UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(MARK ONE)
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission file number: 0-30314
Dealcheck.com Inc.
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(Exact name of Registrant as specified in its charter)
Inapplicable
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(Translation of Registrant's name into English)
Province of Ontario, Canada
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(Jurisdiction of incorporation or organization)
65 Queen Street West, Suite 1905, Toronto, Ontario M5H 2M5, Canada
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(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class Name of each exchange
on which registered
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Inapplicable
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<PAGE>
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Inapplicable
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(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act
Common shares without par value
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(Title of Class)
Indicate the number of outstanding shares of each of the Issuer's classes of
capital or common stock as of the close of the period covered by the annual
report
4,049,316 Common shares without par value as at March 31, 2000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report) and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
--- ---
Indicate by check mark which financial statement item the registrant has elected
to follow
Item 17: X Item 18
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
PART I PAGE
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NO.
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<S> <C> <C>
Item 1 Description of Business 1
ITEM 2 DESCRIPTION OF PROPERTY 7
ITEM 3 LEGAL PROCEEDINGS 7
ITEM 4 CONTROL OF COMPANY 7
ITEM 5 NATURE OF TRADING MARKET 8
ITEM 6 EXCHANGE CONTROLS AND OTHER LIMITATIONS 10
AFFECTING SECURITY HOLDERS
ITEM 7 TAXATION 11
ITEM 8 SELECTED FINANCIAL DATA 13
Statement of Operations Data
Balance Sheet data
Exchange Rates
ITEM 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF 16
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Results of Operations
Liquidity and Capital Resources
ITEM 10 DIRECTORS AND OFFICERS OF THE COMPANY 24
ITEM 11 COMPENSATION OF DIRECTORS AND OFFICERS 26
ITEM 12 OPTIONS TO PURCHASE SECURITIES FROM 27
COMPANY OR SUBSIDIARY
ITEM 13 INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS 27
PART II
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ITEM 14 DESCRIPTION OF SECURITIES TO BE REGISTERED 27
PART IV
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ITEM 17 FINANCIAL STATEMENTS 27
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ITEM 18 FINANCIAL STATEMENTS 28
ITEM 19 FINANCIAL STATEMENTS AND EXHIBITS 28
(a) Index to Financial Statements
(b) Exhibits
SIGNATURE 30
</TABLE>
<PAGE>
PART 1
ITEM 1 - DESCRIPTION OF BUSINESS
-------------------------------------
COMPANY HISTORY AND OVERVIEW
-------------------------------
Dealcheck.com Inc. ("the Company') was incorporated under the Business
Corporation Act (Ontario) in 1973 and is based in Toronto, Ontario, Canada.
The Company went through seven name changes and four major changes in its
business activities. Details of these changes were provided in the Registration
Statement F-20 dated June 12, 2000. The significant changes, briefly, were as
follows:
a. The Company was incorporated under the name "Kamlo Gold Mines Limited
and remained an inactive shell from the date of incorporation to 1985.
b. Between 1986 and 1982, the Company was involved in the development of
a new technology for the marine propulsion business. During this
period, the Company went through three name changes.
c. Between 1993 and 1996, the Company was involved in the distribution
and manufacture of a snack food. During this period, the Company went
through two more name changes.
The Company remained an inactive shell since the closure of snack food business
in November 1996 until December 1998 when it changed its name to the current
name and agreed on a new business strategy.
The Company had no sales since April 1, 1996 and incurred significant losses
since inception. Accumulated deficit at March 31, 2000 was $17.3 million.
The Company's operating cash requirement for the past three years was funded by
amongst others, certain shareholders one of whom has a consulting contract with
the Company.
FISCAL 1999 AND THE NEW BUSINESS STRATEGY
-----------------------------------------------
A new business strategy evolved in December 1998 after considerable deliberation
among the directors and management and comments from the lenders/investors.
The new strategy includes internal development and operations of wholly owned
Internet business concepts as well as investing in new and emerging Internet
companies that have demonstrated synergies with the Company's core business. The
Company's strategy also envisions and promotes opportunities for synergistic
business relationships among the companies within its portfolio.
