Form 10-Q
--------------
U.S. Securities and Exchange Commission
Washington, D.C. 20549
---------------
(MARK ONE)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1999
---------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
---------------
COMMISSION FILE NUMBER: 000-26881
---------------
NETNATION COMMUNICATIONS, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 33-08034 38
(State or other jurisdiction (I.R.S. Employer I.D. No.)
of incorporation or organization)
1410 - 555 West Hastings Street
Vancouver, British Columbia, Canada
V6B 4N6
(Address of principal executive offices)
(Zip Code)
604/688-8946
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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 [ ] No [X]
The number of shares of the registrant's Common Stock outstanding as of
November 10, 1999 was 15,607,000.
<PAGE>
NETNATION COMMUNICATIONS INC.
FORM 10-Q
SEPTEMBER 30, 1999
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets--December 31, 1998
and September 30, 1999
(unaudited) 1
Consolidated Statements of Operations and Deficit
--Three and Nine-Month Period Ended September 30, 1998
and 1999 (unaudited) 2
Consolidated Statements of Cash Flows
--Nine-Month Periods Ended September 30, 1998 and 1999
(unaudited) 3
Notes to Consolidated Financial Statements 4
<PAGE>
NETNATION COMMUNICATIONS INC.
(Formerly COLLECTIBLES ENTERTAINMENT INC.)
Consolidated Interim Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
September 30, 1999
<PAGE>
Page 1
NETNATION COMMUNICATIONS INC.
(Formerly Collectibles Entertainment Inc.)
Consolidated Balance Sheets
(Unaudited)
September 30, 1999 with comparative figures for December 31, 1998
(Expressed in U.S. dollars)
- -------------------------------------------------------------------------------
September 30, December 31,
1999 1998
- -------------------------------------------------------------------------------
Assets
Current assets
Cash $154,868 $45,863
Accounts receivable 50,689 12,635
Prepaid expenses 11,876 3,419
Short-term investments 1,129,269 -
- -------------------------------------------------------------------------------
1,346,702 61,917
Capital assets 398,075 115,442
- -------------------------------------------------------------------------------
$1,744,777 $177,359
Liabilities and Share Capital and Deficit
Current liabilities
Accounts payable and accrued liabilities $346,170 $97,800
Share redemption premium payable, current portion - 36,818
Deferred revenue 274,216 180,748
- -------------------------------------------------------------------------------
620,386 315,366
Share redemption premium payable - 12,484
Debenture payable (note 2) 1,100,000 -
Share capital and deficit
Share capital (note 3) 33,403 1,197
Cost of shares repurchased but not canceled (10,204) (9,721)
Additional paid-in capital 875,895 -
Cumulative translation adjustment 52,056 14,601
Deficit (926,759) (156,568)
- -------------------------------------------------------------------------------
24,391 (150,491)
- -------------------------------------------------------------------------------
$ 1,744,777 $ 177,359
See accompanying notes to financial statements.
<PAGE>
Page 2
NETNATION COMMUNICATIONS INC.
(Formerly Collectibles Entertainment Inc.)
Consolidated Statements of Operations and Deficit
(Unaudited)
Three and Nine-month periods ended September 30, 1999 and 1998
(Expressed in U.S. dollars)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $610,896 $ 323,050 $1,521,536 $ 742,160
Expenses
Amortization 51,745 8,940 71,118 20,213
Marketing & selling 483,616 169,557 1,015,684 403,653
Office and
Administrative 226,658 44,552 411,884 106,165
Wages, benefits
and subcontract 344,259 167,289 793,041 370,817
- ---------------------------------------------------------------------------------------------
1,106,278 390,337 2,291,727 900,848
- ---------------------------------------------------------------------------------------------
Net loss $ 495,382 $ 67,288 $ 770,191 $ 158,688
Deficit,
start of period $ 431,377 $ 110,823 $ 6,601 $ 19,423
Elimination of Collectibles
deficit at April 7, 1999 - - (6,601) -
NetNation deficit - - 156,568 -
- ---------------------------------------------------------------------------------------------
Deficit,
end of period $ 926,759 $ 178,111 $ 926,759 $ 178,111
=============================================================================================
Loss per share
Basic $ 0.031 $ 0.061 $ 0.070 $ 0.145
Fully Diluted $ 0.030 $ 0.061 $ 0.066 $ 0.145
=============================================================================================
Weighted average
number of common shares
Basic 14,767,000 1,097,000 11,059,222 1,097,000
Fully Diluted 15,317,000 1,097,000 11,609,222 1,097,000
=============================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Page 3
NETNATION COMMUNICATIONS INC.
