SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-15241
YELLOWBUBBLE.COM, INC.
(Exact name of registrant as specified in its charter)
Nevada 33-0786959
(State or other jurisdiction (IRS employer
of incorporation or organization) Identification No.)
118 Piccadilly
Mayfair, London W1V 9FJ
England
(Address of principal executive offices)
011-44-20-7569-6782
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class: Name of Each Exchange on Which Registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
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.
Yes x No
Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: none
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days: $48,903,563 as of April
20, 2000.
State the number of shares outstanding of each of the issuer's classes
of common equity, as of April 12, 2000: 13,365,600 shares of common stock, par
value $.001 per share.
<PAGE>
PART I
Item 1. Description of Business
Forward-looking Statements
This Annual Report includes forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 (the "Exchange
Act"). These statements are based on management's beliefs and assumptions, and
on information currently available to management. Forward-looking statements
include statements in which words such as "expect," "anticipate," "intend,"
"plan," "believe," "estimate," "consider," or similar expressions are used.
Forward-looking statements are not guarantees of future performance.
They involve risks, uncertainties and assumptions. The Company's future results
and stockholder values may differ materially from those expressed in these
forward-looking statements. Many of the factors that will determine these
results and values are beyond the Company's ability to control or predict. For
these statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in Section 21E of the Exchange Act.
Description of Business
YellowBubble.com, Inc., a Nevada corporation (the "Company"), is a
development stage company. The Company was incorporated in Nevada on February 5,
1998, under the name "Mall of Fame, Inc." and changed its name on September 15,
1998 to "Famous Internet Mall, Inc." The Company was formed for the purpose of
creating and designing an interactive web site that would allow the public
access to an Internet shopping mall to market and sell the products and/or
services of celebrities.
On February 6, 1998, the Company sold 3,000,000 shares of its common
stock, par value $.001 (the "Common Stock"), to a then officer and director,
Christopher Lucidi, for an aggregate of $3,000, and commenced an offering of up
to 2,000,000 shares of Common Stock at a price of $0.05 per share, pursuant to
Rule 504 promulgated under the Securities Act of 1933. The offering was
completed in March 1998, at which time the Company sold 2,000,000 shares of
Common Stock for an aggregate of $100,000 (realizing net proceeds of $98,000
after deducting expenses of the offering).
Following the offering and throughout 1999, the Company concentrated
its efforts on the creation of its web site, http:/www.themalloffame.com, which
became operational during 1999. However, the Company has not transacted any
business through its web site and has not otherwise generated any revenues since
formation.
In November 1999, the Company's Board of Directors declared a stock
dividend of 1.5 shares of Common Stock for each issued and outstanding share of
Common Stock. Unless otherwise indicated, all share and per share data set forth
below gives effect to such stock dividend.
On December 10, 1999, Christopher Lucidi sold 7,400,000 shares of
Common Stock (representing approximately 60% of the total then issued and
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outstanding) to John Meyer for an aggregate of $2,960. In connection with such
sale, Mr. Lucidi and the then other officer and director of the Company resigned
and Mr. Meyer was elected the sole director and officer of the Company. As a
result, Mr. Meyer became the controlling shareholder of the Company.
After reviewing the Company's business plan and the capital
required to implement such plan, Mr. Meyer concluded that the Company should
consider all of its strategic alternatives, including the possible acquisition
of a new business. Negotiations were commenced to acquire all of the issued and
outstanding capital stock of YellowBubble.com Holdings Limited, a company
incorporated under the laws of England ("Holdings"). In anticipation of such
acquisition, in late December of 1999 the sole director, Mr. Meyer, and
shareholders of the Company approved a change in the Company's name to
YellowBubble.com Inc., which change of name, because of a technical defect, did
not become effective until February 28, 2000.
On February 16, 2000, the Company entered into a Share Exchange
Agreement (the "Agreement") with the five shareholders of Holdings: Narinder
Dhillon; Gordon Barry McFadzean; David Henderson Scroggie; Prashant Naresh
Patel, and The Continental Trust Company Limited (collectively, the "Holdings
Shareholders"). Under the terms of the Agreement, the Holdings Shareholders
agreed to transfer to the Company on the closing date all of their shares in
Holdings in exchange for the issuance to them of an aggregate of 8,163,000
shares of Common Stock, which after giving effect to certain transactions
contemplated thereunder would represent in the aggregate approximately 61.1% of
the issued and outstanding shares of Common Stock on the closing date, subject
to the prior fulfillment of certain terms and conditions. Included among such
terms and conditions were the repurchase by the Company from existing
shareholders of an aggregate of 7,400,000 shares of Common Stock at a price per
share not to exceed $.0004 (the "Share Repurchase") and the execution of a
subscription agreement with an investor providing for a three phase purchase of
an aggregate of 342,000 shares of Common Stock at $14.625 per share provided
certain milestones were achieved (the "Financing").
