U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB - Amendment No. 2
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
NEWSGURUS.COM, INC.
(Formerly Annex Business Resources, Inc.)
(exact name of registrant 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 Canada
(Address of principal executive offices)
Telephone: (250)765-6424
(Issuer's telephone number)
Securities to be registered pursuant to Section 12(g) of the Act:
Common Voting Equity Stock
(Title of Class)
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TABLE OF CONTENTS
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Item 1. Description of Business..................................................................................3
Our Principal Products, Services and Markets...................................................................3
Distribution Methods of our Products and Services and Website Development......................................6
How Our Business Will Generate Revenue.........................................................................6
Competitive Business Conditions and Our Competitive Position in the Industry...................................9
Competitive Analysis..........................................................................................11
Names and Credentials of Principal Suppliers of Content on Our Website........................................12
Estimate of the Amount Spent During Each of the Two Last Fiscal Years on Research and Development
Activities....................................................................................................15
Number of Total Employees and Number of Full Time Employees...................................................15
Item 2. Plan of Operation.......................................................................................15
Item 3. Description of Property.................................................................................18
Item 4. Security Ownership of Certain Beneficial Owners and Management..........................................18
Item 5. Directors and Executive Officers, Promoters and Control Persons.........................................19
Item 6. Executive Compensation..................................................................................22
Item 7. Certain Relationships and Related Transactions..........................................................23
Item 8. Description of Securities...............................................................................24
PART II..........................................................................................................26
Item 1. Market for our Common Equity and Related Stockholder Matters............................................26
Item 2. Legal Proceedings.......................................................................................26
Item 3. Changes in and Disagreements with Accountants...........................................................26
Item 4. Recent Sales of Unregistered Securities.................................................................27
Item 5. Indemnification of Directors and Officers...............................................................28
PART F/S.........................................................................................................28
PART III.........................................................................................................28
Item 1. Index to Exhibits.......................................................................................28
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ITEM 1. DESCRIPTION OF BUSINESS
We were incorporated under the provisions of the General Corporation Act of the
State of Nevada on May 16, 1997 as Annex Business Resources, Inc. We changed our
name to Newsgurus.com, Inc. on February 4, 2000. We have not undergone any
bankruptcy, receivership or similar proceedings. Until our acquisition of
Newsgurus.com, we had not conducted business. We became a reporting company
under the Securities Exchange Act of 1934 on November 20, 1999.
In September, 1999, our former directors and promoters, Mr. Devinder Randhawa
and Mr. Ron Schlitt approached the principals of Gurus International Corp., a
private Nevada company, to investigate the potential for a merger. After
reviewing the business plan for Gurus International Corp. and interviewing Mr.
Chris Bunka and Mr. Sudhir Khanna, our management decided to acquire Gurus
International Corp. Mr. Bunka and Mr. Khanna were appointed directors of our
company on November 20, 1999. Both Mr. Khanna and Mr. Bunka abstained from
voting on the resolution by our board of directors to acquire Gurus
International Corp. In consideration for selling us all of the issued shares of
Gurus International Corp., Mr. Bunka and Mr. Khanna received 3,500,000 of our
common shares. The primary assets we acquired are the URL www.newsgurus.com and
the Newsgurus business plan. We acquired no liabilities.
Mr. Bunka and Mr. Khanna sought the merger with our company because we are a
reporting company under the Securities and Exchange Act of 1934. Our reporting
status has the perceived benefit of making our company eligible for a quotation
or listing on a public exchange in the United States. Mr. Bunka and Mr. Khanna
believed that access to the public markets would be necessary to finance the
development of their business plan. No independent fairness opinion was obtained
in connection with the acquisition of Gurus International Corp. The negotiations
were conducted on an arm's length basis and resulted in the previous owners of
Gurus International Corp. acquiring approximately 33.3% of our issued share
capital.
Our Principal Products, Services and Markets
CURRENT OPERATIONS.
Money, health, and entertainment decisions are made by individuals on a daily
basis based on changing information. Filling this constantly renewing demand for
information is the most basic objective of NewsGurus.com
NewsGurus.com is a source of customized information and opinion delivered by
experts in their fields. The NewsGurus.com website will feature continuously
updated, user-customized and exclusive content from writers, authors,
celebrities, and analysts.
The NewsGurus.com website already features continuously updated and exclusive
content under the topics, Your Money and Your Health. As part of our corporate
development, we plan to expand the breadth of content offered in these sections
of our site, and to add additional content under the topic, Your Life.
According to International Data Corp, at the end of 1998 there were 142 million
Internet users around the world. By June 2000 there were over 170 million
Internet users in Canada and the
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USA. International Data Corp. further projects that, in 2002, there will be 260
million people shopping for goods and services over the Internet and they will
spend US $1.3 trillion. Demand for high quality content will remain strong.
"Americans will spend $663.3 U.S. billion on media by 2003 - making this sixth
largest industry in the United States larger than the food industry." (Veronis,
Suhler & Associates)
NewsGurus.com provides experts who are well known through prior business success
in other media including the newsletter industry, book publishing and other
print, audio and video media. We believe that the public, already familiar with
these established writers in traditional media, should be comfortable
interacting with such writers and journalists on the Internet.
Many of our contributing writers hold an equity position in our company. Through
equity ownership, we believe our contributors have a greater incentive to
establish long-term relationships with us and provide exclusive content.
Not every writer is required to provide exclusive content, though the strategy
of exclusive content ensures that NewsGurus.com will always remain a unique
site. Writers are also encouraged to provide reprints of their existing
publications at the NewsGurus site, and to charge a pay-per-view fee to members
to access this content. This helps preserve the subscription value of
publications to subscribers who are not members of NewsGurus.
The quantity of reprinted content at NewsGurus is not expected to equal the
quantity of new content. Currently, of our database of 1,079 archived articles,
84% are free articles and 16% are pay-per-view articles. The cost to a single
retail user of all the pay-per-view content within our database is $278.75. On
average, our pay-per-view articles cost $1.65 each for retail users. We are
publishing over 35 new written articles per week and 30 minutes of video content
each week. As the health, wellness, and lifestyle sections of our website begin
offering content, the ratio of restricted content is not expected to increase.
The Your Health section of our website now offers content produced by 29
individual contributors. None of this is restricted or pay-per-view, and neither
is it exclusive to NewsGurus. Currently, all 29 of the content providers to the
Your Health section are provided through our third-party affiliate relationship
with HealthNet International.
Newsgurus.com is unlike some Internet sites that serve as de-facto archival
sites of previously published work.
Much of our content is specially crafted for an Internet audience, and where
applicable, designed to complement e-commerce. Internet users need to be given
reasons to return frequently to a content site. We publish new content on a
daily basis. Although NewsGurus.com will accept previously published material as
an archival service to its subscribers, the new and exclusive material is most
attractive to readers at NewsGurus.com.
Writers providing content in the Your Money segment are established newsletter
editors and business journalists from well-known business and financial
newspapers. Book authors are also invited to contribute regular articles or
excerpts. Corporate executives will be invited to offer valuable insight into
their industries through submission of white papers and interviews.
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Our site is currently active under the headings, Your Money and Your Health.
Members have opportunities to purchase goods and services. This includes
purchases within our Your Health section that now offers over 14,000 products
from over 150 different manufacturers through our affiliate relationship with
HealthNet International. Pending adequate funding, we would like to begin
marketing this retail-focused section of our site to the public in an attempt to
generate revenue.
