On February 4, 1999
the Board of Directors of the Registrant determined that given the
depressed status of the oil and gas exploration industry, it would be
in the best interests of the Registrant and its Shareholders to
consider an alternative business focus of the Registrant. The Board of
Directors made the decision that the Registrant would investigate
business opportunities in the internet-based, business services sector.
On February 23, 1999 the Registrant publicly announced that the Board
of Directors had resolved to pursue Internet related growth
opportunities. The Registrant is taking steps to acquire technology and
retain personnel to enable it to provide secure and comprehensive
Internet-based electronic commerce ("e-commerce") solutions for
business-to-business transactions.
The Registrant has filed this Form 10-SB on a voluntary basis to
maintain its quotation on the OTCBB. Effective January 4, 1999, all
companies quoted on the OTCBB are required to be registered with the
Securities and Exchange Commission ("SEC") pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (the "Act"). Starting July
1999, this requirement is to be phased-in alphabetically by trading
symbol for companies already quoted on the OTCBB.
The Registrant is required to file periodic reports with the SEC
pursuant to Section 13 of the Act and will continue to file periodic
reports voluntarily in the event its obligation to file such reports is
suspended under the Act.
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B. CURRENCY AND EXCHANGE RATES
All monetary amounts disclosed in this Form 10-SB are, unless
otherwise indicated, expressed in United States dollars. Refer to Note
2 - Summary of Significant Accounting Policies of the financial
statements under Item 13.
As at March 31, 1999 and 1998, the exchange rates to convert
Canadian dollars into U.S. dollars are 1.5087 and 1.4198, respectively.
The average exchange rates for the three month periods ended March 31,
1999 and 1998 are 1.5115 and 1.4302. respectively.
As at December 31, 1998 and 1997, the exchange rates to convert
Canadian dollars into U.S. dollars are 1.5333 and 1.4305, respectively.
The average exchange rates for the years ended December 31, 1998 and
1997 are 1.4831 and 1.3844, respectively.
C. BUSINESS OF THE ISSUER
Other than investigating potential technologies and recruiting
personnel in support of the Registrant's new business purpose, the
Registrant has had no material business operations since its inception
in 1996. At present the Registrant has yet to acquire or develop the
necessary technology assets in support of its new business purpose to
become a provider of Internet-based, secure and comprehensive e-
commerce solutions in support of business-to-business electronic
commerce.
The Internet is a world-wide medium of interconnected electronic
and/or computer networks. Individuals and companies have recently
recognised that the communication capabilities of the Internet provide
a medium for not only the promotion and communication of ideas and
concepts, but also for the presentation and sale of information, goods
and services.
Electronic commerce, generally refers to utilizing electronic
networks to facilitate buying and selling of products, information, and
services. In electronic commerce, computers and telecommunications take
the place of paper documents, mail and faxes. Businesses now use
computers to electronically send and receive a wide variety of business
documents. These include, for example, product catalogs, price lists,
purchase orders and invoices. Electronic Data Interchange ("EDI") is a
specific form of electronic commerce. It refers to the transmission of
data between a business and its customers or its vendors in the course
of a business transaction. A typical example of EDI is electronically
placing a purchase order for merchandise with a vendor, and having the
vendor electronically confirm the order and produce an invoice when the
goods are shipped. The computers of the buyer and the seller
communicate and exchange the relevant information. They use an agreed-
upon or standard format to do so. In an earlier stage of electronic
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commerce, companies that wanted to do business electronically needed to
have an arrangement with a special type of computer network. That
network is referred to as a value-added computer network, or "VAN."
Traditionally, much of the EDI and e-commerce market was serviced by
companies which provide their services through VANs. A VAN provides
standardized forms and acts as a kind of electronic post office, where
data and forms are exchanged, parties can communicate via email, and
funds can be electronically transferred.
More recently the Internet has provided an alternative means for
companies to conduct electronic commerce. Rather than using a
proprietary VAN, companies can use the Internet as the medium over
which electronic commerce is conducted. The Registrant intends to
utilize this medium to develop business to business e-commerce
solutions with its initial products providing Internet-based
functionality for commercial transactions, marketing, data management
and analysis.
Planned, Products and Services
The Registrant plans on offering a product "suite" of World Wide
Web ("Web") based services in order to allow potential clients to take
advantage of the technology of the Internet cost-effectively finding
and selling to customers online, while developing ongoing electronic
commerce relationships with them, which in turn will help establish
company brands and capture customer loyalty.
The product suite of services intended to be offered by the
Registrant to its clients will be located on servers controlled by the
Registrant, allowing potential clients to access these services through
their own existing Internet connections utilizing standard Internet
browsers such as Netscape's "Communicator" or Microsoft's "Internet
Explorer". The client would not require any specialized software or
hardware to use the Registrant's services. The Registrant's products
will be provided as a "web service" that can be accessed on a cost-
effective, as-needed basis at anytime over the Internet.
The Registrant's planned product suite proposes to offer four types
of services in support of business-to-business e-commerce under the
following names:
1. VeriStore
The proposed VeriStore service will provide e-commerce
transactional capabilities to manage and process transactions between
the client and its customers. VeriStore will offer two different levels
of e-commerce solutions. The first level of service will be tailored
towards clients which do not currently have a Web presence to advertise
their products ("E-Stores"). The service will allow customers to use
the Registrant's own Internet storefront as their "retail" location and
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the Registrant's virtual back office infrastructure for their own E-
Stores. With minimal programming or Internet expertise, clients will be
able to immediately develop a secure, fully customized, commerce ready
online storefront and ordering system without programming. Clients
would simply create their E-Store, which would profile their products,
provide ordering instructions and product pricing, by filling in their
information through user friendly Web forms.
In addition to providing a client with the capability to create
and maintain an E-Store on the Web, VeriStore will also provide a
virtual back office infrastructure to enable clients to handle all
aspects of online transactions. The virtual back office services will
provide clients with the necessary tools to manage and process online
transactions which occur when the client's customer purchases goods from
their E-Store. The back office services will include: (1) processing of
the client's customers orders and sending confirmations (2) online
payment processing in real time (3) calculating applicable shipping
costs and taxes (4) running multiple reports detailing online sales
statistics for any given period and (5) managing customer queries.
The back office services would also be available to clients who
already have established their own E-Store without the support of the
Registrant. While the client's E-Store Web page may be located elsewhere
on the Internet, it is intended that the back office services to be
offered by the Registrant will be flexible enough to be interoperable
with the client's pre-existing E-Store regardless of the design or
format in which it was created.
2. VeriMark
The proposed VeriMark service is intended to be a package of
automated online marketing solutions which will allow online marketers
to deploy, track and measure the cost effectiveness of their online
marketing efforts. The service will work as an automated electronic
marketing manager which will essentially automate the online marketing
process from the first customer contact to the "thank you" email at the
end of a sale.
The VeriMark service will allow its clients to accomplish online
marketing campaign management including the sending of marketing email,
the posting of banner ads, building databases of prospects, sending
fulfillment and follow-up materials to prospects, and tracking
effectiveness ratios and statistics
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3. VeriBase
The proposed VeriBase service is intended to provide data
warehousing services to clients in order to allow clients to
electronically store their customer's contact and demographic
information, track customer and prospect activity from online sales and
marketing activities and perform analysis including demographic
profiling and modeling. Through the tracking and analysis tools the
Registrant's clients will have the ability to better understand and
profile customers which will help define and target future marketing
and prospecting efforts.
4. VeriPlace
The proposed VeriPlace service is intended to create and support
Internet business communities ("IBCs"). IBCs are industry specific web
exchanges or portals that provide an exchange and communications link
for buyers and sellers in a specific industry. The main purpose of the
VeriPlace service is to provide Web technology to the Registrant's
clients which will allow them to aggregate, search, organize and
distribute information within their specific industry primarily through
the integrated use of the VeriStore, VeriMark and VeriBase services.
The VeriStore, VeriMark and VeriBase services are intended to
operate in an integrated manner where a client may use one or more of
the services in conjunction with another or as stand-alone services
where the client has the need for only one of the services.
At this time the Registrant is still at the business investigation
and planning stage and has yet to acquire, license or develop the
necessary software and hardware technology to offer the products and
services that it proposes to offer. The Registrant's proposed plan of
operations has not been completed as of the date hereof and there are
no assurances that the plan will ever be implemented. The Registrant is
currently implementing a plan of operations in order to achieve this
goal (see Item 2. "Plan of Operation") and is currently seeking
qualified parties with the intent of securing a contract to access the
necessary technology. However, at this time, there can be no assurances
that the Registrant will be successful in negotiating such a contract.
Without securing the necessary technology the Registrant will not be in
a position to offer the services it is proposing.
Number of Total Employees and Number of Full Time Employees
In addition to the Registrant's two pre-existing Officers, Mr.
Michael Hinshaw and Mr. Mark Katsumata, the Registrant has recently
hired an additional two Executive Officers who have considerable
experience within the computer industry. Mr. Richard Cohn will fulfill
the duties of Executive Vice President of the Registrant while Mr.
Steve Zimmerman will fulfill the role of Chief Technology Officer. Of
these four Officers and employees, Mr. Richard Cohn will be providing
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his services on a full time basis, while respectively, Mr. Hinshaw, Mr.
Zimmerman and Mr. Katsumata will each dedicate 50%, 50% and 30% of
their time to the Registrant.
Under the terms of their respective employment agreements, Mr.
Zimmerman will receive $4,000 per month in salary and Mr. Cohn will
receive $90,000 per year. In addition to his salary, Mr Zimmerman's
employment agreement grants him an option to purchase 150,000 shares of
the Registrant's common stock at a price of $4.00 per share. Mr. Cohn's
employment agreement grants him an option to purchase 200,000 shares of
the Registrant's common stock at a price of $4.00 per share. The
Registrant intends to hire any further employees on an as needed basis.
