UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[xx] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
Commission file Number: 000-27397
NEWSGURUS.COM, INC.
(FORMERLY ANNEX BUSINESS RESOURCES, INC.)
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
98-0204280
(I.R.S. Employer Identification Number)
5774 Deadpine Drive
Kelowna, British Columbia
V1P 1A3
(Address of principal executive offices)
(250) 765-6424
(Issuer's telephone number)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 9,290,000 common shares as at
September 30, 2000
Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]
<PAGE>
NEWSGURUS.COM, INC.
( formerly Annex Business Resources Inc.)
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
September 30, 2000 and June 30, 2000
Consolidated Statements of Operations for the periods ended
September 30, 2000 and September 30, 1999
Consolidated Statements of Cash Flows for
the periods ended September 30, 2000 and
September 30, 1999
Consolidated Statements of Changes in Stockholders' Equity
Notes to Consolidated Financial Statements
Item 2 Plan of Operation
PART II. OTHER INFORMATION
Item 1 Legal Proceedings
Item 2 Changes in Securities
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8K
SIGNATURES
2
<PAGE>
NEWSGURUS.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED - PREPARED BY MANAGEMENT)
SEPTEMBER 30, 2000
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
=============================================================================================================================
As At As At
September 30, June 30,
2000 2000
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents $ 57,236 $ 83,430
Accounts receivable 1,205 3,000
Deposits -- 10,000
--------------- ---------------
58,441 96,430
CAPITAL ASSETS (Note 5) 3,687 3,670
WEB SITE DEVELOPMENT COSTS (Note 6) 134,271 90,300
OTHER ASSET (Note 7) 2,850 --
--------------- --------------
TOTAL ASSETS $ 199,249 $ 190,400
=============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 31,087 $ 23,540
Convertible loan (Note 8) 200,000 100,000
--------------- ---------------
231,087 123,540
--------------- ---------------
STOCKHOLDERS' EQUITY
Capital stock (Note 9)
Authorized
50,000,000 common shares with a par value of $0.001
25,000,000 preferred shares with a par value of $0.001
Issued and outstanding
9,290,000 common shares (June 30, 2000 - 9,290,000 common shares) 9,290 9,290
Subscription funds received -- 50,000
Additional paid in capital 192,885 192,885
Deficit accumulated during the development stage (234,013) (185,315)
--------------- ---------------
(31,838) 66,860
--------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 199,249 $ 190,400
=============================================================================================================================
</TABLE>
HISTORY AND ORGANIZATION OF THE COMPANY (Note 1)
COMMITMENTS (Note 12)
ON BEHALF OF THE BOARD:
/s/ Chris Bunka Director /s/ Sudhir Khanna Director
-------------------------------- -------------------------
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
=============================================================================================================================
Period From
Date of
Incorporation
on May 16, For the For the
1997 Three Month Three Month
to Period Ended Period Ended
September 30, September 30, September 30,
2000 2000 1999
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE $ 4,517 $ 1,517 $ --
--------------- --------------- --------------
EXPENSES
Advertising 3,615 -- --
Amortization 1,298 921 --
Automobile 10 10 --
Bank charges 241 116 --
Computer 630 630 --
Consulting fees 91,250 12,750 --
Credit card fees 105 105 --
Licences and fees 4,316 2,346 --
Office and miscellaneous 12,258 4,545 --
Professional fees 103,982 20,815 --
Telephone 1,443 1,417 --
Travel and promotion 19,382 6,560 --
--------------- --------------- --------------
238,530 50,215 --
--------------- --------------- --------------
NET LOSS FOR THE PERIOD $ (234,013) $ (48,698) $ --
=============================================================================================================================
BASIC (LOSS) PER COMMON SHARE $ (0.01) $ (0.00)
=============================================================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 9,290,000 7,000,000
=============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
=============================================================================================================================
Period From
Date of
Incorporation
on May 16, For the For the
1997 Three Month Three Month
to Period Ended Period Ended
September 30,- September 30, September 30,
2000 2000 1999