(Formerly Collectibles Entertainment Inc.)
Consolidated Statements of Cash Flows
(Unaudited)
Nine-month periods ended September 30, 1999 and 1998
(Expressed in U.S. dollars)
- -------------------------------------------------------------------------------
1999 1998
- -------------------------------------------------------------------------------
Cash provided by (used in)
Operations
Net loss $(770,191) $(158,688)
Amortization, an item not involving cash 71,118 20,213
Change in non-cash operating working capital
Accounts receivable (38,054) 1,267
Prepaid expenses and deposits (8,457) 253
Accounts payable and accrued liabilities 232,578 175,116
Deferred revenue 93,468 39,437
- -------------------------------------------------------------------------------
(419,538) 77,598
Investments
Capital asset additions (353,751) (83,514)
Financing
Issue of share capital 916,021 -
Issue of Series A Convertible Debentures 1,100,000 -
Repurchase of shares (483) (433)
Cancellation of shares (24)
Share redemption premium payable (41,406) -
- -------------------------------------------------------------------------------
1,974,108 (433)
Change in cumulative translation adjustment 37,455 1,572
- -------------------------------------------------------------------------------
Increase (decrease) in cash 1,238,274 (4,777)
Cash, beginning of period 45,863 27,883
- -------------------------------------------------------------------------------
Cash, end of period $ 1,284,137 $ 23,106
- -------------------------------------------------------------------------------
Cash is defined as cash and cash equivalents:
Cash $ 154,868 $ 23,106
Short-term deposits 1,129,269 -
- -------------------------------------------------------------------------------
Cash, end of period $ 1,284,137 $ 23,106
===============================================================================
Cash paid for
Taxes $ - $ -
Interest $ - $ -
===============================================================================
See accompanying notes to financial statements.
<PAGE>
Page 4
NETNATION COMMUNICATIONS INC.
(Formerly Collectibles Entertainment Inc.)
Notes to Consolidated Financial Statements
(Unaudited)
September 30, 1999
(Expressed in U.S. dollars)
1. Basis of Presentation
In the opinion of management, the accompanying consolidated balance sheets and
related consolidated interim statements of loss and deficit and cash flows
include all adjustments (consisting only of normal recurring items, except as
described in note 2) necessary for their fair presentation in conformity with
generally accepted accounting principles.
2. Acquisition of NetNation Communications Inc.
These financial statements reflect the continuation of NetNation Communications
Inc. ("NetNation"), a company whose shareholders acquired control of
Collectibles Entertainment Inc. ("Collectibles") by way of reverse takeover on
April 7, 1999. This transaction has been accounted for by the purchase method
with the rules applicable for reverse take-overs.
Under these rules, NetNation is deemed to have acquired Collectibles.
Historical financial information contained herein relates only to NetNation and
does not include the results of Collectibles prior to the date of the
transaction. Accordingly, the accumulated deficit of Collectibles to April 7,
1999 has been eliminated in these financial statements. However, the stated
capital of the entity at September 30, 1999, is that of Collectibles. This
capital structure is different than the capital structure appearing in the
comparative financial statements for NetNation due to the application of reverse
takeover accounting.
The transaction was effective April 7, 1999 when Collectibles acquired all of
the issued stock of NetNation, a Canadian company providing web-site hosting
and related services to small and medium sized businesses, for consideration of
10,000,000 common shares of the Collectibles. As a condition of the
transaction, Collectibles also raised proceeds of $1,100,000 through the sale of
two Series A Convertible Debentures, maturing on September 30, 2000. Each
debenture is convertible into 275,000 shares of the common stock of the Company
at a rate of $2.00 per share.
