As filed with the Securities and exchange Commission on
November 2, 1999
Registration No. 333-85011
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-effective amendment number 2 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 Incorporation) (Primary Industrial (IRS Employer ID No.)
Standard Number)
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 Amount price per offering Amount of
registered registered security (1) price (1 )registration 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
Class A warrants (5) 800,000 wts. -0- -0- -0-
Class B warrants (5) 800,000 wts. -0- -0- -0-
Class C warrants (5) 800,000 wts. -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, or Class B or Class C redeemable
purchase warrants (a maximum of 800,000 wts. For each class) 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.)
We are offering a minimum of 400,000 units and a maximum of 800,000
units.
You 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.
You 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.
No public Market exists for the units, common stock and
redeemable warrants.
See "Risk Factors" beginning on p. 6 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>
<S> <C> <C> <C>
Per unit Total of minimum Total of maximum
offering offering
Public
offering price $.50 $200,000 $400,000
</TABLE>
We will terminate the offering period on 2,000 unless we
extend it for an additional 90 days to 2,000. We may
terminate the offering 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. We will receive all the proceeds
from the offering, less offering expenses.
The funds we receive from all 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 Operations32
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 Summar
You should carefully read the entire prospectus including the
"Risk Factors" section and the financial statement including
the notes.
Stratabase.com
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 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
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)
<S> <C> <C>
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 only recently been organized, have no significant
operating history or operating revenues. In order to be
successful, 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 you can expect it 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.
We expect that this increased competition will result in:
less usage of our services;
price reductions for advertising inventory; and
reduced margins or loss of market share,
If any of these factors occur, they 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 our services to be a limited or
ineffective advertising medium, and they may be reluctant to
devote a significant portion of their advertising budgets to
internet advertising, in general, or to advertise with us, in
particular.
We need to grow and manage our growth to become profitable.
If we do not grow, we will probably not become profitable.
However, if we grow, 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. Accordingly, we will limit
or even entirely negate our chances to be profitable if we do
not grow or if we cannot manage our growth.
We are understaffed and we may not be able to accomplish our
goals unless we get additional help.
We are currently understaffed and have only two employees-
our sole officers, Trevor Newton and Fred Coombes. 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. Because Mr. Coombes will only work
part-time for us, Mr. Newton is our only full time employee.
However, Mr. Coombes has assured us that he will give us
enough of his time as he feels is necessary. Obviously, as the
only full-time employee, Mr. Newton will have so many
responsibilities that we can expect that his and our
performance to make us successful.
There are conflicts between our business and Mr. Coombes.
Since Mr. Coombes is active in other unrelated businesses, he
will not be able to devote his full-time to our affairs. He plans
to continue these activities, which may cause conflicts of
interest with our business in terms of time and business
opportunities. These conflicts may not be resolved in our
favor. If they are not resolved in our favor, our business may
suffer.
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.
If the growth of the internet slows down, we will not be as
profitable as we currently project
.
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.
In order to keep up with technological advances, we may have
to incur additional costs to modify services or infrastructure.
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 our 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.
Because the internet is relatively new and is not established
as an advertising medium, actual advertising revenues may be
lower than our projections indicate.
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 with us or only be willing to pay less for our
advertising 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.
The impact of governmental regulation may increase our
costs and impede our growth.
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,
our 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.
Year 2000 risk may adversely affect us.
The Year 2000 issue refers to the potential failures that
computer systems may experience as a result of the date
change from 1999 to 2000. Virtually every computer operation
will be affected in some way by the Year 2000 issue. It is
uncertain what impact the Year 2000 issue will have on the
internet and the world wide web
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 us 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. We can terminate the
offering 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 we receive only that amount, or
insignificantly more, 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.
If we complete the minimum offering, our current management
and principal shareholders will own approximately 93.3% of the
outstanding shares of our common stock. Similarly, if we
complete 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 we complete the 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 our 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 our shares under Rule 144 has a depressive
effect upon the market price of our securities, we could have
difficulty in raising 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, after we complete the
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.