The Company and the Holdings Shareholders completed the share exchange
under the Agreement (the "Share Exchange") on March 2, 2000 (the "Closing
Date"). As contemplated under the Agreement, on or before the Closing Date, the
Company completed the Share Repurchase for an aggregate consideration of $740
($.0001 per share) and the 7,400,000 shares repurchased were canceled. As also
contemplated under the Agreement, on or before the Closing Date, the Company
entered into a subscription agreement with an unrelated private investor (the
"Purchaser"), pursuant to which the Purchaser agreed to effect the Financing as
follows:
On the Closing Date, the Company issued to the Purchaser
102,600 shares of Common Stock for an aggregate consideration of
$1,500,525 (the "Closing Financing"). The proceeds of this phase of the
Financing had been deposited into escrow for the benefit of a creditor
of Holdings in repayment of a $473,000 bridge loan pending completion
of the Share Exchange. These funds have since been released from escrow
to such creditor. The balance was released to the Company and will be
used for working capital purposes.
On the Closing Date, Purchaser deposited into escrow an
additional $1,500,525 in payment of the purchase of 102,600 shares of
Common Stock (the "Second Phase"). These funds are to be released to
the Company provided that YellowBubble.com Limited, a wholly owned
operating subsidiary of Holdings ("YellowBubble"), reaches certain
milestones (the "First Milestones") set forth in the Agreement on or
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before June 30, 2000 ( the "Milestone Date"). These milestones relate
primarily to the registration of new members, implementation of
YellowBubble's marketing plan, the recruitment of additional personnel
and the engagement of professional consultants.
If the First Milestones are reached on or before the Milestone
Date, simultaneous with the closing of the Second Phase the Purchaser
is obligated to deposit in escrow a further $2,000,700 for the purchase
of 136,800 shares of Common Stock by the Milestone Date (the "Third
Phase") if YellowBubble reaches certain additional milestones relating
primarily to the registration of additional new members, the
implementation of YellowBubble's business plan and the commissioning of
a consumer research program. No assurances can be given that the
Company will satisfy any of the milestones by the Milestone Date and
therefore that the Second Phase or the Third Phase of the Financing
will be completed.
In addition, pursuant to the Agreement, Narinder Dhillon, David Frank
Henderson Scroggie and Prashant Naresh Patel were elected directors of the
Company, John Meyer resigned as a director of the Company. Narider Dhillon was
appointed the Company's Chief Executive Officer. David Frank Henderson Scroggie
was appointed the Company's Executive Vice President, Chief Financial Officer
and Secretary. Prashant Naresh Patel was appointed the Company's Marketing
Director.
Holdings, through its wholly owned subsidiary, YellowBubble,
is engaged in developing new forms of on-line shopping for the consumer by
creating a membership organization. Its initial principal markets are expected
to be located in Great Britain and Germany. By combining with Holdings, the
Company's intends to take advantage of the electronic advertising opportunities
presented by the Internet and the proliferation of technology enabling
individuals and businesses to access the world wide web. The Company's strategy
will be to enable consumers who access the Company's web site to share in
advertising revenues and to pay lower prices for their merchandise and services
as a result of collective and direct buying.
Although the Company's web site relating to the purchase and sale of
products and/or services of celebrities remains operational, the Company has no
present intention of pursuing the further development of such web site. Instead,
the Company intends to devote all of its efforts and resources to the
development and expansion of Holding's business.
Item 2. Properties
During 1999, the Company's executive offices were located in
approximately 300 square feet at 11974 Avenida Consentido, San Diego, California
92128. The lease was on a month-to month basis with an unrelated party and
provided for a monthly payment of approximately $300. The Company terminated the
lease in February 2000.
Since February 2000, the Company has leased an executive office of
approximately 500 square feet in London, England, from an unrelated party. The
lease is for six months and expires in September 2000. The monthly lease
payments are (pound)2,411. The Company contemplates relocating to more permanent
offices upon expiration of the current lease.
4
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Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
5
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Market Information
Prior to November 1999, there was no public trading market for the
Company's Common Stock. Since November 22, 1999, the Common Stock has been
included for quotation on the OTC Bulletin Board under the symbol "FIMI", since
January 4, 2000 under the symbol "YBBL" and since April 11, 2000 under the
symbol "YBBLE".
For the periods indicated, the high and low closing bid prices for the
Company's Common Stock were as follows:
High Low
November 22, 1999 to December 31, 1999 $8.31 $2.98
Quarter Ended March 31, 2000 $22.00 $7.25
April 1, 2000 to April 20, 2000 $12.03 $7.00
On April 20, 2000, the closing bid price per share of Common Stock was
$8.00.