Year 2000 Compliance Statement
The Year 2000 issue is the result of computer programs written
using two digits rather than four to define the applicable year. As a
result, date sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000. This could result in system
failures or miscalculations causing disruptions of operations,
including among others, temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
The Registrant's software technology which it recently
purchased from NetOpus Incorporated is warranted by NetOpus
Incorporated as being Year 2000 compliant and will function in a normal
and as expected fashion after the end of 1999. Though the
Registrant has yet to acquire any additional hardware or software
technology in support of its services, the planned acquisitions
will most likely involve hardware or software which is
relatively new and therefore management does not anticipate that it
will incur significant operating expenses or be required to invest
heavily in computer systems improvements to be Year 2000 compliant. As
the Registrant makes arrangements with significant hardware and
software suppliers, the Registrant intends to determine the extent to
which the Registrant's systems may be vulnerable should those third
parties fail to address and correct their own Year 2000 issues and take
measures to reduce the Registrant's exposure, such as, finding
alternative suppliers or requiring the suppliers to correct Year 2000
compliance issues prior to the Registrant acquiring the product.
Should the Registrant have to find alternative suppliers the Registrant
expects that it can find those suppliers promptly and on terms that are
similar to those being sought at this time. Other than the
foregoing measures, the Registrant has no other contingency plans for
dealing with third parties which do not become Year 2000 compliant
within a timely manner. The Registrant anticipates that this will be
an ongoing process as the Registrant begins to implement its Item 2,
"Plan of Operation" through 1999. There can be no assurances that the
systems of suppliers or other companies on which the Registrant may
rely on will be converted in a timely manner and will not have a
materially adverse effect on the Registrant's systems.
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Additionally there can be no assurances that the computer systems
necessary to maintain the viability of the Internet will be Year 2000
compliant. The registrant believes that it is taking the steps
necessary regarding Year 2000 compliance issues with respect to matters
within its control. However, no assurance can be given that the
Registrant's systems will be made Year 2000 compliant in a timely
manner or that the Year 2000 problem will not have a material adverse
effect on the Registrant's business, financial condition and results of
operations.
Risk Factors.
In any business venture, there are substantial risks specific to
the particular enterprise. At a minimum, the Registrant's present and
proposed business operations will be highly speculative and subject to
the same types of risks inherent in any new or unproven venture, and
will include those types of risk factors outlined below.
1. No History of Operations and Reliance on Expertise of Certain
Persons. The Registrant has no history of operations. The management
of the Registrant and the growth of the Registrant's business depends
on certain key individuals who may not be easily replaced if they
should leave the Registrant. Persons in management have other business
interests which may result in them devoting, from time to time, some of
their time to such other interests.
2. Limited Financial Resources. The Registrant has limited or
no financial resources and, if the business is not profitable, may not
be able to raise sufficient funds to sustain, continue or expand its
business. The Registrant currently has limited revenues and relies
principally on the issuance of common shares to raise funds to finance
the business of the Registrant. There is no assurance that market
conditions will continue to permit the Registrant to raise funds if
required. The Registrant has virtually no assets and has had no
operational revenues since its inception in November 1996, nor will the
Registrant receive any revenues until it completes an acquisition of
the technology necessary to provide its proposed products and services,
at the earliest. The Registrant can provide no assurance that any
acquired technology will produce any material revenues for the
Registrant or its stockholders or that any such business will operate
on a profitable basis.
3. Lack of Technology. Management has not finalized an
agreement to acquire the technological assets necessary to provide the
products and services it proposes. The Registrant may never acquire the
necessary technology needed to begin operations.
4. Business Competition. The business of facilitating business-
to-business e-commerce is intensely competitive and fragmented, and is
characterized by rapidly evolving technology. In addition, numerous
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companies, substantially all of which have significantly greater
financial and other resources than the Registrant, are currently
engaged in business-to-business e-commerce. These companies provide a
range of e-commerce functionality and applications including, but not
limited to, EDI-based VAN; Internet store-fronts; Internet catalogues;
secure Internet payment processing; Internet transaction processing
including ordering, fulfillment, shipping, and confirmation elements;
Internet database generation and analysis; automated Internet
marketing; and vertical Internet business communities or exchanges.
The Registrant anticipates that existing competitors are likely to
expand the range and scope of their e-commerce offerings, and that new
competitors, which may include telephone companies, media companies,
and industrial companies, are likely to increasingly offer business-
to-business e-commerce applications that function similarly and compete
with those proposed by the Registrant.
5. Need for Additional Capital. In order to initiate
operations, the Registrant will have to raise additional capital for
operations through the issuance of securities or loans. There is no
assurance that the Registrant will be able to raise the additional
capital.
6. Rapid Technological Change; Need for New Products;
Introduction of Competitive Products. The market for the Registrant's
proposed services is characterized by rapidly changing technology and
frequent new product introductions. Even if the Registrant's proposed
e-commerce service gains initial acceptance, the Registrant's success
will depend on, among other things, its ability to enhance its products
and to develop and introduce new products and services that keep pace
with technological developments, respond to evolving customer
requirements and achieve continued market acceptance. There can be no
assurance that the Registrant will be able to identify, develop,
market, support or acquire new products or deploy new services
successfully, that such new products or services will gain market
acceptance, or that the Registrant will be able to respond effectively
to technological changes or product announcements by competitors. Any
failure by the Registrant to anticipate or respond adequately to
technological developments and customer requirements or any significant
delays in product development or introductions could result in a loss
of market share or revenues.
7. Uncertainties Relating to Commercial Use of the Internet.
The Registrant's strategy is to apply its efforts to the development of
service products for use in connection with the Internet. The success
of these proposed products is dependent on the continued development
and acceptance of the Internet as a medium for the exchange of business
documents and effecting business-to-business transactions. The failure
of the Internet to be an effective channel could have a material
adverse effect on the Registrant's business and prospects. There can
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be no assurance that business-to-business commerce over the Internet
will become widespread and it is not known whether this market will
develop to the extent necessary for demand for the Registrant's
proposed services to emerge and become commercially sustainable.
Changes in or insufficient availability of telecommunications services
to support the Internet also could result in slower response times
which might adversely affect customers' ability or willingness to use
the Internet as a commercial marketplace. In addition, the security
and privacy concerns of existing and potential customers, as well as
concerns related to computer viruses, may inhibit the growth of the
Internet marketplace.
8. Inadequacy of Public Market. There is no assurance that the
public market for the common shares of the Registrant will be
maintained or that the holder of common shares will be able to sell
such shares in the quantity and at the price desired by such holder.
9. Risks Associated with the Year 2000. With regard to risks to
the Registrant's business associated to Year 2000 compliance, there can
be no assurances that the systems of suppliers or other companies on
which the Registrant may rely on will be converted in a timely manner
and will not have a materially adverse effect on the Registrant's
systems and therefore the Registrant's ability to provide its services.
Additionally there can be no assurances that the computer systems
necessary to maintain the viability of the Internet will be Year 2000
compliant. The Registrant believes that it is taking the steps
necessary regarding Year 2000 compliance issues with respect to matters
within its control. However, no assurance can be given that the
Registrant's systems will be made Year 2000 compliant in a timely manner
or that the Year 2000 problem will not have a material adverse effect
on the Registrant's business, financial condition and results of
operations.
Governmental Regulation
The Registrant's proposed services would be transmitted to its
clients over dedicated and public telephone lines. These transmissions
are governed by regulatory policies establishing charges and terms for
communications. Changes in the legislative EDI or the Internet access
industry, including regulatory or legislative changes which directly or
indirectly affect telecommunication costs or increase the likelihood of
competition from regional telephone companies or others, could have an
adverse effect on the Company's business; as could potential
governmental actions outside of the United States.
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Safe Harbor Provisions
Except for the description of historical facts contained herein,
this Form 10-SB contains certain forward-looking statements ^
concerning future applications of the technologies to be acquired
by the Registrant and the Registrant's proposed services and future
prospects, that involve risks and uncertainties, including the
possibility that the Registrant will: (i) be unable to commercialize
services based on its technology, (ii) ever achieve profitable
operations, or (iii) not receive additional financing as required
to support future operations, as detailed herein and under "Item
2, Management's Discussion and Analysis or Plan of Operations"
and from time to time in the Registrant's future filings with
the Securities and Exchange Commission and elsewhere. Such
statements are based on management's current expectations and are
subject to a number of factors and uncertainties which could cause
actual results to differ materially from those described in the
forward-looking statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Registrant has been largely inactive since its incorporation
and hence has not yet received revenues from operations, profitability
or break-even cash flow other than the one time sale of assets not in
the ordinary course of business (see "Item 7. Certain Relationships And
Related Transactions").
The Registrant has experienced losses in each fiscal period
reported on. At the end of the Registrant's 1998 fiscal year it had
$200,656 in working capital. For the fiscal 1999 year, the Registrant
does not have sufficient funds to acquire and/or develop any business
without seeking additional funds. The Registrant relies principally on
the issuance of common shares by private placements to raise funds to
finance the business of the Registrant. There is no assurance that
market conditions will continue to permit the Registrant to raise funds
if required. The Registrant may issue more common shares at prices
determined by the Board of Directors, possibly resulting in dilution of
the value of common shares, and, given there is no preemptive right to
purchase common shares, if a member does not purchase additional common
shares, the percentage share ownership of the member in the Registrant
will be reduced.
Management has determined that consistent with the Registrant's
new business plan, part of its plan of operation for the next 12 months
is to secure the necessary technological assets to support the proposed
products and services to be offered by the Registrant. The Registrant
has taken the initial step of acquiring e-commerce software technology
by entering into a software purchase agreement with NetOpus
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Incorporated ("NetOpus") in order to purchase the core technology
necessary to support the services the Registrant intends to offer.
NetOpus is a private company which owns the rights to certain
preexisting computer software marketed by NetOpus as the "Sales
Associate Store Creator" commerce system (the "Base Technology").