<PAGE>
For the remainder of the fiscal year 1999, the management began evaluating
business proposals and eventually in March 1999 made an investment of $64,914 in
the equity capital of World Vacation Club.com., a Nevada incorporated private
Company seeking to develop online vacation properties rental/management
services. As explained later, this investment was disposed off at cost in May
2000.
OVERVIEW OF THE FISCAL YEAR ENDED MARCH 31, 2000
--------------------------------------------------------
The management continued to pursue the new business strategy developed in
December 1998.
BUSINESS INVESTMENTS
The Company successfully completed a private placement and raised about $3.2
millions. Net proceeds from the private placement were initially placed in money
market account with Bank of Montreal, one of the major Canadian commercial
banks.
The Company's overall business activities were three-fold
- The Company invested funds in short term investments in marketable
securities of new or emerging public companies, in non-marketable
securities of private companies and in convertible debenture of a private
company. All these companies were primarily engaged in development of
Internet related businesses. Investments in marketable securities were made
through three major brokerage firms with whom the Company opened accounts
for this purpose. These investments were intended to be for a short period
of under six months, until identification of and investment into long term
business opportunities. Market value of these investments at March 31, 2000
was approx. $1.2 million.
- The Company acquired a new Internet business concept, EduVu.com and
internally developed another one, IRCheck.com. The Company also spent on
developing its own comprehensive web site. Both the business concepts
envisage creation of information portals for users in a specific industry
group. EduVu.com aims at creating an educational portal serving students,
teachers and parents on a global basis. While IRCheck.com aims at building
web site which will provide details on Investors Relations firms for the
small to medium size public companies seeking to outsource their investor
relation matters. The revenue opportunities in these businesses will
comprise subscription fees chargeable to the owners of the contents
included in the portal (IRCheck.com - IR firms) and user fees to the
visitors to the portal requiring customized information beyond the basic
free information. Other sources of revenue will include sponsorship,
product packaging and sale of proprietary database. The Company spent a
total of $165,370 up to March 31, 2000 on these projects, broken down by
project as follows:
<PAGE>
Shellfn.com $ 77,584
IRCheck.com $ 10,000
EduVu.com $ 33,500
Dealcheck.com $ 44,286
- The Company made equity investments in three different new and emerging
Internet businesses whose business strategy shows synergy with the
Company's core business. Net amount invested in these businesses at March
31, 2000 was $782,687.
Full details of these investments and related business activities are provided
under "Management's Discussion and Analysis of Financial Conditions and Results
of Operations " section of this Report.
During the fiscal year the company provided certain accounting and
administrative services to one of the investees for which the Company charged a
fee of $10,000. The arrangement with this investee expired on March 31, 2000 and
no further services are expected to be provided to the said investee.
PRIVATE PLACEMENTS
The Company initiated a private placement in December 1999 involving issuance of
885,000 Company units, each unit priced at $2.80 US and comprised of one Company
common share and one share purchase warrant, each such warrant being exercisable
to purchase one further Company common share at the price of $3.50 US within 12
months.
All units were fully subscribed and paid for before the fiscal year end.
Expenses of issue, comprising arrangement fee, of $359,161 were charged to the
gross proceeds of $3,610,821. These units were acquired by ten arms-length
entities.
816,700 common shares and related warrants were issued up to March 31, 2000. No
warrant was exercised during the year. The issuance of the remaining 68,300
common shares has been withheld at the request of the investees.
Funds received under this private placement were not subject to any specific
spending restrictions.
RISKS RELATING TO INTERNET INDUSTRY
---------------------------------------
Concerns regarding security of transactions and transmitting confidential
Information over the Internet may have an adverse impact on the Company's
proposed business and on the businesses of the entities in which the Company
holds equity or non equity interest.
The management believes that concern regarding the security of confidential
information transmitted over the Internet prevents many potential customers from
engaging in online transactions. If the Company or its investees entities that
will depend on such transactions do not add sufficient security features to the
future product releases, the products and services may not gain market
acceptance or there may be additional legal exposure.
