As filed with the Securities and exchange
Commission on October 14, 1999
Registration No. 333-85011
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-effective amendment number 1 to
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
STRATABASE.COM
(Name of Small Business Issuer in its charter)
Nevada 737 88-041-4964
(State of Primary Industrial
Incorporation) Standard Number) (IRS Employer ID No.)
Trevor Newton, President 34314 Marshall Road, Suite
203 Abbotsford, B.C. V2S1L2, Canada (604) 504-5811
(Name, address and telephone number of principal
executive officer and principal place of business)
Laughlin Associates, Inc. 2533 Carson Street, Carson
City, Nevada 89706 (775) 883-8484
(Name, address and telephone number of Agent for
Service)
copies to:
James C. Jones, Esq.
Law Offices of James C. Jones, P.C.
65 west 96th Street, Suite 20H
New York, New York 10025
(212) 662-2767
Approximate date of proposed sale to public: As soon
as possible after this registration statement becomes
effective.
If any of the securities being registered on this form
are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act, check
the following box:
If this form is filed to register additional
securities for an offering pursuant to Rule 462(b)
under the Securities Act, check the following box and
list the Securities Act registration statement of the
earlier effective registration statement for the same
offering:
If this form is a post effective amendment filed
pursuant to Rule 462(c) under the securities Act,
check the following box and list the Securities Act
registration statement of the earlier effective
registration statement for the same offering:
If delivery of the prospectus is expected to be made
pursuant to Rule 434, check the following box:
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title maximum maximum
of each Class offering aggregate
of securities Amt.. price per offering registr.
registered registrd. security (1) price fee
<S> <C> <C> <C> <C>
Units (2) 800,000 units $.50 $400,000 $121.20
Common Stock
(3)(4) 800,000 shs. $1.00 $800,000 $242.40
Common Stock
(3)(4) 800,000 shs. $3.00 $2,400,000 $727.20
Common Stock
(3)(4) 800,000 shs. $5.00 $4,000,000 $1,212.00
Redeemable
warrants 2,400,000 uts (5) -0- -0- -0-
Total $7,600,000 $2,302.80
</TABLE>
<F1>
(1) Estimated solely for purposes of calculating the
registration fee pursuant to Rule 457(a) based on a
bonafide estimate of the maximum offering price.
<F2>
(2) Consist of one share of common stock at $.001 par
value, and one Class A, one Class B and one Class C
warrant, each exercisable to purchase one share of
common stock.
<F3>
(3) Issuable upon exercise of the Class A or Class B
or Class C warrants.
<F4>
(4) Additional shares of common stock are being
registered, pursuant to Rule 416, which may become
issuable under the antidilution provisions of the
warrants.
<F5>
(5) The maximum number of Class A, Class B and Class C
redeemable purchase warrants contained in the units
being offered. The warrants are immediately detachable
and tradable. The Registrant has not assigned a value
to the warrants.
The Registrant will amend this registration statement
when necessary to delay its effective date until the
Registrant can state that this registration statement
is effective under Section 8(a) of the Securities Act
or until the date the Securities and Exchange
Commission determines that this registration statement
is effective.
STRATABASE.COM
800,000 Units
(Each unit consists of 1 share of common stock, 1
Class A redeemable purchase warrant, 1 Class B
redeemable purchase warrant and 1 Class C redeemable
purchase warrant.)
Stratabase is offering a minimum of 400,000 units and
a maximum of 800,000 units. Each unit consists of one
share of common stock, and one Class A, one Class B
and one Class C redeemable purchase warrant each
exercisable to purchase one share of common stock.
Investors may exercise the Class A, B and C
warrants for a 6 month, 12 month and 18 month
period respectively, commencing on the date of
this prospectus.
Investors are entitled to purchase: one share
of common stock at $1.00 per share for each
Class A warrant exercised, one share of common
stock at $3.00 per share for each Class B
warrant exercised; and one share of common stock
at $5.00 per share for each Class C warrant
exercised.
There is no public market for the units, common
stock and redeemable warrants.
See "Risk Factors" beginning on p.8 for a Discussion
of facts you should consider before investing.
Neither the United States Securities and Exchange
Commission nor any state securities commission,
including the British Columbia Securities Commission,
has approved or disapproved these securities or
determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal
offense.
<TABLE>
Per unit Total of minimum Total of maximum
<S> <C> <C> <C>
Public offering
price $.50 $200,000 $400,000
</TABLE>
The offering period will terminate on 2,000 unless we
extend it for an additional 90 days to 2,000. The
offering may be terminated earlier if the 800,000 units are
sold before the end of the offering period or if we decide
to terminate it earlier.
We are offering these units directly to you without the
assistance of an underwriter and will receive all the
proceeds from the offering, less offering expenses.
The funds collected from investors will be deposited in a
non-interest bearing escrow account and released to us only
if at least $200,000 is collected during the offering
period.
If we do not sell at least 400,000 units before expiration
of the offering period, we will fully refund all funds
received from you without interest.
The date of this Prospectus is , 1999
TABLE OF CONTENTS
Prospectus Summary . . . . . . . . . . . . .5
Risk Factors . . . . . . . . . . . . . . . .8
How You Can Get More Information about Us.
. . . . . . . . . . . . . . .20
Use of Proceeds. . . . . . . . . . . . . . .21
Dividend Policy. . . . . . . . . . . . . . .21
Capitalization . . . . . . . . . . . . . . 22
Dilution . . . . . . . . . . . . . . . . . 23
Business . . . . . . . . . . . . . . . . . 25
Management's Discussion and Analysis of Financial
Condition and Results of Operations 32
Management . . . . . . . . . . . . . . . . 35
Indemnification. . . . . . . . . . . . . . 38
Principal Shareholders . . . . . . . . . . 40
Description of Units . . . . . . . . . . . 41
Plan of Distribution . . . . . . . . . . . 44
Legal Proceedings. . . . . . . . . . . . . 45
Legal Opinions . . . . . . . . . . . . . . 46
Experts. . . . . . . . . . . . . . . . . . 46
Financial Statements . . . . . . . . . . . 46
Prospectus Summary
You should carefully read the entire prospectus
including the "Risk Factors" section and the financial
statement including the notes.
The Company
We are a development stage corporation, focusing on
providing direct marketing information and online
advertising for corporations seeking to market their
goods and services through the internet. We are
currently compiling a list from internet users for
whom we provide free services such as: internet based
news, newsletters and video. In return for the free
services, we will attempt to obtain the consent of
internet users to receive corporate advertisements.
Their personal information (including name and e-mail
address) will become part of our user database. In
this connection, we recently engaged a leading
distributor of news to provide some of the news
content and began the creation of a free news web site
for internet users. Finally, we have begun development
of our direct marketing web site from which
advertisers will engage in on-line advertising.
We believe that, by providing the free services to
internet users in return for personal information
about their interests and demographics, we can develop
large databases of internet users which will have
great value to advertisers interested in conducting
direct marketing campaigns.
Our focus will also be on providing internet related
services to small businesses by designing, maintaining
and hosting websites, video taping and editing
information presented at the website. As part of these
services, we have established a mobile production
studio devoted to producing videos for the website
which we design and maintain on behalf of these small
businesses.
We intend to translate our activities into revenues
by: (1) selling our video production services to
potential clients; (2) securing clients for our
existing web design, maintenance and hosting services;
and (3) selling advertising space to advertisers
interested in conducting direct marketing campaigns
using our databases.
Stratabase was incorporated under the laws of the
State of Nevada on November 18, 1998. Our offices are
located at 34314 Marshall Road, Suite 203 Abbotsford,
B.C. V2S1L2, Canada. The telephone number is (604)
504-5811.
The Offering
Units offered by the Company 800,000 units (maximum
offering)
400,000 Units (minimum
offering)
Common Stock to be outstanding
after this Offering 6,353,772 shares
(maximum offering)
5,953,772 shares (minimum
offering)
Use of Proceeds
(maximum or minimum offering) working capital and
other general
corporate purposes
including advertising
Each unit contains one share of common stock, one
Class A redeemable common stock purchase warrant which
entitles the holder to purchase one share of Common
stock at a price of $1.00 per share, one Class B
redeemable common stock purchase warrant which
entitles the holder to purchase one share of Common
stock at a price of $3.00 per share and one Class C
redeemable common stock purchase warrant which
entitles the holder to purchase one share of common
stock at a price of $5.00 per share. See "Description
of Units".
We are offering the units directly to the public
without using an underwriter. The offering is made on
a "best efforts all or non" basis with respect to the
first 400,000 units and on a "best efforts" basis with
respect to the remaining 400,000 units. Investors must
make full payment for their purchases by check made
payable to "Securities Transfer Corporation as escrow
agent for Stratabase.com".
Summary of Financial Data
You should read the following financial data in
conjunction with "Management's Discussion and Analysis
of Financial Conditions and Results of Operations" and
the financial statements and notes to the financial
statements found elsewhere in this prospectus. We have
derived the summary of operating data from inception
to June 30, 1999 and the summary of balance sheet for
the same period from our audited financial statements
found elsewhere in this prospectus. The pro-forma
summary of balance sheet data takes into account the
minimum 400,000 units offered in this offering at an
initial offering price of $.50 per unit, and the
application of the net proceeds that we will receive,
less expenses of the offering. To arrive at the net
loss per share of common stock in the summary of
operating data, we used the weighted average of the
shares outstanding during the period from inception to
June 30, 1999. To compute the book value per share of
common stock found in the summary of balance sheet
data, we used 5,943,772 shares as the amount
outstanding.
<TABLE>
<CAPTION>
From Inception
(November 18,1999)
Through June 30, 1999
<S> <C> <C>
Summary of Operating Data:
Revenues -0-
Net Loss $67,512
Net Loss per share of
common stock $0.012
June 30, 1999 Pro Forma
Summary of Balance Sheet Data: (audited) (Unaudited)
Working Capital $154,423.00 $314,423.00
Property and Equipment 14,102.00 14,102.00
Other Assets 572.00 572.00
Total Liabilities 6,797.00 6,797.00
Deficit Accumulated During
Development Stage (67,512. 00) (67,512.00)
Shareholders' Equity 169,097.00 329,097.00
Shareholders' Equity Per Share of
common stock .03 .06
</TABLE>
RISK FACTORS
We have limited resources, have sustained losses since
our inception and expect to continue to do so.
As of June 30, 1999, we had working capital of
$154,423 and incurred losses totaling approximately
$67,512. We are dependent upon the proceeds of this
offering to implement our business plan. Since we are
in the developmental stage and have no share of the
internet market, we may incur losses for a long time.
We have a short operating history upon which you can
judge our prospects.
We have no significant operating revenue. We have only
recently been organized, have no significant operating
history or operating revenues. In order to be
successful, the we must attract a significant number
of users to the information and content delivered
through our website and generate significant
advertising and e-commerce revenues.
Specifically, as an early stage entity in the rapidly
evolving market for internet services, we will face
numerous risks and uncertainties including our ability
to:
anticipate and adapt to changing internet
technologies;
attract a substantial number of internet users
to the content and information delivered through
Stratabase;
generate significant advertising and e-commerce
revenues;
develop an advertising sales force;
implement sales and marketing initiatives;
offer compelling content;
attract, retain and motivate qualified
personnel;
respond and adjust to actions taken by
competitors;
build an operations and technical infrastructure
to effectively manage growth; and
integrate new technologies and services.
We have a major task ahead of us and may not be
successful in achieving our goals.
Since we are new and small, we face significant
competition from established internet and telephone
service providers and others.
The internet industry is, and can be expected to
remain, highly competitive for the following reasons,
among others:
there are no substantial barriers to entry into
this arena;
the number of businesses competing for users;
the spending of internet advertisers and
e-commerce marketers has increased
significantly; and
industry consolidation.
Increased competition could result in:
less usage of our services;
price reductions for advertising inventory; and
reduced margins or loss of market share,
The occurrence of any of the factors would obviously
have a negative effect on our business, results of
operations and financial condition.
Our competitors include:
internet retrieval companies, such as Nexis
search engines and other internet "portal"
companies such as Excite and Yahoo;
online content websites such as CNet and ZDNet;
online community websites such as iVillage and
Miningco.com;
online personal homepage services such as
Geocities and Theglobe.com;
publishers, distributors of television, radio
and print such as CBS, Disney, NBC and
Time-Warner;
general purpose consumer online services such as
America Online and Microsoft Network; and
Web services maintained by internet service
providers such as AT&T Worldnet and Earthlink.
Many of our existing competitors, as well as a number
of potential new competitors, have longer operating
histories, greater name recognition, larger customer
bases and significantly greater financial, technical
and marketing resources than we do. This may allow
them to devote greater resources than we can to the
development and promotion of their services.
These competitors may also engage in more extensive
research and development, undertake more far-reaching
marketing campaigns, adopt more aggressive pricing
policies and make more attractive offers to existing
and potential employees, distribution partners, and
advertisers and e-commerce partners. Our competitors
may develop services that are equal or superior to
Stratabase or that achieve greater market acceptance
than ours.
In addition, we will compete with television, radio,
cable and print (i.e. the traditional advertising
media) for a share of advertisers' total advertising
budgets. Advertisers may perceive the internet or
Stratabase.com to be a limited or ineffective
advertising medium, advertisers may be reluctant to
devote a significant portion of their advertising
budgets to internet advertising, in general, or to
advertise on Stratabase.com, in particular.