Under the terms of the agreement, the Registrant purchased the right to
use, modify, customize, brand, sell and market the Base Technology to
provide online transaction processing functionality and features within
the sites that the Registrant develops.
The Base Technology has been provided by NetOpus in consideration
of a onetime fee paid by the Registrant to NetOpus. The onetime fee
consists of a combination of $50,000 and the issuance to NetOpus of
25,000 common shares of the Registrant. The 25,000 shares of the
Registrant will be restricted from resale for a period of 12 months
from the date of issuance. At the end of the twelve month period, the
shares may be re-sold at a rate that cannot exceed 2,083 shares per
month maximum.
The Registrant may upgrade and modify the purchased software to
support proposed services to be offered by the Registrant. The
Registrant may acquire or license additional software technology
through a technology licensing or purchase agreement to ensure that
other proposed services offered by the Registrant are delivered in a
timely and useable manner during the plan of operation for the next 12
months.
With regard to other necessary hardware assets, such as Internet
computer servers and desktop computers, which are necessary to support
the Registrant's proposed products and services, the Registrant's
initial focus will be on leasing these assets from reliable yet
unidentified lessors.
Analysis of software and hardware acquisitions will be undertaken
by or under the supervision of the Registrant's directors and officers.
The directors and officers are comprised of individuals of varying
business experiences, and management will rely on their own business
judgment in making decisions as to the types of technology, which the
Registrant may acquire or in which the Registrant may participate. It
is possible that management will not have any specific business
experience or expertise in the type of technology engaged in by a
company which may be investigated by the Registrant.
In analyzing prospective software licensors and sellers and
hardware lessors, management will consider such factors as available
technical, financial, and managerial resources; experience of
management services which may be available and the depth of management;
the potential for further research and development; risk factors, trade
or service marks, its name identification, and other relevant factors.
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As part of the Registrant's investigation of software licensing
and purchasing and hardware leasing agreements, management expects that
it will meet personally with the management and personnel of software
providers and hardware lessors, obtain independent analysis or
verification of certain information provided, check references of the
target's management and key personnel, and conduct other reasonable
measures, to the extent that the Registrant's limited resources and
management's technical expertise, if any permit. Generally, the
Registrant will analyze all available information and make a
determination based upon a composite of available facts, without
reliance upon a single factor as controlling.
The Registrant's plan of operations for the next 12 months has
several identifiable phases to support the development of proposed
products and services to be offered by the Registrant. The Registrant
will focus on securing appropriate software, hardware, and human
resources to advance each phase. Phases may be interdependent,
consecutive, or non-linear and delays or exceptional progress in one
phase may or may not affect the timing and execution of another phase.
Phases may also be overlapping, and determinations on personnel will be
made to ensure timely and productive completion of each phase.
In the initial phase, the proposed product(s) or service(s) is
conceptualized with the identification of general business and
technology requirements. In another phase, the concept is assessed and
researched, and major business and technology specifications are
identified. In another phase, business and technology specifications
are scrutinized, revised, and tested, and final development
specifications are issued. In another phase, software development
commences. In another phase, initial software solutions are tested by
the Registrant and by selected potential users. In the final phase,
software is revised, tested by the Registrant and selected potential
users, and made available for packaging, distribution, and sales. While
the Registrant will develop each product or service through the above-
mentioned phases, several different products and services may
simultaneously be in parallel, similar, or different phases of
development. Additionally, each product or service may require
different amounts of time and resources within a particular phase.
The current plan of operations for the next 12 months includes
several products or services advancing through the above-mentioned
phases of development, and being offered for sale, purchase, fee,
lease, license, or other appropriate revenue generating methods for
such e-commerce products and services.
Given the Registrant's current level of working capital and its
operations being conducted to develop its products, it is expected that
the Registrant can satisfy its cash requirements for a further 5 months
before additional capital will have to be raised. Additional sources of
financing will most likely be sought through future private placements
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of the Registrant's common shares rather than seeking interest-bearing
loans. However, the Registrant recognizes that as a result of its
limited, financial, managerial, or other resources, the number of
suitable financing options may be limited. Should these additional
sources of capital not be found the Registrant will modify its
operations to conserve working capital by concentrating on fewer
products and/or services being advanced. Additionally, at the end
of the aforementioned 5 month period, should no further funds be
raised, the Registrant and its two employees, Messrs. Cohn and
Zimmerman, will consider whether to terminate their employment due to
the lack of sufficient funds to pay their current wages or renegotiate
the terms of their employment contracts on terms which are undetermined
at this time, but will be acceptable to both the Registrant and the
respective employee.
ITEM 3. DESCRIPTION OF PROPERTIES
The Registrant does not currently own any real property. The
Registrant's executive office is located at Suite 1500, 50 California
Street, San Francisco, California 94111. The rental space is provided
by a corporate support services firm under a month to month rental
agreement at a rate of $125 per month. The rental agreement may be
terminated by the Registrant on 30 days notice.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The Registrant's securities are recorded on the books of its
transfer agent in registered form. However, a majority of such shares
are registered in the name of intermediaries such as brokerage houses
and clearing houses on behalf of their respective clients and the
Registrant does not have knowledge of the beneficial owners thereof.
The Registrant is not directly or indirectly owned or controlled by a
corporation or foreign government.
As of March 12, 1999, the Registrant had an authorized share
capital of 100,000,000 common shares with a par value of $0.00001 per
share of which 8,887,000 shares were issued and outstanding.
The following table sets forth, as of March 12, 1999, the
beneficial shareholdings of persons or entities holding five per cent
or more of the Registrant's common stock, each director individually,
each named executive officer and all directors and officers of the
Registrant as a group. Each person has sole voting and investment power
with respect to the shares of Common Stock shown, and all ownership is
of record and beneficial.
<PAGE> 15
Amount and
Nature of
Name and Address Beneficial Percent
of Beneficial Owner Owner Position of Class
Michael Hinshaw 2,000,000 President, Chief 22.50%
c/o 50 California St. Common Executive Officer and
Suite 1500 Shares a member of the
San Francisco, CA Board of Directors
Richard Cohn[1] 0 Executive Vice 0.00%
c/o 50 California St. President
Suite 1500
San Francisco, CA
Steve Zimmerman[2] 0 Chief Technology 0.00%
c/o 50 California St. Officer
Suite 1500
San Francisco, CA
Mark Katsumata 0 Secretary/Treasurer 0.00%
c/o 1090 West Pender St. and Chief Financial
Suite 1200 Officer
Vancouver, BC
Bernhard Zinkhofer 210,000 Director 2.36%
c/o 1055 W. Georgia St. Common
Suite 1500 Shares
Vancouver, BC
Peter Rantucci 0 Director 0.00%
c/o 1090 West Pender St.
Suite 1200
Vancouver, BC
All officers and 2,210,000 24.87%
directors as a group. Common
(6 persons) Shares
Alex Guidi 3,026,000 34.05%
c/o 1090 West Pender St. Common
Suite 1200 Shares
Vancouver, BC
Brad Holland 784,500 8.83%
P. O. Box 2314 Common
Dhahran, Saudi Arabia Shares
<PAGE> 16
Peter & Tanya Loretto[3] 699,500 7.87%
c/o 350 - 6165 Hwy. 17 Common
Delta, BC Shares
Jack & Zena Loretto[4] 519,500 5.85%
c/o 350 - 6165 Hwy. 17 Common
Delta, BC Shares
Tracy Godoy 547,000 6.16%
1035 King George Way Common
Vancouver, BC Shares
[1] Within his employment agreement with the Registrant, Mr. Cohn has
been granted the option to purchase 200,000 shares of the Common
Stock of the Registrant exercisable at a price of $4.00 per share.
[2] Within this employment agreement with the Registrant, Mr.
Zimmerman has been granted the option to purchase 150,000 shares
of the Common Stock of the Registrant exercisable at a price of
$4.00 per share.
[3] Of the 669,500 shares in total, Mr. Peter Loretto owns 598,000
shares while his spouse, Tanya Loretto is the beneficial owner of
101,500 shares
[4] Of the 519,500 shares in total, Mr. Jack Loretto is the beneficial
owner of 200,000 shares while his spouse, Zena Loretto is the
owner of 319,500 shares.
No arrangements exist which may result in a change in control of
the Registrant.
Other than the options granted to Mr. Cohn and Mr. Zimmerman in
April 1999, as further disclosed under the section entitled Item 1
"Number of Total Employees and Number of Full Time Employees", the
Registrant has not granted any other stock options or stock
appreciation rights to any other individuals as of the date hereof.
<PAGE> 17
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
The name, age and position held by each of the directors and
officers of the Registrant are as follows:
Name Age Position Held
Michael Hinshaw 37 President, Chief Executive Officer &
Director
Bernhard Zinkhofer 43 Director
Peter Rantucci 29 Director
Richard Cohn 46 Executive Vice President
Steve Zimmerman 34 Chief Technology Officer
Mark Katsumata 33 Secretary, Treasurer and Chief Financial
Officer
All directors have a term of office expiring at the next annual
general meeting of the Registrant, unless re-elected or earlier vacated
in accordance with the bylaws of the Registrant. All officers have a
term of office lasting until their removal or replacement by the board
of directors.
Michael Hinshaw - President, Chief Executive Officer and member of the
Board of Directors.
Mr. Michael Hinshaw was elected to the position of President,
Chief Executive Officer and member of the Board of Directors on
February 4, 1999. Mr. Hinshaw attended the University of San Francisco
and the Academy of Art College in San Francisco, receiving a Bachelor
of Arts in 1985 and a Masters of Fine Arts in Graphic Design from the
Academy in 1988. As President and CEO of Verida Internet Corp., Mr.
Hinshaw brings 15 years of strategic creative, marketing and management
experience to his post.