Subsequent to the transaction, Collectibles changed its name to NetNation
Communications Inc.
<PAGE>
Page 5
NETNATION COMMUNICATIONS INC.
(Formerly Collectibles Entertainment Inc.)
Notes to Consolidated Financial Statements
(Unaudited)
September 30, 1999
(Expressed in U.S. dollars)
- --------------------------------------------------------------------------------
3.Share capital
- --------------------------------------------------------------------------------
Number
of Shares Amount
- --------------------------------------------------------------------------------
Authorized
50,000,000 Common shares,
with a par value of $0.0001
Issued
Balance at December 31, 1998 1,097,000 $ 110
Shares issued for cash on February 1,1999 4,000,000 400
Shares issued to purchase all issued
and outstanding shares of NetNation
on April 7, 1999 10,000,000 -
Shares cancelled on April 7, 1999 (1,000,000) -
Shares issued for cash on April 7, 1999 450,000 45
Adjustment of the Company's share
capital to comply with reverse
take-over accounting
Elimination of the Company's share capital - (510)
NetNation share capital - 6,680
NetNation share capital issued
to purchase net assets of the Company - 26,672
Shares issued for investor
relations services rendered
on June 23, 1999 300,000 30
Cancellation of investor relation shares
on Sept. 1, 1999 (240,000) 24
- --------------------------------------------------------------------------------
Balance at September 30, 1999 14,607,000 $ 33,403
================================================================================
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
OVERVIEW
Our Company was incorporated under the laws of the State of Delaware on May 7,
1998, under the name Collectibles Entertainment Inc. ("Collectibles") for the
purpose of operating an online sports card and other tradeable memorabilia
distribution business. We changed the name of the Company to NetNation
Communications, Inc. on April 14, 1999 in conjunction with the acquisition
of a Canadian based web site hosting business.
Our Company has three wholly-owned subsidiaries.
Our first subsidiary is the Canadian subsidiary, NetNation Communications Inc.
which has the same corporate name as its parent. The Canadian subsidiary is a
private company incorporated under the laws of the Province of British Columbia,
Canada on February 19, 1997. The Canadian company became a wholly owned
subsidiary on April 7, 1999 pursuant to an agreement between the shareholders
of the Canadian company and our Company. Accordingly, our Company acquired
9,000,000 Class A common shares and 1,000,000 Class B preferred shares of the
Canadian company being all of its issued and outstanding shares. The purchase
price payable by our Company for the 9,000,000 Class A common shares and
1,000,000 Class B preferred shares was Cdn$1,000,000 payable by the issuance
of 10,000,000 common shares of our Company. Upon conclusion of the acquisition,
our Company changed its name from Collectibles Entertainment Inc. to NetNation
Communications Inc. As part of this transaction and later in the month of
April 1999, we raised $2 million through the issuance of convertible debentures
and additional common shares.
Our second subsidiary is the UK subsidiary, NetNation Communications UK Limited,
a private company incorporated under the laws of the United Kingdom on
June 1, 1999. The UK subsidiary was incorporated to facilitate our Company's UK
sales operations.
Our third subsidiary is the US subsidiary, NetNation Communications (USA) Inc.,
a private company incorporated under the laws of Delaware on October 20, 1999.
The US subsidiary was incorporated to facilitate our Company's US sales
operations and development of a data centre.
Our Company does not have any other subsidiary companies.
We entered the web hosting business through the acquisition of the Canadian
subsidiary which had started its web hosting business in February of 1997. Web
site hosting refers to the rental of space on a computer infrastructure and
related services, such as email accounts, email addresses, domain name
registration, payment processing that facilitates the ability of a small or
medium sized business to post and operate their website on the Internet and
to conduct business transactions over the Internet. In addition to Web site
hosting services, our Company offers domain name registration, and server
co-location services, which involve the customer locating their server at our
premises. We provide physical security and maintenance for such co-located
servers. However, we are not in the business of creating or maintaining Web
sites or of providing Internet access directly to customers, the latter being
the business of an Internet Service Provider
The common shares of our Company currently trade on the Over-the-Counter
Bulletin Board (OTC-BB) under the ticker symbol "NNCI". On September 30, 1999,
our Company was approved as a reporting issuer by the Securities and Exchange
Commission. On October 7, 1999, we submitted our application for a listing on
the Nasdaq SmallCap market.
