UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[xx] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____ TO ____
Commission file Number: 000-27397
NEWSGURUS.COM, INC.
(FORMERLY ANNEX BUSINESS RESOURCES, INC.)
(Name of small business issuer 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)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [ X ] Yes [ ] No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ X ]
The Issuer's revenues for its fiscal year ended June 30, 2000 were $3,000.
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The aggregate market value of the voting and non-voting stock held by
non-affiliates of the registrant was $0.00 as the Registrant's shares are not
yet listed or quoted on an exchange.
On June 30, 2000, the number of shares outstanding of the registrant's Common
Stock was 9,290,000.
Transitional Small Business Disclosure Format (Check one): Yes __X__; No ____
PART I
BUSINESS
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 were a blank check company and had not conducted business. We
became a reporting company under the Securities Exchange Act of 1934 on November
20, 1999.
As directors of a blank check company, it was former management's mandate to
seek out a business merger or acquisition. Our former directors, 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.
The acquisition of Gurus International Corp. fulfilled our mandate as a blank
check company and will eventually give Mr. Bunka and Mr. Khanna access to the
public markets to finance the development of the Newsgurus 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
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. Members will have extensive opportunities to purchase
goods and services as future website modules are completed, including the health
and wellness store that will offer over 14,000 products from over 150 different
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manufacturers. In the future, we intend to offer additional content, products
and services as we implement additional modules under our lifestyles section.
NewsGurus is an internet-based consumer network that includes the
customer-focused interactive website www.NewsGurus.com. The network will provide
users with trusted content in the areas of money, health, and lifestyles. Tools
and services to empower users to manage their every-day needs will also be
provided through partnerships that enhance our brand. Network affiliates will
include other Internet portals, on-line e-commerce sites, service oriented
websites and traditional sources of news. Our agreement with HealthNet
International Inc. is the first of these affiliate agreements.
Money, health, and entertainment decisions are made by individuals on a daily
basis. NewsGurus.com has evolved from the need to build a community where
members can express their changing information needs and have these needs
addressed by recognized experts. NewsGurus will empower and educate through
interactive, thought provoking, timely content. Rich content will provide an
effective link between customers from various broadcast mediums and e-commerce.
With experts as contributors, we anticipate that NewsGurus.com will be a leading
source of customized, concise, objective analysis of important events affecting
everyday lives. Independent writers, authors, celebrities, and analysts will be
recruited to become active contributors and shareholders, and to interact with
members. The NewsGurus.com website will feature continuously updated,
user-customized and exclusive content from these content providers.
NewsGurus.com intends to become a leading provider of exclusive content
available over the Internet by capitalizing on the celebrity status of its
writers. 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 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 plans to provide experts in several fields who are well known
through prior business success in other media including the newsletter industry,
book publishing and other print, audio and video media. The public, already
familiar with these established writers in traditional media, should be
comfortable interacting with such writers and journalists on the Internet.
A unique aspect of NewsGurus.com is that many contributing writers will have an
equity position in our company. Traditional media journalists are not well
compensated. Through equity ownership, NewsGurus.com expects to entice many
well-known writers to produce exclusive content.
Not every writer is required to provide exclusive content. The strategy of
exclusive content ensures that NewsGurus.com will always remain a unique site.
Writers are encouraged to provide
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reprints of their existing publications at the NewsGurus site, and to charge a
pay-per-view fee to members to access such 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 over 900 archived
articles, 93% are free articles; less than 1% are pay-per-view newsletters; and
6% are stock-specific pay-per-view articles. As the health, wellness, and
lifestyle modules begin contributing content to the site, the ratio of
restricted content is not expected to increase.
New content provided to NewsGurus will include commentary on all sectors in
which NewsGurus is or will be active including investing and finance; health and
wellness; and lifestyles.
Unlike other Internet sites that serve as de-facto archival sites of previously
published work, NewsGurus.com will not function as a repository for stale
content. These other Internet sites are good examples of how not to function on
the Internet. Writers post their earlier-printed material to Internet users,
offering little new value.
Successful Internet media companies are those that provide content especially
crafted for the Internet audience, and where applicable, designed to complement
e-commerce. Internet users need to be given reasons to return frequently to a
content site. NewsGurus.com intends to publish new content on a continual basis.
Although NewsGurus.com will accept previously published material as an archival
service to its subscribers, it is new and exclusive material that will attract
readers to NewsGurus.com.