We need to manage our growth effectively.
If we develop and increase the size of our business,
the demands on our operational systems will also
increase. We will be required to further develop our
operational and financial systems and managerial
controls and procedures. We will also then need to
expand, train and manage a team of staff. We do not
currently have the resources for this type of
expansion and may not be successful in our expansion
efforts.
We currently have only two employees and one devotes
time to other business ventures.
We are currently understaffed and have only two
employees-our sole officers, Trevor Newton and Fred
Coombes. Even if we raise the money from the offering,
our plan is to retain the services of independent
contractors and/or outside consultants, for the
foreseeable future, rather than to hire additional
employees. We may not be able to attract qualified
individuals to join us. Mr. Newton is our only full
time employee. Mr. Coombes is active in other
unrelated businesses. He plans to continue these
activities, which may cause conflicts of interest with
Stratabase in terms of time and business
opportunities. Such conflicts may not be resolved in
our favor. Furthermore, because of these outside
obligations, Mr. Coombes will not be able to devote
his full-time to our affairs. However, he has assured
us that he will give us enough of his time as he feels
is necessary.
If we lose the services of Mr. Newton and Mr. Coombes
our chances of success will be diminished.
We are heavily dependent on the efforts of our limited
staff, especially our Chairman of the Board,
President, CEO Treasurer and Secretary, Mr. Newton.
Except for Mr. Newton, the other officer (Mr. Coombes)
and Director (Mr. John Tarves) do not have any
significant experience in the internet industry. The
loss of the services of any of these individuals,
especially Mr. Newton, would be devastating to our
plans and significantly diminish our chances of
success. Currently, we do not have any employment
agreements with any of our officers and other
personnel and we do not have key man insurance
coverage on Mr. Newton or the others.
We are dependent upon the continued growth of the
internet.
Our future success is substantially dependent on the
continued growth in the use of
the internet. The internet is relatively new and is
rapidly changing. Our business would be adversely
affected if internet usage does not continue to grow.
This usage may be inhibited for a number of reasons,
such as the internet infrastructure not being able to
support the demands placed on it, or its performance
and reliability may decline as usage grows. Similarly,
an adverse affect may be caused by privacy concerns,
or by security and authentication concerns with
respect to transmission over the internet of
confidential information, such as credit card numbers,
and attempts by unauthorized computer users to
penetrate online security systems.
If the internet industry slows down, we will
experience a lower than expected number of internet
users using our services. This slow down would in turn
decrease the attractiveness of our direct marketing
products to potential advertisers and result in a
reduction in revenues derived from advertising. In
addition, an internet industry slow down would result
in a reduction in the number of small businesses
requiring internet services and therefore reduce the
revenues we receive by providing internet services to
small businesses.
We may not be able to keep up with technological
advances.
Our market is characterized by rapidly changing
technologies, evolving industry standards, frequent
new service introductions and changing customer
demands. To be successful, we must adapt to a rapidly
evolving market by continually enhancing Stratabase's
infrastructure, content, information and services to
fulfill our users' needs. We could incur additional
costs if it becomes necessary to modify services or
infrastructure in order to adapt to these or other
changes affecting providers of internet services. Our
business, results of operations and financial
condition could be materially adversely affected if we
incur significant costs to adapt, or if we cannot
adapt, to these changes.
The internet is relatively new and is not established
as an advertising medium.
In the future, we expect to generate a significant
amount of our revenues from internet advertising. The
internet advertising market is new and rapidly
changing. We are not able to gauge our effectiveness
as compared to traditional advertising media. Most of
our potential advertising and e-commerce partners have
little or no experience using the internet for
advertising purposes and they have allocated only a
limited portion of their advertising budgets to
internet advertising. The adoption of internet
advertising, particularly by those entities that have
historically relied upon traditional media for
advertising, requires the acceptance of a new way of
conducting business, exchanging information and
advertising products and services.
Advertisers who have traditionally relied upon other
advertising media may be reluctant to advertise on the
internet. Such customers may find internet advertising
to be less effective than traditional advertising
media for promoting their products and services.
Widely accepted standards have not been set by the
industry to measure the effectiveness of internet
advertising or to measure the demographics of the our
user base. If such standards do not develop,
advertisers may not choose to advertise on the
internet. Furthermore, advertisers and e-commerce
marketers may choose not to advertise on
Stratabase.com or only willing to pay less for
advertising on Stratabase.com if they do not perceive
our audience(s) to be valuable. This choice by
advertisers could have a material adverse effect on
our business, results of operations, and financial
condition. In addition, standards for advertising
rates on the internet have not been determined. It is
difficult to predict which, if any, pricing models for
internet advertising will emerge. Accordingly, it is
difficult for us to project future advertising rates
and revenues, if any.
Finally, "filter" software programs that limit or
prevent advertising from being delivered to an
internet user's computer are available. Widespread use
of such software could adversely effect the commercial
viability of internet advertising.
Governmental regulation and legal uncertainties may
have a material effect upon our bottom line.
There is an increasing number of laws and regulations
pertaining to the internet. In addition, a number of
legislative and regulatory proposals are under
consideration by federal, state, local and foreign
governments and agencies. Laws or regulations may be
adopted with respect to:
the internet relating to liability for
information retrieved from or transmitted over
the internet;
online content regulation;
user privacy;
taxation; and
quality of products and services.
Moreover, the applicability to the internet of
existing laws governing issues such as intellectual
property ownership and infringement, copyright,
trademark, trade secret, obscenity, libel, employment
and personal privacy is uncertain and developing. Any
new legislation or regulation, or the application or
interpretation of existing laws, may decrease the
growth in the use of the internet, which could in turn
decrease the demand for our services, increase our
cost of doing business or otherwise have a material
adverse effect on our business, results of operations
and financial condition.
We may be liable for information retrieved from our
websites and the internet.
Content may be accessed on our websites or on the
websites of our future partners. This content may be
downloaded by users and subsequently transmitted to
others over the internet. This could result in claims
against us based upon a variety of theories, including
defamation, obscenity, negligence, copyright or
trademark infringement or other theories based upon
the nature, publication and distribution of this
content. These types of claims have been brought,
sometimes successfully, against providers of internet
services in the past. We could also be exposed to
liability with respect to third party content that may
be posted by users in chat rooms or message boards. It
is also possible that if any information, including
information deemed to constitute professional advice
such as legal, medical, financial, or investment
advice, provided on Stratabase.com contains errors or
false or misleading information, third parties could
make claims against us for losses incurred in reliance
upon such information. In addition, our websites
contains annotated links to other websites. As a
result, we may be subject to claims alleging that, by
directly or indirectly providing links to other
websites, we are liable for copyright or trademark
infringement or wrongful actions of third parties
through their respective websites. While we will
attempt to reduce our exposure to potential liability,
the enforceability and effectiveness of such measures
are uncertain. Even to the extent that such claims do
not result in liability to us, we could incur
significant costs in investigating and defending
against such claims. Potential liability for
information disseminated through us could lead us to
implement measures to reduce our exposure to such
liability, which may require the expenditure of
substantial resources and limit the attractiveness of
our service to users.
If we do not develop an effective sales force, we may
not generate significant revenues or become
profitable.
We currently have two employees and no sales team. In
order to grow, we must develop an internal advertising
sales team. Our ability to do so successfully involves
a number of factors. They include:
the competition in hiring and retaining
advertising sales personnel,
the Company's ability to integrate and motivate
advertising sales personnel and
the length of time, it takes for new advertising
sales personnel to become effective.
Our failure to develop and maintain an effective
advertising sales team would certainly have a
negative effect upon our business prospects.
Our services are susceptible to disruptive problems,
failures and damages to our systems.
The technical performance of our network, software and
hardware systems is critical to our business and
reputation, and to our ability to attract users,
advertisers and e-commerce partners. Any network,
software or hardware systems failure, including
failure, that causes an interruption in our service or
a decrease in our responsiveness could result in
reduced usage and reduced revenue, and could
negatively effect our reputation and operations. We
could also be affected by computer viruses, electronic
break-ins or other similar disruptions. We must be
able to accommodate a high volume of traffic and may
experience slower response times for a variety of
reasons. An increase in volume of users accessing
Stratabase.com could lead to systems failures or
slower response times and ultimately reduce
advertising revenues. Our users may become
dissatisfied by any system failure that interrupts our
ability to provide services to them. In addition, our
users will depend on third parties such as internet
service providers, online service providers, and other
website operators for access to Stratabase.com. Each
of these providers has experienced significant outages
in the past, and could experience outages, delays and
other difficulties due to system failures unrelated to
our systems in the future. Moreover, the internet
infrastructure, in general, may not be able to support
continued growth in its use. These are factors, events
and occurrences over which we have no control. Yet,
they can have a negative impact on our business.
Failure of computer systems and software products to
be year 2000 compliant could negatively effect our
business.
We have assessed the Year 2000 readiness of our
software. We have also assessed third party vendors,
licensors, and providers of hardware, software and
services for their Year 2000 readiness. We have now
begun our evaluation of the state of readiness,
potential risks and costs, and a determination as to
whether a contingency plan is necessary. If we and/or
our third party vendors are not timely compliant, we
may have to cease operations to correct the problems.
The cost of such correction could be very significant.
Any revenues received in Canadian dollars would
decrease in value because of the unfavorable currency
exchange rate.
Although we are a Nevada corporation, our operations
are located in Canada. Accordingly, most of our
revenues may be in Canadian dollars. In recent years,
the currency exchange rate of the Canadian dollar into
the US dollar has steadily dropped. This trend is
likely to continue. The continued lowering of the
value of the Canadian dollar vis a vis the US dollar,
may have a materially adverse effect on our business,
results of operations and financial condition.
Since no one is obligated to purchase the units, we
cannot be certain that even the minimum offering will
be sold.
No entity, including Stratabase or our officers and
directors, has committed to purchase any of the units.
So there is no assurance that we will be successful in
selling the units. The offering period will terminate
on 2,000 unless we extend it for an additional 90
days to 2,000. The offering may be terminated
earlier if the 800,000 units are sold before the end
of the offering period or if we decide to terminate it
earlier. We are making this offer on a "best efforts,
all or none" basis for the first 400,000 units and on
a "best effort" basis only for the remaining 400,000
units. Your moneys will be deposited in an escrow
account. If we do not sell at least 400,000 units by
, 2000 or by the extended date of , 2000, your
moneys will be refunded without interest. In that
case, you may not have use of your moneys for up to
180 days. If we sell only the minimum offering of
400,000 units, we will receive net proceeds of
approximately $160,000. If that amount is received, it
is likely that we will need further financing in the
near future. We may not be able to obtain this
financing at reasonable terms or even at all.
Since we are attempting to sell the units without the
aid of an underwriter, our chances of success are
reduced and you do not have an underwriter's expertise
to evaluate us.
We are not experienced in the business of selling
securities. We may, therefore, not be able to complete
the minimum offering. In addition to providing selling
expertise, an underwriter is also required to conduct
a "due diligence" evaluation of any company whose
securities it underwrites. In this situation, there is
no underwriter, and no one is providing due diligence
evaluations on your behalf.
Management and principal shareholders have complete
control over our company and investors may not have an
effective voice in the management of our company.
After the minimum offering, our current management and
principal shareholders will own approximately 93.3% of
the outstanding shares of our common stock. Similarly,
after the maximum offering, they will own
approximately 87.4% of the outstanding shares of our
common stock. Accordingly, in either case, they will
be able to control the management policies and conduct
of our business.
Shares eligible for sale after the offering is
completed could negatively affect our stock prices.
The prevailing market price of our units, common stock
and warrants after this offering could be adversely
affected by sales of common stock by the holders of
our common stock already outstanding, or the
perception that these sales may occur.
All of the 5,553,772 shares of the outstanding common
stock are "restricted securities", and, after being
held for a period of one year, may be sold in
compliance with Rule 144 of the Securities Act. Rule
144 provides, in essence, that a person after holding
"restricted securities" for a period of one (1) year,
may sell an amount that does not exceed:
more than one percent of the Company's shares
then outstanding within any three month period,
(i.e. one percent would equal 55,537 shares as
of the date of this Prospectus, 59,537 shares
immediately after the successful completion of
the minimum offering, and 63,537 shares
immediately after the successful completion of
the maximum offering. (This one percent
calculation does not include any exercise of the
redeemable purchase warrants offered by us); or
the average weekly trading volume during the
four (4) weeks before any sale under Rule 144.
Further, under Rule 144, the amount of "restricted
securities" which a person, who is not an affiliate of
our company, may sell is not limited when his or her
shares are held for over two (2) years.
If the sale of shares under Rule 144 has a depressive
effect upon the market price of our securities, this
could make it difficult for us to raise additional
capital through the issuance of more securities.
Finally, the exercise of the warrants, may also have a
depressive effect upon the market price of the our
common stock, should one exist.
You may not be able to sell our securities unless a
public market develops for them.