<PAGE>
The infrastructure, i.e. E-Mail server, of the Company and its investees
entities is potentially vulnerable to physical or electronic break-ins, viruses
or similar problems. If a person circumvents the security measures imposed, he
or she could misappropriate proprietary information or cause interruption in
operations of the Company. Security breaches that result in access to
confidential information could damage the reputation of the company and expose
it to a risk of loss or liability. The Company and its investee entities may be
required to make significant investments and efforts to protect against or
remedy security breaches. Additionally, as e-commerce becomes more widespread,
The Company' s and its investee entities' potential customers will become more
concerned about security. Unless their concerns are not adequately addressed,
The Company and its investee entities may be unable to sell their goods and
services.
The Company and its investee entities plan to operate in markets characterized
by rapid technology change, frequent new product and service introductions and
evolving industry standards. Significant technological changes could render the
existing Web site technology or other products and services of the Company and
its investee entities obsolete . The e-commerce market's growth and intense
competition may exacerbate these conditions.
If the Company and its investee entities are unable to successfully respond to
these developments or do not respond in a cost-effective way, their business,
financial condition and operating results will be adversely affected. To be
successful The Company and its investee entities must adapt to the rapidly
changing markets by continually improving the responsiveness, services and
features of our products and services and by developing new features to meet the
needs of their customers. Their success will depend, in part, on their ability
to license leading technologies useful in their businesses, enhance their
products and services and develop new offerings and technology that address the
needs of their customers. The Company and its investee entities will also need
to respond to technological advances and emerging industry standards in a cost-
effective and timely manner.
Government regulations and legal uncertainties may place financial burdens on
the business of The Company and its investee entities
As at March 31, 2000, there were few laws or regulations directed
specifically at e-commerce. However, because of the Internet's popularity and
increasing use, new laws and regulations may be adopted. These laws and
regulations may cover issues such as the collection of and use of data from Web
site visitors and related privacy issues, pricing, content, copyrights, online
gambling, distribution and the quality of goods and services. The enactment of
any additional laws or regulations may impede the growth of the Internet and
e-commerce, which could decrease the potential revenue and place additional
financial burdens on the business of the Company and its investee entities
<PAGE>
Laws and regulations directly applicable to e-commerce or Internet
communications are becoming more prevalent. For example, Congress recently
enacted laws regarding online copyright infringement and the protection of
information collected online from children. Although these laws may not have a
direct adverse effect on the proposed business of the Company and its investee
entities , they add to the legal and regulatory burden faced by e-commerce
companies.
Currency and Exchange Rates.
All dollar amounts set forth in this report are in Canadian dollars, except
where otherwise indicated. The following table sets forth (i) the rates of
exchange for the Canadian dollar, expressed in U.S. dollars, in effect at the
end of each of the periods indicated; (ii) the average exchange rates in effect
on the last day of each month during such periods; (iii) the high and low
exchange rate during such periods, in each case based on the noon buying rate in
New York City for cable transfers in Canadian dollars as certified for customs
purposes by the Federal Reserve Bank of New York.
<TABLE>
<CAPTION>
2000 1999 1998
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<S> <C> <C> <C>
Rate at end of Period .6879 .6626 .7052
Average Rate During Period .6810 .6629 .7127
High Rate .6925 .7055 .7317
Low Rate .6636 .6351 .6832
</TABLE>
ITEM 2 DESCRIPTION OF PROPERTY
-------------------------------------
The administrative head office of the Company is located in leased premises at
65 Queen Street West, Suite 1905, Toronto, Ontario, Canada. The premises were
subleased on a month-by-month basis until January 31, 2000.
The Company decided to acquire additional premises in the light of the shortage
of commercial space expected in Toronto and to accommodate future expansion and
to provide fulfillment services to its investee entities
As a result, the Company signed on January 20, 2000 a lease agreement for the
above premises for a period of five years and four months from February 1, 2000
to May 30, 2005. On March 20, 2000, the Company signed a supplementary lease for
additional premises adjacent to the existing premises ending on the same day as
the main premises lease i.e. May 30, 2005.