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (234,013) $ (48,698) $ --
Items not affecting cash:
Amortization 1,298 921 --
Stock issued for services 4,000 -- --
Changes in non-cash working capital items:
(Increase) decrease in accounts receivable (1,205) 1,795 --
Increase in accounts payable 31,087 7,547 --
Increase in deposit - 10,000 --
--------------- ---------------- --------------
Net cash used in operating activities (198,833) (28,435) --
--------------- ---------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Convertible Loan 200,000 50,000 --
Share capital 198,175 -- --
--------------- ---------------- --------------
Net cash provided by financing activities 398,175 50,000 --
--------------- ---------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of capital assets (7,835) (3,788) --
Web site development costs (134,271) (43,971) --
--------------- ---------------- --------------
Net cash used in investing activities (142,106) (47,759) --
--------------- ---------------- --------------
CHANGE IN CASH POSITION DURING THE PERIOD 57,236 (26,194) --
CASH POSITION, BEGINNING OF THE PERIOD -- 83,430 --
--------------- ---------------- --------------
CASH POSITION, END OF THE PERIOD $ 57,236 $ 57,236 $ --
=============================================================================================================================
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
Cash paid for income taxes $ -- $ -- $ --
Cash paid for interest -- -- --
SUPPLEMENTAL DISCLOSURE OF NON-CASH OPERATING, INVESTING, AND FINANCING
ACTIVITIES:
Common shares issued for services 4,000 -- --
Common shares issued for acquisition of subsidiary 3,500 -- --
============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited - Prepared by Management)
<TABLE>
<CAPTION>
=============================================================================================================================
Deficit
Accumulated
Common Stock Additional During the Share Total
--------------------------- Paid in Development Subscriptions Stockholders'
Shares Amount Capital Stage Received Equity
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MAY 16, 1997 -- $ -- $ -- $ -- $ -- $ --
Common stock issued
for services 7,000,000 7,000 (6,500) -- -- 500
Loss for the period -- -- -- (500) -- (500)
------------- ------------- ------------ ------------- ------------- -------------
BALANCE, JUNE 30, 1997 AND 1998 7,000,000 7,000 (6,500) (500) -- --
Loss for the period -- -- - (235) -- (235)
------------- ------------- ------------ ------------- ------------- -------------
BALANCE, JUNE 30, 1999 7,000,000 7,000 (6,500) (735) -- (235)
Common stock issued to acquire
subsidiary 3,500,000 3,500 (3,500) -- -- --
Common stock issued for cash 1,147,500 1,148 60,027 -- -- 61,175
Common stock issued for cash 278,000 278 13,622 -- -- 13,900
Common stock issued for cash 100,000 100 24,900 -- -- 25,000
Common stock issued for cash 20,000 20 980 -- -- 1,000
Common stock issued
for services 20,000 20 980 -- -- 1,000
Common stock issued for
services 50,000 50 2,450 -- -- 2,500
Cancellation of shares (3,756,000) (3,756) 3,756 -- -- --
Common stock issued for cash 152,000 152 7,448 -- -- 7,600
Common stock issued for cash 500,000 500 4,500 -- -- 5,000
Common stock issued for cash 70,000 70 3,430 -- -- 3,500
Common stock issued for cash 96,000 96 35,904 -- -- 36,000
Common stock issued for cash 25,000 25 9,975 -- -- 10,000
Common stock issued for cash 25,000 25 9,975 -- -- 10,000
Common stock issued for cash 62,500 62 24,938 -- -- 25,000
Share subscriptions received -- -- -- -- 50,000 50,000
Loss for the year -- -- -- (184,580) -- (184,580)
------------- ------------- ------------ ------------- ------------ -------------
BALANCE, JUNE 30, 2000 9,290,000 9,290 192,885 (185,315) 50,000 66,860
Share subscription converted
to debt -- -- -- -- (50,000) (50,000)
Loss for the period -- -- -- (48,698) -- (48,698)
------------- ------------- ------------ ------------- ------------ -------------
BALANCE, SEPTEMBER 30, 2000 9,290,000 $ 9,290 $ 192,885 $ (234,013) $ -- $ (31,838)
=============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited - Prepared by Management)
================================================================================
1. HISTORY AND ORGANIZATION OF THE COMPANY
NewsGurus.Com, Inc. ("the Company") was incorporated on May 16, 1997
under the laws of Nevada to engage in any lawful business or activity
for which corporations may be organized under the laws of the State of
Nevada. The Company's principal business consists of providing expert
opinion and information in the areas of money, health and lifestyles
and eventually into e-commerce through the Internet.