In 1985 Mr. Hinshaw co-founded an advertising and corporate design
firm Hinshaw, Young & Partners in San Francisco. While there he
developed advertising, direct mail, marketing and branding programs for
several high-technology and financial service corporations including
Apple Computer, Wells Fargo Bank, GTE and Hitachi Data Systems. In
1989, Mr. Hinshaw cofounded Resource Net, a San Francisco based company
which enabled ad agencies and design firms to share management and
marketing knowledge and resources using the technology of the Internet
through an extensive corporate intranet and extranet. In 1994, Mr.
Hinshaw joined the San Francisco based Triad Inc., a marketing and
<PAGE> 18
communications company, to pursue the hands-on creation of effective
branding, advertising and design. As Co-Creative Director and Vice
President of the firm, he drove both traditional and Internet based
marketing and business programs for clients including Wells Fargo,
Novell, Apple Computer and Household Credit Services. Mr. Hinshaw
became President of Triad Inc. in 1997.
Bernhard Zinkhofer - Member of the Board of Directors.
Mr. Bernhard Zinkhofer has been a member of the Board of Directors
since February 4, 1999. Mr. Zinkhofer obtained a Bachelor of Commerce
Degree from the University of Calgary in 1977, became a member of the
Canadian Institute of Chartered Accountants in 1980 after articling
with a predecessor of KPMG Peat Marwick Thorne and obtained a Bachelor
of Law Degree from the University of Victoria in 1983. From 1983 to
1990, Mr. Zinkhofer practiced law with Sobolewski & Anfield, a law firm
in Vancouver, British Columbia, in the corporate and securities areas.
In 1990 Mr. Zinkhofer became an associate of, and in 1991 a partner of,
the firm of Lang Michener Lawrence & Shaw of Vancouver, B.C. and
Toronto, Ontario. Mr. Zinkhofer continues to be a partner in Lang
Michener Lawrence & Shaw of Vancouver to this day. Mr. Zinkhofer is
also a director of Trans-Orient Petroleum Ltd., Durum Cons. Energy
Corp., W.M. Helijet Airways Inc., Strategic Technologies Inc. and Foran
Mining Corporation.
Peter Rantucci - Member of the Board of Directors.
Mr. Peter Rantucci has been a member of the board of directors
since January 28, 1999. Mr. Rantucci received a Bachelor of Commerce
Degree (Honors) from the University of British Columbia in 1992 and a
Bachelor of Law Degree from the University of Manitoba in 1996. Mr.
Rantucci began his articles in July 1996 with a large law firm situated
in Calgary, Alberta called Milner Fenerty where he continued to
practice commercial and tax law until his departure in January 1998.
Since January 1998 until present Mr. Rantucci has been acting as
executive and legal administrator for Indo-Pacific Energy Ltd.
Richard G. Cohn - Executive Vice President.
Mr. Richard G. Cohn serves as Executive Vice President for the
Registrant. Mr. Cohn holds a Bachelor of Arts from the University of
Pennsylvania and a J.D. from Emory University. Mr. Cohn brings more
than twenty years of diverse communications experience to the
Registrant. From 1995 to 1998 Mr. Cohn was Vice President,
Communications Technology/Employee Communications, with Charles Schwab
& Co. in San Francisco, California. At Charles Schwab & Co., Mr. Cohn
spearheaded efforts to align a geographically dispersed work force
through Web technology. He also directed a national series of town hall
meetings featuring CEO Charles Schwab launching the company's new
strategic direction. From 1992 to 1995, Mr. Cohn was the Manager of
Employee Communications with Sun Microsystems, at their Mountain View
California office. While at Sun Microsystems Inc., Mr. Cohn helped
<PAGE> 19
pioneer online communications tools such as desktop video-on-demand and
Web-based audio programming. He also directed global sensing efforts
and managed communications campaigns around the world for Sun
Microsystems Inc. Prior to his technology experience, Mr. Cohn served
as a Senior Attorney for the Department of Energy in both Washington
and San Francisco from 1980 to 1984 and has worked as a Legislative
Assistant to the U.S. House of Representatives in Washington, D.C. from
1977 to 1978.
Steven Zimmerman - Chief Technology Officer
Mr. Steven Zimmerman serves as Chief Technology Officer for the
Registrant. He holds a Bachelor of Arts in economics from the
University of Virginia and a Masters of Business Administration from
San Francisco State University. Mr. Zimmerman brings over 13 years of
technology leadership experience to the Registrant. From 1986 to 1994
Mr. Zimmerman served as Vice President and MIS director for Barclay &
Company, Inc. In 1996 Mr. Zimmerman co-founded NetOpus Incorporated, an
Internet hosting and development company. As President of NetOpus
Incorporated, Mr. Zimmerman oversaw the design, development and
implementation of Internet-based e-commerce solutions, with an emphasis
on transaction processing, security, and database integration. While
there, he also developed the Sales Associate System, a line of web
based applications that enable companies to sell their products and
services securely over the Internet.
Mark Katsumata - Secretary/Treasurer and Chief Financial Officer
Mr. Mark Katsumata has been the Corporate Secretary, Treasurer and
Chief Financial Officer of the Registrant since June 1998. Mr.
Katsumata is a certified general accountant who was in public practice
from 1990 to 1994 with De Visser & Company in Vancouver, B.C. On
October 1994 Mr. Katsumata joined Indo-Pacific Energy Ltd. and
presently continues to occupy the position of Secretary, Treasurer and
Chief Financial Officer. Mr. Katsumata is also the Secretary, Treasurer
and Chief Financial Officer of Trans-Orient Petroleum Ltd.
None of the individuals listed above are subject to any
anticipated or threatened legal proceedings of a material nature.
ITEM 6. EXECUTIVE COMPENSATION
Directors and Officers of the Registrant, both past and present,
have received the following compensation:
<PAGE> 20
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities All
Name and Annual Restricted Underlying Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonus sation Award(s) SARs Payouts sation
($) ($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alex Guidi, 1998 - - 18,000 - - - -
President 1997 - - - - - - -
1996 - - - - - - -
Michael 1998 - - - - - - -
Hinshaw 1997 - - - - - - -
President 1996 - - - - - - -
& CEO
John
Holland 1998 - - - - - - -
Secretary 1997 - - - - - - -
[1] 1996 - - - - - - -
Ronald 1998 - - - - - - -
Bertuzzi 1997 - - - - - - -
Vice 1996 - - - - - - -
President
Richard
Cohn 1998 - - - - - - -
Executive 1997 - - - - - - -
Vice 1996 - - - - - - -
President
Steven
Zimmerman 1998 - - - - - - -
Chief 1997 - - - - - - -
Technology 1996 - - - - - - -
Officer
Mark
Katsumata 1998 - - - - - - -
Secretary/ 1997 - - - - - - -
Treasurer 1996 - - - - - - -
& Chief Financial
Officer
</TABLE>
[1] John Holland passed away in January 1998 and was the father of
Brad Holland.
Effective March 15, 1999, the Registrant entered into an
employment agreement with Richard Cohn, Executive Vice President, at a
rate of $7,500 per month. Additionally, the employment agreement
provides for a stock option to purchase 200,000 shares of the Company
exercisable at a price of $4.00 per share, subject to vesting
provisions.
Effective April 1, 1999, the Registrant entered into an employment
agreement with Steven Zimmerman, Chief Technology Officer, at a rate of
$4,000 per month. Additionally, the employment agreement provides for
a stock option to purchase 150,000 shares of the Company exercisable at
a price of $4.00 per share, subject to vesting provisions.
<PAGE> 21
As of the date hereof, the Registrant has not granted any other
stock options or stock appreciation rights to its officers or directors
since its inception on November 1, 1996.
The Registrant does not have any long-term incentive plans to its
officers and directors during the 1998 fiscal year.
There are no standard or other arrangements pursuant to which the
Registrant's directors were compensated in their capacity as such during
the 1998 fiscal year.
There are no compensation arrangements for employment, termination
of employment or change-in-control between the Registrant and the Named
Executive Officers.
There were no stock options exercised during the period from
incorporation on November 1, 1996 to December 31, 1998 and during the
three month period ended March 31, 1999.
There were no stock options outstanding as at the end of the
Registrant's most recently completed fiscal year of December 31, 1998
and as at the end of its first quarter of March 31, 1999.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Share Acquisitions of Associated Company.
During the 1998 fiscal year, the Registrant acquired within the
public market at prevailing prices a total of 59,800 common shares of
Trans-Orient Petroleum Ltd. ("Trans-Orient") at a total cost of
$174,930. The 59,800 shares of Trans-Orient were subsequently sold on
the market at the prevailing market price on January 27, 1999 for total
net proceeds of $81,972.25. Alex Guidi is the former President and a
former member of the board of directors of the Registrant. Mr. Guidi
is also the Chairman of the Board and a member of the board of
directors of Trans-Orient. Mr. Bernhard Zinkhofer is a member of the
board of directors of the Registrant and is also a member of the board
of directors of Trans-Orient. Mark Katsumata is the Secretary and
Treasurer of the Registrant. Mr. Katsumata is also the corporate
secretary of Trans-Orient.
Transactions with Promoters.
Since the Registrant's incorporation until present, Alex Guidi has
been the promoter of the Registrant. During the 1998 fiscal year,
consulting fees of $18,000 were paid to Pacific Reach Management Ltd.,
a private company wholly-owned by Mr. Guidi. During the 1997 fiscal
year, the Registrant issued, pursuant to Regulation S of the 1933
Securities Act, 3,000,000 common of its common stock to International
<PAGE> 22
Resource Management Corporation (formerly 437577 B.C. Ltd.) a private
company wholly owned by Mr. Guidi. On February 3, 1999, Mr. Guidi
signed, in his capacity as the sole shareholder, director and officer
of International Resource Management Corporation, an agreement with the
Registrant which cancelled, in its entirety, the 3,000,000 common
shares issued by the Registrant to International Resource Management
Corporation.