Prior to this offering, there has been no public
market for any of our securities and we are not
certain that an active trading market for the
securities offered will develop or be sustained after
this offering. We anticipate that, upon completion of
this offering, the units, common stock and redeemable
purchase warrants will be eligible for listing on the
NASD Over-the-Counter Electronic Bulletin Board. If
for any reason, however, our securities are not
eligible for continued listing or a public trading
market does not develop, you may have difficulty
selling your securities should you desire to do so. If
we are unable to satisfy the requirements for
quotation on the Bulletin Board, trading, if any, in
our securities would be conducted in the
over-the-counter market in what are commonly referred
to as "pink sheets". As a result, you may find it more
difficult to dispose of, or to obtain accurate
quotations as to the price of our securities.
We determined our own unit prices and the exercise
prices for the warrants.
We determined the initial public offering price of the
units, as well as the exercise price of the warrants
using a number of factors. We considered our
financial condition and prospects, market prices of
similar securities of comparable publicly traded
companies, certain financial and operating information
of companies engaged in activities similar to ours and
the general conditions of the securities market. They
are not predictive of the market price for the units,
common stock or the redeemable purchase warrants in
the trading market after this offering. You should be
aware that the market price of the securities may
decline below the initial public offering price. The
stock market has experienced extreme price and volume
fluctuations-- especially the securities of internet
related companies.
Our securities are referred to as "penny stocks" which
are not perceived favorably in the market place..
The Securities and Exchange Commission has adopted
regulations which generally define a "penny stock" to
be any equity security that has a market price of less
than $5.00 per share or an exercise price of less than
$5.00 per share, subject to certain exceptions. Our
securities may become subject to rules that impose
additional sales practice requirements on
broker-dealers who sell such securities to persons
other than established customers and accredited
investors (generally those with a net worth in excess
of $1,000,000 or annual income exceeding $200,000, or
$300,000 together with their spouse). For transactions
covered by these rules, the broker-dealer must:
make a special suitability determination for the
purchase of such securities;
have received the purchaser's written consent to
the transaction prior to the purchase;
deliver to the purchaser, prior to the
transaction, a disclosure schedule prepared by
the Securities and Exchange Commission relating
to the penny stock market;
disclose to the purchaser the commission payable
to the broker-dealer and the registered
representative;
provide the purchaser with current quotations
for the securities;
if the broker-dealer is the sole market maker,
he must disclose that fact to the purchaser and
his presumed control over the market; and
provide the purchaser with monthly statements
disclosing recent price information for the
penny stock held in the account and information
on the limited market in penny stocks.
Consequently, the "penny stock" rules may restrict the
ability of broker-dealers to sell our securities in
the secondary market, if one is formed.
Our management has broad discretion over the use of
proceeds raised in the offering.
We intend to use all of the net proceeds of the
offering (either minimum or maximum) for working
capital and general corporate purposes. Accordingly,
the Company's management will have broad discretion as
to the application of such proceeds. In this regard, a
portion of the funds allocated to working capital will
be utilized to pay the salaries of our officers and
you do not know what their salaries will be. We do not
plan to enter into employment contracts with our
officers at this time. Accordingly, their salary
increases, if any, cannot be predicted.
You cannot exercise the warrants if we do not have a
current prospectus.
The warrants are exercisable only if a current
prospectus is then in effect, and only if such shares
are qualified for sale under applicable state
securities laws of the states in which the redeemable
purchase warrant holders reside. As of the date of
this prospectus, our units, common stock and warrants
have been qualified in the State of New York only.
Accordingly, residents of only New York (or non-U.S.
residents) can currently exercise warrants.
Our redemption of the warrants may force holders to
make an investment decision before they are ready.
Commencing on the date of this Prospectus, the
warrants are subject to redemption. If we decide to
redeem the warrants, holders will lose their rights to
purchase shares of common stock issuable upon exercise
unless the warrants are exercised before they are
redeemed. Holders may be forced to make an investment
decision regarding their warrants before they are
ready to do so if we send a notice of redemption.
Although it is not our intention to do so, we can send
the notice when our prospectus is not current. Holders
would then not be able to exercise the warrants even
if they desired to do so.
HOW YOU CAN GET MORE INFORMATION ABOUT US.
Stratabase does not presently file reports or other
information with the United States Securities and
Exchange Commission (the "SEC"). However, following
completion of the minimum offering, we will distribute
to stockholders at fiscal year end on each December
31st, annual reports containing financial statements
that have been audited and reported upon, with an
opinion expressed by an independent public accountant
and other information as may be required by law. In
this regard, upon the completion of the minimum
offering herein, we will be subject to the
informational requirements of the Securities Exchange
Act and are required to file reports, proxy statements
and other information with the SEC.
The reports, proxy statements and other information
that we will file will be available for inspection and
copying (for a specified fee) at the SEC's public
reference room located at Room 1024, 450 Fifth Street,
NW, Washington, D.C. 20549, and the public reference
facilities in the SEC's Northeast Regional Office, 7
World Trade Center, New York, New York 10048; and its
Midwest Regional Office, Citicorp Center, 500 West
Madison Street, Suite 2400, Chicago, Illinois 60661.
Copies of such material may also be obtained at
prescribed rates by writing to the United States
Securities and Exchange Commission, Public Reference
Section, 450 Fifth Street, NW, Washington, D.C. 20549
upon payment of the fees prescribed by the SEC. Please
call the SEC at 1-800-SEC-0330 for more information on
the operation of its Public reference Rooms. The SEC
also maintains a Web site that contains reports, proxy
and information statements and other materials that
are filed through the SEC's Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system. This Web Site
can be accessed at http: /www.sec.gov.
USE OF PROCEEDS
After deduction of the estimated expenses of the
issuance and distribution of the
securities we will receive net proceeds of $160,000 if
we are successful in completing the minimum offering,
and $360,000 if we are successful in completing the
maximum offering. If we are successful in completing
either the minimum or maximum offering, we intend to
use the net proceeds thereof for working capital and
other general corporate purposes, including
advertising. We may also use a portion of the proceeds
for strategic alliances and acquisitions. We have not
yet determined the amount of net proceeds to be used
specifically for each of these purposes. Therefore,
our management will have significant flexibility in
applying the net proceeds of either the minimum or
maximum offering.
We anticipate applying the proceeds of this offering
as soon as they are available (i.e. completion of the
minimum offering) and continuing over the following 12
months. We believe that the proceeds of the maximum
offering will be sufficient to satisfy our
requirements over this period without the necessity of
obtaining additional funds. However, we believe that
if only the minimum offering is completed, additional
funds may be required which may not be available to
us, or, if available, not on reasonable terms. In
addition, if we experience a change in circumstances
or business conditions we may need additional
financing even if the maximum offering is completed.
Finally, any proceeds which we receive from the
exercise of the warrants shall be applied to working
capital.
DIVIDEND POLICY
We have never declared or paid any cash dividends on
our common stock nor do we anticipate paying any in
the foreseeable future. Furthermore, we expect to
retain any future earnings to finance our operations
and expansion. The payment of cash dividends in the
future will be at the discretion of our Board of
Directors and will depend upon our earnings levels,
capital requirements, any restrictive loan covenants
and other factors the Board considers relevant.
CAPITALIZATION
We are currently authorized to issue 25,000,000 shares
of common stock. As of today, we have issued,
5,553,772, shares of common stock, for a total capital
contribution of $236,609. The following table shows
the number of issued and outstanding shares of common
stock as of the date of this prospectus and which will
be outstanding in the event of the successful
completion of both the minimum and maximum offerings:
Shares Outstanding 5,553,772
Shares to be outstanding
in the event of the successful
completion of the minimum
offering- 5,953,772
Shares to be outstanding
in the event of the successful
completion of the maximum
offering 6,353,772
This table does not reflect the effect that the
possible exercise of the warrants will have. Each
share of our common stock has equal, noncumulative
voting rights and participates equally in dividends,
if any. The common stock has no sinking fund
provisions applicable to it. The shares are fully paid
for and nonassessable when issued. Except for the
warrants offered herein, there are no outstanding
options, warrants, or rights to purchase any of the
securities of the Company and we do not plan to issue
any.
The following table sets forth our capitalization at
June 30, 1999, on an actual (audited) basis and on a
pro forma basis (unaudited) after giving effect to the
minimum offering herein (assuming no exercise of the
warrants). This table should be read in conjunction
with our financial statements and notes, as well as
"Summary Financial Data", appearing elsewhere in this
Prospectus:
<TABLE>
<CAPTION>
June 30, 1999
Actual Pro Forma
(audited) (unaudited)
<S> <C> <C>
Debt:
Short-term debt $3,828 $3,828
Long-term debt -0- -0-
Stockholders's Equity:
common stock $5,544 $9,544
Additional Paid-in
Capital 231,065 387,065
Deficit Accumulated During
Development Stage (67,512) (67,512)
Total
Stockholders' Equity $169,097 $329,097
Total
Capitalization $172,925 $332,925
</TABLE>
DILUTION
Our net tangible book value as of June 30, 1999 (based
upon the 5,553,772 shares outstanding) was
approximately $.03 per share of common stock. Net
tangible book value per share is equal to our total
tangible assets less our total liabilities, divided by
the total number of outstanding shares of common stock
at June 30, 1999. If we assume the sale of the minimum
number of units offered, 400,000, the pro forma net
tangible book value per share as of June 30, 1999
would be approximately $.06. This would result in an
immediate dilution to new shareholders (i.e. the
difference between the purchase price of the units,
assuming no value assigned to the warrants, and the
net tangible book value per share after the minimum
offering) of $.44 per share, or approximately 88% of
the purchase price, and an increase in the net
tangible book value to the present shareholders, at no
additional cost to them, of approximately $.03 per
share.
Alternatively, if we assume the sale of the maximum
number of units being offered, 800,000, the pro forma
net tangible book value per share as of June 30, 1999
would be approximately $529,097 This would result in
an immediate dilution to new shareholders of $.42 per
share, or approximately 84% of the purchase price, and
an increase in the net tangible book value to the
present shareholders, at no additional cost to them,
of approximately $.05 per share. The following table
illustrates this per share dilution under both the
minimum and maximum offerings, assuming receipt of the
net proceeds of both and no value being assigned to
the warrants:
<TABLE>
<CAPTION>
Minimum Maximum
Offering Offering
<S> <C> <C>
Public offering price
per share $.50 $.50
Net tangible book value per
share as of
June 30, 1999 $.03 $.03
Increase per share attributable
to new shareholders $.03 $.05
Pro forma net tangible book value
per share as of June 30, 1999
after offering $.06 $.08
Dilution per share to
new shareholders $.44 $.42
</TABLE>
The following tables summarize, as of June 30, 1999,
the number of our shares previously purchased, the
total consideration and the average price per share
paid by existing stockholders and to be paid by
purchasers in the minimum and maximum offering,
assuming that no value is attributed to the warrants:
<TABLE>
<CAPTION>
Minimum Offering (400,000 Units)
% of Total
Avg.
Total % of Capital Effective Price
Shares Total Cash Cash Per
Purchased Shares Contrib. Contrib. Share
<S> <C> <C> <C> <C> <C>
New Share-
holders(l) 400,000 06.7% $200,000 45.8% $.50
Old Share
holders 5,543,772 93.3% 236,609 54.2% $.04
Total 5,943,772 100. 0% $436,609 100.0% $.07
Maximum Offering (800,000 Units)
New Share
holders 800,000 12.6% $400,000 62.8% $.50
Old Share
holders 5,543,772 87.4% 236,609 37.2% .04
Total 6,353,772 100.0% $636,609 100.0% $.10
</TABLE>
BUSINESS
Incorporated on November 18, 1998, we are
a development stage corporation. Our
objective is to become one of the
internet's leading direct marketers and
providers of internet services to small
businesses. The key element of our
strategy is the compiling of databases of
marketing information about internet
users. To compile the database, we will
provide free information and free
services, such as internet-based news,
newsletters and videos, to internet users
in return for their personal information
such as names and e-mail addresses. The
users receiving the free services will be
asked to consent to the use of their
personal information for direct marketing
purposes. We believe we can develop large
databases of information about internet
users including their interests and
various demographic information which
would be of great value to advertisers.
Using our compiled database, we then
intend to conduct internet-based direct
marketing programs on behalf of
advertisers. The direct marketing will
consist of presenting online
advertisements to users in our database
who have consented to receive specific
information about products and services.
If the users are interested in the
advertisements presented to them, they
will be asked to respond to the
advertisers by e-mail. Our primary source
of revenues will be the fees charged to
advertisers for providing these direct
marketing services.
As an additional source of revenue, we are
also developing our capability to provide
internet-related services to small
businesses or businesses which are
independently owned and operated and which
are not dominant in their field of
operation. Services to small businesses
include:
designing websites,
updating and maintaining their
websites;
producing and editing informational
or advertising video tapes; and
hosting their websites on our
servers for accessing by internet
users.
For the period from November 18, 1998
through the present, our activities
related primarily to the recruitment of
independent contractors and suppliers, and
the establishment of our organizational
and technical infrastructure. As our
business develops, we expect revenues to
come partly from sales of advertising and
direct marketing opportunities on our
websites and partly from the sale of
internet services to small businesses.
Industry overview.
The internet is a rapidly growing global
computer network for collecting and
exchanging information, communicating, and
conducting business. The growth of this
computer network is driven by inexpensive
web access, inexpensive website production
costs, and businesses wishing to
capitalize on the potential revenues which
may result from effective advertising.