The Company entered the development stage in accordance with SFAS No. 7
on May 16, 1997. Its purpose is to evaluate, structure and complete a
merger with, or acquisition of a privately owned corporation. During
the period ended June 30, 2000, the Company acquired a 100% interest in
Gurus International Corp.
2. DISCLOSURE OF MANAGEMENT
In the opinion of management, the accompanying financial statements
contain all adjustments necessary (consisting only of normal recurring
accruals) to present fairly the financial information contained
therein. These statements do not include all disclosures required by
the generally accepted accounting principles and should be read in
conjunction with the audited financial statements of the Company for
the year ended June 30, 2000. The results of operations for the period
ended September 30, 2000 are not necessarily indicative of the results
to be expected for the year ending June 30, 2001.
3. GOING CONCERN
The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business. The Company incurred a loss of $234,013 for the period from
inception to September 30, 2000. The Company anticipates expending
approximately $4,000,000 over the next twelve month period in pursuing
its anticipated plan of operations. The Company anticipates covering
these costs by operating revenues and additional equity financing. The
Company is presently undertaking an offering of 4,000,000 common shares
at a price of $2.00 per share in accordance with the United States
Securities Act of 1933. To date, the Company has not received any of
the funds from this offering which, once fully completed, will enable
the Company to complete its anticipated plan of operations. The Company
has also entered into additional financing agreements including a
convertible debt agreement for $150,000 of which it has received all of
the proceeds as at September 30, 2000. In association with this
agreement, the Company has entered into a separate financing agreement
whereby it may issue 1,100,000 shares for total proceeds of $440,000
and warrants to acquire an additional 1,500,000 shares for additional
proceeds in the amount of $1,950,000. To date, the Company has received
$50,000 from this financing. As of September 30, 2000, the $50,000
financing received was converted into a convertible loan (Note 8).
However the other party does not have the funds at the present time to
continue with the agreement. If the Company is unable to complete its
financing requirements or achieve revenue as projected, it will then
modify its expenditures and plan of operations to coincide with the
actual financing completed and actual operating revenues. The financial
statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the
amounts and classification of liabilities that might be necessary
should the Company be unable to continue in existence.
4. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
These consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, Gurus International Corp and
Independent Outsider Inc. All significant intercompany balances and
transactions have been eliminated.
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited - Prepared by Management)
================================================================================
4. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
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 amount of assets and
liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenues
and expenses during the period. Actual results could differ from these
estimates.
BASIC LOSS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" ("SFAS 128"). Under SFAS 128, basic and diluted earnings per
share are to be presented. Basic earnings per share is computed by
dividing income available to common shareholders by the weighted
average number of common shares outstanding during the year. Diluted
earnings per share takes into consideration common shares outstanding
(computed under basic earnings per share) and potentially dilutive
common shares.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments with
original maturities of three months or less.
CAPITAL ASSETS
Tangible capital assets, being computer equipment and software, are
recorded at cost. Amortization of capital assets is calculated using
the declining balance method at an annual rate of 30% for computer
equipment and 50% for software.
SOFTWARE DEVELOPMENT
The Company has adopted Statement of Position 98-1 ("SOP 98-1"),
"Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use", as its accounting policy for internally developed
computer software costs. Under SOP 98-1, computer software costs
incurred in the preliminary development stage are expensed as incurred.
Computer software costs incurred during the application development
stage are capitalized and amortized over the software's estimated
useful life.
INCOME TAXES
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". A deferred
tax asset or liability is recorded for all temporary differences
between financial and tax reporting and net operating loss
carryforwards. Deferred tax expenses (benefit) result from the net
change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
OTHER ASSETS
Intangible assets, being merchant credit rights, are amortized over 3
years on straight line basis.