Tools and services to empower users to manage their every-day needs are provided
both through our site and through third-party affiliate partnerships. Network
affiliates may include other Internet portals, on-line e-commerce sites, service
oriented websites and traditional sources of news. Our agreement with HealthNet
International Inc. was the first of these affiliate agreements. We also have an
agreement with DataCow Technology to provide its investment software to our
NewsGurus members. This software allows members to keep track of stock
portfolios, consolidate quotes, data, news, and other information from around
the Internet, and to perform sophisticated option pricing analysis.
PROPOSED OPERATIONS.
Certain aspects of our business plan are not yet implemented and will not be
implemented unless we receive additional funding. In the future, we intend to
offer additional content, products and services as we implement development of
our Website and as we continually search for additional third-party
relationships that can deliver products and services to NewsGurus members. We
plan to offer additional content, products, services, and affiliate
relationships under the Your Life section of the website.
We plan to develop the newsgurus.com website to enable members to interact with
each other and with our site as we endeavor to provide customized and relevant
information to meet individual needs.
Planned new content provided to members will include commentary on all sectors
in which NewsGurus is or will be active including investing and finance, health
and wellness and lifestyles. We will attempt to obtain new, exclusive content
for our Your Health section in order to become a more exclusive health and
wellness destination. We will do this by asking journalists and experts active
in this field to join NewsGurus as content providers.
Eventually, staff journalists employed by NewsGurus.com could provide members
with financial market update information every 30 or 60 minutes during regular
business hours.
We also plan to produce a NewsGurus magazine in print format. There are two
potential phases to this. The 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. The content from
several newsletters, as well as some from our website, will be combined into one
regularly issued print magazine. The 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
must await the next proposed stages of website development.
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Eventually, we hope to be able to offer customized and personalized content
available in print, audio and video mediums, using both the Internet and
conventional distribution methods.
Distribution Methods of our Products and Services and Website Development.
The goal of our website interface is to enable NewsGurus to receive user
information preferences to then distribute useful content to our users.
Achieving effectiveness requires a strategy. Part of our strategy is to provide
users with a rich menu of products and services.
Especially in the age of the Internet, an effective organization is one that
develops a structure focused on the needs of its customers. Our website tries to
meet this challenge.
NewsGurus has already established a web presence. This helps us attract
affiliate partners, content providers, and ultimately, members. It also helps us
to develop early revenue streams. The NewsGurus Website is being developed in
three stages, beta version, stage one, and stage two.
The beta site was soft-launched in May, 2000. Users can become members for no
fee. Notification of further site developments will be provided through e-mail.
NewsGurus has not yet widely advertised or marketed the site although it is now
operational.
Our content is categorized, searchable, and database driven. Our site has the
capability to advertise, interact with users, and accept credit cards for retail
subscription-based services, pay-per-view articles, or other product sales.
Credit card clearing is achieved through the Bank of America. Our site is fully
operational though it lacks the advanced features planned for the stage one and
stage two sites. There are roughly 1,000 registered users at our beta site and
an average of 13,000 hits per day were registered during September, 2000. Our
site traffic has been growing by roughly 20% per month since our soft launch.
The final major addition to the beta site was the Your Health content and store
that was unveiled to the public during the first week of October, 2000.
Distribution of the products offered for sale through the health store is
achieved through a 100,000 square foot computerized fulfillment center located
in Philadelphia, operated by a HealthNet International partner. The Beta site is
now fundamentally complete and requires only modest monthly care and maintenance
expenditures.
How Our Business Will Generate Revenue.
If we execute our business plan, we plan to generate revenue by selling content
in bulk to corporate clients selling content on a piecemeal basis to retail
clients, selling products and services to retail users from our health and
wellness store, generating referral and affiliate fees by referring our users to
other web sites, selling advertising space at our web site and in our proposed
print magazine and selling marketing services to companies interested in
reaching our members.
There will be tiers of service available only to paying retail members. We do
not consider the revenue generated by these tiered services to be significant to
our company, particularly in our early development stages. In so far as we will
act as a distributor of previously published content for our content suppliers,
the revenue streams generated by offering content through NewsGurus to paying
retail members is proportionately more significant to the content providers than
it is to
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our company. The price of each piece of restricted content is determined solely
by the person who produces the content and provides it to our site. Typically,
these articles cost between $0.50 and $4.00 each, with the average price to date
being $1.65.
We do consider as significant the potential revenue streams generated by bulk
sales of our content to third party corporations.
For $9.95 per month, retail users will have unlimited access to otherwise
restricted Website content provided to NewsGurus from the "Your Money" content
providers. They will also eventually receive a print subscription to the
NewsGurus monthly magazine when it is developed. This monthly fee-based service,
as well as that described immediately below, are expected to be implemented in
conjunction with completed Stage One website development.
For $19.95 per month, retail users will enjoy benefits beyond those provided at
the $9.95 monthly level. Most of these benefits will not be available until the
implementation of stage one and stage two site development is complete. These
will include free e-mail delivery of previously selected news stories as they
are posted on the Website and the creation and delivery of a personalized
NewsGurus magazine. Users will also receive special offers from on-line
merchandisers and discounts off the price of merchandise at the NewsGurus site
as well as at any affiliate Website.
Members can also elect, beginning with the current beta version website, to
simply purchase guru points for use with any pay-per-view articles or for the
purchase of products. With the guru point system, members are not prompted to
make a financial transaction every time they read an article. This would inhibit
e-commerce and severely impact NewsGurus' profitability due to the effect that
credit card transaction fees have on micro transactions of just $0.50, $1.00, or
$2.00.
The guru point system was developed to meet the challenge posed by these
concerns. Guru points are purchased less frequently, in minimum purchase
quantities of $20.00 (2000 points). The financial transaction is made with the
credit-card clearing company for $20.00. The points are then stored in a data
bank accessible only by each individual user. These points are used to purchase
individual articles or entire pay-per-view newsletters. When the guru point
balance reaches zero, another purchase of points is required. Members who become
regular users are expected to adopt a monthly membership plan that will reward
them with bonus points.
The NewsGurus e-commerce system and credit card verification system was designed
by and is operated by the Bank of America.
As an introductory offer, we now award each new user 5,000 free guru points that
can be used to view otherwise restricted content within 30 days of the time the
user first registers at our site. 128,165 of these free points and 47,300
($473.00) paid points have been used by our members to date
The subscription and pay-per-view revenue stream is expected to be one of the
smallest revenue streams at NewsGurus. The value in Internet content lies not in
its individual resale value, but in the value realized when it is leveraged.
NewsGurus will leverage its content to produce revenue in several ways.
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First, content will be amalgamated and offered in bulk for syndication to other
websites and companies. We are producing original, exclusive content or
otherwise gaining rights to individually produced content. Part of the value of
content lies in its exclusivity. NewsGurus will identify other websites wishing
to purchase our content in bulk rather than trying to produce their own.
Examples might include on-line financial services firms or financial websites
that wish to differentiate themselves from others in a competitive market
sector. One way they can do this is by offering content that is not widely
available. NewsGurus will attempt to sell bulk content in each of the fields in
which it operates, as it builds the respective modules at its website. We were
unable to offer this service until recently, as it is necessary to offer a large
quantity of applicable content. Since we began offering this service we have now
obtained our first business customer that is purchasing bulk content from us,
through an initial six-month trial agreement. We have also entered an additional
agreement with a second business customer through which we will provide content
to their Internet system under a three-year agreement.