Our Web hosting business has generally operated on close to a breakeven basis.
As our cash flow improved, we increased our advertising expenditures. This
philosophy was maintained until the start of the second quarter of 1999 at
which time it was decided to increase advertising.
RESULTS OF OPERATIONS
Revenue
Our Company is not dependent on any one customer and we have not experienced
any seasonality with our business. Our customers are currently located in more
that 90 countries with 57% from the United States, 25% from Canada and the
balance from other worldwide locations. With the establishment of our UK office
in July 1999, we expect that the international component of our customer base
will shift slightly in favor of the UK base. We are also planning to establish
a location in California in the near future as a base for our US sales
operations and data center.
Our customers can sign up for Web hosting services on a monthly basis or they
can prepay for up to a year. These are normal terms in the industry and do not
create large demands upon our working capital. If a customer misses a monthly
payment, the Web hosting services can be suspended until the situation is
corrected. If the customer is engaged in e-commerce, any disruption in service
would be crucial to their business, hence, such customers rarely present a
problem. Consequently, losses arising from any one customer are negligible and
can be capped. Furthermore, recoveries of outstanding amounts are possible in
those cases where the customer has invested significant resources in developing
their Web site and requires our cooperation to allow for a transfer of the Web
site to another hosting company or ISP.
<PAGE>
In May 1999, our Company was selected as an accredited registrar of domain names
by the Internet Corporation for Assigned Names and Numbers ("ICANN"). Until
recently, Network Solutions Inc. held sole authority to register domain names
ending in .com, .net and .org which account for between 50% - 75% of the world's
Internet addresses. The transfer of registration authority had not taken place
during this quarter but is expected to occur before the end of 1999. When this
occurs, our Company will benefit from receiving revenues associated with the
registration of domain names. However, we also expect that competitive pressures
will result in the fees charged for domain registrations to decline
significantly over time.
Three months ended September 30,1998 compared to the three months ended
September 30, 1999
Total revenue increased 89% from $323,050 for the three months ended
September 30, 1998 to $610,896 for the three months ended September 30,
1999. Our company has recorded its eleventh consecutive quarter of revenue
growth by posting a 26% increase over the quarter ended June 30, 1999.
Nine months ended September 30,1998 compared to the nine months ended
September 30, 1999
Total revenue increased 105% from $742,160 for the nine months ended
September 30, 1998 to $1,521,536 for the nine months ended September 30,
1999. There were no acquisitions or mergers during the period that could
have contributed to growth.
Marketing and Selling Expense
Marketing and selling expense consists primarily of advertising, marketing and
Internet access charges.
Three months ended September 30,1998 compared to the three months ended
September 30, 1999
The marketing and selling expenses increased $314,059 or 185% from $169,557 for
the three months ended September 30, 1998 to $483,616 for the three months ended
September 30, 1999. The increase is primarily due to increased advertising that
started during the second quarter of 1999 and has continued to increase.
Nine months ended September 30,1998 compared to the nine months ended
September 30, 1999
The marketing and selling expenses increased $612,031 or 151% from $403,653 for
the nine months ended September 30, 1998 to $1,015,684 for the nine months ended
September 30, 1999. The increase in expenditures was planned for and achieved
the desired results. The London, UK office was not open during the comparative
period and, although the amounts were not large, the additional advertising
exposure in the UK publications did contribute to increased expenses during the
latter part of the 1999 period.
Office and Administration Expense
Office and administration expense consists primarily of professional fees,
insurance, occupancy costs, telecommunication lines and office expenses.