Writers providing content in the your money segment will be successful
investment newsletter editors and business journalists from well-known business
and financial newspapers. Authors of best-selling books will also be invited to
contribute regular articles. Corporate executives will offer valuable insight
into their industries. Staff journalists employed by NewsGurus.com will provide
members with financial market update information every 30 or 60 minutes during
regular business hours.
Distribution Methods of our Products and Services and Website Development.
The goal of our website interface is to enable NewsGurus to cost-effectively
distribute useful information to a broad range of users. Achieving effectiveness
requires a strategy. Part of our strategy is to provide users with a rich menu
of products and services.
With the Internet, there are no more captive customers. The effective
organization will be one that develops a structure focused on the needs of its
customers. It is the challenge of our website developers to bring this structure
to life.
NewsGurus is establishing a web presence as quickly as possible. This will
assist us to attract partners, members and content providers. It will also help
us build revenue streams. The NewsGurus Website is being developed in three
stages, beta version, stage one, and stage two.
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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
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
as many as 10,000 hits have been registered in one day. The final major addition
to the beta site will be the health and wellness content and store that is
expected to be launched before the end of 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. Additional fulfillment centers are planned for
Canada and the U.K.
A complete stage one site could be launched by the 1st quarter of 2001. This
would increase functionality and fully implement a major upgrade to the
NewsGurus website. With the upgrade, the NewsGurus site will be capable of
withstanding increased traffic and e-commerce demands. It will implement a fully
designed backend engine linking our databases with back office software. The
capabilities offered by these systems should allow NewsGurus management and
content providers to access our website from any remote location in the world.
These features are integral to the NewsGurus business plan because they help to
control overall costs of operation allowing NewsGurus to remain competitive
within its sector. The successful construction and implementation of these
systems will allow NewsGurus to become a company that has a minimum number of
employees and the lowest possible operating costs. Stage one features will also
add video and audio capabilities to the site, allowing content providers a
greater dimension in producing their content. This will also allow users of the
site the ability to receive information in the media of their choice. One of the
final modules expected to be implemented in stage one design will be the
addition of the lifestyles segment of NewsGurus, offering expanded content and
e-commerce opportunities.
Stage two will likely not be launched before the 3rd quarter of 2001. It will be
the final version of development that fully executes the NewsGurus business
plan. Stage two uses the basic content modules built in the beta website and the
powerful back-office and data management systems built in stage one to offer
complete user personalization. Personalization will allow our users to order and
use only that content that is of particular importance to them. NewsGurus
members will be able to build individual user profiles that will allow our
systems to construct personal on-line and even traditional hard copy magazines
with content relevant to their needs. Advertising will be targeted specifically
at the requested content. A key component of stage two design will be the
implementation of wireless technology allowing users remote access to our
content and e-commerce opportunities. Extensive interactive capabilities are an
integral part of personalization, and as such the site will offer many
opportunities for members to self-publish their comments and discussions, and to
interact with our content providers. The features and services provided by the
site will continue to grow with users' needs.
www.newsgurus.com will be an informative, dynamic, and fun Website to visit and
use. Our guru-supplied content ensures that each visit will be informative. The
site will be dynamic
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because it will encourage interactivity. Many sites do not recognize that the
Internet is a two-way medium.
Most of the content available at our Website is free to all registered users in
return for their provision of nothing more than simple personal information.
While the no-cost content is designed to draw people to the Website, important
value-added content is available to help the company generate revenue. As the
site develops through subsequent phases, we will include written, audio, and
video content.
The no charge content will include articles in all of the major
NewsGurus-focused sectors: your money, your health, and your life. Staff writers
will provide content on current headlines and trends. Corporate news releases
will be available as will articles produced by guest Gurus. All registered users
will also be able to access the categorized NewsGurus archives, containing the
full wealth of information previously posted at NewsGurus.
In the your health section the vast majority of content will remain free of
charge as the NewsGurus revenue model plans to leverage this content with the
sale of products from our on-line health store that will offer over 14,000
products. NewsGurus will pursue other partnerships that could enable it to offer
additional products and content in the lifestyles category.
How Our Business Will Generate Revenue.
There will be several tiers of service available only to paying members.
For $9.95 per month, 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.
For $19.95 per month, 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
newsletter or 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
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reaches zero, another purchase of points is required. Those 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.
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.
First, content will be amalgamated and offered in bulk for syndication to other
websites. 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.