On our own, 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 SEC 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 the
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, our 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 if, when or how often their salaries will be increased. 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 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 SEC's 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, 5,543,772, 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:
<TABLE>
<S> <C>
Shares Outstanding 5,543,772
Shares to be outstanding
in the event of the successful
completion of the minimum
offering- 5,943,772
Shares to be outstanding
in the event of the successful
completion of the maximum
offering 6,343,772
</TABLE>
This table does not reflect the effect that the possible exercise
of the warrants will have. Each share of our common stock
ha 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)
Debt:
<S> <C> <C>
Short-term debt $3,828 $3,828
Long-term debt -0- -0-
Stockholders's Equity:
common stock $5,544 $5,944
Additional Paid-in Capital 231,065 390,665
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 5,543,772 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>
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 6,343,772 100.0% $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
free news will be supplied by COMTEX under a contract with
us and delivered to the users by email at no extra charge. The
free newsletters ,the free videos and the free informational
items such as special reports on various topics of interest to
users will be supplied by advertisers and paid for out of a
portion of the proceeds from our direct marketing campaigns.
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.
Stratabase.com will meet the competition.
During the last four years, the amount of advertising dollars
spent by internet companies to attract new clients and users
has increased significantly. This increase is due to 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 has 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 stage 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.
Concerning the free services for internet users:
The news we provide will be supplied by COMTEX
under our existing contract. The newsfeed consists of
business news, financial news, current events, and
various other topics of interest to users.
The newsletters we intend to provide have not yet
been developed, nor do we know precisely what
topics the newsletters will over. We intend to
determine these topics during the first quarter of 2000.
The newsletters will be written by outside
contractors. A portion of the proceeds from our direct
marketing campaigns for advertisers will be used to
pay the fees of these outside consultants.
The subject matter of the videos has not been
determined but will cover the same topics as the
newsletters and will be determined in the first quarter
of 2000.
The videos will be produced using our own the video
facility which is currently in place. The information
contained in the videos will be presented interview
style by outside contractors and script writers.
The proceeds of the advertising campaigns we carry
out for advertisers will be used to pay the fees of the
outside contractors and script writers.
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>
<CAPTION>
Name Age Position
<S> <C> <C>
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 secondar
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>
<CAPTION>
Summary of Annual Compensation
Name and
Principal Position Year Salary
<S> <C> <C>
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). Insert Boccieri's shares here. Have they
been issued already?. 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, we 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 have agreed to issue 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 Offering
to Offering of
Officers,
Directors, 5% No. of 400,000 800,000
Shareholders Shares % Units Units
<S> <C> <C> <C> <C>
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 under 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 under this offering, our
shares of common stock are not subject to further assessment
or call.. If there are differences between the following summary
description of our common stock and our amended certificate
of incorporation and by-laws, the information contained in our
amended certificate of incorporation and by-laws is
controlling.
Our shareholders are not given cumulative voting rights in
electing board members. So minority shareholders may not
have any representation. 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 future.
The Redeemable Purchase Warrants
There are no Class A, Class B and Class C warrants, presently
outstanding. After we issue them, the warrants will be
exercisable at:
a price of $1.00 per share of common stock for Class
A for 6 months from the effective date of this offering
,
a price of $3.00 per share of common stock for Class
B for 12 months from the effective date of this
offering and
a price of $5.00 per share of common stock for Class C
for 18 months from the effective date of this offering,
We may extend each warrant exercise period at any time,
and/or reduce the exercise price(s) by up to 50%. If the exercise
period is extended, you will be given a written notice 30 days
before the beginning of the extension period . One warrant
entitles the holder to purchase one share of common stock.
The following discussion of the warrants may not be complete.
You should read the warrant agreement for a complete
discussion. The essential provisions of the warrants are as
follows:
The warrants, which will be issued under the warrant
agreement between us and our warrant agent,
Security Transfer Corp., will be in registered form.
After successful completion of the minimum offering,
the warrants may be sold, assigned or conveyed
separately and apart from the common stock included
in the Units.
Upon the successful completion of the offering 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 the
warrants, in whole or in part, at a 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
if we sell 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 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. We are 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 5,943,772 shares
of common stock. Similarly, if our maximum offering is
completed, we will have 6,343,772 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 5,543,772 shares of common stock presently
outstanding are "restricted securities" as that term is defined
in Rule 144 of 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. We have already paid the escrow agent's fees. The
transfer agent will be responsible for all record-keeping and
administrative functions in connection with the warrants. A
copy of the executed escrow agreement, and the executed
warrant agreement with exhibits attached are 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 we sell at least 400,000 of the offered units
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 we sell the minimum number of units within the
specified period, the offering will continue until the earlier of:
when we sell all 800,000 units or
the expiration of the offering period and any
extension, 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 concerning
this offering. 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 we sell at least 400,000 of the units, 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 we sell the minimum number of units within the escrow
period, as extended, payments from subscribers will 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. 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. We have not
retained a broker-dealer who 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
Directors or Officers 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.