Three months ended September 30,1998 compared to the three months ended
September 30, 1999
The office and administration expense increased $182,106 or 408% from $44,552
for the three months ended September 30, 1998 to $226,658 for the three months
ended September 30, 1999. The increase is directly related to the growth of the
Web hosting business and the associated costs required to support the
infrastructure. The premises have almost doubled in size and related costs are
similarly proportional.
Nine months ended September 30,1998 compared to the nine months ended
September 30, 1999
The office and administration expense increased $305,719 or 288% from $403,653
for the nine months ended September 30, 1998 to $411,884 for the nine months
ended September 30, 1999. The continued growth of the Web hosting business as
evidenced by the eleven consecutive quarters of revenue growth has resulted in
the same trend in office and administrative expenses. One of the main expenses
which increased more than proportionately between the two periods was the
increased office area secured during the first quarter of 1999. With the
responsibilities of becoming a public reporting company in April 1999 and
further work to apply for a Nasdaq SmallCap market listing, there was an
increase in professional fees and insurance costs.
<PAGE>
Wages, Benefit and Subcontract Expense
Wages, benefit and subcontract expense consists primarily of wages and
salaries to employees and contract workers.
Three months ended September 30,1998 compared to the three months ended
September 30, 1999
The wages, benefit and subcontract expense increased $176,970 or 106% from
$167,289 for the three months ended September 30, 1998 to $344,259 for the three
months ended September 30, 1999. The increase in human resource costs is
directly related to the growth of the Web hosting business.
Nine months ended September 30,1998 compared to the nine months ended
September 30, 1999
The wages, benefit and subcontract expense increased $422,225 or 114% from
$370,816 for the nine months ended September 30, 1998 to $793,041 for the nine
months ended September 30, 1999. Continued revenue growth over the entire period
of review necessitated the addition of personnel.
Amortization
Amortization has increased consistently throughout all periods as additions were
made to equipment to support the growth of the Web hosting business and to
furniture and fixtures to accommodate the increase in personnel.
LIQUIDITY AND CAPITAL RESOURCES
Our Company had obtained $1,100,000 of financing through issuance of two
convertible debentures on April 12, 1999.which mature September 30, 2000. Until
the debenture holders exercise their right to convert some or all of the
debentures to common shares, our Company may have to obtain financing for
repayment of some or all of the debentures on the maturity date. During the
period to maturity of the debentures, our Company will be subject to the risks
inherent in the capital markets for Internet based technological companies
seeking financing. If the debenture holders decide to convert their entire
debenture amount, then we will not be required to obtain funds to meet the
obligation on maturity. Except for the debentures, we do not have any material
long term balance sheet items that affect liquidity and capital resources.
Also during April 1999, we had issued 450,000 common shares and received
$900,000. Along with the previous amount of $1,100,000, we were successful in
raising $2 million during April 1999. These funds have been primarily used for
working capital purposes.
Our Company has historically satisfied its capital needs by cash generated from
operations, by borrowing and by issuing equity securities. We do not have a
bank operating facility in place upon which we can draw funds. On a quarterly
basis, there may be periods that incur greater losses or earnings than in other
periods due to the timing when expenses are incurred and associated revenues are
received. These variations are considered normal as we operate on a cashflow
policy whereby excess cash is reinvested in order to maximize the growth of our
Company.
We do not have any material commitments for capital expenditures as of
September 30, 1999. We expect to continue to incur operational costs associated
with the improvement of our technical systems, network, customer care, billing
and financial systems. However, we expect that reduced incremental operational
costs in terms of general and administrative expenditures will benefit us in the
long term. As we commit our resources to maximize market opportunities, we may
find that we may have cash requirements in excess of our present resources.
Under these circumstances, our Company expects to meet its capital needs over
the next twelve months through existing cash flows, lease financing and the
issuance of capital stock. Except for the maturity of the interest-free
convertible debentures described above, we do not expect to take on additional
debt that would require the continued servicing of debt principal and/or
interest.
IMPACT OF THE YEAR 2000.