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.
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.
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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 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 various 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 very
little new content. Almost all material 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 distributors 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 far ahead of 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
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`ad-supported'". (eMarketer, 2000; OCLC Office of Research, 1999.) There are
obviously 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.
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, limited 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 but they are not true
competitors to NewsGurus.com. Newsletteraccess.com is one of many examples.
There is little brand awareness.
The second group are public company stock.com 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 limited
original content. The public company has limited revenue streams. Stockscape.com
and Stockgroup.com are good examples. Stockscape.com had revenue of $1.2 million
in 1999. Stockgroup.com had revenue of $1.9 million in 1999 (Source: Edgar).
These companies are beginning to build their brands.
Competitors in the stock.com category will affect only the your money section of
NewsGurus. They do not compete with the your health or your life sections.
It is expected that private companies wanting to duplicate the NewsGurus
business model will face a six-to-twelve month competitive disadvantage as
NewsGurus will have already secured contracts with many of the available
established content providers.
As NewsGurus signs exclusive contracts with more feature writers, its potential
competition diminishes. There is a finite group of celebrity-style writers from
which to develop media sites.
Most importantly, these competitors do not share our business model of
amalgamating users with varying interests. NewsGurus will attempt to reach a far
broader audience than the stock.com sites through its health & wellness and
lifestyles sections. These broader modules 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 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, CNET.com, and DrKoop.com.
Other examples include sites spawned from traditional media sites such as
MarketWatch.com, CNNfn.com and Bloomberg.com. Substantial brand awareness has
been achieved.
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Some competitors, such as TheStreet.com, require subscribers to pay a fee to
view most of the content provided. This strategy is now seen as flawed. Recent
employee layoffs in the industry "show the financial strain in producing
original content for the Web." (New York Times, June 9, 2000) We believe that
the business plans of some of our competitors are demonstrably weaker than our
business plan.
Our business plan recognizes pay for content problems and our business model is
built around primarily free content to registered members. The registration
process provides NewsGurus.com with valuable marketing information that supports
other revenue streams.
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 prove that the largest subscriber bases
can only 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, and others.
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 believes it is well positioned as a budding specific-media site.
NewsGurus management believes that, if internet participation increases in line
with independent forecasts, there is room for two or three additional general
media sites in North America before the Internet is fully developed.
We believe we can aggressively 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. We can place staff writers on
equity incentive programs in the future, expanding our business plan as we
attract journalists and writers. These writers may currently be working for
NewsGurus competitors as well as for the traditional media.
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.
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Existing financial and media sites have ignored the natural competitive
instincts shared by all successful people. Newsletter writers and journalists
who have a choice of contributing to an effort that offers strong financial
incentives should 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 in the hands of our content
providers. The advisory board is designed to give NewsGurus content providers
control over their own destiny. This advantage is one that few public companies
have been willing to grant.
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. Writers will continually be recruited 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.
Our contributing writers are under four year contracts to provide exclusive
and/or non-exclusive articles for our website. Each of our contributing writers
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 no other compensation during the terms of their agreements with us other
than the seed stock which they have already purchased. The following writers are
under contract to provide us with content:
o Chris Bunka
Mr. Bunka is the founder and President of NewsGurus.com, Inc. He has been the
editor of Outsider's Overture newsletter since 1996 and has been widely quoted
in The Globe and Mail, The Financial Post, Canadian Business, The Prospector,
Planning For Profits, Stox Magazine, Bull & Bear and other periodicals. 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.
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o CanStock
CanStock publishes four newsletters which are the most widely-read independently
owned newsletters in Canada. Senior Editor Al Budai is a CGA. 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.
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 Sudhir Khanna, P. Eng.
Mr. Khanna is our VP of Information Technology and a director. 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.