There are no outstanding options or warrants to purchase, or securities
convertible into, shares of Common Stock.
The Company is not and has not proposed to publicly offer any shares of
Common Stock.
Holders of Record
As of April 19, 2000, there were 15 holders of record of the Company's
Common Stock, and the number of beneficial holders was approximately 50.
Dividends
The Company has never paid a cash dividend on its Common Stock nor does
the Company anticipate paying cash dividends on its Common Stock in the near
future. It is the present policy of the Company not to pay cash dividends on the
Common Stock but to retain earnings, if any, to fund growth and expansion.
Item 6. Management's Discussion and Analysis
Overview
6
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The Company is in the development stage and was organized in February
1998. The Company has never generated any revenues.
On March 2, 2000, the Company completed a share exchange with the five
shareholders of YellowBubble.com Holdings Limited ("Holdings"), a company
incorporated under the laws of England. Under the terms of the Share Exchange
Agreement, the Holdings shareholders transferred to the Company all of their
shares in consideration for the issuance to them of 8,163,000 shares of Common
Stock, representing in the aggregate approximately 61.1% of the then issued and
outstanding shares of Common Stock. In connection with this transaction,
effective February 2000, the Company changed its name to YellowBubble.com., Inc.
Holdings is engaged in developing new forms of on-line shopping for the
consumer by creating a membership organization. Currently, the principal markets
for its services are located in the United Kingdom and Germany.
During the next 12 months, the Company intends to devote all of its
resources to developing and expanding Holdings' business.
Results of Operations
The Company generated no revenues in 1999 or 1998. Operating expenses
in 1999 were approximately $27,800 resulting, after giving effect to the write
down of capital assets, in a net loss for 1999 in the amount of approximately
$38,000. Operating expenses in 1998 were approximately $73,591, resulting, after
giving effect to a loss of $6,158 on the sale of marketable securities, in a net
loss for 1998 in the amount of approximately $79,700. The decrease in net loss
was attributable to the decrease in operating expenses during 1999, primarily in
salaries and web site development expenses. The Company expects operating losses
to continue for the foreseeable future as it intends to significantly increase
its operating expenses to implement its business plan.
Liquidity and Capital Resources
The Company financed its operations during 1999 through the remainder
of the proceeds of an offering under Rule 504 that was completed in 1998.
In connection with the share exchange completed in March 2000, the
Company effected a three phase private placement of its Common Stock to an
unaffiliated purchaser (the "Purchaser") that provided the Company initially
with $1,500,525, of which approximately $473,000 was used for the repayment of a
bridge loan. The balance of approximately $1,026,000 will be used for working
capital purposes. The Company is expected to receive an additional $1,500,525
that was deposited into escrow by the Purchaser on the date of the closing of
the share exchange. Such funds are to be released to the Company, provided that
it achieves certain milestones by June 30, 2000. If the Company achieves certain
additional milestones by June 30, 2000, it is expected to receive a further
$2,000,700 in proceeds from the sale of shares to the Purchaser. Although the
Company's auditors have issued a going concern qualification in their opinion
with respect to the Company's financial statements for the fiscal year ended
December 31, 1999, the Company expects to be able to fund its operations for the
foreseeable future if it receives all of the funds in connection with the
afore-mentioned private placement. If the Company fails to meet the milestones
required under the terms of the private placement, it will have to find
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alternative sources of equity or debt financing. Any equity financing would be
expected to result in dilution to the holders of the Company's Common Stock. Any
debt financing obtained by the Company would be likely to include restrictive
covenants limiting the Company's ability to obtain additional capital, whether
through additional debt or equity financings, as well as restrictive covenants
limiting the Company with respect to various operational and financial matters.
There can be no assurance that the Company will be able to find such sources of
financing on terms acceptable to the Company, if at all. If the Company is
unable to find such additional financing, it may have to curtail its operations.
8
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Item 7. Financial Statements
The following financial statements of the Company are included in Item 7.
Balance Sheet at December 31, 1999 and December 31, 1998.
Statements of Operations for the Years Ended December 31, 1999 and 1998
and for the period from inception to December 31, 1999.
Statements of Cash Flows for the Years ended December 31, 1999 and 1998
and for the period from inception to December 31, 1999.
Statements of Shareholders' Equity for the Years ended December 31, 1999
and 1998 and for the period from inception to December 31, 1999.
Notes to Financial Statements
9
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Yellowbubble.com, Inc. (formerly Famous Internet Mall, Inc.)
(A Development Stage Company)
We have audited the balance sheet of Yellowbubble.com, Inc. (formerly Famous
Internet Mall, Inc.) as at December 31, 1999 and the statements of operations,
changes in stockholders' equity and cash flows for the year ended December 31,
1999, and for the period from incorporation on February 5, 1998 through December
31, 1999. 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 United States generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Yellowbubble.com, Inc.