<PAGE>
Total area of the premises is approximately 4,000 sq. ft., about 60% of these
premises have been sub leased on a month-to-month basis to other entities,
Ontario private companies, in which the directors of the Company have
significant ownership control.
ITEM 3 LEGAL PROCEEDINGS
------------------------------
There are no material legal proceedings in progress or to the knowledge of the
Company, pending or threatened to which the Company is a party or to which any
of its properties is subject.
ITEM 4. CONTROL OF THE COMPANY
-------------------------------------
The Company's securities are recorded on the books of its transfer agent in
registered form. The majority of such shares are, however, registered in the
name of intermediaries such as brokerage houses and clearing houses on behalf of
their respective clients. The Company does not have knowledge of the beneficial
owners thereof. To the best of its knowledge the Company is not directly nor
indirectly owned or controlled by another corporation(s) or by a foreign
government.
The following table sets forth information, provided by the Company's transfer
agents, regarding the beneficial ownership of shares of the Company's Common
Stock as of August 21, 2000 by (i) all stockholders known to the Company to be
beneficial owners of more than 10% of the outstanding Common Stock; and (ii) all
officers and directors of the Company as a group. Except as may be otherwise
indicated in the footnotes to the table, each person has sole voting power and
sole dispositive power as to all of the shares shown as beneficially owned by
them.
<TABLE>
<CAPTION>
Name of Common Stock Percent
Beneficial Owner Beneficially Owned Owned (1)
<S> <C> <C>
CDS & Co. (2) 1,801,248 44%
CEDE & Co. (2) 496,927 12%
Frank Calandra in Trust (2) 500,000 12%
All officers and
Directors) 66,667 2%
as a group
(three total)
<FN>
(1) Based on 4,117,616 shares issued and outstanding at August 21, 2000
(2) The beneficial owners are unknown to the Company and its Officers and
Directors.
</TABLE>
There are no voting agreements or similar arrangements (formal, informal,
written, or oral) known to management to exist.
<PAGE>
ITEM 5 NATURE OF TRADING MARKET
---------------------------------------
The Company's common shares were traded on the Over The Counter Bulletin Board
(OTCBB) and Canadian Dealing Network (CDN) under different symbols ending with
the symbol "FDQI" until January 20, 1999.
Following the name change and 15:1 common shares consolidation in December 1998,
the Company's common shares were traded primarily on OTCBB under the symbol
"Deal" effective January 21, 1999. The symbol was further changed to "NMBC" on
August 13, 1999 and then to "DCHK" on November 3, 1999.
On May 26, 2000, the Company shares were de-listed from OTCBB and began trading
on the "Pink Sheet" pending clearance of the Registration Statement, F-20
by Securities and Exchange Commission (SEC). The Company filed F-20 originally
in December 1999 and then filed several amendments in response to the comments
received from SEC to its submissions. The SEC clearance was finally received on
June 16, 2000 and the common shares of the Company began trading again on OTCBB
effective August 2, 2000.
The following table sets forth the reported high and low sale prices and volume
traded for the common shares as quoted on OTCBB or Pink Sheet on a quarterly
basis since April 1, 1998
<TABLE>
<CAPTION>
--------------------------------------------------------
PERIOD (M/D/Y) HIGH LOW VOLUME FOR
(IN US DOLLAR) QUARTER
--------------------------------------------------------
<S> <C> <C> <C>
4/1/98 - 6/30/98 0.07 0.01 66,800
7/1/98 - 9/30/98 0.11 0.02 1,227,700
10/1/98 - 12/31/98 0.02 0.01 459,000
1/1/99 - 1/25/99 0.09 0.01 282,200
1/25/99 -3/31/99* 4.00 0.875 225,700
4/1/99 - 6/30/99* 3.125 1.375 230,700
7/1/99 - 9/30/99* 2.50 1.75 152,700
10/1/99 - 12/31/99 8.00 2.00 277,500
1/1/00 - 3/31/00 6.50 2.75 223,000
</TABLE>
- Reflects prices after the consolidation of 15 old
common shares into 1 new common share.