Technology Purchase
On June 11, 1999 the Registrant entered into a software purchase
agreement (the "Software Agreement") with NetOpus Incorporated
("NetOpus") in order to purchase the core technology necessary to
support the services the Registrant intends to offer. NetOpus is a
private company owned and controlled by Steve Zimmerman. Mr. Zimmerman
is also an executive officer of the Registrant fulfilling the role of
Chief Technology Officer. NetOpus owns the rights to certain
preexisting computer software marketed by NetOpus as the "Sales
Associate Store Creator" commerce system (the "Base Technology"). Under
the terms of the Software Agreement, the Registrant purchased the right
to use, modify, customize, brand, sell and market the Base Technology
to provide online transaction processing functionality and features
within the sites that the Registrant develops.
The Base Technology has been provided by NetOpus in consideration
of a onetime fee paid by the Registrant to NetOpus. The onetime fee
consists of a combination of $50,000 and the issuance to NetOpus of
25,000 common shares of the Registrant. The 25,000 shares of the
Registrant will be restricted from resale for a period of 12 months
from the date of issuance. At the end of the twelve month period, the
shares may be re-sold at a rate that cannot exceed 2,083 shares per
month maximum.
Corporate and Website Development
During the 1999 fiscal period, the Registrant entered into an
agreement with Triad, Inc. to design and produce the Registrant's
Internet site and other corporate materials for an estimated total cost
of $129,875 of which $114,005 was incurred by the Registrant as of June
29, 1999. The President of the Registrant is also the president and a
majority owner of Triad, Inc. At June 29, 1999, the Registrant owed
$15,870 to Triad, Inc.
ITEM 8. LEGAL PROCEEDINGS
There are no material legal proceedings to which the Registrant is
subject to or which are anticipated or threatened.
<PAGE> 23
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
The Registrant's shares traded on the Bulletin Board under the
trading symbol "APCE" until March 10, 1999. On March 11, 1999 the
Registrant's shares began trading on the Bulletin Board under the symbol
"VERY". Summary trading by quarter for the 1998 and 1997 fiscal years
are as follows:
Fiscal Quarter High Bid(1) Low Bid(1)
1999
First Quarter 4.50 .25
1998
First Quarter .562 .032
Second Quarter .875 .033
Third Quarter .875 .1
Fourth Quarter .6875 .1
1997
First Quarter .375 .25
Second Quarter .25 .1875
Third Quarter .25 .1875
Fourth Quarter .4375 .1875
[1] These quotations reflect inter-dealer prices, without retail mark-
up, mark-down or commission and may not represent actual
transactions.
At March 29, 1999, there were 8,887,000 common shares of the
Registrant issued and outstanding.
March 29, 1999, there were 28 holders of record including common
shares held by brokerage clearing houses, depositories or otherwise in
unregistered form. The beneficial owners of such shares are not known
by the Registrant.
No cash dividends have been declared by the Registrant nor are any
intended to be declared. The Registrant is not subject to any legal
restrictions respecting the payment of dividends, except that they may
not be paid to render the Registrant insolvent. Dividend policy will
be based on the Registrant's cash resources and needs and it is
anticipated that all available cash will be needed for property
acquisition, exploration and development for the foreseeable future.
The Registrant is not aware of any reason as to why the price of
the security would have appreciated from those prices reflected in the
summary trading table other than the demand for securities has been
greater than the available supply.
<PAGE> 24
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
The Registrant was incorporated in November 1996. In the past
three fiscal years, the Registrant has issued the following
unregistered securities at the following prices. There were no
underwriters engaged and no underwriting discounts or commissions paid.
All issues were made pursuant to exemptions from registration contained
in Regulation D, Rule 504, Regulation S, Rules 901-905 and Section 4(2)
of the 1933 Securities Act.
Date Type of Security Number Proceeds Exemption
1996
12/12/96 Common Shares 1,000,000 $ 10,000 Reg. D (504)
12/12/96 Common Shares 1,000,000 $100,000 Reg. D (504)
1997
08/11/97 Common shares 3,000,000 $ 30,000 Reg. S (901-904)[1]
12/18/97 Common Shares 1,600,000 $ 48,000 Reg. D (504)
1998
04/21/98 Common Shares 1,967,000 $ 59,010 Reg. D (504)
1999
02/01/99 Common Shares 800,000 $ 24,000 Reg. D (504)
02/08/99 Common Shares 1,000,000 $ 1,000 Section 4(2) [2]
02/08/99 Common Shares 1,120,000 $ 33,600 Reg. D (504)
02/08/99 Common Shares 100,000 $ 100 Reg. S (901-905)
02/17/99 Common Shares 300,000 $ 75,000 Reg. D (504)
05/13/99 Common Shares 60,000 $300,000 Reg. S (901-905)
06/11/99 Common Shares 25,000 $131,250 Section 4(2) [3]
[1] Cancellation of Shares. During the 1997 fiscal year, the
Registrant issued, pursuant to Regulation S of the 1933 Securities
Act, 3,000,000 common shares to International Resource Management
Corporation (then 437577 B.C. Ltd.), a private company wholly
owned by Alex Guidi. On February 3, 1999, Mr. Guidi signed, in his
capacity as the sole shareholder, director and officer of
International Resource Management Corporation, an agreement with
the Registrant which cancelled, in its entirety, the 3,000,000
common shares issued by the Registrant to International Resource
Management Corporation.
[2] Mr. Michael Hinshaw, the President of the Registrant and an
affiliate of the Registrant, was issued 1,000,000 shares under
Section 4(2).
[3] NetOpus Incorporated, a private company owned and controlled by
Mr. Steve Zimmerman, was issued 25,000 shares under Section 4(2)
as partial payment for the sale of its technology assets. Mr.
Zimmerman is also an Executive Officer of the Registrant and as
such, an affiliate of the Registrant. See "Item 7. Certain
Relationships And Related Transactions."
<PAGE> 25
ITEM 11. DESCRIPTION OF SECURITIES.
The Registrant's securities consist of common stock with a par
value of $0.00001 per share. The Registrant's authorized capital is
100,000,000 common shares of which 8,887,000 common shares are issued
and outstanding. All of the Registrant's common stock, both issued and
unissued, is of the same class and ranks equally as to dividends,
voting powers and participation in the assets of the Registrant on a
winding-up or dissolution. No common shares have been issued subject
to call or assessment. Each common share is entitled to one vote with
respect to the election of directors and other matters. The shares of
common stock do not have cumulative voting rights. Therefore, the
holders of a majority of shares voting for the election of directors
can elect all the directors then standing for election, if they chose
to do so, and in such event the holders of the remaining shares will
not be able to elect any directors.
The common shares have no preemptive or conversion rights, and no
provisions for redemption, purchase for cancellation, surrender of
sinking fund or purchase fund. Provisions as to the creation or
modifications, amendments or variations of such rights or such
provisions are contained in the Private Corporations Act, Chapter 78,
Nevada Revised Statutes.
Neither the Articles of Incorporation nor the Bylaws of the
Registrant contain provisions which would delay, defer or prevent a
change in control of the Registrant.
The Registrant's transfer agent is American Securities Transfer &
Trust, Inc. 938 Quail Street, Suite 101, Lakewood, Co 80215, telephone
(303) 234-5300, facsimile (303) 234-5340.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The constating documents of the Registrant provide that the
Registrant shall indemnify any director, officer, employee or agent of
the Registrant to the full extent permitted by the laws of the State of
Nevada. Chapter 78, rules 78.7502, 78.751 and 78.752 of the Nevada
Revised Statutes contain the provisions which, subject to certain
restrictions, in general provide for the Registrant's ability to
indemnify, and thereby limit the personal liability of, the directors
and officers of the Registrant against certain liabilities. Officers
and directors of the Registrant are indemnified generally against
expenses, actually and reasonably, incurred in connection with
proceedings, whether civil or criminal, provided that it is determined
that they acted in good faith, were not found guilty and, in any
criminal matter, had reasonable cause to believe their conduct was not
unlawful.
<PAGE> 26
ITEM 13. FINANCIAL STATEMENTS.
Jorgensen Telford Sadovnick, P.L.L.C.
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Austral Pacific Energy
Corp.
We have audited the accompanying balance sheets of Austral Pacific
Energy Corp. as of December 31, 1998 and 1997 and the related
statements of loss and comprehensive loss, changes in stockholders'
equity and cash flows for the years ended December 31, 1998 and 1997
and for the period from November 1, 1996 (inception) to December 31,
1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these 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 about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Austral
Pacific Energy Corp. as of December 31, 1998 and 1997 and the results
of its operations and its cash flows for the years ended December 31,
1998 and 1997 and for the period from November 1, 1996 (inception) to
December 31, 1998 in conformity with generally accepted accounting
principles.
/s/ Jorgensen Telford Sadovnick, P.L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
Seattle, Washington
February 9, 1999
F-1
<PAGE> 27
AUSTRAL PACIFIC ENERGY CORP.
(A Development Stage Enterprise)
Balance Sheets
<TABLE>
<CAPTION>
As of December 31, 1998 1997
<S> <C> <C>
Assets
Current
Cash and short-term deposits $ 21,178 $ 153,670
Subscriptions receivable (Note 8) 133,700 -
Marketable securities (Note 3) 80,356 -
---------- ---------
Total Assets $ 235,234 $ 153,670
========== =========
Liabilities
Current
Accounts payable and accrued
liabilities $ 4,578 $ 2,000
Loan payable to related party (Note 6) 30,000 30,000
---------- ---------
Total Liabilities 34,578 32,000
---------- ---------
Stockholders' Equity
Common stock, $0.00001 par value;
100,000,000 shares authorized
(1998: 8,887,000 shares issued
and outstanding) (1997: 3,600,000
shares issued and outstanding) 89 36
Additional paid-in capital 340,621 147,964
Deficit accumulated during
the development stage (45,480) (26,330)
Cumulative comprehensive adjustment (94,574) -
---------- ---------
Total Stockholders' Equity 200,656 121,670
---------- ---------
Total Liabilities and
Stockholders' Equity $ 235,234 $ 153,670
========== =========
</TABLE>
F-2
<PAGE> 28
AUSTRAL PACIFIC ENERGY CORP.