(formerly Famous Internet Mall, Inc.) as at December 31, 1999 and the results of
its operations, changes in its stockholders' equity and its cash flows for the
year ended December 31, 1999 and for the period from incorporation on February
5, 1998 through December 31, 1999, in conformity with generally accepted
accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has recurring operating losses and a limited supply of
cash, which raises substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
The audited financial statements as at December 31, 1998 and for the period from
incorporation on February 5, 1998 through December 31, 1998 were examined by
other independent auditors who expressed an audit opinion without reservation on
those statements in their audit report dated September 13, 1999.
Davidson & Company
Vancouver, Canada Chartered Accountants
February 4, 2000
10
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YELLOWBUBBLE.COM, INC.
(formerly Famous Internet Mall, Inc.)
(A Development Stage Company)
BALANCE SHEETS
AS AT DECEMBER 31
- ----------------------------------------------- ---------------- ---------------
1999 1998
- ----------------------------------------------- ---------------- ---------------
- ----------------------------------------------- ---------------- ---------------
ASSETS
Current
Cash $ - $ 3,546
Accounts receivable - 1,313
--------------- --------------
- 4,859
Capital assets (Note 4) - 18,907
--------------- --------------
$ - $ 23,766
=============================================== ================ ===============
=============================================== ================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 16,645 $ 2,466
--------------- --------------
Stockholders' equity Capital stock (Note 5)
Authorized
50,000,000 common shares with a par value of $0.001
Issued and outstanding
December 31, 1999 and 1998 -
12,500,000 common shares 12,500 12,500
Additional paid-in capital 88,500 88,500
Deficit accumulated during the
development stage (117,645) (79,700)
--------------- --------------
(16,645) 21,300
---------------- --------------
$ - $ 23,766
=============================================== ================ ===============
The accompanying notes are an integral part of these financial statements.
11
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YELLOWBUBBLE.COM, INC.
(formerly Famous Internet Mall, Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
- --------------------------------------------------------------------------- ---------------- ---------------- ---------------
<CAPTION>
<S> <C> <C> <C>
Cumulative
Amounts From Period From
February 5, February 5,
1998 1998
(Incorporation) (Incorporation)
to Year Ended to
December 31, December 31, December 31,
1999 1999 1998
- --------------------------------------------------------------------------- ---------------- ---------------- ---------------
- --------------------------------------------------------------------------- ---------------- ---------------- ---------------
OPERATING EXPENSES
Consulting $ 20,000 $ - $ 20,000
Amortization 13,397 6,988 6,409
Bad debts 1,323 1,323 -
General and administrative 4,240 976 3,264
Internet and website development 27,726 1,226 26,500
Professional fees 19,000 16,500 2,500
Salary and benefits 12,918 - 12,918
Shareholder information and transfer agent fees 2,809 809 2,000
--------------- --------------- --------------
(101,413) (27,822) (73,591)
--------------- --------------- --------------
OTHER ITEMS
Interest and other income 1,845 1,796 49
Loss on sale of marketable securities (6,158) - (6,158)
Write-down of capital assets (11,919) (11,919) -
--------------- --------------- -------------
(16,232) (10,123) (6,109)
--------------- --------------- --------------
Loss for the period $ (117,645) $ (37,945) $ (79,700)
=========================================================================== ================ ================ ===============
Basic and diluted loss per common share (Note 3) $ - $ (0.01) $ (0.01)
=========================================================================== ================ ================ ===============
=========================================================================== ================ ================ ===============
Weighted average shares outstanding 12,500,000 11,924,242
=========================================================================== ================ ================ ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
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YELLOWBUBBLE.COM, INC.
(formerly Famous Internet Mall, Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
- --------------------------------------------------------------------------- ---------------- ---------------- ----------------
<CAPTION>
<S> <C> <C> <C>
Cumulative
Amounts From Period From
February 5, February 5,
1998 1998
(Incorporation) (Incorporation)
to Year Ended to
December 31, December 31, December 31,
1999 1999 1998
- --------------------------------------------------------------------------- ---------------- ---------------- ----------------
- --------------------------------------------------------------------------- ---------------- ---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (117,645) $ (37,945) $ (79,700)
Items not affecting cash:
Amortization 13,397 6,988 6,409
Loss on sale of marketable securities 6,124 - 6,124
Write-down of capital assets 11,919 11,919 -
Net change in non-cash working capital items:
(Increase) decrease in accounts receivable - 1,313 (1,313)
Increase in accounts payable and accrued liabilities 16,645 14,179 2,466
--------------- -------------- ---------------
Net cash used in operating activities (69,560) (3,546) (66,014)
--------------- -------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital assets (25,282) - (25,282)
Purchase of marketable securities (14,797) - (14,797)
Proceeds from sale of marketable securities 8,639 - 8,639
--------------- -------------- ---------------
Net cash used in investing activities (31,440) - (31,440)
--------------- -------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 103,000 - 103,000
Payments for offering costs (2,000) - (2,000)
--------------- -------------- ---------------
Net cash provided by financing activities 101,000 - 101,000
--------------- -------------- ---------------
Increase (decrease) in cash position for the period - (3,546) 3,546
Cash position, beginning of period - 3,546 -
--------------- -------------- --------------
Cash position, end of period $ - $ - $ 3,546
=========================================================================== ================ ================ ================
Supplemental disclosure with respect to cash flows
Cash paid for income taxes $ - $ - $ -
Cash paid for interest - - -
=========================================================================== ================ ================ ================
There were no non-cash transactions during the periods presented.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
YELLOWBUBBLE.COM, INC.