12
<PAGE>
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
We have contracts with contributing writers to provide exclusive and
non-exclusive articles for our Newsgurus website. These contributing editors are
also shareholders of our company. 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. The number of exclusive and
non-exclusive articles our contributing writers are to produce and the number of
seed stock units they have acquired is as follows:
<TABLE>
<CAPTION>
Exclusive Non-exclusive Compensation Style of Equity
Name Term Articles/Week Articles/Week Equity Units Warrant
---- ---- ------------- ------------- ------------ -------
<S> <C> <C> <C> <C> <C>
Bunka 4 YR 2 Variable 100,000 C
Davlin 4 YR 1 0 60,000 B
Canstock 4 YR 7 0 360,000 B
Wilcox 4 YR 4 1 147,000 B
Dany 4 YR 5 0 148,500 B
Taylor 4 YR 4 0 125,000 B
McAllister 4 YR 2 2 100,000 C
Khanna 4 YR 1 3 500,000 A
Lewis 4 YR 1 4 118,000 B
Thompson 2 YR 0.5 1 70,000 A
TOTAL 27.5 11 1,728,500
</TABLE>
13
<PAGE>
Note: "C" warrants entitle the holder to purchase two shares for each warrant
held. "B" warrants entitle the holder to purchase one share for each
warrant held. "A" warrants entitle the holder to purchase one-half
share for each warrant held. All warrants are priced at $1.00 per
share.
We currently have 16 writers who have either signed content provision contracts
with NewsGurus, or have entered casual agreements to provide content on an
informal basis. Over 900 articles are available within the NewsGurus archives.
Approximately 35 additional articles 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. DESCRIPTION OF PROPERTY
The Company occupies office space in Kelowna, British Columbia, Canada. This
space is currently provided by management on a rent free basis. The Company's
Web Servers are located in secure environments under a third party agreement
with Net Nation Communications in Vancouver, British Columbia, Canada, and with
Nebular Research and Development in Toronto, Ontario, Canada.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any current or pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
14
<PAGE>
The Company's 2000 annual general meeting is scheduled to be held on October 27,
2000 at 5774 Deadpine Drive, Kelowna, British Columbia at 1:00 p.m. The
Company's security holders will be requested to elect new directors, to appoint
the Company's auditors for the 2000/2001 fiscal year and to ratify all actions
taken by the officers and directors of the Company the preceding year. No other
business is expected to be brought before the Company's shareholders at the 2000
annual general meeting. The Company's notice of annual general meeting, Schedule
14A proxy statement and proxy are being filed separately and are incorporated
herein by reference.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's shares are not currently listed on any exchange or quotation
system.
There are approximately 42 shareholders holding 9,290,000 of our issued common
shares. There are 2,243,500 options and warrants to purchase additional common
shares of the Company.
There is a convertible debenture held by one party that could result in the
issuance of up to 650,000 common shares of the Company with no additional
funding required by the Company; and, up to a further 650,000 common shares upon
the Company's receipt of up to $845,000 in additional funding.
The Company does not expect to pay a dividend on its common stock in the
foreseeable future. Payment of dividends in the future will depend on the
Company's earnings and its cash requirements at that time.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR 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 $300,000 through private placements and
begun construction of the Newsgurus.com website.
Our corporate operations commenced in May, 2000 with the launch of the
www.newsgurus.com website which 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
website database. This includes individual pay-per-view content, monthly
subscriptions and user-selected personalized electronic magazines.
We will pursue partnerships and relationships with on-line companies that are
interested in purchasing bulk quantities of our content for distribution to
others. Wider distribution of content and material appearing at our website can
help us increase revenues and raise awareness of the www.newsgurus.com website.
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. If successful, this will produce another revenue
stream through magazine subscriptions and magazine
15
<PAGE>
advertising, while 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. 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.
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. 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 no current
source of revenue. Without additional capital, it is unlikely that we will be
able to continue as a going concern.
The Company is in the process of organizing additional new financing through
either the issuance of equity securities or convertible debentures. There can be
no assurance that the Company will be successful in obtaining funding as and
when required.
We can function at a reduced activity level for a period of 12 months based on
funds already raised through our funding agreement with Canalaska. This reduced
level of funding will not permit aggressive deployment of our business plan
however it will allow basic operation of our website and corporate activities.
Continual development of our website is required. 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.
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.
16
<PAGE>
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
$900,000 over the next twelve months on our marketing program. 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.
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. 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.
ITEM 7. FINANCIAL STATEMENTS
The audited financial statements for Newsgurus.com, Inc. for the year ending
June 30, 2000 are included as part of this Form 10KSB following the signature
page of this Form 10KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On January 26, 2000, the Registrant's directors resolved to change our
accountant from Kish, Leake & Associates, P.C. (the "Former Accountant") to
Davidson & Company, Chartered Accountants. 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.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Biographical Information on our Officers and Directors:
Christopher Bunka, Director, President and C.F.O., Age 39
17
<PAGE>
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 specific investment sectors. Mr.
Bunka has been quoted in international publications and has written articles for
several magazines.