--------------------------------------------------------
The following table sets forth the reported high and low sale prices and average
volume traded for the common shares as quoted on CDN on a quarterly basis since
April 1, 1998
<PAGE>
<TABLE>
<CAPTION>
PERIOD (M/D/Y) HIGH LOW VOLUME
(IN CANADIAN FOR
DOLLAR)
----------------------------------------------
<S> <C> <C> <C>
4/1/98 - 6/30/98 0.080 0.050 112,355
7/1/98 - 9/30/98 0.195 0.050 500,740
10/1/98 - 12/31/98 0.130 0.010 201,252
1/1/99 - 1/25/99 0.080 0.050 156,000
1/25/99 -3/31/99* x 3.75 1,000
4/1/99 - 6/30/99* x
7/1/99 - 9/30/99* x
</TABLE>
- Reflects prices after the consolidation
of 15 old common shares into 1 new
common share.
X There was only one transaction - 1,000
shares traded for $3.75 - since
Consolidation date till to date.
----------------------------------------------
As of March 31, 2000, the Company's share register indicated that 401,515 of the
issued and outstanding common shares were held by 446 shareholders with
addresses in the United States, representing approximately 10% of the issued and
outstanding common shares of the Company.
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS.
Canada has no system of exchange controls. There are no exchange restrictions on
borrowing from foreign countries nor on the remittance of dividends, interest,
royalties and similar payments, management fees, loan repayments, settlement of
trade debts, or the repatriation of capital. The Investment Canada Act (the
"Act") enacted on June 20, 1985, as amended by the Canada-United States Free
Trade Agreement Implementation Act (Canada), requires the prior notification
and, in certain cases, advance review and approval by the Government of Canada
of the acquisition by a "non-Canadian" of "control" of a "Canadian business,"
all as defined in the Act. For the purposes of the Act, "control" can be
acquired through the acquisition of all or substantially all of the assets used
in the Canadian business, or the direct or indirect acquisition of interests in
an entity that carries on a Canadian business or which controls the entity,
which carries on the Canadian business. Under the Act, control of a corporation
is deemed to be acquired through the acquisition of a majority of the voting
shares of a corporation, and is presumed to be acquired where more than
one-third, but less than a majority, of the voting shares of a corporation are
acquired, unless it can be established that the corporation is not controlled in
fact through the ownership of voting shares. Other rules apply with respect to
the acquisition of non-corporate entities. Under the Act, the Company is
considered a Canadian business.
<PAGE>
Investments requiring review and approval include direct acquisitions of
Canadian businesses with assets with a gross book value of $5,000,000 or more;
indirect acquisitions of Canadian businesses with assets of $50,000,000 or more;
and indirect acquisitions of Canadian businesses where the value of assets of
the entity or entities carrying on business in Canada, control of which is
indirectly being acquired, is greater than $5,000,000 and represents greater
than 50% of the total value of the assets of all of the entities, control of
which is being acquired. Subject to certain exceptions, where an investment is
made by an "American," or the vendor of the Canadian business is an "American"
(as defined in the Act), the monetary thresholds discussed above are higher. In
these circumstances the monetary threshold with regard to direct acquisitions is
$150,000,000 in constant 1992 dollars as determined in accordance with the Act.
The monetary threshold for indirect acquisitions, where the value of the
assetsof the entity or entities carrying on business in Canada is greater than
50% of the total value of the assets of all of the entities being acquired, is
$150,000,000 in constant 1992 dollars as determined in accordance with the Act
Other indirect acquisitions of Canadian businesses by or from Americans are not
subject to review.
An "American", as defined under the Act, includes an individual who is a
national of the United States or is lawfully admitted for permanent residence
within the meaning of the Immigration and Nationality Act of the United States,
and a corporation that is controlled by an American in accordance with the Act.