Our second revenue stream will come from the NewsGurus health store, where
relevant content will draw the attention of members who may then enter a
transaction to buy vitamins or other health products. Before this component of
our website was launched in October, 2000, we were unable to utilize it as a
revenue source. We believe this could become a significant revenue source but
only after and if we have sufficient financial resources to conduct important
marketing campaigns.
Our third revenue stream will come from relationships with on-line vendors of
products. NewsGurus will collect revenue from vendors for producing customized
advertorial features designed to publicize a brand or product. This might
include products such as apparel, food supplements or exercise equipment.
NewsGurus will further leverage this content by establishing relationships only
with those online vendors who offer a referral fee to NewsGurus each time a
NewsGurus member completes a transaction with the partnered vendor.
In the course of facilitating e-commerce transactions and providing free content
to members, NewsGurus will gradually build a large database of users. This will
be leveraged to provide additional revenue streams that are expected to become
the largest sources of our revenue over time. The best example of this is
through direct marketing and advertising. Partnered vendors who wish to reach
our members may provide those members with information on their own products.
NewsGurus intends to become a marketing company that collects a fee from product
vendors who are reaching a targeted audience.
Another specific source of revenue arising out of the your money section will
come from companies who become corporate members of NewsGurus. For an annual
fee, these companies will gain unlimited access to the NewsGurus content
database. This excludes third party newsletter content reserved for paying
subscribers. Corporate members will enjoy the benefits of offering NewsGurus
members easy access through the URL to the corporate information available at
their website.
Another form of marketing revenue arises from the assembly of a large member
database at NewsGurus. Any company can engage NewsGurus to conduct a large
traditional marketing campaign where NewsGurus can provide access to specified
target markets. NewsGurus will never sell access to its member lists. NewsGurus
will administer access to its lists and deliver
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corporate messages on behalf of paying corporate customers. This ensures that
only those messages screened by NewsGurus are delivered to members and further
ensures that such messages are appropriate for the users. Eventually, as the
NewsGurus magazine is launched, NewsGurus will construct customized hardcopy
magazines that are relevant to each user demographic. This allows our
subscribers to receive only content they wish to receive, and further allows
NewsGurus to achieve higher advertising revenue rates from those companies
participating in targeted delivery of their messages to our user base.
We believe that our creation of a media-centered website complete with revenue
from e-commerce, referrals, marketing, advertising, and content syndication will
enable us to compete effectively within a growing market.
Competitive Business Conditions and Our Competitive Position in the Industry
On-line investing is one of the fastest growing segments of the Internet. Online
investment activity jumped by 69% in the first quarter of 2000, according to
U.S. Bancorp Piper Jaffray. "Online brokers added 2.5 million new accounts in
the quarter, ending with 15.95 million, almost double the 8.49 million of a year
ago. Assets rose 23.5%, or US $211 billion, to US $1.11 trillion". (Financial
Post)
There are many services available on the Internet that act primarily as content
directories. An example is newsletteraccess.com. While newsletteraccess.com
boasts over 5,000 newsletters available, it provides little exclusive new
content. Most content available at these sites is restricted to paying
customers. What is available for free view to all is limited in scope.
Sites such as newsletteraccess.com are not competitors as they are not content
providers. They are more accurately on-line directories of existing content
usually produced for print media.
Competitors exist for each of the three main sectors of our focus, Your Money,
Your Health and Your Life.
These competitors include TheStreet.com and MarketWatch.com when compared to
NewsGurus - Your Money. They include WebMD.com and others when compared to
NewsGurus - Your Health. And, they include Martha Stewart Omnimedia and
Webzine.com when compared to NewsGurus - Your Life.
Each of these companies is more advanced than NewsGurus.com in terms of
developing its own on-line brand and in acquiring readers or subscribers. Each
of these companies is an Internet content provider.
"There are over 3.6 million websites around the world, with more than 4,400 new
sites added every day. 2.2 million sites offer publicly available content, but
only 850,000 of these are classified as active sites. Finally, only a little
less than 8,000 or 0.2% of the universe of 3.6 million sites received paid-for
advertising on a regular basis and therefore could be described as
`ad-supported'". (eMarketer, 2000; OCLC Office of Research, 1999.) There are a
limited number of active, content-producing websites that make use of all
available revenue streams.
There are four levels of competitors to NewsGurus.com.
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The first are non-public company focus sites. These are smaller sites with a
tight focus on a micro-segment of a larger market. They generally have a limited
subscriber base and financial resources, little original material and little
growth opportunity outside of their market niche. Unless backed by a corporate
parent or by venture capitalists these private companies may not be able to
raise the funds required to effectively compete in the marketplace. These are
the most common types of site on the Internet. Newsletteraccess.com is one of
many examples.
The second group are public-company focus sites. These are the smallest
niche-focused sites that enjoy the benefits of being public. A typical focus
might be on several micro-segments of the financial markets. For example,
resource, technology, and internet stocks might be the focus of one site. These
sites generally have a relatively small but loyal user group and offer a limited
quantity of original content. The public company has some revenue streams.
Stockscape.com and Stockgroup.com are examples. Stockscape.com had revenue of
$1.2 million in 1999. Stockgroup.com had revenue of $1.9 million in 1999
(Source: Edgar).
Competitors in the public-company focus site category will each affect only the
corresponding segment of NewsGurus, be it Your Money, Your Health, or, Your
Life. They do not compete with the other NewsGurus sections.
Companies wanting to duplicate the NewsGurus business model will need to acquire
exclusive content. NewsGurus will endeavor to secure contracts with as many of
the available established content providers as possible. If we fail to secure
such contracts then other companies will more easily compete against us.
Our business model amalgamates users with varying interests at our site.
NewsGurus will attempt to reach a broader audience than the niche-focused sites
through relying on its three main areas of interest. These broader areas of
interest are expected to attract a wider audience and enable the implementation
of several revenue streams not available to sites with a narrower focus. We
believe this is a crucial distinction.
The third group of competitors are public company specific-media sites. These
are large companies that have been successful in raising capital and have built
varying degrees of brand recognition. These sites have a broader focus and
reach. Much of the content is original and not found at other sites. These
companies enjoy diverse revenue streams derived in large part from advertising
revenue as well as user fees. Examples here include TheStreet.com and CNET.com.
Other examples include sites spawned from traditional media sites such as
MarketWatch.com, CNNfn.com and Bloomberg.com.
Some competitors, such as TheStreet.com, require subscribers to pay a fee to
view most of the content they provide.
While most of the content at our site is free, it is also leveraged to produce
the other forms of revenue earlier noted. Over 90% of the content available at
our site is free to registered individual users. The free content is available
for viewing only after the user registers at our site, and the content acts to
draw users to our site where we hope to sell products and services from our
other modules. This process also provides NewsGurus.com with marketing
information that supports other revenue streams.
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NewsGurus.com does face serious competition from this sector. The companies
within this sector are often well-capitalized or are subsidiary companies of
traditional media companies. They often have substantial brand-name recognition.
NewsGurus.com will rely in part on the motivation of contributing writers to
help it entice other writers from some of these competitors.
The fourth group are public company general media sites. These are the largest
content providers on the Internet. These companies have successfully amalgamated
content previously focused on several market sectors such as finance,
investment, technology, health, news, sports, community news and others. Their
dominance as the most active websites on the Internet suggest that the largest
subscriber bases can be supported by diverse content.