(formerly Famous Internet Mall, Inc.)
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
==================================================== ============================ ============== ============== ==============
<CAPTION>
<S> <C> <C> <C> <C>
Deficit
Accumulated
Additional During the Total
Common Stock Paid-in Development Stockholders'
----------------------------
-------------- -------------
Shares Amount Capital Stage Equity
- ---------------------------------------------------- -------------- ------------- -------------- -------------- --------------
- ---------------------------------------------------- -------------- ------------- -------------- -------------- --------------
Balance, February 5, 1998 (incorporation) - $ - $ - $ - $ -
Common stock issued for cash to officers 7,500,000 7,500 (4,500) - 3,000
Common stock issued for cash pursuant
to an offering memorandum, net of
$2,000 in offering costs 5,000,000 5,000 93,000 - 98,000
Loss for the period - - - (79,700) (79,700)
------------- ------------ ------------- ------------- -------------
Balance, December 31, 1998 12,500,000 12,500 88,500 (79,700) 21,300
Loss for the year - - - (37,945) (37,945)
------------- ------------ ------------- ------------- -------------
Balance, December 31, 1999 12,500,000 $ 12,500 $ 88,500 $ (117,645) $ (16,645)
==================================================== ============== ============= ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
YELLOWBUBBLE.COM, INC.
(formerly Famous Internet Mall, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION OF THE COMPANY
The Company was incorporated under the laws of Nevada on February 5,
1998 under the name of Mall of Fame, Inc. The principal activities since
inception have been organizational matters and the sale and issuance of
shares of its $0.001 par value common stock. The Company was formed to
create and design a fully functional, interactive internet website which
was to allow the public to access an internet shopping mall to market
and sell the products and/or services of celebrities. The Company, in
accordance with SFAS No. 7, is considered a development stage company.
On September 15, 1998, the Company changed its name from Mall of Fame,
Inc. to Famous Internet Mall, Inc.
On December 31, 1999, the Company changed its name from Famous Internet
Mall, Inc. to Yellowbubble.com, Inc. The name change is carried out in
anticipation of the acquisition of an innovative, technology driven
marketing company which is creating a global on-line community of
members who are paid to surf the web.
On November 22, 1999, the Company forward split its common stock 2.5:1,
thus increasing the number of outstanding common shares from 5,000,000
shares to 12,500,000 shares.
2. GOING CONCERN
As of December 31, 1999, the Company has recurring operating losses and
a limited supply of cash, which raises substantial doubt about its
ability to continue as a going concern.
From February 5, 1998 (inception) through December 31, 1999, the Company
raised initial working capital through a public offering of its common
stock, which was expected to permit the Company to continue its start-up
operations through December 31, 1999. The Company anticipates conducting
debt financing or additional common stock offerings, which are not yet
beyond the planning stages, to fund its proposed operations. The Company
is largely dependent upon the proceeds anticipated to be received from
proposed future debt financings or common stock offerings to carry out
its proposed operations. There is no assurance that the Company will be
successful in its efforts to raise the proceeds needed to commence its
proposed operations. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
3. SIGNIFICANT ACCOUNTING POLICIES
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.
Cash and cash equivalents
The Company considers all investments with a maturity of three months or
less to be cash equivalents.
<PAGE>
YELLOWBUBBLE.COM, INC.
(formerly Famous Internet Mall, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Capital assets
Capital assets will be recorded at cost less accumulated depreciation.
The cost of capital assets is depreciated over the estimated useful
lives of the related assets. Amortization is computed by the
straight-line method over the estimated useful lives of the assets,
which are five years for furniture and three years for equipment, for
financial reporting purposes. Amortization is computed on the Modified
Accelerated Cost Recovery System ("MACRS") for income tax purposes.