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.
Sudhir Khanna, Director and Secretary, Age 36
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.
In January, 1997, Mr. Khanna launched The Resource Indicator, an investment
publication covering the resource industry. Mr. Khanna is both the editor and
the publisher of the newsletter, since renamed eKHANNA, and has been successful
in increasing the newsletter's exposure by creating mutually beneficial
partnerships with content providers. Mr. Khanna has spoken at investment
conferences and has been quoted in resource related journals.
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.
18
<PAGE>
ITEM 10. 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.
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 $1,000,000 in equity financing. This agreement also provides that Mr.
Khanna is to receive 200,000 of our stock options which will vest over a three
year period. The agreement also provides that Mr. Khanna may not compete against
us in our chosen line of business during the term of his employment or for one
year following his employment.
Other than as described above, none of our directors or officers receive any
other compensation for their services. The salaries shown in the following table
are for three months of fiscal 1999/2000 only.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
------------------------------------- -------------------------- -----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
------------------------------------------------------------------------------------------------------------------------
Other All
Annual Restricted Securities Other
Name and Principle Comp- Stock Underlying LTIP Comp-
Position Salary Bonus ensation Award(s) Option/SARs Payouts ensation
Year ($) ($) ($) ($) (#) ($) ($)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chris Bunka, 1999/ 7,500.00 $0.00 $0.00 $0.00 400,000 $0.00 $0.00
President and Director 2000
------------------------------------------------------------------------------------------------------------------------
Sudhir Khanna, 1999/ 5,250.00 $0.00 $0.00 $0.00 200,000 $0.00 $0.00
Secretary and Director 2000
------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information regarding the beneficial ownership of
our common stock as of June 30, 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
Mississauga, Ontario shares
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.
VIY 2E6
$.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 a convertible loan of $100,000. This
loan 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.
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. As of June 30,
2000, Canalaska has subscribed for 250,000 units at $0.40 per unit. The shares
underlying these units have not yet been issued to Canalaska. 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
20
<PAGE>
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 12. 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.
The original director and promoter of our company was Mr. Devinder Randhawa. 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.
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 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.
(A) Exhibits
21
<PAGE>
<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 Issuer's Form
10-SB (file no. 000-27397) filed on September 21, 1999
incorporated herein by reference.
3.3 Bylaws as filed with the Issuer's Form 10-SB (file no.
000-27397) on September 21, 1999 incorporated herein by
reference.
4.1 Form of Lock Up Agreement Executed by the Issuer's Shareholders
as filed with the Issuer's Form 10-SB (file no. 000-27397) filed
on September 21, 1999, incorporated herein by reference.
13.1 Form 10QSB for the Period ended December 31, 1999, filed on
February 15, 2000, incorporated herein by reference.
13.2 Form 10QSB for the Period ended March 31, 2000, filed on May 15,
2000, incorporated herein by reference.
16 Letter from Kish, Leake & Associates, P.C. as filed with the
Issuer's Form 8-K on February 2, 2000, incorporated herein by
reference.
27 Financial Data Schedule
</TABLE>
(B) Reports on Form 8-K
The Issuer filed a Form 8-K on January 13, 2000 and on February 2, 2000.
22
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) 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: September 22, 2000 Per: /s/ Chris Bunka
---------------
Chris Bunka, President, C.E.O. and Director
In accordance with the Exchange Act, this report has been signed below by the
following person on behalf of the Registrant and in the capacities and on the
dates indicated.
/s/ Chris Bunka
---------------
Chris Bunka, President, C.E.O. and Director
September 22, 2000
------------------
Date
23
<PAGE>
NEWSGURUS.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
<PAGE>
DAVIDSON & COMPANY [LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of NewsGurus.Com, Inc.
(A Development Stage Company)
We have audited the consolidated balance sheet of NewsGurus.Com, Inc. (A
Development Stage Company) as at June 30, 2000 and the consolidated statements
of operations, changes in stockholders' equity and cash flows for the year then
ended and the cumulative amounts from inception on May 16, 1997 to June 30,
2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at June 30, 2000 and
the results of its operations, changes in stockholders' equity and its cash
flows for the year then ended and the cumulative amounts from inception on May
16, 1997 to June 30, 2000 in accordance with generally accepted accounting
principles in the United States.
The audited financial statements as at June 30, 1999 and for the year then ended
were examined by other auditors who expressed an opinion without reservation on
those statements in their report dated August 26, 1999.