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited - Prepared by Management)
================================================================================
4. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In September 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133") which
establishes accounting and reporting standards for derivative
instruments and for hedging activities. SFAS 133 is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999. In June
1999, the FASB issued SFAS 137 to defer the effective date of SFAS 133
to fiscal quarters of fiscal years beginning after June 15, 2000. The
Company does not anticipate that the adoption of the statement will
have a significant impact on its financial statements.
REPORTING ON COSTS OF START-UP ACTIVITIES
In April 1998, the American Institute of Certified Public Accountant's
issued Statement of Position 98-5 ("SOP 98-5"), "Reporting on the Costs
of Start-Up Activities" which provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs
of start-up activities and organization costs to be expensed as
incurred. SOP 98-5 is effective for fiscal years beginning after
December 15, 1998 with initial adoption reported as the cumulative
effect of a change in accounting principle. The adoption of SOP 98-5 by
the Company during the year had no effect on its financial statements.
COMPREHENSIVE INCOME
In 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income". This
statement establishes rules for the reporting of comprehensive income
and its components. The adoption of SFAS 130 had no impact on total
stockholders' equity as of September 30, 2000.
STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require, companies
to record compensation cost for stock-based employee compensation plans
at fair value. The Company has chosen to account for stock-based
compensation using Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees." Accordingly, compensation
cost for stock options is measured as the excess, if any, of the quoted
market price of the Company's stock at the date of the grant over the
amount an employee is required to pay for the stock
5. CAPITAL ASSETS
=======================================================================
Net Book Value
-------------------------
Accumulated September 30, June 30,
Cost Amortization 2000 2000
-----------------------------------------------------------------------
Computer equipment $ 4,047 $ 704 $ 3,343 3,670
Computer software 688 344 344 --
-------- -------- -------- --------
$ 4,735 $ 1,048 $ 3,687 $ 3,670
=======================================================================
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited - Prepared by Management)
================================================================================
6. WEB SITE DEVELOPMENT COSTS
Web site development costs of $134,271 are comprised of software costs
incurred by the Company in developing its web site. The Company's
amortization policy concerning these costs is to amortize the costs
over a period of five years commencing from the date of operations. As
at September 30, 2000, no amortization has been taken.
7. BUSINESS COMBINATION
During the period, the Company entered into an acquisition agreement
whereby the Company acquired all of the outstanding shares of
Independent Outsider Inc ("Independent"). The Company paid $3,000 to
acquire all the shares of Independent. At the date of acquisition,
Independent's net assets had a fair value of $3,100.
The total fair value of $3,100 has been allocated to other asset which
consist of an intangible right to merchant credit.
8. CONVERTIBLE LOAN
=======================================================================
September 30, June 30,
2000 2000
-----------------------------------------------------------------------
Canalaska Ventures Ltd. $ 200,000 $ 100,000
=======================================================================
The convertible loan bears interest at a rate of 7% per annum and is
repayable by March 7, 2001 unless converted into common stock of
NewGurus.com, Inc. at a price of $0.25 per share on the first $100,000
and at a price of $0.40 on the second $100,000.
9. CAPITAL STOCK
On August 16, 1999, the Company implemented a 1,000:1 forward stock
split and on December 17, 1999, a 7:1 forward stock split. The
statements of changes in stockholders' equity has been restated to give
retroactive recognition of the stock splits by reclassifying to common
stock from additional paid in capital, the par value of shares arising
from the split. In addition, all references to number of shares and per
share amounts of common stock have been restated to reflect the stock
split.
On May 16, 1997, the Company issued 7,000,000 shares with a par value
of $0.001 for services valued at $500.
On December 17, 1999, the Company issued 3,500,000 shares with a par
value of $0.001 to acquire all of the outstanding shares of Gurus
International Corp.
On January 12, 2000, the Company issued 1,147,500 shares at $0.05 per
share for cash proceeds in the amount of $61,175.
On February 1, 2000, the Company issued 278,000 shares at $0.05 per
share for cash proceeds in the amount of $13,900.
On February 24, 2000, the Company issued 100,000 shares at $0.25 per
share for cash proceeds in the amount of $25,000.
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited - Prepared by Management)
================================================================================
9. CAPITAL STOCK (cont'd.....)
On February 24, 2000, the Company issued 20,000 shares at $0.05 per
share for cash proceeds in the amount of $1,000.