FINANCIAL STATEMENTS
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
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
CURRENT ASSETS
<S> <C>
Cash $152,410
Accounts receivable 7,179
GST receivable 1,631
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 share 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)
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 theTotal
Common Stock Paid in Development 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 - - (67,512) (67,512)
5,543,77 $5,544 $231,06 (67,512) $169,097
</TABLE>
See accompanying notes.
<TABLE>
<CAPTION>
STRATABASE.COM
(a development stage company)
STATEMENT OF CASH FLOWS FOR THE PERIOD FROM
INCEPTION (NOVEMBER 18, 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
</TABLE>
See accompanying notes.
STRATABASE.COM
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
August 10, 1999
<F1>
NOTE 1 - NATURE OF OPERATIONS AND
ORGANIZATION
Stratabase.com (the Company) 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. The Company has adopted December 31 as the
closing of its fiscal year.
<F2>
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 exist.
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. Depreciation expense in the amount of $1,740 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.
Foreign Exchange Accounting- The Company's Canadian
transactions are measured in local currency and then
translated into U.S. dollars. All balance sheet accounts have
been translated using the current rate of exchange at the
balance sheet date. Results of operations have been translated
using the average rates prevailing throughout the year.
Translations gains or losses resulting from the changes in the
exchange rates are accumulated in a separate component of
shareholders' equity. All amounts in the accompanying
financial statement and footnotes are denominated in U.S.
dollars unless otherwise indicated.
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.
<F3>
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.
<F4>
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 (Canadian
dollars) 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.
Distribution Agreement- The Company has entered into a
Disbursement Agreement to receive and transmit certain
electronic information services and content among its
customer base. The Agreement extends for a two year period
with provisions for additional two year renewal periods. Under
the terms of the Agreement, the Company will pay fees of
$750.00 in July 1999, $1,500.00 in August 1999, $2,250.00 in
September 1999 and $3,000.00 each month thereafter for the
entire term of the Agreement. Further, the Company will pay
the Distributor a royalty equivalent to 25% of net advertising
revenues it realizes from distribution of information and
content under the Agreement.
(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 agreed
to receive 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)
Consideration
<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
</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.
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. Description
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 2 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 2 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 November, 2,
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 November, 2,
1999
Fred Coombes Vice President and Director
/s/ John Tarves November, 2,
1999
John Tarves Director
EXHIBITS TO
PRE-EFFECTIVE AMENDMENT NUMBER 2 TO THE
REGISTRATION STATEMENT ON
FORM SB-2/A
FILED ON November, 2, 1999
BY
STRATABASE.COM
EXHIBIT INDEX for pre-effective amendment
number 2 to Form SB-2/A
DESCRIPTION EXHIBIT
NUMBER
Form of Escrow Agreement with Escrow Agent 10.1
Consent of Moss Adams LLP 24.2
Financial Data Schedule 27.1
EXHIBIT 10.1
Escrow Agreement
Agreement made this 28th day of October, 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 will be 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.333-85011) filed with
the SEC and, as amended, to be 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 October 28, 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: /s/
Kevin Halter, President
The Company:
Stratabase.com
By: /s/
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
October 29, 1999
<TABLE>
EXHIBIT 27.1-Financial Data Schedule
<S> <C> <C>
(ARTICLE ) 5
(MULTIPLIER) 1,000
(PERIOD-TYPE) 8-MOS
(FISCAL YEAR-END) DEC-31-
1999
(PERIOD END) JUN-30-
1999
(CASH) 152
(SECURITIES) 0
(RECEIVABLES) 9
(ALLOWANCES) 0
(INVENTORY) 0
(CURRENT ASSETS) 161
(PP&E) 16
(DEPRECIATION) (2)
(TOTAL ASSETS) 176
(CURRENT LIABILITIES) 7
(BONDS) 0
(PREFERRED MANDATORY) 0
(PREFERRED) 0
(COMMON) 6
(OTHER SE) 163
(TOTAL LIABILITY AND EQUITY) 176
(SALES) 7
(TOTAL REVENUES) 7
(CGS) 0
(TOTAL COSTS) 0
(OTHER EXPENSES) 75
(LOSS PROVISION) 0
(INTEREST EXPENSE) 0
(INCOME PRETAX) (68)
(INCOME TAX) 0
(INCOME CONTINUING) 0
(DISCONTINUED) 0
(EXTRAORDINARY) 0
(CHANGES) 0
(NET INCOME) (68)
(EPS PRIMARY) (.01)
(EPS DILUTED) (.01)
</TABLE>