Special rules apply with respect to investments by non-Canadians to acquire
control of Canadian businesses that engage in certain specified activities,
including financial services, transportation services, and activities relating
to Canada's cultural heritage or national identity. If an investment is
reviewable, an application for review in the form prescribed by regulation is
normally required to be filed with the Agency (established by the Act) prior to
the investment taking place and the investment may not be consummated until the
review has been completed and ministerial approval obtained. Applications for
review concerning indirect acquisitions may be filed up to 30 days after the
investment is consummated. Applications concerning reviewable investments in
culturally sensitive and other specified activities referred to in the preceding
paragraph are required upon receipt of a notice for review. There is, moreover,
provision for the Minister (a person designated as such under the Act) to permit
an investment to be consummated prior to completion of review if he is satisfied
that delay would cause undue hardship to the acquirer or jeopardize the
operation of the Canadian business that is being acquired.
The Agency will submit the application for review to the Minister, together with
any other information or written undertakings given by the acquirer and any
representation submitted to the Agency by a province that is likely to be
significantly affected by the investment. The Minister will then determine
whether the investment is likely to be of "net benefit to Canada," taking into
account the information provided and having regard to certain factors of
assessment prescribed under the Act. Among the factors to be considered are: (i)
the effect of the investment on the level and nature of economic activity in
Canada, including the effect on employment, on resource processing, on the
utilization of parts, components and services produced in Canada, and on exports
from Canada; (ii) the degree and significance of participation by Canadians in
the Canadian business and in any industry in Canada of which it forms a part;
(iii) the effect of the investment on productivity, industrial efficiency,
technological development, product innovation, and product variety in Canada;
(iv) the effect of the investment on competition within any industry or
industries in Canada; (v) the compatibility of the investment with national
industrial, economic and cultural objectives enunciated by the government, or
legislature of any province likely to be significantly affected by the
investment; and (vi) the contribution of the investment to Canada's ability to
compete in world markets.
<PAGE>
Within 45 days after a completed application for review has been received, the
Minister must notify the investor that (a) he is satisfied that the investment
is likely to be of "net benefit to Canada," or (b) he is unable to complete his
review in which case he shall have 30 additional days to complete his review
(unless the investor agrees to a longer period) or (c) he is not satisfied that
the investment is likely to be of "net benefit to Canada."
If the Minister is unable to complete his review and no decision has been taken
within the prescribed or agreed upon time, the Minister is deemed to be
satisfied that the investment is likely to be of "net benefit to Canada."
Where the Minister has advised the investor that he is not satisfied that the
investment is likely to be of net benefit to Canada, the acquirer has the right
to make representations and submit undertakings within 30 days of the date of
the notice (or any further period that is agreed upon between the investor and
the Minister). On the expiration of the 30-day period (or an agreed extension),
the Minister must notify the investor whether or not he is satisfied that the
investment is likely to be of "net benefit to Canada." In the latter case, the
investor may not proceed with the investment or, if the investment has already
been consummated, must relinquish control of the Canadian business.
ITEM 7. TAXATION.
CANADIAN FEDERAL INCOME TAXATION.
------------------------------------
The following discussion is a summary of the principal Canadian federal income
tax considerations generally applicable to purchasers of the Company's Common
stock pursuant to this registration who, for purposes of the Income Tax Act
(Canada) (the "Canadian Act"), deal at arm's length with the Company, hold
shares of Common stock as capital property, are not residents of Canada at any
time when holding Common stock, and do not use or hold and are not deemed to use
or hold Common stock in or in the course of carrying on business in Canada.
<PAGE>
This summary is based on the current provision of the Canadian Act, the
regulations thereunder and the Canada-United States Income Tax Convention (1980)
(the "Treaty") as amended. This summary takes into account specific proposals to
amend the Canadian Act and the regulations there under publicly announced by the
Minister of Finance prior to the date hereof and the Company's understanding of
the current published administrative and assessing practices of Revenue Canada
Taxation. This summary does not take into account Canadian provincial income tax
laws or the income tax laws of any country other than Canada.