On February 24, 2000, the Company issued 20,000 shares at an agreed
value of $1,000 as payment of fees for services received.
On February 28, 2000, the Company issued 50,000 shares at an agreed
value of $2,500 as payment of fees for services received.
On February 28, 2000, the Company cancelled 3,756,000 shares gifted
back to treasury.
On February 28, 2000, the Company issued 152,000 shares at $0.05 per
share for cash proceeds in the amount of $7,600.
On February 28, 2000, the Company issued 500,000 shares at $0.01 per
share for cash proceeds in the amount of $5,000.
On March 21, 2000, the Company issued 70,000 shares at $0.05 per share
for cash proceeds in the amount of $3,500.
On March 27, 2000, the Company issued 96,000 shares at $0.375 per share
for cash proceeds in the amount of $36,000.
On March 27, 2000, the Company issued 112,500 shares at $0.40 per share
for cash proceeds in the amount of $45,000.
On September 30, 2000, the Company converted subscription funds
received in advance into debt.
INITIAL PUBLIC OFFERING
The Company is currently in the process of filing a registration
statement under the Securities Act of 1933 for its Initial Public
Offering. The offering consists of two million units offered by the
Company at a price of $2.00 per unit, each unit being comprised of one
share and one warrant to acquire one additional common share at a price
of $2.00 per share for six months following acceptance of its
registration statement and at $2.50 per share for the period which is
seven to twelve months following acceptance of its registration
statement and an additional 11,533,500 shares offered by selling stock
holders which may be sold if the Company's shares become quoted or
listed on an exchange or quotation service.
10. STOCK OPTIONS AND WARRANTS
As at September 30, 2000, the Company had outstanding stock options,
enabling the holders to acquire the following number of common shares:
=======================================================================
Number Exercise
of Shares Price Expiry Date
-----------------------------------------------------------------------
600,000 $ 1.00 February 1, 2005
=======================================================================
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited - Prepared by Management)
================================================================================
10. STOCK OPTIONS AND WARRANTS (cont'd.....)
As at September 30, 2000, the Company had outstanding share purchase
warrants, enabling the holders to acquire the following number of
shares:
=======================================================================
Original
Number Exercise
of Shares Price Expiry Date
-----------------------------------------------------------------------
60,000 $ 1.00 January 25, 2003
35,000 1.00 February 28, 2003
125,000 1.00 November 29, 2004
200,000 1.00 November 29, 2004
200,000 1.00 November 30, 2004
148,500 1.00 December 13, 2004
118,000 1.00 January 3, 2005
147,000 1.00 February 15, 2005
360,000 1.00 February 25, 2005
250,000 1.00 February 25, 2005
=======================================================================
11. STOCK BASED COMPENSATION EXPENSE
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation", encourages but does not require companies to
record compensation cost for stock-based employee compensation plans at
fair value. The Company has chosen to account for stock-based
compensation using Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees". Accordingly, compensation
cost for stock options is measured as the excess, if any, of quoted
market price of the Company's stock at the date of grant over the
option price. No stock based compensation has resulted from the use of
this standard.
Following is a summary of the status of the plan:
=======================================================================
Weighted
Average
Number Exercise
of Shares Price
-----------------------------------------------------------------------
Outstanding at June 30, 1999 and 1998 -- $ --
Granted 600,000 1.00
Forfeited -- --
Exercised -- --
------- -------
Outstanding at June 30, 2000 and September 30, 2000 600,000 $ 1.00
=======================================================================
Weighted average fair value of options granted $ --
=======================================================================
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited - Prepared by Management)