Effective internet advertising requires
the targeting of specific audiences who
consent to be the recipients of specific
information about products.
We intend to conduct direct marketing to
only those users in our databases who have
expressly consented to receive specific
information about products from
advertisers. The internet allows
advertisers to target specific audiences,
based on their personal information and
interests. The effectiveness of internet
advertising efforts can be monitored by
the number of times an ad is viewed and
counting the number of people who respond
to the ad. We believe that internet
advertising will become more effective as
more personal information about internet
users is gathered. We also believe that
the problem to date with internet
advertising is that there are very few
companies who understand how to conduct
effective online direct marketing programs
for advertisers. We believe that our
strategy of first compiling a database of
internet users who consent to the receipt
of specific information from advertisers
is essential to the development of an
effective direct marketing programs for
advertisers. By marketing to users who
have requested specific marketing
information, we will deliver quality
marketing information and programs to our
advertisers targeted at specific
audiences. In this way, we enhance the
effectiveness of our direct marketing
programs.
Internet users demand quality information
and service.
A vast amount of information is being
added to the internet every day and the
quality of this information is often low.
We believe that high quality information
will have a high perceived value to
internet users. By providing this
information free of charge, we believe
internet users will have an incentive to
access it, and voluntarily provide their
personal information such as names and
email addresses. This information, in
turn, can then be added to our databases
ultimately to be used to conduct direct
marketing programs. We also believe that
we can provide free services to internet
users, such as information delivery via e-
mail, in return for users' personal
information.
Small businesses demand quality web
services.
Our management believes that as the web
expands and develops, there will be an
increasing number of small businesses who
require web services - be they video
production for the web, website design, or
website hosting. We believe that there is
substantial demand for these services, and
that such demand will continue to grow in
the coming years as more and more small
businesses seek to develop a presence on
the web for themselves.
We are taking the following specific
actions necessary to achieve our business
goals.
Our objective is to become one of the
internet's leading direct marketers. We
also intend to deliver internet services
to small businesses. We believe we can
develop large databases of information
about internet users including their
interests and various demographic
information which is of use to
advertisers.
In the fourth quarter of 1999, we
intend to launch a website focused
solely on providing news. We expect
that internet users will find the
site highly useful, and will provide
us with their personal information
in order to have full access to the
website. We intend to market and
advertise the website heavily during
the next twelve months through both
online and offline advertising
programs. We believe this website
will add thousands of users to our
databases during the next year.
In the fourth quarter of 1999, we
also intend to launch a website
which provides internet users with
incentives to receive advertisements
via e-mail. Users will receive free
enrollment, and receive various free
products and services in return for
viewing advertisements from
corporate sponsors. We intend to
market this website through online
and offline advertising programs
during the next twelve months. We
expect to sign up thousands of users
during that time.
We believe that the development our
databases of information regarding our
users, will be a valuable direct marketing
product to offer advertisers.
When will our development stage be
completed?
We believe that by mid-year 2000 we will
have developed a useful database of
information on our users. We will then
have a product of high perceived value to
advertisers interested in conducting
direct marketing campaigns. We believe we
can sell direct marketing programs to
advertisers who are interested in reaching
the internet users in our databases who
have provided us with their permission to
be marketed to.
Users seek well organized websites.
We believe that internet users seek well
organized online communities (websites)
specific to given products, information or
services. We believe that, when structured
around proprietary and nonproprietary
databases which encourage continued usage,
a significant core of frequent users can
result. Our management feels that users
are seeking:
indexing that enables users to
efficiently locate quality and
relevant website information
(content),
proprietary content and data
developed by knowledgeable
contributors, and
associated services which enhance
the value of the community.
In addition, we believe that internet
advertisers and e-commerce marketers are
seeking highly targeted audiences with
interest in purchasing goods and services
online.
The demand for services offered by us will
grow.
Management believes that as the world wide
web expands and develops, an increasing
number of individuals, businesses and
organizations will require the
sophisticated web services that we offer
including:
direct marketing programs
online video production;
video editing;
distribution of useful information
(news, newsletters);
web design;
hosting and maintenance of websites
for small businesses.
We believe that there is substantial
demand for these services, and that the
demand will continue to grow in the coming
years as more and more companies seek to
develop a sophisticated web presence.
Our objective and strategy
Our objective is to become a leading
source for video production, video
content, video editing, website designing,
hosting and maintaining websites, and
online direct marketing. In this regard,
we plan to provide an engaging experience
for those who use our websites.
Additionally, we will attempt to provide
effective marketing solutions for our
advertisers by creating databases of users
who have consented to be targeted for the
receipt of advertisements for narrowly
defined topics and products. The key
elements of our strategy are:
Build databases of users who have
expressed an interest in the
products of advertisers .
We believe that developing and delivering
to advertisers, proprietary and
nonproprietary databases containing
information about users who have expressed
an interest in the products which are
specific to each website is critical to
attracting and retaining users,
advertisers and e-commerce partners. We
believe that combining narrowly defined
information resources and making it easily
searchable and accessible is the most
effective way of generating information
targeted for specific advertisers.
Focus on creating e-commerce.
We believe that successful websites need
to focus on creating opportunities for
their advertisers to sell goods and
services to users of the websites. By
having this as our focus from the start,
we believe this factor will differentiate
our websites from others which have tended
to focus less on the e-commerce aspect.
Dealing with internet regulations
Several federal and state statutes
prohibit the transmission of certain types
of indecent, obscene or offensive content
over the internet to certain persons. In
addition, pending legislation seeks to ban
internet gambling and federal and state
officials have taken action against
businesses that operate internet gambling
activities. An overly broad interpretation
and enforcement of these statutes and
initiatives, may result in limitations on
the type of content and advertisements
available on Stratabase.com. Present or
future legislation regulating online
content could dampen the growth in the use
of the internet generally and decrease the
acceptance of the internet as an
advertising and e-commerce medium. This
could have a material adverse effect on
our business, results of operations and
financial condition.
We have no intention of running
pornography or gambling sites. The
relevance of this disclosure is that we
run computer servers which internet users
can use to conduct realtime chat or to
post messages in order to communicate with
each other. On occasion, internet users
have been known to abuse these services
and post messages of an adult or obscene
nature (this happens on AOL quite
frequently). These users could leave us in
a potentially damaging position because
the objectionable content would be
physically residing on our computer
servers, and if the content were of a
regulated nature, we could be deemed
responsible. While we intend to do
everything that we reasonably can to
ensure such an event does not transpire,
this is a possibility you should be aware
of.
We will meet the competition.
Spending has increased significantly with
the rising number of businesses competing
for users, internet advertisers' and
e-commerce marketers'. We expect that the
competition will continue to increase
because there are no substantial barriers
to entry into the market.
We intend to meet the competition by
focusing on the following factors:
the quality of information (content)
displayed at our websites,
information and services we provide
compared to our competitors,
the ease of the use of the services
we develop as compared to those of
our competitors,
the timing and market acceptance of
new and enhanced services we or our
competitors develop, and
sales and marketing efforts.
Mr. Newton will devote his full time to
our business.
As of the date of the prospectus, we have
two employees --Mr. Newton, Chairman of
the Board, President, Secretary, Treasurer
and CEO and Mr. Coombes, Vice President of
Corporate Development and a Director. Only
Mr. Newton is devoting his full-time
efforts to the company. Neither have a
collective bargaining agreement with the
Company.
Currently, the Company retains the
services, on an as needed basis, of
independent contractors and/or outside
consultants. If at least the minimum
offering is successfully completed, we
intend to continue to retain independent
contractors and/or outside consultants as
service providers for the foreseeable
future. We will also retain additional
full-time employees when considered
cost-effective to do so.
Mr. Newton oversees the technical and
marketing sides of the business, and the
tasks themselves are generally carried out
by independent contractors and outside
consultants as much as possible. However,
we understand that in some instances it
will be more cost-effective to hire
full-time employees should suitable
candidates be found. We will hire full-
time employees when appropriate. In all
instances, Mr. Newton will continue to
oversee any and all of our contractors,
consultants, and employees. Additionally,
he will oversee all aspects of operations
including technical development and
marketing.
Our properties, equipment and primary
agreements
We do not own any real property. All costs
described in this section are stated in
U.S. dollars as converted from Canadian
dollars. Accordingly, the costs may vary
to some degree with the currency exchange
rate. Our offices are approximately 750
square feet located at 34314 Marshall
Road, Suite 203, Abbotsford, B.C., V2S1L2,
Canada. The office is leased for one year
lease commencing on March 1, 1999. The
monthly rent is $634.50. We believe that
the facilities will be adequate for the
foreseeable future.
We lease a Bandwidth/Connectivity (-fiber
optic line) from BCTEL.. It is the subject
of a three year agreement which commenced
on May 1, 1999, and calls for a monthly
fee of $1,000.
In addition, we have entered a two year
contract for a Newsfeed with COMTEX which
commenced on June 1, 1999. The contract
requires monthly payments of $3,400 plus
royalties. The royalties will equal 25% of
all advertising revenues us resulting from
users accessing the COMTEX's online
newsfeed to our websites.
Finally, we pay an annual premium of
$1,354 for a one year term comprehensive
general liability insurance policy with
the following coverages:
general liability for $1,354,200;
Software for $15,000;
Hardware for $34,000;
Flood/Earthquake for $185,000); and
Replacement Costs of contents for
$68,000.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis
should be read in conjunction with the
financial statements and notes thereto
appearing elsewhere in this prospectus.
This discussion contains forward-looking
statements that involve risks and
uncertainties.
Operations
We are in the development stag and have
not generate revenues from our inception
to June 30, 1999 having incurred primarily
only start-up and organizational expenses.
Accordingly, our financial results, from
inception to June 30, 1999, are not
meaningful as an indication of future
operations.
We are presently engaged in the
development of free services for internet
users(such as internet based news,
newsletters, and videos) in return for
users' personal information. We will then
compile lists of users from which we will
conduct internet based direct marketing
programs on behalf of advertisers.
We are also developing our capabilities to
provide internet related services to small
businesses. These services include video
taping and editing and designing,
maintaining and hosting those websites.
For the period from our incorporation on
November 18, 1998 through June 30, 1999,
our activities related primarily to the
recruitment of independent contractors and
suppliers, and the establishment of its
organizational and technical
infrastructure. As our business develops,
we anticipate that revenues will be
derived partly from the sale of
advertising and direct marketing
opportunities on our website and partly
from the sale of our online video
production services and web services.
Further into our development, it is
anticipated that e-commerce will play an
increasing revenue role. E-commerce
revenues will likely come from revenue
sharing agreements with merchants whose
sites are affiliated with our websites
that are now being developed. Any revenues
that we derives from revenue sharing
arrangements will be recognized by us upon
notification from our e-commerce merchant
partners of sales attributable to our
websites.
The expected significant costs related to
our operation will be the purchase of:
hardware;
software;
a bandwidth fiber optic line;
data acquisition costs;
human resource costs; and
advertising and market costs.
Our liquidity and capital resources
From inception through June 30, 1999, we
received $236,609 in net proceeds from an
investor and our founders.. As of June 30,
1999, we had approximately $152,500 in
cash and cash equivalents. To date, we
show negative cash flows. We expect losses
from operations and negative cash flow to
continue for the foreseeable future. If
our revenues, and our spending levels are
not adjusted accordingly, we may not
generate sufficient revenues to achieve
profitability. Even if we achieve
profitability, we may not sustain or
increase such profitability on a quarterly
or annual basis in the future. We
currently anticipate the net proceeds from
the maximum offering, together with
available funds, will be sufficient to
meet our anticipated needs for at least 12
months. We may need to raise additional
funds in the future in order to fund more
rapid expansion, to develop new or
enhanced services, to respond to
competitive pressures or to acquire
complementary businesses, technologies or
services. The need to raise additional
funds may arise especially if we only
complete the minimum offering or if
significantly less than the maximum
offering is completed. We cannot be
certain that any required additional
financing will be available on terms
favorable to us. If additional funds are
raised by the issuance of our equity
securities, such as through the exercise
of the redeemable warrants, then existing
stockholders may experience dilution of
their ownership interest and such
securities may have rights senior to those
of the then existing holders of common
stock. If additional funds are raised by
our issuance of debt instruments, we may
be subject to certain limitations on our
operations. If adequate funds are not
available or not available on acceptable
terms, we may be unable to fund our
expansion, take advantage of acquisition
opportunities, develop or enhance services
or respond to competitive pressures.
Impact of the Year 2000 issues
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
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 such Year 2000 requirements or may
risk system failure or miscalculations
causing disruptions of normal business
activities.
We are assessing Year 2000 issues
The Company has begun to assess the Year
2000 readiness of its information
technology ("IT") systems, including the
hardware and software that enable us to
provide and deliver our services. Our
assessment plan consists of:
quality assurance testing of our
internally developed software
incorporated in our websites;
contacting third- party vendors and
licensors of material hardware,
software and services that are both
directly and indirectly related to
the delivery of our services;
contacting vendors of material
non-IT systems;
assessment and repair or replacement
requirements;
repair or replacement;
implementation; and
creation of contingency plans in the
event of Year 2000 failures.
Our Year 2000 assessment plan will be
completed by November 1999.