The accompanying consolidated financial statements have been prepared assuming
that NewsGurus.Com, Inc. will continue as a going concern. As discussed in Note
2 to the financial statements, unless the Company attains future profitable
operations and/or obtains additional financing, there is substantial doubt about
the Company's ability to continue as a going concern. Management's plan in
regards to these matters are discussed in Note 2. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/S/ DAVIDSON & COMPANY
"DAVIDSON & COMPANY"
Chartered Accountants
Vancouver, Canada
August 17, 2000
A Member of SC INTERNATIONAL
Suite 1200, Stock Exchange Tower, 609 Granville Street, P.O. Box 10372, Pacific
Centre, Vancouver, BC, Canada, V7Y 1G6
TELEPHONE (604) 687-0947 FAX (604) 687-6172
F-2
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
AS AT JUNE 30
<TABLE>
<CAPTION>
========================================================================= =============== ================
2000 1999
------------------------------------------------------------------------- --------------- ----------------
<S> <C> <C>
ASSETS
CURRENT
Cash $ 83,430 $ --
Accounts receivable 3,000 --
Deposit 10,000 --
-------------- -------------
Total current assets 96,430 --
CAPITAL ASSETS (Note 4) 3,670 --
WEB SITE DEVELOPMENT COSTS (Note 5) 90,300 --
-------------- -------------
TOTAL ASSETS $ 190,400 $ --
========================================================================= =============== ================
</TABLE>
Continued.....
F-3
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
AS AT JUNE 30
<TABLE>
<CAPTION>
============================================================================================== =============== ================
2000 1999
---------------------------------------------------------------------------------------------- --------------- ----------------
<S> <C> <C>
Continued.....
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 23,540 $ 235
-------------- ---------------
Total current liabilities 23,540 235
-------------- ---------------
LONG TERM
Convertible loan (Note 7) 100,000 --
-------------- --------------
Total long term liabilities 100,000 --
-------------- --------------
Total liabilities 123,540 235
-------------- ---------------
STOCKHOLDERS' EQUITY
Capital stock (Note 8)
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, 1999 - 7,000,000 common shares) 9,290 7,000
Subscription funds received 50,000 --
Additional paid in capital 192,885 (6,500)
Deficit accumulated during the development stage (185,315) (735)
-------------- ---------------
Total stockholders' equity 66,860 (235)
-------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 190,400 $ --
============================================================================================== =============== ================
</TABLE>
HISTORY AND ORGANIZATION OF THE COMPANY (Note 1) COMMITMENTS (Note 11)
SUBSEQUENT EVENTS (Note 17) 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.
F-4
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
=========================================================== ================ ================ =============== ================
Period From
May 16,
1997
(Incorporation) Year Ended Year Ended
to June 30, June 30, June 30,
2000 2000 1999
----------------------------------------------------------- ---------------- ---------------- --------------- ----------------
<S> <C> <C> <C>
REVENUE $ 3,000 $ 3,000 $ --
--------------- -------------- ---------------
EXPENSES
Advertising 3,615 3,615 --
Amortization 377 377 --
Bank charges 124 124 --
Consulting 78,500 78,500 --
Licences and fees 1,970 1,735 235
Office and miscellaneous 7,714 7,214 --
Professional fees 83,167 83,167 --
Telephone 26 26 --
Travel and promotion 12,822 12,822 --
--------------- -------------- ---------------
188,315 187,580 --
--------------- -------------- ---------------
LOSS FOR THE YEAR $ (185,315) $ (184,580) $ (235)
=========================================================== ================ ================ =============== ===============
BASIC AND DILUTED LOSS PER SHARE $ (0.03) $ (0.01)
=========================================================== ================ ================ =============== ===============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 6,506,278 7,000,000
=========================================================== ================ ================ =============== ==============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
F-5
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
============================================================ ================ ================ =============== ===============
Period From
May 16,
1997
(Incorporation) Year Ended Year Ended
to June 30, June 30, June 30,
2000 2000 1999
------------------------------------------------------------ ---------------- ---------------- --------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year $ (185,315) $ (184,580) $ (235)
Items not affecting cash:
Amortization 377 377 --
Stock issued for services 4,000 3,500 --
Changes in non-cash working capital items:
Increase in accounts receivable (3,000) (3,000) --
Increase in deposit (10,000) (10,000) --
Increase in accounts payable 23,540 23,305 235
--------------- -------------- ---------------
Net cash used in operating activities (170,398) (170,398) --
--------------- -------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Convertible loan 100,000 100,000 --
Issuance of capital stock 198,175 198,175 --
Share subscriptions received 50,000 50,000 --
--------------- -------------- ---------------
Net cash provided by financing activities 348,175 348,175 --
--------------- -------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of capital assets (4,047) (4,047) --
Web site development costs (90,300) (90,300) --
--------------- -------------- ---------------
Net cash used in investing activities (94,347) (94,347) --
--------------- -------------- ---------------
CHANGE IN CASH POSITION DURING THE YEAR 83,430 83,430 --
CASH POSITION, BEGINNING OF THE YEAR - - --
--------------- -------------- ---------------
CASH POSITION, END OF THE YEAR $ 83,430 $ 83,430 $ --
============================================================ ================ ================ =============== ===============
</TABLE>
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS (Note 13)
The accompanying notes are an integral part
of these consolidated financial statements.