================================================================================
11. STOCK BASED COMPENSATION EXPENSE (cont'd.....)
Following is a summary of the status of options outstanding at
September 30, 2000:
=======================================================================
Outstanding Options Exercisable Options
------------------------------- -------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Contractual Exercise Exercise
Exercise Price Number Life Price Number Price
-----------------------------------------------------------------------
$ 1.00 600,000 3.45 $ 1.00 600,000 $ 1.00
=======================================================================
COMPENSATION
Had compensation cost been recognized on the basis of fair value
pursuant to Statement of Financial Accounting Standards No. 123, net
loss and loss per share would have been adjusted as follows:
=======================================================================
September 30, September 30,
2000 1999
-----------------------------------------------------------------------
NET LOSS
As reported $ (48,697) $ --
=================================
Pro forma $ (48,697) $ --
=================================
BASIC AND DILUTED LOSS PER SHARE
As reported $ (0.01) $ --
=================================
Pro forma $ (0.01) $ --
=======================================================================
The fair value of each option granted is estimated using the Black
Scholes Option Pricing Model. The assumptions used in calculating fair
value are as follows:
=======================================================================
September 30, September 30,
2000 1999
-----------------------------------------------------------------------
Risk-free interest rate 6.434% --
Expected life of the options 2 years --
Expected volatility 0.001% --
Expected dividend yield -- --
=======================================================================
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited - Prepared by Management)
================================================================================
12. COMMITMENTS
a) On March 7, 2000, the Company entered into a Financing and
Management Agreement with Canalaska Ventures Ltd. ("Canalaska") to
obtain financing for information technology and software
development .
The terms of the agreement between the Company and Canalaska
includes the following provisions:
Canalaska has the exclusive right to earn up to a 26.6% (three
million shares) interest in the Company by purchasing an equity
position in the Company in three phases, subject to specific terms
and conditions.
Phase One requires Canalaska to issue a $30,000 convertible loan
(received) to the Company and a further $70,000 (received) subject
to regulatory approval. The entire convertible loan must be
converted to common shares of the Company at a price of $0.25 per
common share within 30 days of the Approval Date.
Phase Two requires Canalaska to make an investment of $440,000
($50,000 received) by purchasing 1,100,000 shares at a price of
$0.40 per share of the Company. After each increment of financing
provided, Canalaska earns a warrant that allows Canalaska the
right to purchase an equal number of additional shares in the
Company at a price $1.30 per common share for a period of two
years from the date each increment is executed or exercised. As of
September 30, 2000, $100,000 had been advanced but none was
converted into shares as there was no regulatory approval. The
$50,000 received by June 30, 2000 has been reallocated along with
the $50,000 received to September 30, 2000 as a convertible loan.
Phase Three gives Canalaska the right to invest up to an
additional $1,950,000 in the common shares of the Company by
executing its warrants to purchase up to 1,500,000 common shares
at a price of $1.30 per share, on a pro rata basis.
Subject to completion of the Phase II financing of the Company,
Canalaska has the exclusive right to own 51% and be the operator
of an exact Clone of the Company for Europe, South America,
Mexico, the Caribbean and Central and South America.
As of September 30, 2000, Canalaska has not received regulatory
approval and therefore all of the advance to September 30, 2000 in
the amount of $200,000 are carried as a convertible loan (Note 8).
Canalaska has, as of September 30, 2000, no more funds to advance
or invest under the agreement as stipulated above. As of September
30, 2000 the Company is in discussions with Canalaska with regard
to the agreement, however, no resolution has been reached.
b) The Company entered into a hardware and software licensing
agreement with Healthnet International Inc. ("Healthnet") so that
the Company may operate web-based e-commerce health stores.
The terms of the agreement between the Company and Healthnet
include the following provisions:
The payment of an initial license, production and set-up fee of
$35,000 of which $10,000 is payable upon execution of the
agreement (paid). The outstanding balance shall be paid in six
equal payments of $4,167 over a six month period, beginning one
month following the execution of the agreement. The Company
further agreed to pay 10% of the initial license fee per annum as
a renewal fee, and royalty fees based on monthly gross revenues.
In addition, the Company agreed to pay marketing fees equal to 3%
of quarterly sales (net of shipping) and a sub-license fee for use
of the Super-Nutrition Distribution Inc. product database.
The agreement shall automatically renew for one year terms unless
either party gives not less than three months written notice that
it wishes to have the agreement expire.
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited - Prepared by Management)
================================================================================
13. RELATED PARTY TRANSACTIONS
During the period ended September 30, 2000, the Company entered into
the following related party transactions:
a) The Company paid $3,000 to acquire Independent Outsider Inc., a
company controlled by common directors (Note 7).
b) The Company paid consulting fees of $12,750 (September 30, 1999 -
$Nil) to companies controlled by directors.