Revenue at these sites is diverse and includes banner ads, marketing,
business-to-business agreements, co-branding, links, user fees, sales of
products and services, and more. Content is almost always exclusive and is
designed to foster a sense of community among subscribers. These early
competitors now have dominant brand recognition. If NewsGurus is capable of
penetrating into the general media category it will face stiff competition.
In many important ways, including the diverse revenue streams and the reliance
on exclusive content leveraged to support those revenue streams, management
feels the NewsGurus business plan most closely resembles these larger
competitors.
Competitive Analysis
NewsGurus management believes that, if internet participation increases as
expected by independent forecasts, there is room for additional general media
sites, and a larger number of specific-media sites, before the Internet is fully
developed.
We believe we can compete against much larger companies because few competitors
have built their business based on a model in which many of the content
producers are owners in the company. Those future content providers who wish to
become employees of our company, as well as staff writers, can participate in
employee equity option plans. This close relationship may help us attract
journalists and writers. These writers may currently be working for NewsGurus
competitors; the traditional media; or act as freelance journalists.
NewsGurus aggregates content from a wide variety of writers, and has original
content produced for it at low cost. We believe this plan will help us compete
against larger, more established companies. The aggregation of content at low
cost is the key: Recent employee layoffs in the industry "show the financial
strain in producing original content for the Web." (New York Times, June 9,
2000)
Newsletter writers and journalists who have a choice of contributing to an
effort that offers strong financial incentives may abandon other, less rewarding
efforts.
We intend to establish an editorial advisory board that enforces the highest
ethical and professional standards. The board will also have the ability to
submit presentations to NewsGurus management and to our Board of Directors, thus
influencing our strategic vision. This is why we have established a corporate
structure that places great power and responsibility
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in the hands of our content providers. The advisory board is designed to give
NewsGurus content providers a degree of control over the content they produce.
Other companies that do not offer such control may be at a competitive
disadvantage.
Names and Credentials of Principal Suppliers of Content on Our Website
The list of people who have agreed to provide content to our site is constantly
changing. Journalists are continually invited to participate and are asked to
sign non-disclosure agreements. A major effort to attract writers has not yet
been made as we believe it is necessary to develop the website and tools that
will make participation at NewsGurus compelling.
The contributing writers to our website are exempt from registration as
investment advisors in the United States under section 80(b)-2(11)(d) of the
Investment Advisors Act by virtue of them being publishers of financial
publications of general and regular circulation. The contributing writers are
also exempt under Canadian securities regulation from registration as investment
advisors also by virtue of the fact that they are publishers or writers of
financial publications of general and regular paid circulation.
Many of our contributing writers are under two-year to four-year contracts to
provide exclusive and/or non-exclusive articles for our website. Each writer who
has entered a contract with us has subscribed and paid for units of our company
consisting of common shares and warrants. The units were purchased by our
contributing writers through private placements under Regulation S at prices
ranging from $0.05 per share to $1.00 per share. All warrants for additional
common shares are exercisable at $1.00 per share. The contributing writers who
are currently under contract will receive equity units as per their agreements
with us. They will also receive per-word cash payments for content that we
subsequently sell to third party businesses. The following writers provide us
with content:
o Chris Bunka
Mr. Bunka is the founder and President of NewsGurus.com, Inc. He is the editor
of Outsider's Overture newsletter and has been widely quoted in The Globe and
Mail, The Financial Post, Canadian Business, and many other publications. He has
appeared on television on the CBC network, Global's Prime network and a
syndication of over 100 US local stations. He gives weekly radio commentary on
CKWX radio in Vancouver and previously on CKNW radio. Mr. Bunka is the author of
the book, "The Outsider's Guide to Speculative Stocks," and has been a public
speaker in every major city in Canada.
o CanStock
CanStock publishes four newsletters. Senior Editor Al Budai is a CGA. Other
editors include Grant Robertson, Doren Quinton, and Kelley Chaplin. These
publications have been widely quoted in the Canadian Press. Mr. Budai has also
served as a radio talk-show host specializing in the area of investing and has
appeared on national and local television.
o Eric Dany
Mr. Dany has an MBA and has been investing for over 30 years. He is editor of
The Prospector newsletter, a publication focused on mutual fund investing.
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o Andrew Davlin
Mr. Davlin was former Research Partner at Tucker Anthony and Hambrecht & Quist
and was also an analyst/investment banker at New York Securities, Inc. Mr.
Davlin has been a member of The New York Society of Security Analysts for over
30 years and is a longtime member of the Association for Investment Management
and Research. He has followed aquaculture for 18 years. Mr. Davlin is founder
and editor of The Davlin Report, first published in 1990.
o Boni Fox
Boni Fox is a journalist, reporter, producer, and news anchor. She has worked
with the Discovery Channel, the CBC, and other networks. She is the President of
the Canadian Association of Journalists, with over 1,500 members across Canada.
She is the Chair of the Inaugural Steering Committee of Open Government Canada.
She is the winner of the CAB Gold Ribbon Award, and other broadcasting awards.
o Allan Holender
Allan Holender is Chief Community Officer for Let's Talk Business Network,
Vancouver. He has extensive radio and television on-air experience.
o Sudhir Khanna, P. Eng.
Mr. Khanna is our VP of Information Technology and a director of NewsGurus. Mr.
Khanna graduated in Systems Design Engineering in 1989 from the University of
Waterloo. He has completed work for IBM and Proctor & Gamble. Mr. Khanna is the
editor of eKhanna and has been quoted in The Prospector and consulted by
reporters regarding various resource-related stories. He has been invited to
speak at the Prospectors and Developers Association and at investment
conferences. Mr. Khanna is a Professional Engineer.
o Michael King
Michael King is the Director and Chief Economist of Princeton Research, Inc of
Nevada, which specializes in economic analysis of public companies, equities,
derivatives, and cash market trends throughout the world. He hosts a weekly live
talk show "Not For Widows and Orphans" every Sunday in South Florida.
o Vivian Lewis
Vivian Lewis enjoys a distinguished career as a freelance business journalist.
She graduated from Harvard magna cum laude. She became bureau chief for the
Brussels bureau of Business Week before working for The Economist and the Sunday
Times of London. She worked in Washington first for the Joint Economic Committee
and then for the Senate Foreign Relations Committee before taking positions with
Euromoney and the Institutional Investor. In 1992 she founded and remains the
editor for Global Investing, a monthly publication designed to help Americans
with their international investments. Global Investing has been quoted in
Barrons; Forbes; Connoisseur; Money: International Herald Tribune (Paris); Asian
Wall St. Journal; and, many other publications.
o Robert Macallister
Mr. Macallister has been the editor of Investors First since 1996 and has been
quoted in Investors Digest of Canada, The Prospector, Bull & Bear and Dick
Davis.