(A Development Stage Enterprise)
Statements of Loss and Comprehensive Loss
<TABLE>
<CAPTION>
November
1, 1996
Year Ended Year Ended (inception) to
December 31, December 31, December 31,
1998 1997 1998
<S> <C> <C> <C>
Revenues
Interest income $ 3,491 $ 1,986 $ 5,477
---------- --------- ----------
Expenses
General and
administrative 22,641 21,547 50,957
---------- --------- ----------
Net loss for the period (19,150) (19,561) (45,480)
Unrealized loss on
marketable securities (94,574) - (94,574)
---------- --------- ----------
Comprehensive loss
for the period $ (113,724) $ (19,561) $ (140,054)
========== ========= ==========
Basic and diluted
loss per share $ (0.00) $ (0.01) $ (0.03)
========== ========= ==========
</TABLE>
F-3
<PAGE> 29
AUSTRAL PACIFIC ENERGY CORP.
(A Development Stage Enterprise)
Statements of Cash Flows
<TABLE>
<CAPTION>
November
1, 1996
Year Ended Year Ended (inception) to
December 31, December 31, to December 31,
1998 1997 1998
<S> <C> <C> <C>
Operating Activities
Net loss for the period $ (19,150) $ (19,561) $ (45,480)
Changes in non-cash
working capital:
Accounts payable and
accrued liabilities 2,578 1,082 4,578
---------- --------- ----------
Net cash used in operating
activities (16,572) (18,479) (40,902)
---------- --------- ----------
Financing Activities
Loan from related party,
net - 20,000 30,000
Common shares issued
for cash 59,010 48,000 217,010
Cost of common stock
offering - - (10,000)
---------- --------- ----------
Net cash provided by
financing activities 59,010 68,000 237,010
---------- --------- ----------
Investing Activities
Purchase of marketable
securities (174,930) - (174,930)
---------- --------- ----------
Net cash used in
investing activities (174,930) - (174,930)
---------- --------- ----------
Net increase (decrease)
in cash (132,492) 49,521 21,178
Cash position -
Beginning of period 153,670 104,149 -
---------- --------- ----------
Cash position -
End of period $ 21,178 $ 153,670 $ 21,178
========== ========= ==========
</TABLE>
F-4
<PAGE> 30
AUSTRAL PACIFIC ENERGY CORP.
(A Development Stage Enterprise)
Statements of Changes in Stockholders' Equity
For the periods ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
Premium
Paid on
Common Stock Common
Shares Amount Stock
<S> <C> <C> <C>
Balance at inception on
November 1, 1996 - $ - $ -
Common stock issued for cash
at $0.01 and $0.10 per share 2,000,000 20 109,980
Cost of common stock offering - (10,000)
Net loss during the period
--------- ----- ---------
Balance at December 31, 1996 2,000,000 20 99,980
Common stock issued for cash
at $0.03 per share (Note 6) 1,600,000 16 47,984
Net loss during the year
--------- ----- ---------
Balance at December 31, 1997 3,600,000 36 147,964
Common stock issued for
cash at $0.03 per share 1,967,000 20 58,990
Common stock issued for
cash at $0.001, $0.03 and
$0.25 per share (Note 8) 3,320,000 33 133,667
Net loss during the year
Unrealized loss on
marketable securities
--------- ----- ---------
Balance at December 31, 1998 8,887,000 $ 89 $ 340,621
========= ===== =========
F-5a
<PAGE> 31
AUSTRAL PACIFIC ENERGY CORP.
(A Development Stage Enterprise)
Statements of Changes in Stockholders' Equity
For the periods ended December 31, 1998, 1997 and 1996
Deficit
Accumulated
during the Cumulative Total
Development Comprehensive Stockholders
Stage Adjustment Equity
<S> <C> <C> <C>
Balance at inception on
November 1, 1996 $ - $ - $ -
Common stock issued for cash
at $0.01 and $0.10 per share 110,000
Cost of common stock offering (10,000)
Net loss during the period (6,769) (6,769)
--------- --------- ---------
Balance at December 31, 1996 (6,769) - 93,231
Common stock issued for cash
at $0.03 per share (Note 6) 48,000
Net loss during the year (19,561) (19,561)
--------- --------- ---------
Balance at December 31, 1997 (26,330) - 121,670
Common stock issued for
cash at $0.03 per share 59,010
Common stock issued for
cash at $0.001, $0.03 and
$0.25 per share (Note 8) 133,700
Net loss during the year (19,150) (19,150)
Unrealized loss on
marketable securities (94,574) (94,574)
--------- --------- ---------
Balance at December 31, 1998 $ (45,480) $ (94,574) $ 200,656
========= ========= =========
</TABLE>
F-5b
<PAGE> 32
AUSTRAL PACIFIC ENERGY CORP.
(A Development Stage Enterprise)
Notes to the Financial Statements
For the Period from November 1, 1996 (Inception) to December 31, 1998
NOTE 1 - NATURE OF OPERATIONS
The Company was incorporated under the laws of the State of Nevada on
November 1, 1996. The Company is in the development stage and has been
relatively inactive since its inception.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Accounting Principles and Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the fiscal year. Actual results may differ from
those estimates.
b) Translation of Foreign Currencies
Revenues and expenses arising from foreign currency transactions are
translated into United States dollars at the average rate for the
period. Monetary assets and liabilities are translated into United
States dollars at the rates prevailing at the balance sheet date.
Other assets and liabilities are translated into United States dollars
at the rates prevailing on the transaction dates. Exchange gains and
losses are recorded as income or expense in the period in which they
occur.
c) Financial Instruments and Financial Risk
The Company's financial instruments consist of current assets and
current liabilities. The fair values of the current assets and
liabilities approximate the carrying amounts due to the short-term
nature of these instruments.
d) Accounting Pronouncements Recently Issued
The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards No. 128: Earnings per Share ("SFAS
128"), effective for fiscal periods ending after December 15, 1997 and
requiring restatement of all prior period earnings per share data.
SFAS 128 replaces the presentation of primary earnings per share
("EPS") with a presentation of both basic and diluted EPS for all
entities with complex capital structures. Basic EPS excludes dilutive
securities and is computed by dividing income available to common
shareholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if dilutive securities were converted into
common shares and is computed similarly to fully diluted EPS pursuant
to previous accounting pronouncements. SFAS 128 applies equally to
loss per share presentations.
F-6
<PAGE> 33
AUSTRAL PACIFIC ENERGY CORP.
(A Development Stage Enterprise)
Notes to the Financial Statements
For the Period from November 1, 1996 (Inception) to December 31, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The FASB issued Statement of Financial Accounting Standards No. 130:
Reporting Comprehensive Income ("SFAS 130"), effective for fiscal
periods beginning after December 15, 1997 and requiring restatement of
all comparative financial statements disclosed. SFAS 130 requires that
all items required to be recognized under accounting standards as
components of comprehensive income be reported as part of the basic
financial statements. The Company does not expect adoption of this new
standard to have a material effect on its financial reporting.
e) Cash and Short-term Deposits
Cash and short-term deposits include government treasury bills and
bankers' acceptances with maturities no longer than 90 days, together
with accrued interest.
NOTE 3 - MARKETABLE SECURITIES
Marketable securities are comprised of 59,800 (1997 - Nil) shares of
Trans-Orient Petroleum Ltd., which were acquired at a cost of $174,930.
At December 31, 1998, the market value of these shares is $80,356 (1997
- - Nil). These securities are classified as available-for-sale
securities and are reported at market value, with unrealized gains and
losses included as a component of comprehensive income.
Trans-Orient Petroleum Ltd. is a public company related by an
individual who is a common director, officer and principal shareholder.
Refer to Note 6
NOTE 4 - COMMON STOCK
Stock Options and Share Purchase Warrants
There were no stock options granted or share purchase warrants issued
during the 1998 and 1997 fiscal years. No stock options or share
purchase warrants were outstanding at December 31, 1998.
NOTE 5 - LOSS PER SHARE
Net loss per common share is computed based on the weighted-average
number of common shares and common share equivalents outstanding.
There were no dilutive securities outstanding for the periods
presented. No differences existed between basic and diluted loss per
share for the periods presented. The weighted-average number of shares
outstanding after giving retroactive effect to share transactions are
8,294,205 for the 1998 fiscal year and 2,061,370 for the 1997 fiscal
year.
Refer to Note 8
F-7
<PAGE> 34
AUSTRAL PACIFIC ENERGY CORP.
(A Development Stage Enterprise)
Notes to the Financial Statements
For the Period from November 1, 1996 (Inception) to December 31, 1998
NOTE 6 - RELATED PARTY TRANSACTIONS
During the 1998 fiscal year, the Company paid $18,000 (1997 - $ Nil) in
consulting fees to a private company wholly-owned by the President of
the Company.
During the 1998 fiscal year, the Company purchased 59,800 common shares
of Trans-Orient Petroleum Ltd., a public company related by an
individual who is a common director, officer and principal shareholder.
Refer to note 3
During the 1997 fiscal year, the Company repaid a $10,000 loan to a
shareholder of the Company.
During the 1997 fiscal year, the Company issued 3,000,000 shares for
total cash proceeds of $30,000 to a private company wholly-owned by the
President of the Company. This private placement was rescinded by
mutual agreement on February 3, 1999. Refer to Note 8
NOTE 7 - INCOME TAXES
There are no income taxes payable by the Company at December 31, 1998.