Included in accounts payable as at September 30, 2000 is $6,673
(June 30, 2000 - $Nil) due to directors of the Company.
No significant non-cash investing and financing transactions occurred
during the period ended September 30, 1999.
14. INCOME TAXES
The Company's total deferred tax asset is as follows:
<TABLE>
<CAPTION>
==================================================================================
September 30, June 30,
2000 2000
----------------------------------------------------------------------------------
<S> <C> <C>
Tax benefit relating to net operating loss carryforwards $ 81,905 $ 64,388
Valuation allowance (81,905) (64,388)
---------- -----------
$ -- $ --
==================================================================================
</TABLE>
The Company has a net operating loss carryforward of approximately
$234,013 which expires in 2019, 2020 and 2001. The Company has provided
a full valuation allowance on the deferred tax asset because of the
uncertainty regarding realizability.
15. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash
equivalents, accounts payable and accrued liabilities and convertible
loans. Unless otherwise noted, it is management's opinion that the
Company is not exposed to significant interest, currency or credit
risks arising from these financial instruments. The fair value of these
financial instruments approximate their carrying values, unless
otherwise noted.
<PAGE>
PLAN OF OPERATION
The following discussion of the plan of operations of the Company should be read
in conjunction with the financial statements and the related notes thereto
included elsewhere in this quarterly report for the three months ended September
30, 2000. This quarterly report contains certain forward-looking statements and
the Company's future operation results could differ materially from those
discussed herein.
Before our appointment of Chris Bunka and Sudhir Khanna as management in May and
July, 1999, we had no operating history. Since the appointment of Mr. Bunka and
Mr. Khanna, we have raised approximately $400,000 through private placements and
completed construction of the Newsgurus.com Beta website.
Our continued development is almost entirely dependent upon our receipt of
additional equity funding. Our rate of development and schedule of
accomplishments will be largely influenced by the quantity of equity funding
received.
Our corporate operations commenced in May, 2000 with the launch of the
www.newsgurus.com website that is now capable of processing customer
transactions. This beta version website has substantial e-commerce capabilities
allowing users to select and purchase specified content contained within the
"Your Money" sections of the website database, including individual pay-per-view
content and monthly subscriptions. We currently publish about 35 new written
articles per week and 30 minutes of video content each week in the "Your Money"
section. Products and services from the "Your Health" section are also available
for purchase.
Continual development of our website is required. As part of our corporate
development, we plan to expand the breadth of content offered in our existing
site modules, and to add additional content under the topic, "Your Life".
Ongoing development costs will be substantial and will be necessary in order for
us to compete in the marketplace. For example, our beta version website requires
manual database indexing of submitted content. Automated database index systems
are available and will be implemented in future versions of the website. This is
one of many features and systems that will make our website competitive within
its marketplace.
We are constantly pursuing partnerships and relationships with on-line companies
that are interested in purchasing bulk quantities of our content for
distribution to others, or that are interested in distributing products and
services that they offer. Wider distribution of content and products appearing
at our website can help us increase revenues and raise awareness of the
www.newsgurus.com website.
We plan to undergo additional website development, labelled Stage One and Stage
Two. Concurrent with site development, we plan to pursue corporate relationships
as noted above; conduct marketing programs; and generally carry out normal
business activities. All our plans are dependent, in whole or in part, upon our
efforts at securing funding.
We must raise additional capital in order to execute our business plan to the
extent and within the timelines anticipated. We do not currently have sufficient
funds to develop our business plan. We require $4 million in new equity in order
to execute our business plan within the next 12 months. This would permit us to
complete our Stage One website development and to complete much of our Stage Two
development, as earlier described. This level of funding would also allow us to
complete most of our other corporate activities as planned, also as earlier
described.
17
<PAGE>
Our financial statements have been prepared using generally accepted accounting
principles applicable to a going concern. We will not remain a going concern
without additional capital. This accounting treatment contemplates the
realization of assets and liquidation of liabilities in the normal course of our
business. However, we have only modest current sources of revenue. Without
additional capital or greatly increased sources of revenue, it is unlikely that
we will be able to continue as a going concern.