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<PAGE>
o Rogelio Ramirez De la O
Rogelio Ramirez De la O is President of Ecanal S.A., a private company dedicated
to economic analysis for major private clients, among which there are largest
multinational firms with investments in Mexico. He is a Director and Counselor
to several private firms and one of the best-known economists in Mexico. He
holds a PhD degree in Economics from Cambridge University and has published
original works on foreign investment, the peso crisis, Nafta, and the
macroeconomic stabilization in Mexico.
o John Schreiner
John Schreiner is a senior business writer for the National Post newspaper. He
has written for the Post (formerly the Financial Post) since 1961 and was
received numerous awards for his achievements as one of Canada's most respected
print journalists. He is also the writer of four books on wine and the wine
industry.
o Jay Taylor
Mr. Taylor holds an MBA. He began working for Barclays Bank International in
1973. In 1981 he began publishing North American Gold Mining Stocks, one of the
longest published newsletters in North America and one that has evolved to be
known today as J Taylor's Gold & Technology stocks. Mr. Taylor resigned from the
mining and metals department in the New York office of ING - Bearings in August
1997 to work full-time as a consultant and journalist. He has been widely quoted
throughout North America and is an international speaker.
o Al Thomas
Mr. Thomas founded Security Dynamics Investment Corporation in 1965, an
insurance holding company. In 1970 he co-founded and served as President of Real
Life Estate, Inc. He later purchased a seat on the Chicago Open Board of Trade,
which he subsequently sold in 1981. In 1984 he founded World Trading Group which
grew to be the 7th largest introducing commodity brokerage firm in the US, and
which was sold in 1992. Mr. Thomas is a public speaker, writer and author of the
book, "If it Doesn't Go Up, Don't Buy It!"
o Don Wilcox
Mr. Wilcox is currently employed in New York City as a currency trader.
o William Thomson
Mr. Thomson is Chairman of the Siam Recovery Fund and Momentum Asia Ltd. He is a
consultant to asset management companies and a writer on Asia economic trends.
Mr. Thomson is former Vice president of Asian Development Bank, former Board
Member Asian Development Bank and a former US Treasury official.
o Sheldon Zerden
Sheldon Zerden is a Financial Advisor and Portfolio Manager with Bishop, Rosen &
Co, Inc. He is also the author of several books, including the award winning
"Best Books on the Stock Market", and "The Cholesterol Hoax".
We have contracts with contributing writers to provide exclusive and
non-exclusive articles for our Newsgurus website. Many of these contributing
writers are also shareholders of our company. Many of our contributing writers
have subscribed and paid for equity positions.
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<PAGE>
Writers can also earn per-word cash compensation for submitted content when our
company subsequently sells such content to any third-party business. We
currently have 20 journalists who have either signed content provision contracts
with NewsGurus, or have entered casual agreements to provide content on an
informal basis. 1,079 articles are available within the NewsGurus archives.
Approximately 35 additional articles and 30 minutes of video content are
presently posted each week.
Estimate of the Amount Spent During Each of the Two Last Fiscal Years on
Research and Development Activities
We had no material expenses in the fiscal years ending June 30, 1998 or June 30,
1999. Since June 30, 1999, we have incurred expenses of approximately $104,000
in the development of our website and business plan.
Number of Total Employees and Number of Full Time Employees
On April 1, 2000, we engaged Chris Bunka and Sudhir Khanna as full-time paid
consultants. Mr. Bunka worked on the Newsgurus project without compensation from
May, 1999 to March 31, 2000. Mr. Khanna worked full-time on the Newsgurus
project without compensation from July, 1999 to March 31, 2000.
Beginning in November, 1999, the Company 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 typically
has four full-time persons devoted to the Newsgurus project. There are no other
direct or indirect employees of the Company.
Over the next 12 months, we expect to hire as many as twelve persons in
positions of direct employment, sub-contractual relationships, and full-time
consultants. These positions will include but will not be limited to; Chief
Operating Officer, computer programmers, secretarial and back-office personnel,
editors and copy writers.
ITEM 2. PLAN OF OPERATION
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
15
<PAGE>
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. 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.
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 the $4 million we require for full execution of our business plan,
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.
16
<PAGE>
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.
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
17
<PAGE>
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.
ITEM 3. DESCRIPTION OF PROPERTY
The Company maintains an office at 5774 Deadpine Drive, Kelowna, British
Columbia, Canada. This office is provided on a rent free basis to the Company by
its President, Mr. Chris Bunka. Currently, the Company's principal asset is its
URL www.newsgurus.com and the intellectual property and publications comprising
that website. The Company owns no other material properties.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information regarding the beneficial ownership of
our common stock as of November 10, 2000 by:
* each person or entity known by us to be the beneficial owner of more
than 5% of the outstanding shares of common stock,
* each of our directors and named executive officers, and
* all of our directors and executive officers as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNER OF CLASS
-------------- ------------------- ------------------- --------
<S> <C> <C> <C>
$.001 Par Value Christopher Bunka (1) President and Director 33.10%
Common Stock 5774 Deadpine Drive 3,075,000 common shares
Kelowna, B.C.
V1P 1A3
$.001 Par Value Sudhir Khanna (1) Secretary and Director 11.03%
Common Stock 6407 Alderwood Trail 1,025,000 common shares
Mississauga, Ontario
L5N 6W9
$.001 Par Value Devinder Randhawa Former Director 5.38%
Common Stock 104 - 1456 St. Paul Street 500,000 common shares
Kelowna, B.C. V1Y 2E6
$0.001 Par Value Canalaska Corporate Investor 13.99%
Common Stock Mezzanine Floor 1,300,000 common shares
626 West Pender Street
Vancouver, B.C.
V6B 1V9
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$.001 Par Value Management as a Group 4,050,000 common shares 49.51%
Common Stock
</TABLE>
(1) Messrs. Bunka and Khanna hold options and warrants which entitle them to
acquire an additional 600,000 and 450,000 of our common shares
respectively.
Canalaska Ventures Ltd. has advanced us convertible loans of $200,000. The first
$100,000 is convertible into units of our company at $0.25 per unit. Each unit
is comprised of one common share and one warrant to acquire one additional
common shares at $1.30 per share for two years expiring May 24, 2002. Canalaska
also has the right to subscribe for an additional 1,100,000 units at $0.40 per
unit.
The second $100,000 is convertible into units at $0.40 per unit. Each unit is
comprised of one common share and one warrant to acquire one additional common
share at $1.30 per share for a two year period. Canalaska is a public company
listed on the Canadian Venture Exchange.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of our common stock which may be
acquired upon exercise of stock options or warrants which are currently
exercisable or which become exercisable within 60 days of the date of the table
are deemed beneficially owned by the optionees. Subject to community property
laws, the persons or entities named in the table above have sole voting and
investment power with respect to all shares indicated as beneficially owned by
them.
Changes in Control. We are not aware of any arrangements which may result in
"changes in control" as that term is defined by the provisions of Item 403(c) of
Regulation S-B.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Our directors and principal executive officers are as follows:
NAME AGE POSITION
---- --- --------
Christopher Bunka 39 Director, C.F.O. and President
Sudhir Khanna 36 Director, Secretary
Stephen Encarnacao 52 Director
Biographical Information on our Officers and Directors:
CHRISTOPHER BUNKA, DIRECTOR AND PRESIDENT
Mr. Bunka was appointed a director of our company on November 20, 1999. Mr.
Bunka is not a director of any other reporting companies.
From January to December, 1995, Mr. Bunka provided independent consulting,
management and operational services to small private businesses. Since January,
1996 Mr. Bunka has been editor of Outsider's Overture publications which
specialize in identifying economic trends in
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<PAGE>
investment sectors in the search for specific investment opportunities. Mr.
Bunka conducts and publishes independent research into market sectors and
individual companies. Mr. Bunka has been quoted in international publications
and has written articles for several magazines.