We are now in the "assessment and repair
or replacement" stage of our assessment
plan. The last stage of our assessment
plan, "the creation of contingency plans
in the event of Year 2000 failure" will be
completed by November , 1999.
We do not possess the information
necessary to estimate the potential costs
of addressing year 2000 issues.
To date, we have not incurred any material
costs in identifying or evaluating Year
2000 compliance issues. At this time, we
do not possess the information necessary
to estimate the potential costs of
unanticipated revisions to our software
should such revisions be required or the
replacement of third-party software,
hardware or services that are determined
not to be Year 2000 compliant. Although we
do not anticipate that such expenses will
be material, such expenses, if higher than
anticipated, could have a material adverse
effect on our business, results of
operations and financial condition.
We are not aware of any year 2000
compliance problems relating to our own
software or systems.
We are not currently aware of any Year
2000 compliance problems relating to our
software or systems that would have a
material adverse effect on our business,
results of operations and financial
condition, without taking into account our
efforts to avoid or fix any problems.
There can be no assurance that we will not
discover Year 2000 compliance problems in
our software that will require substantial
revisions or replacements. In addition,
there can be no assurance that third-
party software, hardware, or services
incorporated into our systems will not
need to be revised or replaced, which
could be time consuming and expensive. Our
failure to fix our software or to fix or
replace third-party software, hardware or
services on a timely basis could result in
lost revenues, increased operating costs
and other business interruptions, any of
which could have a material adverse effect
on our business, results of operations and
financial condition. Moreover, failure to
adequately address Year 2000 compliance
issues in our software and systems could
result in claims of mismanagement,
misrepresentation or breach of contract
and related litigation, which could be
costly and time-consuming to defend. In
addition, there can be no assurance that
governmental agencies, utility companies,
internet access companies, third-party
service providers and others outside our
control will be Year 2000 compliant. The
failure by such entities to be Year 2000
compliant could result in a systematic
failure beyond our control, such as
prolonged internet, telecommunications or
electrical failure. That type of failure
could prevent us from delivering our
services, decrease the use of the internet
or prevent users from accessing our
websites any of which would have a
material adverse effect on our business,
results of operations and financial
condition.
MANAGEMENT
Our Directors and Executive Officers
The following sets forth the names and
ages of our directors and executive
officers.
<TABLE>
<S> <C> <C>
Name Age Position
Trevor Newton 30 President,
Secretary,
Treasurer,
Chairman
of the Board
of
Directors,
Chief
Operating
and
Executive
Officer
Fred Coombes 46 Vice President of
Corporate
Development and
Director
John Tarves 45 Director
</TABLE>
TREVOR NEWTON, since our incorporation to
the present has been our President ,
secretary, treasurer, Chairman of the
Board of Directors, Chief Operating and
Executive Officer. From June, 1993 through
August 1994, Mr. Newton was employed as a
Statistical Analyst with the British
Columbia Gas Co. Thereafter, from August
1994 until December 1995, Mr. Newton
taught Economics and Statistics at the
University College of Fraser Valley. From
February 1996 until October 1996, Mr.
Newton was a registered representative
with Global Resource Investment, a broker-
dealer located in Southern California.
From October 1996 until September 1999,
Mr. Newton was employed in various
capacities at Stockscape.com, a publicly
traded producer of a financial website
which has published dozens of financial
newsletters and delivered financial
information, such as stock quotes and
news, to its users 24 hours a day. His
responsibilities at Stockscape included
the overseeing of all aspects of
operations such as programming, content
development, technical infrastructure and
marketing.
FRED COOMBES, since our inception to the
present, has been one of our Directors and
since January 20, 1999 to the present our
Vice-President of Corporate Development.
Since 1987 to the present, Mr. Coombes has
also acted as the President of Co-ab
Marketing, Ltd., an investor and corporate
relations firm and since October 1995 as
President and Director of Yuma Copper
Corp., a mineral exploration firm. In
addition, Mr. Coombes has been retained as
an outside investor relations consultant
to the NBG Radio Network. Presently, he
devotes minimal time to our affairs. Upon
the successful completion of the minimum
offering, Mr. Coombes, who plans on
continuing with his other outside
responsibilities, will devote as much time
to our affairs as he deems necessary for
it to achieve its goals. There can be no
assurance that any conflicts of interest
that may arise from these outside
activities will be resolved in our favor.
JOHN TARVES has been one of our Director
since our incorporation. Since 1979, Mr.
Tarves has been a secondary school teacher
in the Chichester School District in
Boothwyn, Pennsylvania. He is a member of
the school district's Technology
Leadership Team and has initiated an
internet usage program in the classroom.
Mr. Tarves has a B.A. degree from St.
Francis College (Loretto, PA) and an M.A.
degree from Fairfield University
(Fairfield, CT.).
Our Directors have been elected to serve
until the next annual meeting of
stockholders and until their successor(s)
have been elected and qualified, or until
death, resignation or removal.
Executive Compensation
The following table sets forth information
with respect to compensation paid we paid
for the period ended December 31, 1998 for
services of the executive officers. We
have not paid any executive officer in
excess of $100,000 (including salaries and
benefits) during the period ending
December 31, 1998. We do not expect to pay
compensation to any person in excess of
$100,000 for the twelve months ending
December 31, 1999. A portion of the net
proceeds of the offering herein will be
used to pay at least a portion of
officers' salaries.
<TABLE>
<S> <C> <C>
Summary of Annual Compensation
Name and Principal Position Year Salary
Trevor Newton, Chairman of
the Board, President, Secretary,
Treasurer and Chief Operating
and Executive Officer 1998 $0
Fred Coombes,
Vice President of Corporate
Development and Director 1998 $0
</TABLE>
Messrs. Newton and Coombes, as founders or
promoters of Stratabase were issued
2,422,400 and 732,300 shares of the common
stock, respectively, for nominal
consideration (i.e $.0025 per share).We
have not, nor do we intend to, in the
foreseeable future, enter into any
employment agreements with executive
officers. We have no other compensation
plans for our executive officers. However,
we plan to institute an executive employee
stock option plan in the future, the terms
of which have not been determined or
agreed upon. In addition, in the future,
the Company may consider an executive
bonus plan.
Upon the successful completion of the
minimum offering, we will pay salaries to
Messrs. Newton and Coombes at an annual
rate of $60,000 and $ 36,000,
respectively. From February 1999 to the
present , Mr. Newton has been paid $5,000
per month in salary. Mr. Coombes has not
been paid any compensation in 1999, nor
has he accrued any compensation. We intend
to pay salaries from the net proceeds of
the offering allocated to working capital
and revenues from operations.
We do not compensate Directors
We do not pay our directors any
remuneration for their service. However,
they are reimbursed for their
out-of-pocket expenses associated with
meetings of the Board of Directors. Mr.
John Tarves, a Stratabase director, was
issued 25,000 shares of the common stock,
for nominal consideration (i.e. $.0025 per
share). We do not maintain a stock option
plan for Directors.
INDEMNIFICATION
Our by-laws provide for the
indemnification of officers and directors
to the fullest extent possible under
Nevada law against expenses (including
attorney's fees), judgements, fines,
settlements, and other amounts actually
and reasonably incurred in connection with
any proceeding, arising by reason of the
fact that such person is or was an agent
of Stratabase. We are also granted the
power, to the maximum extent and in the
manner permitted by Nevada Revised
Statutes, to indemnify each of our
employees and agents (other than directors
and officers) against expenses (including
attorneys' fees), judgements, fines,
settlements and other amounts actually and
reasonably incurred in connection with any
lawsuits arising by reason of the fact
that such person is or was an agent of
Stratabase.
Our Certificate of Incorporation limits or
eliminates the personal liability of
officers and directors for damages
resulting from breaches of their fiduciary
duty for acts or omissions except for
damages resulting from acts or omissions
which involve intentional misconduct,
fraud, a knowing violation of law, or the
inappropriate payment of dividends in
violation of Nevada Revised Statutes.
Concerning whether indemnification for
liabilities arising under the Securities
Act may be permitted to our officers,
directors and controlling persons, we were
advised by legal counsel that in the
opinion of the SEC such indemnification of
officers, directors and controlling
persons is against public policy, and is,
therefore, unenforceable. If a claim for
indemnification against such liabilities
(other than expenses actually incurred or
paid by an officer, director or
controlling person in successful defense
the lawsuit) is asserted by any officer,
director or controlling person in
connection with these securities being
registered, we will, then, submit to a
court of appropriate jurisdiction the
question of whether such indemnification
is against public policy as expressed in
the Securities Act of 1933, and will be
governed by the final adjudication of that
issue.
CERTAIN TRANSACTIONS
At the time of incorporation, we
authorized the issuance of 25,000 shares
of common stock, no par value. To
facilitate a public offering of our
securities, we authorized on January 20,
1999, the amendment of our certificate of
incorporation to effect certain changes,
which were:
a change in the par value of the
common stock to $.001 par value; and
an increase in the number of shares
of common stock authorized to
25,000,000 shares.
Unless stated otherwise, all stock
transactions in this prospectus are stated
as if they had already occurred..
In February, 1999, we issued shares of
common stock, at $.001 par value, to our
founders as follow:
2,422,400 to Trevor Newton;
1,464,072 to Mary Martin;
732,300 to Fred Coombes; and
25,000 to John Tarves.
In each case, the consideration was
nominal, i.e. $.0025 per share.
In addition to the above, we issued to our
previous counsel, Thomas Boccieri, 10,000
shares of common stock in lieu of
receiving an additional $2,500 towards his
legal fee.
In March, 1999, we privately sold 900,000
shares of our common stock, at a price of
$.25 per share, to one affiliated investor
for a total of $225,000. To date, $75,000
of the proceeds have been utilized for
hardware, software, programming and
computing fees, content acquisition,
general operations, salaries, connectivity
and costs associated with this offering.
The balance was retained for operating
funds. The investor, New Horizons LP, is
affiliated with one of our founders, Ms.
Mary Martin in that its general partner
and a minority limited partner is Ms.
Martin's husband, Joe MacDonald.
We have not adopted any provisions,
resolutions or bylaws regarding related
party transactions nor do we intend to do
so in the future.
In connection with each of these stock
issuances, we relied upon the exemption
from registration provided under Section
4(2) of the Securities Act.
PRINCIPAL SHAREHOLDERS
The following table contains information
concerning:
those persons whom we know
beneficially own more than 5% of our
outstanding shares of common stock;
each of our officers and directors;
and
all of our officers and directors as
a group.
<TABLE>
<CAPTION>
Beneficial % of Ownership
Ownership Prior After an
to Offering Offering
of
<S> <C> <C> <C> <C>
Officers,
Directors, 5% No. of 400,000 800,000
Shareholders Shares % Units Units
Trevor Newton
2,422,400 43.6% 40.7% 38.1%
Mary Martin 1,464,072 26.4% 24.6% 23.0%
Fred Coombes 732,300 13.2% 12.3% 11.5%
John Tarves 25,000 .5% .4% .4%
New Horizons LP 900,000 16.2% 15.1% 14.2%
All directors and
executive officers
as a Group
(3 persons) 3,179,700 57.3%. 53.4% 50.0%
</TABLE>
The persons or entities named in this
table, based upon the information they
have provided to us, have sole voting and
investment power with respect to all
shares of common stock beneficially owned
by them. The shares beneficially owned and
percentage of ownership are based on the
total shares outstanding before this
offering and the total shares to be
outstanding after both the minimum and
maximum offerings assuming no exercise of
any of the warrants contained in the
units.
DESCRIPTION OF UNITS
The Units
We are offering a minimum of 400,000 units
and a maximum of 800,000 Units directly to
the public pursuant to this Prospectus.
Each unit consists of one share of common
stock, $.001 par value, and one Class A
redeemable purchase warrant to purchase
one share of common stock at $1.00, one
Class B redeemable purchase warrant to
purchase one share of common stock at
$3.00 and one Class C redeemable purchase
warrant to purchase one share of common
stock at $5.00. The warrants will be
immediately detachable and transferable if
we successfully complete the minimum
offering.
Common stock
We are authorized to issue 25,000,000
shares of common stock, $.001 par value.
After being sold pursuant to this
offering, our shares of common stock are
not subject to further assessment or call.
The following summary description of the
common stock is qualified in its entirety
by reference to our Certificate of
Incorporation, as amended, and our Bylaws,
as amended. There is no provision for
cumulative voting with respect to the
election of directors by holders of our
common stock. Holders of common stock:
have equal rights to dividends from
funds legally available for that
purpose, when and if declared by our
board of directors;
are entitled to share ratably in all
of our assets available for
distribution to holders of common
stock upon liquidation, dissolution
or winding up of our affairs; and
do not have preemptive rights,
conversion rights, or redemption of
sinking funds rights.
We have not paid dividends since inception
and do not intend to do so in the
foreseeable future.