Earnings (loss) per share
The Company reports earnings per share using a dual presentation of
basic and diluted earnings per share. Basic earnings per share excludes
the impact of common stock equivalents. Diluted earnings per share
utilizes the average market price per share when applying the treasury
stock method in determining common stock equivalents. However, the
Company has a simple capital structure for the period presented and,
therefore, there is no variance between the basic and diluted earnings
per share.
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) results 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 September 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities" which
establishes accounting and reporting standards for derivative
instruments and for hedging activities. SFAS 133 is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999. In June
1999, the FASB issued SFAS 137 to defer the effective date of SFAS 133
to fiscal quarters of fiscal years beginning after June 15, 2000. The
Company does not anticipate that the adoption of the statement will have
a significant impact on its financial statements.
Reporting on costs of start-up activities
In April 1998, the American Institute of Certified Public Accountant's
issued Statement of Position 98-5 ("SOP 98-5"), "Reporting on the Costs
of Start-Up Activities" which provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs of
start-up activities and organization costs to be expensed as incurred.
SOP 98-5 is effective for fiscal years beginning after December 15, 1998
<PAGE>
with initial adoption reported as the cumulative effect of a change in
accounting principle. The Company's adoption of this statement during
the period had no affect on its financial statements.
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.
Comprehensive income
The Company has 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 December 31, 1999.
Internet and web site development
The Company expenses all internal and external costs incurred to develop
the internal-use computer software. As a development stage company,
management has determined that the web site is not expected to provide
substantive service potential to the Company.
Comparative figures
Certain comparative figures have been reclassified to conform with the
current year's presentation.
4. CAPITAL ASSETS
<TABLE>
<CAPTION>
====================================================== ============== =============== ==============================
Net Book Value
------------------------------
--------------- --------------
<S> <C> <C> <C> <C>
Amortization
Cost Accumulated 1999 1998
------------------------------------------------------ -------------- --------------- --------------- --------------
------------------------------------------------------ -------------- --------------- --------------- --------------
Furniture and fixtures $21,640 $ 12,149 $ 9,491 $ 15,751
Equipment and software 3,642 1,214 2,428 3,156
------- ------ ------ ------
25,282 13,363 11,919 18,907
Write-down of capital assets (25,282) (13,363) (11,919) -
-------- -------- -------- -------
$ - $ - $ - $ 18,907
====================================================== ============ =========== =========== ============
</TABLE>
5. CAPITAL STOCK
Stock split
On November 22, 1999, the Company implement a 2.5:1 forward stock split
thus increasing the number of outstanding common shares from 5,000,000
to 12,500,000 shares. All reference to number of shares and per share
amounts of common stock have been restated to reflect the stock split.
<PAGE>
YELLOWBUBBLE.COM, INC.
(formerly Famous Internet Mall, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
5. CAPITAL STOCK (cont'd.....)
Common stock sales
On February 6, 1998, the Company sold 7,500,000 shares of its $0.001
common stock to officers for cash totaling $3,000. These shares are
"restricted securities" and may be sold only in compliance with Rule 144
of the Securities Act of 1933, as amended (the "Act').
On March 15, 1998, the Company sold 5,000,000 shares of its $0.001 par
value common stock for $0.02 per share pursuant to Rule 504 of
Regulation D of the Act resulting in net proceeds of $98,000 after
deducting offering costs of $2,000.
6. 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
incorrectly recognize the year 2000 as some other date, resulting in
errors. The effects of the Year 2000 Issue may be experienced before,
on, or after January 1, 2000 and, if not addressed, the impact on
operations and financial reporting may range from minor errors to
significant systems failure which could affect an entity's ability to
conduct normal business operations. It is not possible to be certain
that all aspects of the Year 2000 Issue affecting the Company, including
those related to the efforts of customers, suppliers, or other third
parties, will be fully resolved.
7. RELATED PARTY TRANSACTION
During the year ended December 31, 1999, the Company entered into the
following related party transactions:
a) paid a director $Nil (December 31, 1998 - $6,500) for internet and
website development services.
b) paid a director $Nil (December 31, 1998 - $12,918) for salaries and
benefits.
Included in accounts receivable is $Nil (December 31, 1998 - $918) due
from a director for payroll taxes not withheld from his salary.
8. INCOME TAXES
A reconciliation of the U.S. statutory federal income tax rate to the
effective rate is as follows:
<TABLE>
- ----------------------------------------------------------------------------------- ---------------- ----------------
<CAPTION>
<S> <C> <C>
December 31, December 31,
1999 1998
- ----------------------------------------------------------------------------------- ---------------- ----------------
- ----------------------------------------------------------------------------------- ---------------- ----------------
U.S. federal statutory graduated rate 15.00% 15.00%
State income tax rate, net of federal benefit 7.00% 7.00%
Net operating loss for which no tax benefit is currently available (22.00)% (22.00)%
------------- -------------
0.00% 0.00%
=================================================================================== ================ ================
</TABLE>
<PAGE>
YELLOWBUBBLE.COM, INC.