Mr. Bunka's Outsider's Overture has been published monthly since August, 1996.
It is a monthly newsletter delivered by mail. An annual subscription is US$119.
Outsider's Overture covers economic and investment trends.
Mr. Bunka also published the Outsider's Overture Instant Alert from February,
1997 until November, 1999. This was an irregularly-published supplement designed
to update subscribers on tumultuous international economic or market events. It
was delivered either by fax or mail. It included a regular subscription to the
Outsider's Overture and had an annual subscription fee of US$1,000.
Mr. Bunka has published the Outsider's Overture Tracker continuously since
March, 1997. This is an e-mail delivered publication that also includes a
subscription to Outsider's Overture and is available for an annual subscription
of US$239. Roughly 50 issues of the Tracker are published each year and it
offers short, single-page market and company updates.
In April, 1998 Mr. Bunka wrote and published "The Outsider's Guide to
Speculative Stocks", a "how to" book designed to aid investors in building a
logical approach to discovering temporarily undervalued investment sectors.
Since September, 1998, Mr. Bunka has presented weekly radio commentary on CKWX
and CKNW radio in Vancouver and he has also appeared on local and national
television. His commentary covers politics, investment research, economics, and
sectoral investment trends.
SUDHIR KHANNA, DIRECTOR AND SECRETARY
Mr. Khanna was appointed a director of our company on November 20, 1999. Mr.
Khanna also serves as a director of Latitude Minerals Corp., symbol "LTU" on the
Canadian Venture Exchange.
Sudhir Khanna is a professional engineer. From January, 1992 until September,
1997, Mr. Khanna worked on the development of the policy framework in the areas
of sewage biosolids, hazardous waste, and recycling for the Province of Ontario,
Canada. He also modeled, evaluated and managed approximately 80 projects dealing
with the Ontario recycling infrastructure with a budget of more than $20
million.
Since June, 1992, Mr. Khanna has also worked on various projects as an
independent consultant with Procter & Gamble, Scarborough Board of Education,
the Province of Ontario and IBM.
Mr. Khanna launched an investment publication called The Resource Indicator in
January, 1997. The newsletter has since been renamed eKHANNA, providing expanded
coverage of speculative investment opportunities in the broader market. eKHANNA
provides factual research and analysis of specific companies focusing on
financial, managerial, and sectoral expectations.
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<PAGE>
Mr. Khanna has spoken at investment conferences and has been quoted in resource
related journals.
Mr. Khanna devotes approximately 50 hours per week to our business affairs.
STEPHEN ENCARNACAO, DIRECTOR
Mr. Encarnacao was appointed a director of our company on September 19, 2000.
Mr. Encarnacao was born in New Bedford, Massachusetts and educated at the
University of Massachusetts receiving a Bachelors Degree in Economics. He also
received an MBA with Honors from Florida State University. He began his career
in sales with CBS Records. Upon finishing his graduate studies he joined the H.
J. Heinz company as district sales manager for the New York District.
Mr. Encarnacao was promoted to the brand management team of the Heinz
Subsidiary, Ore Ida Foods in Boise, Idaho. As senior brand manager for the Ore
Ida Brand, he was instrumental in doubling market share and increasing revenue
to over $ 300 million in sales in a three year period. In 1978, he was promoted
to General Manager of Marketing for the Weight Watcher Foods Division of Heinz
with overall marketing responsibility for the brand.
After eight years at Heinz, Mr. Encarnacao returned to the Boston Area to assume
marketing responsibility for the $500 Million Frozen Food and Dairy Business of
H. P. Hood. After three years at Hood, he joined Synectics Inc., an
international management consulting firm in Cambridge, Massachusetts as senior
associate and member of the operating committee.
Accounts under his management direction during his three years at Synectics
included ATT, Bell Labs, General Foods, Nestle, Black & Decker, Clairol,
Maybelline and Young & Rubican. In 1984, Mr. Encarnacao's smallest account was a
small-but-growing athletic shoe company, Reebok USA. Mr. Paul Fireman, CEO of
the company, invited Mr. Encarnacao to join Reebok as Vice President, Chief
Marketing Officer. Mr. Encarnacao accepted the position and joined Reebok later
that year.
Over the next three years, Reebok grew from less than $50 Million in annual
sales to nearly $1 Billion. Mr. Encarnacao served a broad range of critical
roles for the company. He was responsible for and directed all domestic and
international marketing efforts in addition to managing long range strategic
planning, including acquisitions. He also served as the primary spokesperson for
the company.
At the end of 1987, Mr. Encarnacao joined Puma USA as General Manager and Chief
Operating Officer. After leading a successful 18-month turnaround at Puma, he
joined Converse in late 1989 as Senior Vice President of Marketing, Research and
Development. During his tenure at Converse, he successfully repositioned the All
Star Brand and secured the merchandising rights to Batman.
In 1991, Mr. Encarnacao founded Stonemark Inc. a consumer marketing and
management consulting company. Mr. Encarnacao successfully launched the Carter's
Children Brand of Footwear and as well as Blackburne Racquets. In addition to
the consumer products, he
21
<PAGE>
provided strategic management advisory and consulting services to a select
number of clients including Airwalk, Domain, Deckers Outdoors, The National
Potato Board, Winston Flowers, Wallwork Curry Advertising and Booktech.
In September of 1999, Mr. Encarnacao joined booktech.com as Chief Marketing
Officer. He is responsible for marketing, sales, and business strategy as well
as investor relations. Mr. Encarnacao serves as a director for Blackburne
Advanced Racquet Systems and Brand Leaders International. Ltd. He has served on
the Chancellor's Council at the University of Massachusetts for the past ten
years and chairs the advisory board for the Department of Economics at the
University of Massachusetts where he is a frequent lecturer in the Department of
Economics and the School of Management.
There are no family relationships among the directors or executive officers of
the Company.
No director or executive officer of ours has been a director or executive
officer of any business which has filed a bankruptcy petition or had a
bankruptcy petition filed against it. No director or executive officer of ours
has been convicted of a criminal offence or is the subject of a pending criminal
proceeding. No director or executive officer of ours has been the subject of any
order, judgment or decree of any court permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any type of
business, securities or banking activities.
No director or officer of ours has been found by a court to have violated a
federal or state securities or commodities law.
ITEM 6. EXECUTIVE COMPENSATION
Compensation received by officers, directors, and management personnel will be
determined from time to time by our Board of Directors. Officers, directors, and
management personnel will be reimbursed for any out-of-pocket expenses incurred
on our behalf.
We are party to two consulting and employment agreements both dated March 20,
2000. Under these agreements, we have contracted the services of C.A.B.
Financial Services Ltd. and S.K. Services Ltd. C.A.B. Financial Services Ltd.
and S.K. Services Ltd. are private companies wholly owned by Mr. Chris Bunka and
Mr. Sudhir Khanna, respectively.
Under the agreement with C.A.B. Financial Services Ltd., Mr. Bunka received fees
of $2,500 per month since April 1, 2000. The agreement provides that Mr. Bunka's
payments will increase to $5,000 per month at such time as we have raised a
cumulative total of $1,000,000 in equity financing. This agreement also provides
that Mr. Bunka is to receive 400,000 of our stock options which will vest over a
three year period. The agreement also provides that Mr. Bunka may not compete
against us in our chosen line of business during the term of his employment or
for one year following his employment.