The Redeemable Purchase Warrants
The Class A, Class B and Class C warrants,
none of which are presently outstanding,
will be exercisable from the effective
date of this offering at a price of $1.00,
$3.00 and $5.00 per share of common stock,
respectively, at any time after we
successfully complete the minimum offering
until 6 months, 12 months and 18 months,
respectively. We reserve the right to
extend each warrant exercise period, or
any of them, at anytime, and/or to reduce
the exercise price(s) by up to 50% upon 30
days prior written notice. One warrant is
required for the purchase of one share of
common stock. The following discussion of
the warrants does not purport to be
complete and is qualified in its entirety
by reference to the Warrant Agreement. The
essential provisions of the warrants are
as follows:
The warrants, which will be issued
pursuant to a Warrant Agreement
between us and our warrant agent,
Security Transfer Corp., will be in
registered form and, after
successful completion of the minimum
offering, may be sold, assigned or
conveyed separately and apart from
the common stock component of the
Units.
Upon the successful completion of
the offering herein and during the
remainder of the term of the
warrants, we may, at our option and
on 30 days' prior written notice
mailed to the warrant holders, call
and/or redeem, in whole or in part,
the warrants at price of $0.01 per
A, B or C warrant if the average bid
price of the common stock for any
seven trading days during a 10
consecutive trading day period is
greater than 20% above the
respective exercise price.
The holders of the warrants are
protected against dilution of their
interests represented by the number
of shares of common stock underlying
the warrants upon the occurrence of
certain events, including stock
dividends, splits, mergers,
reclassifications, and sale by us of
shares of common stock below the
then book value, other than sale to
employee benefit and stock option
plans.
The holders of the warrants have no
right to vote on matters submitted
to our shareholders and have no
right to receive dividends. The
holders of the warrants are not
entitled to share in our assets in
the event of liquidation,
dissolution, or the winding up of
our affairs.
We do not have an exemption from
registration with the SEC for the
issuance of the common stock upon
the exercise of the warrants. So, in
order for the holder to exercise the
Warrant, we are therefore required
to have a current, effective
registration statement on file with
the Commission and have satisfied
the "Blue Sky" registration
requirements of the applicable
regulatory authority of the state in
which the holder of a warrant
resides. Therefore, we will be
required to file post-effective
amendments to our registration
statement when subsequent events
require such amendments in order to
continue the registration of the
shares of common stock underlying
the warrants. Although it is our
intention to both maintain a current
prospectus and meet the requirements
of the regulatory authorities of the
State of New York during the term of
the warrants, there can be no
assurance that the Company will be
in a position to keep its
registration statement current and
effective or to meet the
requirements of any state regulatory
authority. It is not our intention
to call and/or redeem the
outstanding warrants, if our
prospectus is not current or if we
are not in compliance with the
requirements of an appropriate state
regulatory authority.
After our offering is successfully
completed.
Before this offering, there has been no
public market for our units, shares of
common stock and Class A, Class B and
Class C warrants. We cannot assure you
that a public trading market for any of
our securities will ever develop or, if
one develops, that it will be maintained.
If we complete our minimum offering, but
before the exercise of any of the
warrants, we will have outstanding
5,953,772 shares of common stock.
Similarly, if our maximum offering is
completed, we will have 6,353,772 shares
of common stock outstanding. Of the shares
outstanding, if our minimum offering is
completed, 400,000 shares (and if the
maximum offering is completed, 800,000
shares) will be freely tradeable without
restriction under the Securities Act, if
those shares are not later acquired by our
"affiliates" (i.e., a person is an
affiliate if he or she directly, or
indirectly through one or more
intermediaries controls or is controlled
by us, or is under common control with
us).
All of the 5,553,772 shares of common
stock presently outstanding are
"restricted securities" as that term is
defined in Rule 144, promulgated under the
Securities Act. In general, under Rule
144, a person (or persons whose shares
must be aggregated) who has satisfied a
one- year holding period may, under
certain circumstances, publicly sell
within any three (3) month period, a
number of shares which does not exceed the
greater of one percent (1%) of the then
outstanding shares of our common stock or
the average weekly trading volume of our
common stock during the four calendar
weeks before such sale.
Rule 144 also permits, under certain
circumstances, the sale of shares of
common stock by a person without any
quantity limitation. Future sales under
Rule 144 or even the perception of such
sales, may have a depressive effect on the
market price of our common stock, should a
public market develop for our shares. None
of our current shareholders have already
satisfied the one-year holding period. We
are unable to predict the effect that
sales, or even the threat of sales under
Rule 144 or otherwise, may have on the
then prevailing market price of our shares
of common stock.
Our Transfer and Warrant Agent
We have appointed Securities Transfer
Corp., with offices at 1690 Dallas
Parkway, Suite 100 Dallas, TX 75248, (972)
447-9890, as transfer agent for our shares
of common stock and warrant. The transfer
agent will be responsible for all record-
keeping and administrative functions in
connection with the warrants. A copy of
the form of warrant agreement is filed as
a exhibit to our registration statement on
file with the SEC.
Reports to Shareholders
We intend to forward annual reports to our
shareholders including audited financial
statement to our investors. We will also
forward such interim reports we deems
appropriate.
PLAN OF DISTRIBUTION
We are offering, directly to the public,
up to 800,000 units. The first 400,000
units are offered on a "best efforts all
or none" basis. We are offering the
remaining 400,000 units on a "best
efforts" basis only. There can be no
assurance that any of the units will be
sold. If at least 400,000 of the offered
Units are not sold within the offering
period (90 days from the effective date of
this prospectus, unless we extend it for
an additional 90 days), then the offering
will be terminated and the subscription
payments, if collected, will be promptly
refunded in full to subscribers within 7
days of the termination without payment of
interest or deducting expenses , subject
to the collection of funds. If the minimum
number of units is sold within the
specified period, the offering will
continue until the earlier of the sale of
all 800,000 units or the expiration of the
offering period and any extension thereof,
unless we terminate the offering earlier.
All subscription payments must be sent to
us along with a separate sheet indicating
the name, address and social security
number of the subscriber(s), and the
number of shares for which subscription is
being made. Payments must be by check made
payable to "Securities Transfer
Corporation, as escrow agent for
Stratabase.com". We will then send the
subscription payments, no later than noon
of the next business day following
receipt, to an escrow account maintained
by Securities Transfer Corporation, 16910
Dallas Parkway, Suite 100, Dallas, Texas
75248. Securities Transfer is only acting
as escrow, transfer and warrant agent in
connection with this offering and has made
no investigation of us or this offering
nor makes any recommendation with respect
thereto. The escrow agent will hold all
subscriptions payments pending the sale of
the minimum number of units within the
specified period. Subscription payments
will only be withdrawn from the escrow
account for the purpose of paying us for
the units sold, if at least 400,000 of the
units offered are sold, or for the purpose
of refunding subscription payments to
subscribers. Subscribers will not earn
interest on the funds held in escrow and
will not have use or right to return of
such funds during the escrow period, which
may last as long as 180 days. If the
minimum number of units is sold within the
escrow period, as extended, payments from
subscribers will thereafter be deposited
into the escrow account for collection and
all funds will be periodically disbursed
to us.
We have arbitrarily determined the public
offering price of the units and the
exercise prices of the warrants based upon
various considerations including market
conditions and the perceived reception of
the offering price and exercise prices by
potential investors. The public offering
price and the exercise prices do not bear
any relationship to assets, book value or
any other traditionally recognized
indications of value.
We have not engaged a market maker of
securities and do not propose to engage
any entity to make a market in our
securities following completion of the
offering, Therefore, the development of a
trading market following the completion of
this offering will be particularly
dependent on broker-dealers initiating
quotations in inter-dealer quotation
mediums, in maintaining trading positions
and in otherwise engaging in market making
activities in our securities. No
broker-dealer has agreed to engage in such
activities, and there is no assurance that
any trading market for our securities will
develop following the offering.
LEGAL PROCEEDINGS
We are not involved in any material
pending litigation, nor are we aware of
any material pending or contemplated
proceedings against us. We know of no
material legal proceedings pending or
threatened, or judgments entered against
any of our Director or Officer in his
capacity as such.
LEGAL OPINIONS
The legality of the issuance of the
securities offered pursuant to this
Prospectus will be passed upon for us by
James C. Jones, Esq., 65 West 96th Street,
Suite 20H, New York, New York 10025.
EXPERTS
Our financial statements included in the
Prospectus, to the extent and for the
period indicated in their report with
respect thereto, have been audited by Moss
Adams LLP, independent certified public
accountants, as stated in their report
appearing elsewhere herein, and are
included in reliance upon such report
given upon the authority of that firm as
experts in accounting and auditing.
<TABLE>
FINANCIAL STATEMENTS
<S> <C>
Page
Independent Auditor's Report dated August
10, 1999 45
Balance Sheet dated June 30, 1999 46
Statement of Operations for the period
from inception
(11/18/98) to 6/30/99 47
Statement of Stockholders' Equity for the
period from
inception (11/18/98) to 6/30/99 48
Statement of Cash Flows for the period
from
inception (11/18/98) to 6/30/98 49
Notes to Financial Statements (6/30/99) 50-52
</TABLE>
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Stratabase.com
We have audited the accompanying balance
sheet of Stratabase.com (a development
stage company) as of June 30, 1999, and
the related statements of operations,
stockholders' equity, and cash flows for
the period from inception (November 18,
1998) to June 30, 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 the audit in accordance with
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 Stratabase.com (a development stage
company) as of June 30, 1999, and the
changes in its operations and its cash
flows for the period from inception
(November 18, 1998) to June 30, 1999, in
conformity with generally accepted
accounting principles.
/s/ Moss Adams LLP
Portland, OR
August 10, 1999
<TABLE>
<CAPTION>
STRATABASE.COM
(a development stage company)
BALANCE SHEET JUNE 30, 1999
ASSETS
<S> <C>
CURRENT ASSETS
Cash $152,410
Accounts receivable 7,179
GST receivable 146
Total current assets 161,220
OFFICE EQUIPMENT, at cost
computer hardware $8,177
computer software 499
office equipment 205
office furniture 2,077
video production equipment 4,884
$15,842
accumulated depreciation
and amortization (1,740)
14,102
DEPOSITS 572
Total assets $ 175,894
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
liability $ 2,969
Shareholder loans 3,828
Total current liabilities 6,797
COMMITMENTS (Note 3)
SHAREHOLDERS' EQUITY
common stock, $.001 par value;
25,000,000 shares authorized,
5,543,772 shares issued and
outstanding 5,544
Additional paid-in capital 231,065
Deficit accumulated in the
development stage (67,512)
Total Shareholders' equity 169,097
Total liabilities and
shareholders' equity $ 175,894
</TABLE>
<TABLE>
<CAPTION>
STRATABASE.COM
(a development stage company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM
INCEPTION (NOVEMBER 18,
1998) TO June 30, 1999
<S> <C>
REVENUE $ 6,709
OPERATING EXPENSES
Web related services 3,730
Video production
and encoding 2,324
Internet connectivity 1,889
Network administration 598
Total operating expenses 8,541
Excess of operating
expenses over revenue (1,832)
GENERAL AND ADMINISTRATIVE EXPENSES
Management fees 25,000
Community site development 12,590
Legal fees 10,576
Accounting 3,675
Office 3,205
Rent 2,290
Depreciation an amortization 1,740
Licenses and dues 1,705
Insurance expense 1,517
Program and site design 1,357
Telecommunications 744
Organizational costs 695
Travel 677
Other expenses 558
Total general and
administrative expenses 66,329
INTEREST INCOME 649
Net loss in the development
stage$ (67,512
BASIC LOSS PER SHARE OF
COMMON STOCK $ 0.01
DILUTED LOSS PER SHARE OF
COMMON STOCK 0.01
</TABLE>
<TABLE>
<CAPTION>
STRATABASE.COM
(a development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (NOVEMBER
18, 1998) TO June 30, 1999
DEFICIT
ACCUMULATED
ADD'T'N'L IN THE TOTAL
COMMON STOCK PAID IN Dev. STKHLD'RS'
SHARES AMOUNT CAPITAL STAGE EQUITY
<S> <C> <C> <C> <C> <C>
Issuance of
common stock
at $.0025
per share
4,643,772 4,664 $6,965 - $11,609
Issuance of
common stock
at $.25 per
share
900,000 900 $224,100 - 225,000
Net loss in
the development
stage (21,726) (21,726)
5,543,772 $ 5,544 $231,065 (21,726) $214,883
See accompanying notes.
</TABLE>
<TABLE>
<CAPTION>
STRATABASE.COM
(a development stage company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (NOVEMBER18,1998)
TO June 30, 1999
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss in the
development stage $ (67,512)
Depreciation and
amortization 1,740
Adjustments to reconcile
net loss to net cash from
operating activities:
Increase in assets:
Accounts receivable (7,179)
GST receivable (1,631)
Accounts payable 2,969
Deposits (572)
Net cash from operating
activities (72,185)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of
office equipment (15,842)
Net cash from investing
activities (15,842)
CASH FLOWS FROM FINANCING ACTIVITIES
Shareholder loan 3,828
Sale of common stock 236,609
Net cash from financing
activities 240,437
NET INCREASE IN CASH AND
CASH EQUIVALENTS 152,410
CASH AND CASH EQUIVALENTS, at date of
inception -
CASH AND CASH EQUIVALENTS,
end of period $ 152,410
See accompanying notes.
</TABLE>
STRATABASE.COM
(a development stage company)
NOTES TO FINANCIAL STATEMENTS August 10,
1999
NOTE 1 - NATURE OF OPERATIONS AND
ORGANIZATION
Stratabase.com is a Nevada company
specializing in the provision of online
content, information, and services in
specific topic areas, with an emphasis on
relationship (name) development and
corresponding database management. The
Company operates from its headquarters in
Abbotsford, British Columbia, Canada.