F-6
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
==============================================================================================================================
Deficit
Accumulated
During
Common Stock Additional 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
==================================== ============= ============= ============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
F-7
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
--------------------------------------------------------------------------------
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. 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 $185,315 for the period from inception to June 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 $100,000 of which it
has received all of the proceeds as at June 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. 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.
3. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
These consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Gurus International Corp. The subsidiary
was incorporated on October 29, 1999 under the laws of Nevada. All
significant intercompany balances and transactions have been eliminated.
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.
F-8
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
--------------------------------------------------------------------------------
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
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
Capital assets, being computer equipment, are recorded at cost.
Amortization of capital assets is calculated using the declining balance
method at an annual rate of 30%.
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.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 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.
F-9
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
--------------------------------------------------------------------------------
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
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 June 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.
4. CAPITAL ASSETS
<TABLE>
<CAPTION>
=========================================================================================================
Net Book Value
Accumulated -------------------------------
Cost Amortization 2000 1999
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Computer equipment $ 4,047 $ 377 $ 3,670 $ --
=========================================================================================================
</TABLE>
5. WEB SITE DEVELOPMENT COSTS
Web site development costs of $90,300 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 June 30,
2000, no amortization has been taken.
6. BUSINESS COMBINATION
During the year, the Company entered into an acquisition agreement whereby
the Company acquired all the outstanding shares of Gurus International
Corp. ("Gurus"). The Company issued 3,500,000 of its common shares at an
agreed value of $3,500 to acquire the shares of Gurus. At the date of
acquisition, Gurus' net assets had a fair value of $Nil.
F-10
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
--------------------------------------------------------------------------------
7. CONVERTIBLE LOAN
<TABLE>
<CAPTION>
===========================================================================================================
2000 1999
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Canalaska Ventures Ltd. $ 100,000 $ --
===========================================================================================================
</TABLE>
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.
8. 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.
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.
F-11
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
--------------------------------------------------------------------------------
8. CAPITAL STOCK (cont'd.....)
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.
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.
9. STOCK OPTIONS AND WARRANTS
As at June 30, 2000, the Company had outstanding stock options, enabling
the holders to acquire the following number of common shares:
<TABLE>
<CAPTION>
===========================================================================================================
Number Exercise
of Shares Price Expiry Date
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
600,000 $ 1.00 February 1, 2005
===========================================================================================================
</TABLE>
As at June 30, 2000, the Company had outstanding share purchase warrants,
enabling the holders to acquire the following number of shares:
<TABLE>
<CAPTION>
============================================================================================================
Original
Number Exercise
of Shares Price Expiry Date
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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
============================================================================================================
</TABLE>
F-12
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
--------------------------------------------------------------------------------
10. 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 during 1999 and 2000:
<TABLE>
<CAPTION>
==========================================================================================================
Weighted
Average
Number Exercise
of Shares Price
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at June 30, 1999 and 1998 -- $ --
Granted 600,000 $ 1.00
Forfeited -- $ --
Exercised -- $ --
------------ ------------
Outstanding at June 30, 2000 600,000 $ 1.00
==========================================================================================================
Weighted average fair value of options granted $ --
==========================================================================================================
</TABLE>
Following is a summary of the status of options outstanding at June 30,
2000:
<TABLE>
<CAPTION>
=====================================================================================================================
Outstanding Options Exercisable Options
------------------------------------------- -------------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Contractual Exercise Exercise
Exercise Price Number Life Price Number Price
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1.00 600,000 4.60 $ 1.00 600,000 $ 1.00
=====================================================================================================================