NOTE 8 - SUBSEQUENT EVENTS
The following material events have occurred subsequent to the year-end:
a) Private Placements
Subsequent to the 1998 fiscal year, the Company issued a total of
3,320,000 shares pursuant to private placements for total cash proceeds
of $133,700. Additionally, 3,000,000 shares previously issued in the
1997 fiscal year under a private placement for total cash proceeds of
$30,000 were cancelled in its entirety. Since these transactions
affect the Company's permanent capital, the financial statements have
been prepared giving retroactive effect to these transactions. The
3,000,000 shares issued in the 1997 fiscal year and cancelled
subsequent to the 1998 fiscal year are not shown as issued. The
3,320,000 shares which were issued in February 1999 are shown as if
they had been outstanding for all of the 1998 fiscal year.
b) Sale of Marketable Securities
Subsequent to the 1998 fiscal year, the Company sold 59,800 shares of
Trans-Orient Petroleum Ltd. for cash proceeds of $81,972, net of
commissions, resulting in a loss of $92,958.
F-8
<PAGE> 35
JORGENSEN TELFORD SADOVNICK, P.L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
REVIEW ENGAGEMENT REPORT
To the Board of Directors and Shareholders of Verida Internet Corp.
(formerly Austral Pacific Energy Corp.)
We have reviewed the accompanying balance sheets of Verida Internet
Corp. (formerly Austral Pacific Energy Corp.) as of March 31, 1999 and
1998 and the related statements of operations, cash flows and changes
in stockholders' equity for the three month periods ended March 31,
1999 and 1998, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of
Certified Public Accountants. All information included in these
financial statements is the representation of the management of the
Company.
A review consists principally of inquiries of company personnel and
analytical procedures applied to financial data. It is substantially
less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements in order
for them to be in conformity with generally accepted accounting
principles.
/s/ Jorgensen Telford Sadovnick, P.L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
Seattle, Washington
June 23, 1999
720 Third Avenue, Suite 1910, Seattle, Washington 98104
Telephone; (206) 521-0403 Facsimile: (206) 624-3301
F-1
<PAGE> 36
VERIDA INTERNET CORP. (Formerly Austral Pacific Energy Corp.)
(A Development Stage Enterprise)
Balance Sheets
(Unaudited - See Accountants' Review Report)
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
<S> <C> <C>
ASSETS
Current
Cash and short-term deposits $ 139,583 $ 144,165
Subscriptions receivable (Note 3) - 133,700
--------- ---------
Total Assets $ 139,583 $ 277,865
--------- ---------
LIABILITIES
Current
Accounts payable and accrued
liabilities $ 8,500 $ 2,078
Due to related party (Note 5) 32,469 -
Loan payable to related party
(Note 5) - 30,000
--------- ---------
Total Liabilities 40,969 32,078
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $0.00001 par value;
100,000,000 shares authorized
(Note 3) (1999: 8,887,000 shares
issued and outstanding) (1998,
6,920,000 shares issued and
outstanding) 89 69
Additional paid-in capital 340,621 281,631
Deficit accumulated during the
development stage (242,096) (35,913)
--------- ---------
Total Stockholders' Equity 98,614 245,787
--------- ---------
Total Liabilities and
Stockholders' Equity $ 139,583 $ 277,865
--------- ---------
</TABLE>
F-2
<PAGE> 37
VERIDA INTERNET CORP. (Formerly Austral Pacific Energy Corp.)
(A Development Stage Enterprise)
Statements of Operations
(Unaudited - See Accountants' Review Report)
<TABLE>
<CAPTION>
Three Month Three Month November 1, 1996
Period Ended Period Ended (inception) to
March 31, March 31, March 31,
1999 1998 1999
<S> <C> <C> <C>
REVENUE
Interest income $ 1,559 $ 1,683 $ 7,036
---------- --------- ----------
OPERATING EXPENSES
Product development 71,719 - 71,719
General and administrative 33,498 11,266 84,455
Loss on sale of marketable
securities (Note 5) 92,958 - 92,958
---------- --------- ----------
198,175 11,266 249,132
---------- --------- ----------
Net loss for the period $ (196,616) $ (9,583) $ (242,096)
========== ========= ==========
Basic and diluted loss
per share $ (0.02) $ (0.00) $ (0.05)
========== ========= ==========
</TABLE>
F-3
<PAGE> 38
VERIDA INTERNET CORP. (Formerly Austral Pacific Energy Corp.)
(A Development Stage Enterprise)
Statements of Cash Flows
(Unaudited - See Accountants' Review Report).
<TABLE>
<CAPTION>
Three Month Three Month November 1, 1996
Period Ended Period Ended (inception) to
March 31, March 31, March 31,
1999 1998 1999
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss for the period $ (196,616) $ (9,583) $ (242,096)
Changes in non-cash
working capital:
Accounts payable and
accrued liabilities 3,922 78 8,500
Due to related party 32,469 - 32,469
Loss on sale of
marketable securities 92,958 - 92,958
---------- --------- ----------
Net cash used in
operating activities (67,267) (9,505) (108,169)
---------- --------- ----------
FINANCING ACTIVITIES
Common shares issued
for cash 133,700 - 350,710
Cost of common stock
offering - - (10,000)
Repayment of related
party loan (30,000) - (30,000)
Loan from related party - - 30,000
---------- --------- ----------
Net cash provided by
financing activities 103,700 - 340,710
---------- --------- ----------
INVESTING ACTIVITIES
Proceeds from sale of
marketable securities 81,972 - 81,972
Purchase of marketable
securities - - (174,930)
---------- --------- ----------
Net cash provided by
(used in) investing
activities 81,972 - (92,958)
---------- --------- ----------
Net increase (decrease)
in cash 118,405 (9,505) 139,583
Cash position - Beginning
of period 21,178 153,670 -
---------- --------- ----------
Cash position - End of
period $ 139,583 $ 144,165 $ 139,583
========== ========= ==========
</TABLE>
F-4
<PAGE> 39
VERIDA INTERNET CORP. (Formerly Austral Pacific Energy Corp.)
(A Development Stage Enterprise)
Statements of Changes in Stockholders' Equity
(Unaudited - See Accountants' Review Report)
For the Three Month Periods Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in
Shares Amount Capital
<S> <C> <C> <C>
Balance at
December 31, 1998 8,887,000 $ 89 $ 340,621
Net loss during the period
Loss on sale of marketable
securities realized
--------- ---- ---------
Balance at March 31, 1999 8,887,000 $ 89 $ 340,621
========= ==== =========
Balance at December 31, 1997 3,600,000 $ 36 $ 147,964
Common stock issued for
cash at $0.001, $0,03 and
$0.25 per share (Note 3) 3,320,000 33 133,667
Net loss during the period
--------- ---- ---------
Balance at March 31, 1998 6,920,000 $ 69 $ 281,631
========= ==== =========
</TABLE>
F-5a
<PAGE> 40
VERIDA INTERNET CORP. (Formerly Austral Pacific Energy Corp.)
(A Development Stage Enterprise)
Statements of Changes in Stockholders' Equity
(Unaudited - See Accountants' Review Report)
For the Three Month Periods Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
Deficit
Accumulated
during the Cumulative Total
Development Comprehensive Stockholders'
Stage Adjustment Equity
<S> <C> <C> <C>
Balance at
December 31, 1998 $ (45,480) $ (94,574) $ 200,656
Net loss during the period (196,616) (196,616)
Loss on sale of marketable
securities realized 94,574 94,574
---------- --------- ----------
Balance at March 31, 1999 $ (242,096) $ - $ 98,614
========== ========= ==========
Balance at December 31,
1997 $ (26,330) $ - $ 121,670
Common stock issued for
cash at $0.001, $0,03 and
$0.25 per share (Note 3) 133,700
Net loss during the period (9,583) (9,583)
--------- --------- ----------
Balance at March 31, 1998 $ (35,913) $ - $ 245,787
========= ========= ==========
</TABLE>
F-5b
<PAGE> 41
VERIDA INTERNET CORP. (Formerly Austral Pacific Energy Corp.)
(A Development Stage Enterprise)
Notes to the Financial Statements
(Unaudited -See Accountants' Review Report)
For the Three Month Periods Ended March 31, 1999 and 1998
NOTE 1 - NATURE OF OPERATIONS
The Company was incorporated under the laws of the State of Nevada on
November 1, 1996 and is a development stage enterprise. The Company is
currently developing business-to-business electronic commerce solutions
for use on the Internet.
These financial statements have been prepared on the basis that the
Company will continue as a going concern. The Company has incurred
operating losses since its incorporation and significant acquisitions
in the future, if any, will likely require additional equity financing.
However, there can be no assurance that such acquisitions will occur,
or whether additional funds required, if any, would be available to the
Company when required or on terms acceptable to the Company. Such
limitations could have a material adverse effect on the Company's
business, financial condition or operations and these financial
statements do not include any adjustment that could result therefrom.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Accounting Principles and Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the fiscal periods. Actual results may differ from
those estimates.
b) Translation of Foreign Currencies
Revenues and expenses arising from foreign currency transactions are
translated into United States dollars at the average rate for the
period. Monetary assets and liabilities are translated into United
States dollars at the rates prevailing at the balance sheet date. Other
assets and liabilities are translated into United States dollars at the
rates prevailing on the transaction dates. Exchange gains and losses
are recorded as income or expense in the period in which they occur.
c) Financial Instruments and Financial Risk
The Company's financial instruments consist of current assets and
current liabilities. The fair values of the current assets and
liabilities approximate the carrying amounts due to the short-term
nature of these instruments.
F-6
<PAGE> 42
VERIDA INTERNET CORP. (Formerly Austral Pacific Energy Corp.)