For the period from inception (November
18, 1999) to June 30, 1999, the Company
has been in the development stage.
Substantially, all activity during this
period has been devoted to the raising of
equity capital and development of a
long-term business plan.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Cash and cash equivalents - The Company
considers all highly liquid investments
purchased with a maturity of three months
or less to be cash equivalents.
Revenue recognition - Revenues will be
recognized as website related services,
video production and encoding services, or
direct e-mail marketing services are
realized or realizable and when there are
no further performance obligations and no
right of refund .
Software development costs - The Company
capitalizes certain software development
and implementation costs. To date, such
costs are not significant. Development and
implementation costs are expensed until
the company has determined that the
software will result in probable future
economic benefits and management has
committed to funding the project.
Thereafter, all direct external
implementation costs and purchase software
costs are capitalized and amortized using
the straight-line method over the
remaining estimated useful lives,
generally not exceeding five years. The
company does not develop software for sale
to its customers.
Office equipment - Office equipment is
recorded at cost and depreciated over its
useful life which ranges from three to
five years. No depreciation expense was
recognized for the period from inception
to June 30, 1999.
Advertising - Advertising costs are
expensed as incurred.
Income taxes - The Company follows the
asset and liability method of accounting
for income taxes whereby deferred tax
assets and liabilities are recognized for
the future tax consequences of differences
the financial statement carrying amounts
of existing assets and liabilities and
their respective tax bases.
Earnings (loss) per share of common
stock-basic earnings (loss) per share of common
stock is computed by dividing net income
(loss) available to common stockholders by
the weighed average number of common
shares outstanding for the period
(5,290,647). Diluted earnings per share
reflects the potential dilution that could
occur if securities or other contracts to
issue common stock were exercised or
converted into common stock that then
shared in the earnings of the company.
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 amounts
reported in the financial statements and
accompanying notes. Actual results could
differ from those estimates.
NOTE 3 - SHAREHOLDER TRANSACTIONS
For the period from inception (November
18, 1998) through June 30, 1999, the
company has been involved in raising
equity capital. On November 18, 1998, the
company issued 4,643,772 shares of common
stock at $.0025 per share to its founding
group of shareholders. In January 1999,
the company's Board of Directors consented
to the sale of 900,000 additional shares
of common stock at $.25 per share to New
Horizons LLP, a New York venture capital
firm.
NOTE 4 - COMMITMENTS
Lease obligations - The company leases its
office space and certain equipment under
operating lease agreements. The agreements
provide for monthly office rents of $937
for a term of one year and equipment
rentals of $1,100 for a term of three
years. For the period from inception to
June 30, 1999, rent expense was $2,290.
Management fees - The Company has agreed
to pay its President a salary of $5,000 a
month commencing February 1999.
Compensation of $25,000 through June 30,
1999, has been recorded as management fees
in the accompanying financial statements.
(BACK COVER)
We have not authorized any dealer,
salesperson or other person to give any
information or represent anything not
contained in this prospectus. You must not
rely on any unauthorized information. This
prospectus does not offer to sell or buy
any shares in any jurisdiction where it is
unlawful. The information in this
prospectus is current only as of the date
of this prospectus.
STRATABASE.COM
800,000 Units
(Each unit consists of 1 share of common
stock,
1 Class A redeemable purchase warrant,
1 Class B redeemable purchase warrant and
1 Class C redeemable purchase warrant.)
Stratabase.com
Trevor Newton, President
34314 Marshall Road, Suite 203
Abbotsford, B.C. V2S1L2, Canada
(604) 504-5811
, 1999
Until , 1999 (25 days after
the date of this Prospectus) all dealers
that buy or sell or trade these
securities, whether or not participating
in this offering, may be required to
deliver a Prospectus. This is in addition
to the obligation of dealers to deliver a
prospectus when acting as underwriters and
with respect to their unsold allotments or
subscriptions.
The warrants contained in the units may
not be redeemed if a current prospectus is
not in effect. In such event, warrant
holders will not be able to exercise their
warrants and, if the warrants are
redeemed, will receive only the nominal
redemption price at a time when the market
value of the warrants may be significantly
higher.
STRATABASE.COM
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and
Officers
The Company is incorporated under the laws
of the State of Nevada. As authorized by
Section 78.751 of the Nevada General
Corporation law, the Company may indemnify
its officers and directors against
expenses incurred by such persons in
connection with any threatened, pending or
completed action, suitor proceedings,
whether civil, criminal, administrative or
investigative, involving such persons in
their capacities as officers and
directors, so long as such persons acted
in good faith and in a manner which they
reasonably believed to be in the best
interests of the Company. If the legal
proceeding, however, is by or in the right
of the Company, the director or officer
may not be indemnified in respect of any
claim, issue or matter as to which he is
adjudged to be liable for negligence or
misconduct in the performance of his duty
to the Company unless a court determines
otherwise.
Under Nevada Law, corporations may also
purchase and maintain insurance or make
other financial arrangements on behalf of
any person who is or was a director or
officer (or is serving at the request of
the corporation as a director or officer
of another corporation) for any liability
asserted against such person and any
expenses incurred by him in his capacity
as a director or officer. These financial
arrangements may include trust funds, self
insurance programs, guarantees and
insurance policies.
The Twelfth Article of the Articles of
Incorporation, as amended, provides that
no director or officer of the Company
shall be personally liable to the Company
or any of its stockholders for damages for
breach of fiduciary duty as a director or
officer involving any act or omission of
any such director; provided, however, that
the foregoing provision shall not
eliminate or limit the liability of a
director or officer (i) for acts or
omissions which involve intentional
misconduct, fraud or knowing violation of
law, or (ii) the payment of dividends in
violation of Section 78.300 of the Nevada
Revised Statutes.
Article V of the Company's bylaws provides
for the indemnification of officers and
directors, and former officers and
directors, or any person who may have
served at the Company's request as an
officer and director of another
corporation in which the Company owns
shares of capital stock or of which it is
a creditor, against expenses actually and
necessarily incurred by them in connection
with the defense of any action, suit or
proceeding in which they, or any of them,
are made parties, or a party, by reason of
being or having been director(s) or
officer(s) of the Company, or of another
corporation, except, in relation to
matters as to which any such director or
officer or former director or person shall
be adjudged in such action, suit or
proceeding to be liable for negligence or
misconduct in the performance of duty.
Such indemnification shall not be deemed
exclusive of any rights to which those
indemnified may be entitled, under by-law,
agreement, vote of shareholders or
otherwise.
Currently, the Company does not maintain
Director and Officer Liability Insurance
coverage. However, it may do so in the
future.
Item 25. Other Expenses of Issuance and
Distribution
The expenses to be paid by the Registrant
in connection with the issuance and
distribution of the securities being
registered, under both the minimum and
maximum offerings, are estimated to be as
follows:
<TABLE>
<S> <C>
SEC Registration Fee $2,302.80
Printing and Engraving Expenses 2,000.00
Accounting Fees and Expenses 5,000.00
Legal Fees ($15,500) and Expenses
($500.00)(1) 16,000.00
Blue Sky Expenses, and other Fees 2,500.00
Registrar and Warrant and Transfer Agent
Fees 2,500.00
Miscellaneous 9,697.20
Total $40,000.00
</TABLE>
<F1>
(1) In addition, the Registrant's prior
legal counsel has accepted 10,000 shares
of the Registrant's common stock as an
additional legal fee ($2,500) in
connection with this offering.
Item 26. Recent Sales of Unregistered
Securities
During the past three years, the
Registrant sold securities which were not
registered under the Securities Act, as
follows:
<TABLE>
<CAPTION>
Number of
Date of Shares of
Shareholders Issuance common
stock (1) Consid.
<S> <C> <C> <C>
Trevor Newton
2/5 and 2/17/99 2,422,400 $6,056.00
Mary Martin
2/5 and 2/17/99 1,464,072 3,660.18
Fred Coombes
2/5 and 2/17/99 732,000 1,830.75
John Tarves
2/5/99 25,000 62.50
New Horizons LP
3/19/99 900,000 225,000.00
Thomas E. Boccieri
6/24/99 10,000 2,500.00(2)
</TABLE>
<F1>
(1)Reflects a recapitalization whereby,
pursuant to an amendment to the Company's
Certificate of Incorporation authorized on
November 18, 1999 the par value of the
Company's common stock was changed from no
par value to $.001 par value, and the
Company's total authorized shares of
common Stock was increased from 25,000
shares to 25,000,000 shares.
<F2>
(2) Mr. Boccieri, the Registrant's prior
counsel in connection with the offering
herein, agreed to accept these shares in
lieu of $2,500 of his legal fee.
The foregoing transactions are exempt from
the registration provisions of the
Securities Act of 1933, as amended, by
reason of Section 4(2) thereof as
constituting private transactions not
involving a public offering. A restricted
legend has been placed on all shares
issued in these transactions and the
registrant's transfer agent will be given
the appropriate stop transfer
instructions. The offers and sales should
not be integrated with the public offering
herein since such sales and those sales to
be made to the public (a) are not part of
a single plan of financing; (b) have not
and will not be made at or about the same
time; and (c) have not and will not be
made for the same general purpose.
Furthermore, said sales should not be
integrated in reliance upon the safe
harbor interpretation of Rule 152 under
which it is the view of the staff of the
U.S. Securities and Exchange Commission
that the filing of a registration
statement following an offering otherwise
exempt under Section 4(2) does not vitiate
the exemption under that Section.
Item 27. Exhibits
Exhibit No. Descri
ption
3.1 Certificate of
Incorporation of
Registrant.*
3.2 Registrant's
Certificate of
Amendment of
Registrant's
Certificate of
Incorporation.*
3.3 By-Laws of
Registrant.*
4.1 Specimen common
stock
Certificate.*
4.2 Specimen of Class
A redeemable
common stock
purchase Warrant.*
4.3 Specimen of Class
B redeemable
common stock
purchase Warrant.*
4.4 Specimen of Class
C redeemable
common stock
purchase Warrant*
4 5 Form of Warrant
Agreement with the
Warrant Agent.*
5.1. Opinion of James
C. Jones, Esq.
10.1 Form of Escrow
Agreement.
10.2 Lease with SGS
Enterprises.*
10.3 Internet Business
Service Agreement
with BCTEL.*
10.4 Distributor
Agreement with
COMTEX*
24.1 Consent of James
C. Jones, Esq.*
24.2 Consent of Moss
Adams LLP.
27.1 Financial Data
Schedule
*Previously filed.
Item 28. Undertakings
Insofar as indemnification for liabilities
arising under the Securities Act, may be
permitted to directors, officers and
controlling persons of the Registrant
pursuant to the foregoing provisions or
otherwise, the Registrant has been advised
that in the opinion of the SEC such
indemnification is against public policy
as expressed in the Act and is, therefore,
unenforceable. In the event that a claim
for indemnification against such
liabilities (other than the payment by the
Registrant of expenses incurred or paid by
a director, officer or controlling person
of the Registrant in the successful
defense of any action, suit or proceeding)
is asserted by such director, officer or
controlling person in connection with the
securities being registered, the
Registrant will, unless in the opinion of
its Counsel the matter has been settled by
controlling precedent, submit to a court
of appropriate jurisdiction the question
whether such indemnification by it is
against public policy as expressed in the
Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby
undertakes:
1. To file, during any period in which
offers or sales are being made, a
post-effective amendment to this
Registration Statement:
To include any prospectus required
by Section 10(a)(3) of the
Securities Act;
To reflect in the prospectus any
facts or events arising after the
effective date of the Registration
Statement (or the most recent
post-effective amendment thereof)
which, individually or in aggregate,
represent a fundamental change in
the information set forth in the
Registration Statement;
To include any material information
with respect to the plan of
distribution not previously
disclosed in the Registration
Statement or any material change to
such information in the Registration
Statement.
2. That for the purpose of determining any
liability under the Securities Act, each
such post-effective amendment shall be
deemed to be a new Registration Statement
relating to the securities offered
therein, and the offering of such
securities at the time shall be deemed to
be the initial bona fide offering thereof.
3. To remove from registration by means of
a post-effective amendment any of the
securities being registered which remain
unsold at the termination of the offering.
SIGNATURES
Pursuant to the requirements of the
Securities Act, the registrant certifies
that it has reasonable grounds to believe
that it meets all of the requirements for
filing on Form SB-2 and has duly caused
its pre-effective amendment number 1 to
the Registration Statement to be signed on
its behalf by the undersigned, thereunto
duly authorized, in the City of
Abbotsford, British Columbia, Canada, on
the 12th day of October, 1999.
STRATABASE.COM
(Registrant)
By: Trevor Newton,
President and Director
Pursuant to the requirements of the
Securities Act, this pre-effective
amendment number 1 to the Form SB-2
Registration Statement has been signed
below by the following persons in the
capacities and on the dates indicated.