Many currently installed computer systems and software products are coded to
accept or recognize only two digit entries in the date code field. These
systems may therefor recognize a date using "00" as the year 1900 rather than
the year 2000. As a result, computer systems and/or software used by many
companies and governmental agencies may need to be upgraded to comply with Year
2000 requirements or risk system failure or miscalculations causing disruptions
of normal business activities.
.
The third-party vendor upon which we materially rely is AT&T Canada which
provides our connection to the Internet. AT&T Canada has responded to our
inquiries into its year 2000 readiness and indicates that it is actively
preparing and testing its contingency plans to further mitigate Year 2000
risks. They had indicated that while their goal is to become Year 2000
compliant, due to the complex nature of the telecommunications services that
they provide and the fact that their systems are interconnected with other
carriers and suppliers, both domestic and international, they are unable to
guarantee Year 2000 compliance or provide Year 2000 warranties.
<PAGE>
We have been conducting an internal assessment of all material information
technology and non-information technology systems at our headquarters for Year
2000 compliance. Our internal assessment involves the analysis of both mission
critical and non-critical systems. The assessment of all mission critical
systems is complete and all such systems are Year 2000 compliant. The
non-critical systems are under continual assessment. However, due to the complex
nature of our services and the fact that our systems are interconnected with
other carriers and suppliers, both domestic and international, our Company is
unable to guarantee Year 2000 compliance or provide Year 2000 warranties.
To date, we have incurred approximately $20,000 in identifying or evaluating
Year 2000 compliance issues. Most of our expenses have related to, and are
expected to continue to relate to, the upgrades or replacements, when necessary,
of software or hardware, as well as personnel costs associated with the
evaluation process and Year 2000 compliance matters generally. Future expenses
are not expected to be material to our financial position or results of
operations. These expenses, however, if higher than anticipated, could have a
material and adverse effect on our business, results of operations and financial
condition.
Currently, we do not have a contingency plan to deal with the worst case
scenario that might occur if technologies on which we depend are not Year 2000
compliant and fail to operate effectively after the Year 2000. The results of
our Year 2000 compliance evaluation and the responses received from
distributors, suppliers and other third parties with which we conduct will be
taken into account in determining the need for and nature and extent of any
contingency plans.
FORWARD-LOOKING STATEMENTS
The statements included in the discussion and analysis above that are not
historical or factual are "forward-looking statements" (as such term is
defined in the Private Securities Litigation Reform Act of 1995). The safe
harbor provisions provided in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
apply to forward-looking statements made by NetNation. These statements can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. Management cautions the reader
that these forward-looking statements addressing the timing, costs and scope of
expansion of operations or investments and other matters contained herein or
therein from time to time regarding matters that are not historical facts, are
only predictions. No assurance can be given that future results indicated,
whether expressed or implied, will be achieved. These forward-looking
statements are based upon a variety of assumptions relating to the business of
NetNation, which, although considered reasonable by NetNation, may not be
realized. Because of the number and range of the assumptions underlying
NetNation's forward-looking statements, many of which are subject to significant
uncertainties and contingencies that are beyond the reasonable control of
NetNation, some of the assumptions will not materialize and unanticipated events
and circumstances may occur subsequent to the date of this report.
These forward-looking statements are based on current expectations, and
NetNation assumes no obligation to update this information. Therefore, the
actual experience of NetNation and results achieved during the period covered by
any particular forward-looking statements may differ substantially from those
projected. Consequently, the inclusion of forward-looking statements should
not be regarded as a representation by NetNation, or any other person that these
statements will be realized and actual results may vary materially. There can
be no assurance that any of these expectations will be realized or that any of
the forward-looking statements contained in this report will prove to be
accurate.
ITEM 3: Quantitative and Qualitative Disclosures About Market Risk
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Our Company is not a party to any legal proceedings.
Item 4
Signatures
Pursuant to the requirements 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.
Date: November 12, 1999
NETNATION COMMUNICATIONS, INC.
By: /s/ ASHLEY JAMES SINCLAIR
(Signature)*
Ashley James Sinclair, Chief Financial Officer
*Print name and title of the signing officer under his signature.