22
<PAGE>
Under the agreement with S.K. Services Ltd., Mr. Khanna received fees of $1,750
per month since April 1, 2000. The agreement provides that Mr. Khanna's payments
will increase to $3,500 per month at such time as we have raised a cumulative
total of $1,000,000 in equity financing. This agreement also provides that Mr.
Khanna is to receive 200,000 of our stock options which will vest over a three
year period. The agreement also provides that Mr. Khanna may not compete against
us in our chosen line of business during the term of his employment or for one
year following his employment.
Other than as described above, none of our directors or officers receive any
other compensation for their services. The salaries shown in the following table
are for the fourth quarter of fiscal 1999/2000 only.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------------------------
Long Term Compensation
-----------------------------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
-----------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
-----------------------------------------------------------------------------------------------------------------------
Other All
Annual Restricted Securities Other
Name and Principle Comp- Stock Underlying LTIP Comp-
Position Salary Bonus ensation Award(s) Option/SARs Payouts ensation
Year ($) ($) ($) ($) (#) ($) ($)
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chris Bunka, Fiscal 7,500.00 $0.00 $0.00 $0.00 400,000 $0.00 $0.00
President and Year
Director ended
June
30,
2000
-----------------------------------------------------------------------------------------------------------------------
Sudhir Khanna, Fiscal 5,250.00 $0.00 $0.00 $0.00 200,000 $0.00 $0.00
Secretary and Director Year
ended
June
30,
2000
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
We acquired our Newsgurus.com URL and the business plan which we are developing
from Gurus International Corp., a private Nevada company which was owned by Mr.
Chris Bunka and Mr. Sudhir Khanna. Messrs. Bunka and Khanna were subsequently
elected to the Company's board of directors and appointed President and
Secretary respectively. Mr. Bunka and Mr. Khanna are responsible for developing
the Company's business plan. Mr. Bunka owned 297,500 shares of Gurus
International Corp. and Mr. Khanna owned 52,500 shares of Gurus International
Corp. In consideration for selling these share positions to us, Mr. Bunka
received 2,975,000 of our shares and Mr. Khanna received 525,000 of our shares.
Chris Bunka and Sudhir Khanna were appointed directors on November 20, 1999.
Both Mr. Bunka and Mr. Khanna abstained from voting on the resolution by our
Board of Directors to acquire Gurus International Corp. The acquisition of Gurus
International Corp. was approved by our disinterested directors, Mr. Dev
Randhawa and Mr. Ron Schlitt after reviewing the business plan for Gurus
International Corp. and considering the experience of Mr. Bunka and Mr. Khanna
in the investment newsletter industry.
We also acquired 100% of the issued shares of Independent Outsider Inc., a
private Washington State corporation, from Mr. Chris Bunka in consideration for
$3,000. Independent Outsider Inc. had current assets of under $500 but also had
a working merchant account with the Bank of America, allowing it to fulfill
credit card transactions with potential customers. Our ability to process credit
card transactions is important to the implementation of our business plan and
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<PAGE>
acquiring Independent Outsider Inc. allowed us to gain this relationship with
the Bank of America quickly and at low cost.
The original directors and promoters of our company were Mr. Devinder Randhawa
and Mr. Ron Schlitt. Mr. Randhawa owns 500,000 common shares or 5.5% of our
issued share capital. Mr. Chris Bunka and Mr. Sudhir Khanna are the current
promoters of our company.
The original promoters of our company, Mr. Devinder Randhawa and Mr. Ron
Schlitt, were issued an aggregate of 1,000 common shares of our company on May
16, 1997 for services valued at $0.50 per share or a total of $500. This is the
only compensation or consideration which we issued to our former promoters.
Mr. Chris Bunka and Mr. Sudhir Khanna are the promoters of Gurus International
Corp. Mr. Bunka owned 297,500 shares of Gurus International Corp. and Mr. Khanna
owned 52,500 shares of Gurus International Corp. These shares were subscribed
for by Messrs Bunka and Khanna at $0.001 per share. No other compensation or
payments were made by Gurus International Corp. to Chris Bunka or Sudhir Khanna.
We have contracts with contributing writers to provide exclusive and
non-exclusive articles for our website. These contributing writers have acquired
seed stock in our company and warrants to acquire additional shares of our
company at $1.00 per share. The sole compensation to be paid to our contributing
writers over the four year term of their engagement is the share position which
they have subscribed and paid for. Additional details relating to the
obligations of our writers to provide content and the share positions they have
acquired is described under the description of business section of this
prospectus.
We have no policy with respect to entering into transactions with members of
management or affiliated companies. Any non arm's length transaction we consider
will be reviewed and voted on by disinterested members of our board of
directors.
ITEM 8. DESCRIPTION OF SECURITIES.
The Company is authorized to issue 75,000,000 shares consisting of 50,000,000
shares of common stock having a par value of $0.001 per share and 25,000,000
shares of preferred stock having a par value of $0.001 per share and the
designations, preferences, limitations and relative rights of the shares of each
such class are as follows:
Preferred Shares
The Company may divide and issue the preferred shares into series.
Preferred shares of each series, when issued, shall be designated to
distinguish them from the shares of all other series of the class of
preferred shares. The Board of Directors is vested with authority to
fix and determine the relative rights and preferences of the shares of
any such series so established to the fullest extent permitted by the
Articles of Incorporation and Nevada Revised Statutes in respect to the
following:
(a) the number of shares to constitute each series, and their
distinctive designations;
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(b) the rate and preference of dividend, if any, the time of payment
of dividend, whether dividends are cumulative and the date from
which any dividend shall accrue;
(c) whether the shares may be redeemed and, if so, the redemption
price and the terms and conditions of redemption;
(d) the amount payable on shares in the event of involuntarily
liquidation;
(e) the amount payable on shares in the event of voluntary
liquidation;
(f) sinking fund or other provisions, if any, for the redemption or
purchase of shares;
(g) the terms and conditions on which shares may be converted, if the
shares of any series are issued with the privilege of conversion;
(h) voting powers, if any; and
(i) any other relative rights and preferences of shares of each
series, including, without limitation, any restriction on an
increase in the number of shares of any series authorized and any
limitation or restriction of rights or powers to which shares of
any further series are subject.
Common Shares
(a) The rights of holders of the common shares to receive dividends or
share in the distribution of assets in the event of liquidation,
dissolution or winding up of the affairs of the Corporation are
subject to the preferences, limitations and relative rights of the
preferred shares fixed in the resolution or resolutions which may
be adopted from time to time by the Board of Directors of the
corporation providing for the issuance of one or more series of
the preferred shares.
(b) The holders of the common shares shall be entitled to one vote for
each share of common shares held by them of record at the time for
determining the holders entitled to vote.
Dividend Policy
We have never declared or paid a cash dividend on our capital stock and
we do not expect to pay cash dividends on our common stock in the
future. We currently intend to retain our earnings, if any, for use in
our business. Any dividends declared in the future will be at our
discretion and subject to any restrictions that may be imposed by our
lenders.
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PART II
ITEM 1. MARKET FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There is no trading market for the Company's Common Stock at present and there
has been no trading market to date. Management has not undertaken any
discussions, preliminary or otherwise, with any prospective market maker
concerning the participation of such market maker in the aftermarket for the
Company's securities. There is no assurance that a trading market will ever
develop or, if such a market does develop, that it will continue.
(a) Market Price. The Company's Common Stock is not quoted at the present
time.