Signature Capacity Date
/s/ Trevor Newton October 12, 1999
Trevor Newton President, Treasurer,
Secretary and Chairman
of the Board of
Directors (Principal
Executive,
Officer Principal Operating
Officer, and Principal
Financial Officer)
/s/ Fred Coombes October 12, 1999
Fred Coombes Vice President
and Director
/s/ John Tarves October 12, 1999
John Tarves Director
EXHIBITS TO
PRE-EFFECTIVE AMENDMENT NUMBER 1 TO THE
REGISTRATION STATEMENT ON
FORM SB-2
FILED ON October 14, 1999
BY
STRATABASE.COM
EXHIBIT INDEX for pre-effective amendment
number 1 to Form SB-2/A
DESCRIPTION EXHIBIT NUMBER
Opinion of James C. Jones, Esq. 5.1
Form of Escrow Agreement
with Escrow Agent 10.1
Consent of Moss Adams LLP 24.2
Financial Data Schedule 27.1
EXHIBIT 5.1 - OPINION OF COUNSEL
October 6, 1999
Stratabase.com
343154 Marshall Road, Suite 2032
Abbotsford, B.C. V2S1L2 Canada
Gentlemen:
I refer to the registration statement file
No. 333-85011 and all amendments thereto
on Form SB-2 (the "Registration
Statement") to be filed by Stratabase.com
(the "Company"), a corporation duly and
properly organized under the laws of the
State of Nevada, with the U.S. Securities
and Exchange Commission under the
Securities Act of 1933, as amended. Said
Registration Statement relates to an
offering of Units comprised of common
Stock ($.001 par value) and Redeemable
warrants to purchase shares of common
Stock to be sold by the Company.
As counsel for the Company, I have
examined such corporate records, documents
and such questions of law as I have
considered necessary or appropriate for
the purposes of this opinion, and, upon
the basis of such examination, advise you
that in my opinion the:
1. Company is duly organized and validly
existing as a corporation in good standing
under the laws of the State of Nevada;
2. 800,000 shares of $.001 par value
common Stock; and 2,400,000 shares of
common stock issuable upon the exercise of
the redeemable warrants included in the
units being offered, have been duly and
validly authorized and when sold in the
manner contemplated by the Registration
Statement, and upon the receipt by the
Company of payment therefore as provided
in the Registration Statement, the
aforementioned securities will be legally
issued, fully paid and non-assessable.
3. 800,000 units being offered and
redeemable warrants contained therein when
sold in the manner contemplated by the
Registration Statement, and upon receipt
by the company of payment therefor as
provided in the Registration Statement
will be legal and binding obligations of
the company.
I am qualified to practice law in the
state of New York and do not purport to be
an expert on or express any opinion herein
concerning any law, other than the laws of
the State of New York, the Nevada general
Corporation Law and the federal Laws of
the United States.
Very truly yours,
James C. Jones, Esq.
JCJ:bt
EXHIBIT 10.1
Escrow Agreement
Agreement made this _ day of _, 1999 by
and among Stratabase.com, a Nevada
Corporation, and Securities Transfer
Corporation, a Texas Corporation ("Escrow
Agent"), with reference to the following
facts and circumstances:
The company has offered and is presently
offering (the "Offering") for sale to
investors up to 800,000 units of its
common stock as described on the form SB-2
of the company (File No. ) filed
with the SEC and, as amended, declared
effective on , 1999.
Description of the Units
A total of 800,000 units are available to
be sold for $0.50 per unit. Each unit
consists of one share of common stock
($.001 par value), one redeemable Class A
common stock purchase warrant ("Class A
warrants"), one redeemable Class B common
stock purchase warrant ("Class B
warrants"), and one redeemable Class C
common stock purchase warrant ("Class C
warrants").
The Offering is being made on a
best-efforts, all or none basis as to the
first 400,000 units, and on a best efforts
basis as to the remaining units. If
400,000 units are not sold within 90 days
from the effective date of the offering
(which period can be extended for an
additional 90 days), all funds received
will be refunded within 7 days of
termination, subject to collection of
funds, to subscribers in full, without
interest, or deduction. If 400,000 units
are sold, the Offering will continue
without any provision for refund: (1)
until all of the remaining 400,000 units
are sold; (2) until 90 days (or 180 days
if extended) from the date of the
effective date of the offering; or (3)
upon the prior termination of the offering
by Stratabase.com, whichever occurs first.
The units are being offered by
Stratabase.com when, as and if received
and accepted by it, subject to prior sale,
allotment and withdrawal, cancellation or
modification of the offer without notice
and subject to the exclusive right of
Stratabase.com to reject any order in
whole or in part at any time, and to
certain further conditions. The Offering
may close in up to 14 days after the end
of the Offering period.
A. Stratabase.com and Escrow Agent have
executed that certain Transfer Agent
Agreement, dated ,
1999 (the "Transfer Agent Agreement")
whereby the Escrow Agent acts as the
Transfer Agent for Stratabase.com.
B. Stratabase.com desires the Escrow Agent
to act on behalf of Stratabase.com, and
the Escrow Agent is willing so to act, in
connection with the receipt of funds from
subscribers in payment of the subscription
price of the units pursuant to the terms
of the offering.
THEREFORE, in consideration of the mutual
covenants and agreements hereinafter set
forth, the parties agree as follows:
1. Escrow Amount:
The Escrow Agent shall promptly notify
Stratabase.com in writing of any
subscription and of the number of units
subscribed and shall cause payment of an
amount in cash equal to the subscription
price of the units to be promptly
deposited into the Escrow Account. The
Parties contemplate such payments will be
deposited to the Escrow Account on a
weekly basis and will consist of collected
funds only. The Escrow Agent shall hold
any proceeds collected in an escrow
account federally insured, at all times
relevant hereto. Stratabase.com hereby
consents and authorizes the agent to
establish said escrow account and to sign
and execute whatever forms or documents
are necessary to establish the account.
Stratabase.com also authorizes the agent
to endorse any checks received as
subscription payment which are made
payable to Stratabase.com for deposit into
said account. As soon as collected funds
are equal to the minimum offering
($200,000) and have cleared, Escrow Agent
will release collected funds to
Stratabase.com. All funds collected
thereafter will be turned over to
Stratabase.com on a weekly basis once
cleared.
2. Rights of Escrow Agent:
2.1 No person, firm, or corporation will
be recognized by the Escrow Agent as a
successor or assignee of Stratabase.com
until there shall be presented to the
Escrow Agent evidence satisfactory to it
of such succession or assignment.
2.2 The Escrow Agent shall not be
responsible for the identity, authority or
rights of any person, firm, or corporation
executing or delivering or purporting to
execute or deliver this escrow agreement
or any document or instrument deposited
hereunder or any endorsement thereon or
assignment thereof.
2.3 The Escrow Agent may rely upon any
instrument in writing believed by it to be
genuine and sufficient and properly
presented, and shall not be liable or
responsible for any action taken or
omitted in accordance with the provisions
thereof.
2.4 The Escrow Agent shall not be liable
or responsible for any act it may for or
omit to do in the exercise of reasonable
care.
2.5 In the event any property held by the
Escrow Agent hereunder shall be attached
garnisheed or levied upon under any court
order, or if the delivery of such property
shall be stayed or enjoined by any court
order, or if any court order, judgment or
decree shall be made or entered affecting
such property or affecting any act by the
Escrow Agent, the Escrow Agent may, in its
sole discretion, obey and comply with all
writs, orders, judgments or decrees so
entered or issued, whether with or without
jurisdiction notwithstanding any provision
of the Escrow Agreement to the contrary.
If the Escrow Agent obeys and complies
with any such writs orders, judgments or
decrees it shall not be liable to any of
the parties hereto or to any other person,
firm or corporation, by reason of such
compliance, notwithstanding that such
writs, orders, judgments or decrees may be
subsequently reversed, modified, annulled,
set aside or vacated.
2.6 The Escrow Agent shall be entitled to
receive its normal fees as compensation
for its services hereunder, as shall be
set forth in Schedule A hereof.
Furthermore, the Company shall reimburse
the Escrow Agent for any and all
reasonable expenses, disbursements and
advances made by it in the performance of
its duties hereunder including reasonable:
fees, expenses and disbursements incurred
by its counsel.
2.7 If the delivery of the Escrow Amount
to the Company is disputed, the Escrow
Agent shall, subject to the provisions of
this Section 2, withhold such delivery
until the dispute is resolved by written
agreement between The parties or by court
decree. Such court decree shall also be
accompanied by a legal opinion by counsel
for the party requesting delivery that
such adjudication is final and
unappealable.
2.8 The Escrow Agent makes no
representation as to the validity, value,
genuineness or the collectibility of any
security or other document or instrument
held by or delivered to it.
3. Miscellaneous Provisions:
3.1 All the terms and provisions hereof
shall be binding upon and inure to the
benefit of and be enforceable by the
representatives, successors, heirs and
assign, of the parties hereto.
3.2 This Escrow Agreement constitutes the
entire understanding between the parties
with respect to the subject matter hereof
superseding all negotiations, prior
discussions and preliminary agreements.
This Escrow Agreement may not be changed
except in writing by an instrument or
instruments executed by and Escrow Agent.
3.3 No Waiver of any provisions of this
Escrow Agreement nor waiver of any breach
or default under this Escrow Agreement
shall be considered valid unless in
writing and signed by the party giving
such waiver, and no such waiver shall be
deemed a waiver of any other provision or
any subsequent breach or default of a
similar nature.
3.4 The invalidity or unenforceability of
any particular provision of this Escrow
Agreement shall not affect the other
provisions hereof and this Escrow
Agreement shall be construed in all
respects as if such invalid or
unenforceable provisions were omitted.
3.5 This Agreement may be executed in one
or more counterparts each of which shall
be deemed an original, and all of which
taken together shall constitute one and
the same instrument. Execution and
delivery of this Agreement by exchange of
facsimile copies bearing facsimile
signature of a party shall constitute a
valid and binding execution and delivery
of this Agreement by such party. Such
facsimile copies shall constitute
enforceable original documents.
3.6 Section headings are contained in this
Escrow Agreement only for purposes of
convenience of reference and shall not
affect the interpretation of this Escrow
Agreement or modify any of its terms or
provisions.
3.7 This Agreement shall be construed and
enforced according to the internal laws of
the State of
Texas, without regard to its rule
pertaining to conflicts of laws.
3.8 Any notice or other communication
permitted or required to be given
hereunder shall be in writing and shall be
deemed to have been given upon mailing by
first class registered mail, postage
prepaid addressed to the parties as set
forth below:
To Escrow Agent: Security Transfer
Corporation
16910 Dallas
Parkway, Suite 100
Dallas, Texas
75249
Attn: Kevin Halter,
President
To the Company: Stratabase.com
3414 Marshall
Road, Suite 203
Abbotsford, B.C.
V2S1L2, Canada
Trevor Newton,
President
Each of the foregoing shall be entitled to
specify a different address by giving
notice as aforesaid to the other parties
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly
executed as of the day and year first
above written,
ESCROW AGENT:
SECURITIES TRANSFER CORPORATION
By:
Kevin Halter, President
The Company:
Stratabase.com
By:
Trevor Newton, President
EXHIBIT 24.2
[MOSS ADAMS LLP]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in this Registration Statement of our
report dated August 10, 1999, relating to the financial statements
of Stratabase.com, and to the reference to our Firm under the
caption "Experts" in the Prospectus.
/s/ MOSS ADAMS LLP
Portland, Oregon
August 10, 1999
EXHIBIT 27.1-Financial Data Schedule
ITEM NUMBER ITEM DESCRIPTION
5-02(1) $ 152,410 Cash and cash items
5-02(2) $ - Marketable securities
5-02(3)(a)(1) $ 8,810 Notes and accounts
receivable-trade
5-02(4) $ - Allowances for doubtful
accounts
5-02(6) $ - Inventory
5-02(9) $ 161,220 Total current assets
5-02(13) $ 15,842 Property, plant and
equipment
5-02(14) $ 1,740 Accumulated
depreciation
5-02(18) $ 175,894 Total assets
5-02(21) $ 6,797 Total current
liabilities
5-02(22) $ - Bonds, mortgages and
similar debt
5-02(28) $ - Preferred stock-
mandatory redemption
5-02(29) $ - Preferred stock-no
mandatory redemption
5-02(30) $ 5,544 Common stock
5-02(31) $ 163,553 Other stockholders'
equity
5-02(32) $ 175,894 Total liabilities and
stockholders' equity
5-03(b)1(a) $ 6,709 Net sales of tangible
products
5-03(b)1 $ 6,709 Total revenues
5-03(b)2(a) $ 8,541 Cost of tangible goods
sold
5-03(b)2 $ 8,541 Total costs applicable
to sales and revenues
5-03(b)3 $ 66,329 Other costs and
expenses
5-03(b)5 $ - Provision for doubtful
accounts and notes
5-03(b)8 $ - Interest and
amortization of debt
discount
5-03(b)(10) $ (65,512) Income before taxes and
other items
5-03(b)(11) $ - Income tax expenses
5-03(b)(14) $ (67,512) Income/loss continuing
operations
5-03(b)(15) $ - Discontinued operations
5-03(b)(17) $ - Extraordinary items
5-03(b)(18) $ - Cumulative effect-changes in
accounting principles
5-03(b)(19) $ (67,512) Net income or loss
5-03(b)(20)$ (0.01) Earnings per share - primary
5-03(b)(20) $ (0.01) earnings per share - full
diluted