(A Development Stage Enterprise)
Notes to the Financial Statements
(Unaudited - See Accountants' Review Report)
For the Three Month Periods Ended March 31, 1999 and 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
d) Accounting Pronouncements Recently Issued
The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards No. 128: Earnings per Share ("SFAS
128"), effective for fiscal periods ending after December 15, 1997 and
requiring restatement of all prior period earnings per share data. SFAS
128 replaces the presentation of primary earnings per share ("EPS")
with a presentation of both basic and diluted EPS for all entities with
complex capital structures. Basic EPS excludes dilutive securities and
is computed by dividing income available to common shareholders by the
weighted average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if
dilutive securities were converted into common shares and is computed
similarly to fully diluted EPS pursuant to previous accounting
pronouncements. SFAS 128 applies equally to loss per share
presentations.
The FASB issued Statement of Financial Accounting Standards No. 130:
Reporting Comprehensive Income ("SFAS 130"), effective for fiscal
periods beginning after December 15, 1997 and requiring restatement of
all comparative financial statements disclosed. SFAS 130 requires that
all items required to be recognized under accounting standards as
components of comprehensive income be reported as part of the basic
financial statements. The Company does not expect adoption of this new
standard to have a material effect on its financial reporting.
e) Cash and Short-term Deposits
Cash and short-term deposits include government treasury bills and
bankers' acceptances with initial maturities no longer than 90 days,
together with accrued interest.
f) Product Development Costs
Product development costs include expenses incurred by the Company to
develop, monitor and operate the Company's website. Product development
costs are expensed as incurred.
NOTE 3 - COMMON STOCK
a) Stock Options and Share Purchase Warrants
There were no stock options granted or share purchase warrants issued
during the 1999 and 1998 fiscal periods. No stock options or share
purchase warrants were outstanding at March 31, 1999.
Refer to Notes 5 and 8
<PAGE> 43
VERIDA INTERNET CORP. (Formerly Austral Pacific Energy Corp.)
(A Development Stage Enterprise)
Notes to the Financial Statements
(Unaudited - See Accountants' Review Report)
For the Three Month Periods Ended March 31, 1999 and 1998
NOTE 3 - COMMON STOCK (continued)
b) Private Placements
During the 1999 fiscal period, the Company issued a total of 3,320,000
shares pursuant to private placements for total cash proceeds of
$133,700 and cancelled 3,000,000 shares previously issued pursuant to
a private placement for total cash proceeds of $30,000. Since these
transactions affect the Company's permanent capital, the financial
statements for the year ended December 31, 1998 were prepared giving
retroactive effect to these transactions.
Accordingly, the comparative figures for the 1998 fiscal period have
also been prepared giving retroactive effect to these transactions. The
3,320,000 shares issued during the 1999 fiscal period are shown as if
they had been outstanding at the beginning of the 1998 fiscal period.
The 3,000,000 shares issued during the 1997 fiscal year and cancelled
during the 1999 fiscal period are not shown as being issued.
Refer to Notes 5 and 8
NOTE 4 - LOSS PER SHARE
Net loss per common share is computed based on the weighted-average
number of common shares and common share equivalents outstanding. There
were no dilutive securities outstanding for the periods presented and
consequently, no differences existed between basic and diluted loss per
share for the periods presented. The weighted-average number of shares
outstanding after giving retroactive effect to subsequent share
transactions are 8,887,000 for the 1999 fiscal period and 6,920,000 for
the 1998 fiscal period.
Refer to Note 3
NOTE 5 - RELATED PARTY TRANSACTIONS
a) Due to Related Party
During the 1999 fiscal period, the Company entered into an agreement
with a private company to design and produce the Company's internet
site and other corporate materials for an estimated total cost of
$129,875 (1998 fiscal period - Nil), of which $97,406 was incurred by
the Company. The President of the Company is also the president of this
private company.
At March 31, 1999, the Company owed $32,469 (March 31, 1998 - Nil) to
this private company.
F-8
<PAGE> 44
VERIDA INTERNET CORP. (Formerly Austral Pacific Energy Corp.)
(A Development Stage Enterprise) Notes to the Financial Statements
(Unaudited - See Accountants' Review Report)
For the Three Month Periods Ended March 31, 1999 and 1998
NOTE 5 - RELATED PARTY TRANSACTIONS (continued)
b) Loan Payable to Related Party
During the 1999 fiscal period, the Company repaid a $30,000 loan from
a private company wholly-owned by a former President of the Company.
This amount relates to the cancellation during the 1999 fiscal period
of 3,000,000 shares issued during the 1997 fiscal year for total cash
proceeds of $30,000.
Refer to Note 3
c) Sale of Marketable Securities
During the 1999 fiscal period, the Company sold 59,800 shares of Trans-
Orient Petroleum Ltd. for cash proceeds of $81,972, net of commissions,
resulting in a loss of $92,958. These available-for-sale securities
were originally acquired at a cost of $174,930 and reported
historically at market value, with unrealized gains and losses included
as a component of comprehensive income.
Trans-Orient Petroleum Ltd. is a public company with directors,
officers and/or principal shareholders in common with the Company.
d) Employment Agreement and Stock Option
The Company entered into an employment agreement with the Company's
Executive Vice President at a rate of $7,500 per month. The employment
agreement also provides for a stock option to purchase 200,000 shares
of the Company exercisable at a price of $4.00 per share, subject to
vesting provisions. This option is to be granted concurrently with the
initial granting of stock options to other key individuals of the
Company and has yet to be granted.
e) Consulting Agreement
During the 1998 fiscal period, the Company incurred $9,000 in
consulting fees to a private company wholly-owned by the former
President of the Company.
Refer to Note 8
NOTE 6 - INCOME TAXES
There are no income taxes payable by the Company at March 31, 1999.
F-9
<PAGE> 45
VERIDA INTERNET CORP. (Formerly Austral Pacific Energy Corp.)
(A Development Stage Enterprise) Notes to the Financial Statements
(Unaudited - See Accountants' Review Report)
For the Three Month Periods Ended March 31, 1999 and 1998
NOTE 7 - NAME CHANGE
On March 11, 1999, the name of the Company was changed from Austral
Pacific Energy Corp. to Verida Internet Corp.
NOTE 8 - SUBSEQUENT EVENTS
a) Private Placement
Subsequent to March 31, 1999, the Company issued 60,000 shares pursuant
to a private placement for total cash proceeds of $300,000.
b) Employment Agreement and Stock Option
Subsequent to March 31, 1999, the Company entered into an employment
agreement with the Company's Chief Technology Officer at a rate of
$4,000 per month. The employment agreement also provides for a stock
option to purchase 150,000 shares of the Company exercisable at a price
of $4.00 per share, subject to vesting provisions. This option is to be
granted concurrently with the initial granting of stock options to
other key individuals of the Company and has yet to be granted.
c) Software Purchase Agreement
Subsequent to March 31, 1999, the Company entered into an agreement to
purchase computer software from NetOpus Incorporated in consideration
of $50,000 and 25,000 shares of the Company. The Company has the right
to use, brand, sell and market this computer software including the
right to modify and customize at the Company's expense as required.
Additionally, the Company has the right to share equally in any revenue
generated from any future sale or licensing of the modified computer
software by NetOpus Incorporated.
The Chief Technology Officer of the Company is the president of
NetOpus Incorporated.
F-10
<PAGE> 46
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Registrant's former independent auditor, Terrence J. Dunne,
Certified Public Accountant, of Spokane, Washington was
dismissed by the Registrant on February 9, 1999. The former auditor
expressed an unqualified opinion on the financial statements of the
Registrant for the period from November 1, 1996 (inception) to
ended December 31, 1996.
The decision to change auditors was approved by the Registrant's
board of directors. The board of directors decided to dismiss Mr. Dunne
due to the belief that Mr. Dunne would not be able to consistently meet
the time requirements for the preparation of the Registrant's financial
statements. There were no disagreements with the former auditor on any
audit or accounting issues.
The Registrant engaged the firm of Jorgensen Telford Sadovnick,
PLLC, Certified Public Accountants, as its new auditor, on February 9,
1999. Jorgensen Telford Sadovnick, PLLC received a letter dated
February 11, 1999 from Mr. Dunne confirming that he was not aware of
any circumstances which would cause concern over the acceptance as
auditors of the Registrant and that there were no disagreements between
the Registrant and Mr. Dunne in regard to any accounting principles or
audit procedures.
The Registrant is required to obtain a Letter on Change in
Certifying Accountant for filing as Exhibit 16 of Item 601 of
Regulation S-B. Accordingly, the Registrant contacted Mr. Dunne and
provided a copy of the disclosures made under this item pursuant to
Item 304(a)(3) of Regulation S-B. However, Mr. Dunne has notified the
Registrant that he is under an order pursuant to Rule 102(e) of the
Commission's Rules of Practice for a period of three years in accordance
with an Administrative Proceeding No. 3-9610 dated May 27, 1998.
In lieu of filing Exhibit 16: Letter on Change in Certifying
Accountant in this Form 10-SB, the Commission has requested that the
Registrant provide details of its attempts to comply with this
requirement, as described in the foregoing paragraph.
<PAGE> 47
ITEM 15. INDEX TO EXHIBITS
The following exhibits required by Item 601 of Regulation S-B are
filed herewith:
Exhibit
Number Description
3.1 * Initial Articles of Incorporation, as filed November 1,
1996
3.2 * Bylaws
3.3 * Articles of Amendment to the Articles of Incorporation,
as filed on November 8, 1996
3.4 * Articles of Amendment to the Articles of Incorporation,
as filed on March 11, 1999
27.2 * Financial Data Schedule
99.1 * Cohn Employment Agreement
99.2 * Zimmerman Employment Agreement
99.3 * Triad, Inc. Agreement
99.4 * Software Purchase Agreement
* Previously Filed.
<PAGE> 48
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the Registrant has caused this signature page to be signed on its
behalf by the undersigned, thereunto duly authorized.
VERIDA INTERNET CORP.
Name Title Date
/s/ Peter Rantucci Director August 2, 1999
Peter Rantucci
/s/ Mark Katsumata Secretary, Treasurer August 2, 1999
Mark Katsumata and Chief Financial
Officer