The Securities and Exchange Commission adopted Rule 15g-9, which
established the definition of a "penny stock," for purposes relevant to
the Company, as any equity security that has a market price of less
than $5.00 per share or with an exercise price of less than $5.00 per
share, subject to certain exceptions. For any transaction involving a
penny stock, unless exempt, the rules require: (i) that a broker or
dealer approve a person's account for transactions in penny stocks; and
(ii) the broker or dealer receive from the investor a written agreement
to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the
person; and (ii) make a reasonable determination that the transactions
in penny stocks are suitable for that person and that person has
sufficient knowledge and experience in financial matters to be capable
of evaluating the risks of transactions in penny stocks. The broker or
dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prepared by the Commission relating to the penny
stock market, which, in highlight form, (i) sets forth the basis on
which the broker or dealer made the suitability determination; and (ii)
that the broker or dealer received a signed, written agreement from the
investor prior to the transaction. Disclosure also has to be made about
the risks of investing in penny stock in both public offering and in
secondary trading, and about commissions payable to both the
broker-dealer and the registered representative, current quotations for
the securities and the rights and remedies available to an investor in
cases of fraud in penny stock transactions. Finally, monthly statements
have to be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny
stocks.
(b) Holders. There are fifty (50) holders of our Common Stock.
(c) Dividends. The Company has not paid any dividends to date and has no
plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
We are not a party to any legal proceeding.
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ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
On January 26, 2000, our directors resolved to change our accountant from Kish,
Leake & Associates, P.C., Financial Consultants of 7901 East Belleview Avenue,
Suite 220, Englewood, Colorado 80111 (the "Former Accountant") to Davidson &
Company, Chartered Accountants, Suite 1200, P.O. Box 10372 Pacific Centre, 609
Granville Street, Vancouver, British Columbia, V7Y 1G8. This resolution of our
board of directors constitutes a dismissal of the Former Accountant, however, we
were in no way dissatisfied with the professionalism or accounting work of the
Former Accountant. The decision to change our accountant was approved by the
board of directors. There were no disagreements with the Former Accountant
whether or not resolved on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure which if not
resolved to the Former Accountant's satisfaction would have caused it to make
reference to the subject matter of the disagreements in connection with its
report. We filed a Form 8-K with the Commission (File No. 000-27397) on February
2, 2000.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
In May 1997, we issued 1,000 shares of our common stock to 10 persons at a price
of $0.50 per share, and in August 1999, declared a 1,000 for one forward split.
These shares were issued under the exemption from registration afforded by
section 4(2) of the Securities Act of 1933. Each shareholder was either an
"accredited investor" (as that term is defined in the 1933 Act) or a
sophisticated investor, and each shareholder was provided all information
necessary in order to allow each investor to exercise their respective business
judgment as to the merits of the investment.
On December 17, 1999, we forward split our shares on a 7 for 1 basis which
increased our issued share capital to 7,000,000 common shares. On December 17,
1999, we also issued 3,500,000 common shares to Mr. Chris Bunka and Mr. Sudhir
Khanna in consideration for all of the issued and outstanding common shares of
Gurus International Corp. under section 4(2) of the Securities Act of 1933.
On February 1, 2000, we issued 1,728,500 units in consideration for $66,425
through an offering to U.S. non-residents conducted under Regulation S and to
U.S. residents under Rule 506. None of the Regulation S offerees or purchasers
are U.S. persons as defined in Rule 902(k) of Regulation S, and no sales efforts
were conducted in the U.S., in accordance with Rule 903(c). Subscribers to the
offering acknowledge that the securities purchased must come to rest outside the
U.S., and the certificates contain a legend restricting the sale of such
securities until the Regulation S holding period is satisfied in accordance with
Rule 903(b)(3)(iii)(A).
On February 29, 2000, we issued 500,000 common shares at $0.01 per share,
505,000 common shares at $0.05 per share, 100,000 common shares at $0.25 per
share and 4,000 common shares at $1.00 per share. These shares were offered to
U.S. non-residents under Regulation S and to U.S. residents under Rule 506. None
of the Regulation S offerees or purchasers are U.S. persons as defined in Rule
902(k) of Regulation S, and no sales efforts were conducted in the U.S., in
accordance with Rule 903(c). Subscribers to the offering acknowledge that the
securities purchased must come to rest outside the U.S., and the certificates
contain a legend restricting the sale of such securities until the Regulation S
holding period is satisfied in accordance with Rule 903(b)(3)(iii)(A).
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On May 1, 2000, we issued 192,500 common shares at $0.40 per share, 16,000
common shares at $0.25 per share. All shares were offered to U.S. non-residents
under Regulation S and to U.S. residents under Rule 506. None of the Regulation
S offerees or purchasers are U.S. persons as defined in Rule 902(k) of
Regulation S, and no sales efforts were conducted in the U.S., in accordance
with Rule 903(c). Subscribers to the offering acknowledge that the securities
purchased must come to rest outside the U.S., and the certificates contain a
legend restricting the sale of such securities until the Regulation S holding
period is satisfied in accordance with Rule 903(b)(3)(iii)(A).
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation incorporate the provisions of the Nevada Revised
Statutes providing for the indemnification of officers and directors and other
persons against expenses, judgments, fines and amounts paid in settlement in
connection with threatened, pending or completed suits or proceedings against
such persons by reason of serving or having served as officers, directors or in
other capacities, except in relation to matters with respect to which such
persons shall be determined not to have acted in good faith and in the best
interests of our company. With respect to matters as to which our officers and
directors and others are determined to be liable for misconduct or negligence,
including gross negligence in the performance of their duties to us, Nevada law
provides for indemnification only to the extent that the court in which the
action or suit is brought determines that such person is fairly and reasonably
entitled to indemnification for such expenses which the court deems proper.
Insofar as indemnification for liabilities arising under the 1933 Act may be
permitted to officers, directors or persons controlling us, we have been
informed that in the opinion of the U.S. Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act, and is
therefore unenforceable.
PART F/S
Reference is made to the audited financial statements for the year ended June
30, 2000 filed with the SEC on Form 10KSB on September 22, 2000 and unaudited
financial statements for the three month period ended September 30, 2000 filed
with the SEC on Form 10QSB.
PART III
ITEM 1. INDEX TO EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
3.1 Articles of Incorporation filed May 16, 1997, and amendments thereto filed August 11,
1999, as filed with the Registrant's Form 10-SB (file no. 000-27397) filed on September
21, 1999 incorporated herein by reference.
3.2 Bylaws as filed with the Registrant's Form 10-SB (file no. 000-27397) on September 21,
1999 incorporated herein by reference.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
4.1 Form of Lock Up Agreement Executed by the Issuer's Shareholders as filed with the
Registrant's Form 10-SB (file no.000-27397) filed on September 21, 1999, incorporated
herein by reference.
16 Letter from Kish, Leake & Associates, P.C. as filed with the Registrant's Form 8-K on
February 2, 2000, incorporated herein by reference.
27 Financial Data Schedule for the quarter ending September 30, 2000 as filed with the
Registrant's Form 10QSB, incorporated herein by reference and financial data schedule
for the year ending June 30, 2000 as filed with the Registrant's Form 10KSB,
incorporated herein by reference.
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
NEWSGURUS.COM, INC.
----------------------------------------
(Registrant)
Date: November 16, 2000 By: /s/Chris Bunka
-----------------------------------
Chris Bunka, President and Director
(Signature)