</TABLE>
F-13
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
--------------------------------------------------------------------------------
10. STOCK BASED COMPENSATION EXPENSE (cont'd.....)
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:
<TABLE>
<CAPTION>
=====================================================================================
June 30, June 30,
2000 1999
-------------------------------------------------------------------------------------
<S> <C> <C>
NET LOSS
As reported $ (184,580) $ (235)
============== ===============
Pro forma $ (184,580) $ (235)
============== ===============
BASIC AND DILUTED LOSS PER SHARE
As reported $ (0.03) $ (0.01)
============== ===============
Pro forma $ (0.03) $ (0.01)
=====================================================================================
</TABLE>
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:
<TABLE>
<CAPTION>
======================================================= ============== ==============
June 30, June 30,
2000 1999
------------------------------------------------------ -------------- ---------------
<S> <C> <S>
Risk-free interest rate 6.434% --
Expected life of the options 2 years --
Expected volatility .001% --
Expected dividend yield -- --
=====================================================================================
</TABLE>
11. 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
milliion shares) interest in the Company by purchasing an equity
position in the Company in three phases, subject to specific terms and
conditions.
Phase One, of the agreement, 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 date of regulatory approval.
F-14
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
--------------------------------------------------------------------------------
11. COMMITMENTS (cont'd.....)
Phase Two, of the agreement, requires Canalaska to make an investment
of $440,000 ($50,000 received) by purchasing 1,100,000 common 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.
Phase Three, of the agreement, 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 a
similarly structured company for Europe, South America, Mexico, the
Caribbean and Central and South America.
12. RELATED PARTY TRANSACTIONS
During the year ended June 30, 2000, the Company entered into the following
related party transactions:
a) The Company paid consulting fees of $70,000 (June 30, 1999 - $Nil) to
a company controlled by a former director.
b) The Company paid professional fees of $30,000 (June 30, 1999 - $Nil)
to a company controlled by a former director.
c) The Company issued 3,500,000 common shares at an agreed value of
$3,500 to acquire all of the outstanding shares of Gurus International
Corp., a company controlled by common directors (Note 6).
d) The Company paid consulting fees of $8,500 (June 30, 1999 - $Nil) to
companies controlled by directors.
13. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
<TABLE>
<CAPTION>
=====================================================================================
June 30, June 30,
2000 1999
-------------------------------------------------------------------------------------
<S> <C> <C>
Cash paid for income taxes $ -- $ --
Cash paid for interest -- --
=====================================================================================
</TABLE>
Non-cash investing and financing transactions during the year ended June
30, 2000 were as follows:
a) The Company issued 3,500,000 shares of common stock at an agreed value
of $3,500 to acquire 100% of the outstanding shares of Gurus
International Corp.
b) The Company issued a total of 70,000 shares of common stock at an
agreed value of $3,500 for services rendered.
F-15
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
--------------------------------------------------------------------------------
13. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS (cont'd.....)
No significant non-cash investing and financing transactions occurred
during the year ended June 30, 1999.
14. INCOME TAXES
The Company's total deferred tax asset is as follows:
<TABLE>
<CAPTION>
===============================================================================================
June 30, June 30,
2000 1999
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Tax benefit relating to net operating loss carryforwards $ 64,388 $ 80
Valuation allowance (64,388) (80)
-------------- ---------------
$ -- $ --
===============================================================================================
</TABLE>
The Company has a net operating loss carryforward of approximately $185,315
which expires in 2019 and 2020. 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.
16. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. Although the change in date has
occurred, it is not possible to conclude that all aspects of the Year 2000
Issue that may affect the entity, including those related to customers,
suppliers, or other third parties, have been fully resolved.
17. SUBSEQUENT EVENTS
The following are events which occurred subsequent to year end:
a) The Company entered into an acquisition agreement whereby the Company
acquired all the outstanding shares of Independent Outsider, Inc.
("Independent") from a company owned by a director. The Company paid
$3,000 to acquire all of the outstanding shares of Independent. At the
date of acquisition, Independent's net assets had a fair market value
of $Nil.
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.
F-16
<PAGE>
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
--------------------------------------------------------------------------------
17. SUBSEQUENT EVENTS (cont'd.....)
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.
F-17