(formerly Famous Internet Mall, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999
8. INCOME TAXES (cont'd.....)
At December 31, 1999, deferred taxes consisted of a net tax asset of
$29,411 due to operating loss carryforwards of $117,645, which was fully
allowed for in the valuation allowance of $29,411. The valuation
allowance offsets the net deferred asset for which there is no assurance
of recovery. The change in the valuation allowance for the years ended
December 31, 1998 and 1999 was $19,925 and $9,486, respectively. Net
operating loss carryforwards will expire in 2020.
The valuation allowance will be evaluated at the end of each year,
considering positive and negative evidence about whether the asset will
be realized. At that time, the allowance will either be increased or
reduced; reduction could result in the complete elimination of the
allowance if positive evidence indicates that the value of the deferred
tax asset is not longer impaired and the allowance is no longer
required.
9. SUBSEQUENT EVENTS
The Company entered into the following transactions subsequent to
December 31, 1999:
On February 16, 2000, Yellowbubble.com, Inc. (the "Company") acquired
all of the issued and outstanding common shares of Yellowbubble.com
Holdings Limited ("Holdings"), a British corporation, in exchange for
8,163,000 newly issued voting common shares of the Company issued at
a deemed price per share of US$1.00. Holdings is the sole legal and
beneficial owner of Yellowbubble.com Limited ("Yellowbubble"), a
British corporation, which is an innovative, technology driven
marketing company involved in the business of creating a global
on-line community of members who are paid to surf the web.
On the closing date of March 2, 2000, the Company purchased from
existing shareholders 7,400,000 voting common shares of the Company
for US$0.0004 per share, and then returned those shares to treasury.
On the closing date of March 2, 2000, the Company completed a
financing to raise US$1,500,525 for working capital purposes by
issuing 102,600 voting common shares of the Company at a price per
share of US$14.625 after having met certain closing milestones
pursuant to a subscription agreement.
After the share cancellation and the issuance of new shares, the
Company will have 13,365,000 issued and outstanding common shares.
The Company is required to complete the following financing
arrangements within 120 days after the closing date provided that
Yellowbubble shall meet certain post-closing milestones pursuant to a
subscription agreement:
a) to raise US$1,500,525 for working capital purposes by issuing
102,600 voting common shares of the Company at a price per share
of US$14.625 if Yellowbubble meets the First Post-Closing
milestones.
b) to raise US$2,000,700 for working capital purposes by issuing
136,800 voting common shares of the Company at a price per share
of US$14.625 if Yellowbubble meets the Second Post-Closing
milestones.
<PAGE>
As a result of the share exchange, control of the Company passed to
the former shareholders of Holdings. This type of share exchange will
be accounted for as a capital transaction accompanied by a
recapitalization of Holdings.
<PAGE>
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 9. Directors and Executive Officers of the Registrant
The following table sets forth the name, age and position of each
director and executive officer of the Company as of the date hereof.
NAME AGE POSITION
John Meyer 41 President
Narider Dhillon 37 Chief Executive Officer and Director
David Frank Henderson Scroggie 65 Executive Vice President, Chief
Financial Officer, Secretary and Director
Prashant Naresh Patel 36 Marketing Director and Director
John Meyer has been the Company's President since December 1999. Since
May 1996, he has also been the President of Micro Management Inc., a consulting
firm which provides financial, public relations and investor relations services
for various private and public companies. From May 1994 until May 1996 Mr. Meyer
was a marketing and sales consultant for Bonanza Management
Narinder Dhillon is the Founder Director of YellowBubble.com Holdings
Limited, the Company's wholly owned subsidiary, and the originator of its
concept. He was elected a director and appointed the Chief Executive Officer of
the Company in March 2000. From 1988 to 1996 he was National Marketing Director
of National Safety Associates, Inc., a U.S. based environmental products
organization.
David Frank Henderson Scroggie has been the Company's Chief Financial
Officer, Executive Vice President, Secretary and a director since March 2000. He
is a founder of Holdings. He was a Director at Cambridge Corporate Management
from 1995 to 1999. Prior thereto he was a consultant with Sanlam Insurance.
Prashant Naresh Patel has been a director of the Company and its
Marketing Director since March 2000. He is a founder of YellowBubble.com
Holdings Limited. Since 1997 he has been Managing Director of a group of
Professional Photographic Imaging businesses based in Soho and Royal Park in
London. From 1988 to 1996 he was employed by National Safety Associates, Inc.
21
<PAGE>
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than ten percent of the Common
Stock of the Company to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. Executive officers, directors and more
than ten percent stockholders are required by regulations promulgated under the
Exchange Act to furnish the Company with copies of all Section 16(a) reports
filed.