We can function at only the most basic of levels during the next 12 months
without additional funding. Our current funding level prohibits deployment of
our business plan however it will allow basic operation of our website and
corporate existence.
If we raise sufficient funds, we expect to spend $1,500,000 on computer hardware
and software, and $1,900,000 on website development. Computer hardware includes
servers, routers and other communications equipment to house and distribute
website content. Hardware is also required to facilitate seamless communications
between content providers and the website. Computer software includes commercial
software packages in the fields of communications, data management, database
mining and automated database indexing.
Our projected website development costs of as much as $1,900,000 include costs
of customized and proprietary code writing and project management costs. These
initiatives are expected to result in an advanced website with extensive
customer management and processing capabilities, user-friendly content
submission features, data mining and list management tools, interactive content
request features, artificial intelligence modules and audio and video streaming.
We are dependent on high traffic at our website. To this end it is in our best
interests to build a useful and informative website that will attract initial
interest from users, and continue to hold that interest over time.
We propose an extensive marketing program using both traditional and new media
as our forums. If we are able to raise sufficient funds, we plan to spend as
much as $3,400,000 to market our products and services, and our website. This
will be sufficient to launch and operate a controlled circulation magazine that
will market the NewsGurus website and brand, launch Internet-based marketing and
awareness initiatives, conduct marketing campaigns using traditional media such
as print and radio, and participate in investment conferences and trade shows as
required.
We intend to eventually publish a monthly magazine to be distributed by
traditional methods such as newspaper inserts as a way of attracting a wider
audience for our content and to generate additional advertising revenue. If
successful, this will produce an important revenue stream through magazine
subscriptions and magazine advertising, while also marketing our website. The
goal of the magazine would be to popularize the content appearing at the
website, and to promote the NewsGurus brand, while at the same time collecting
revenue from magazine advertisers. Per-page advertising rates of US$5,000 per
issue could conservatively be expected at our projected distribution rate of
100,000 copies or more per month. We expect that some of the magazine readers
will be attracted to participate at the www.newsgurus.com website to meet their
needs of more timely content delivery.
18
<PAGE>
There are two potential phases to the NewsGurus Magazine development: first is
to consolidate the existing fractured production and distribution processes of
the individual newsletter editors and their existing publications into a single
print magazine. Thus the content from several newsletters, as well as some from
our website, will be combined into one regularly issued print magazine. Second
is to use as-yet undeveloped technology at NewsGurus to utilize the user data
gathered at our site to produce individualized print magazines. This proposed
second evolution of the magazine can only occur if we substantially complete our
equity funding requirements.
Eventually, we hope to be able to offer similarly customized and personalized
content available in print; audio; and video mediums, using both the Internet
and conventional distribution methods. Our goal always remains the same: to
leverage content acquired by us at low cost; add value to the content through
developing personalization technology; and distributing it via both the Internet
and conventional mediums.
On April 1, 2000, we engaged Chris Bunka and Sudhir Khanna as full-time paid
consultants. Mr. Bunka and Mr. Khanna each currently devote more than 50 hours
per week to our business.
In November, 1999, we engaged the services of Nebular Research and Development
Co. of Toronto, Canada. Nebular was chosen to construct the Newsgurus website
under the direction of Sudhir Khanna. Nebular has devoted four full-time
employees to the development of our website. Since the beta stage site
development is now complete, Nebular is working for us only on a care and
maintenance basis until such time as we have secured additional funding. We have
no other direct or indirect employees.
We expect to hire as many as twelve persons in positions of direct employment,
sub-contractual relationships, and full-time consultants over the next 12
months. These positions will include a Chief Operating Officer, computer
programmers, secretarial and back-office personnel, editors and copy writers.
The actual number of persons we eventually employ will be determined by our
ability to attract equity investment into our company.
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
None
Item 3 DEFAULTS UPON SENIOR SECURITIES
None
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
19
<PAGE>
Item 5 OTHER INFORMATION
None
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NEWSGURUS.COM, INC.
(formerly Annex Business Resources Inc.)
Dated: November 20, 2000 Per: /s/ Chris Bunka
-----------------------------------
Chris Bunka, President and Director