None of the requisite forms were filed in connection with the transfer
of shares of Common Stock from Mr. Lucidi to Mr. Meyer for the fiscal year ended
December 31, 1999
Item 10. Executive Compensation
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Other Restricted
Annual Stock Options/ LTIP All Other
Name Title Year Salary Bonus Compensation Awarded SARs(#) payouts($) Compensation
- ---- ----- ---- ------ ----- ------------ ------- ------- ---------- ------------
Joseph G. Lucidi(1) PRES., 1998 $0 $0 $0 -0- -0- -0- $0
COB 1999 $0 $0 $0 -0- -0- -0- $0
John Meyer(2) PRES., 1999 $0 $0 $0 -0- -0- -0- $0
</TABLE>
- --------------------
(1) Mr. Lucidi resigned as President on December 10, 1999.
(2) Mr. Meyer became President on December 10, 1999.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding beneficial
ownership of Registrant's common stock as of the date of this report by all
shareholders who own 5% or more of Registrant's common stock. Beneficial
ownership has been determined for purposes herein in accordance with Rule 13d-3
of the Securities Exchange Act of 1934 as amended, under which a person is
deemed to be the beneficial owner of securities if such person has or shares
voting power or investment power in respect of such securities or has the right
to acquire beneficial ownership within 60 days.
22
<PAGE>
Number of Percent
Name and Address of Beneficial Owner Shares Owned Owned
Narider Dhillon(1) 4,081,500 30.5%
David Frank Henderson Scroggie 612,225 4.6%
Gordon Barry McFadzean 816,300 6.1%
Prashant Naresh Patel 612,225 4.6%
John Meyer -0-
The Continental Trust 2,040,750 15.3%
Company Limited(2)
All Executive Officers and Directors
as a Group (four persons)..................... 5,305,950 39.7%
- -----------------
(1) Does not include shares of Common Stock held by The Continental Trust
Company Limited (the "Trust") as to which Mr. Dhillon may have a financial
interest (at the discretion of the Trust's trustees) in the event of a sale of
such shares which sale is at the sole discretion of the trustees of the Trust.
Mr. Dhillon has no voting or dispositive power over said shares.
(2) Held for the benefit of a number of individuals at the discretion of the
trustees of the Trust. Except as set forth in footnote 1 above, none of the
beneficiaries of the Trust are affiliates of the Company,
Item 12. Certain Relationships and Related Transactions
None that are required to be disclosed herein.
23
<PAGE>
PART IV
Item 13. Exhibits, List and Reports on Form 8-K
(a) Exhibits
Exhibit Number Description of Exhibit
2. Share Exchange Agreement dated February 16, 2000 between
Registrant, Yellowbubble.com Holdings Limited, Gordon Barry
McFadzean, Narinder Dhillon, Prashant Naresh Patel, David Frank
Henderson Scroggie, The Continental Trust Company Limited and
Yellowbubble.com Limited*
3.1 Certificate of Incorporation, as amended**
3.1a Certificate of Amendment to Certificate of Incorporation
3.2 Registrant's By-laws**
27.1 Financial Data Schedule
- -------------------
* Incorporated by reference to Registrant's Current Report on Form 8-K
filed on April 12, 2000
** Incorporated by reference to Registrant's Registration Statement on Form
10-SB
b) Reports on Form 8-K
None.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
YELLOWBUBBLE.COM, INC.
By: /s/ Narider Dhillon
------------------------
Narider Dhillon
Chief Executive Officer
Dated: April 25, 2000
Name Title Date
/s/ Narider Dhillon Director April 25, 2000
- -----------------------------------
Narider Dhillon
/s/ Prashant Naresh Patel Director April 25, 2000
- -----------------------------------
Prashant Naresh Patel
/s/ David Frank Henderson Scroggie Director April 25, 2000
- ------------------------------------ Chief Financial
David Frank Henderson Scroggie and Accounting Officer
25
<PAGE>
State of Nevada
Office of the Secretary of State
Carson City, Nevada
1. Name of the Corporation: Famous Internet Mall, Inc.
2. The Articles have been amended as follows (provide article numbers, if
available):
Article One (1):
The name of the Corporation is :
YellowBubble.com, Inc.
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a vote
by classes or series, or as may be required by the provisions of the articles of
incorporation have voted in favor of the amendment is: 9,000,000
4. Signatures:
/s/ John Meyer /s/ John Meyer
- ---------------------------- ----------------------------
John Meyer John Meyer
President or Vice President Secretary or Asst. Secretary
26
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Dec-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 16645
<BONDS> 0
0
0
<COMMON> 12500
<OTHER-SE> 88500
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 101413
<OTHER-EXPENSES> 10123
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37945
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