A shareholder of the Company will generally not be subject to tax pursuant to
the Canadian Act on a capital gain realized on a disposition of Common stock
unless the Capital Stock is "taxable Canadian property" to the shareholder for
purposes of the Canadian Act and the shareholder is not eligible for relief
pursuant to an applicable bilateral tax treaty. The Capital Stock will not be
taxable Canadian property to a shareholder provided that the Company is a
"public corporation" within the meaning of the Canadian Act and provided that
such shareholder, or persons with whom such shareholder did not deal at arm
length (within the meaning of the Canadian Act), or any combination thereof, did
not own 25% or more of the issued shares of any class or series of the Company
at any time within five years immediately preceding the date of disposition. The
Company is a "public corporation" within the meaning of the Canadian Act. In
addition, the Treaty will generally exempt a shareholder who is a resident of
the United States for purposes of the Treaty from tax in respect of a
disposition of Common stock provided that the value of the shares of the Company
is not derived principally from real property (including resource property)
situated in Canada and provided such shareholder does not have and has not had
within the 12-month period preceding the disposition a permanent establishment
or fixed base available to such shareholder in Canada.
Any dividend, including stock dividends, paid or credited, or deemed to be paid
or credited, by the Company to a shareholder will be subject to Canadian
withholding tax at the rate of 25% on the gross amount of the dividend, subject
to the provisions of any applicable income tax convention. Pursuant to the
Treaty, the rate of withholding tax generally will be reduced to 15% in respect
of dividends paid to a shareholder who is a resident of the United States for
purposes of the Treaty and further reduced to 5% if the beneficial owner of the
shares is a corporation owning at least 10% of the voting shares of the Company.
United States Taxation.
For federal income tax purposes, an individual who is a citizen or resident of
the United States or a domestic corporation ("U. S. Taxpayer") will recognize a
gain or loss on the sale of the Company's Common stock equal to the difference
between the proceeds from such sale and the adjusted cost basis in the Common
stock. The gain or loss will be a capital gain or capital loss if the Company's
Common stock is a capital asset in the hands of the U.S. Taxpayer.
<PAGE>
For federal income tax purposes, a U.S. Taxpayer will be required to include in
gross income dividends received on the Company's Common stock. A U.S. Taxpayer
who pays Canadian tax on a dividend on the Common stock will be entitled,
subject to certain limitations, to a credit (or alternatively, a deduction)
against federal income tax liability. A domestic corporation that owns at least
10% of the voting stock of the Company should consult its tax advisor as to
applicability of the dividends received deduction or deemed paid foreign tax
credit with respect to dividends paid on the Company's Common stock.
The foregoing discussion of Canadian taxation and United States taxation is of a
general and summary nature only and is not intended to be, nor should it be
considered to be, legal or tax advice to any particular shareholder.
Accordingly, prospective investors should consult their own tax advisors as to
the tax consequences of receiving dividends from the company or disposing of
their common stock.
ITEM 8 SELECTED FINANCIAL DATA
-------------------------
This Report includes consolidated financial statements of the Company for the
years ended March 31, 2000, 1999 and 1998.These financial statements were
prepared in accordance with accounting principles generally accepted in Canada.
Reference is made to Financial Statement Notes for a discussion of the material
differences between Canadian GAAP and U.S. GAAP, and their effect on the
Company's financial statements.
The following is a selected financial data for the Company for each of the
fiscal years ended March 31, 1996,97, 98,99 and 2000, on a consolidated basis.
The data is extracted from the audited financial statements of the Company for
each of the said years.
SUMMARY OF FINANCIAL INFORMATION IN THE COMPANY FINANCIAL
STATEMENTS (Canadian $)
OPERATING DATA - FISCAL YEAR ENDED MARCH 31
<TABLE>
<CAPTION>
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Sales/ Gross revenue $ 30,524 NIL NIL NIL $ 83,923
Loss from Continuing $1,390,457 $477,596 $563,035 $626,488 $908,004
Operations
Loss from discontinued NIL NIL NIL $190,959 $446,194
Operations
Loss per Share $ 0.52 $ 0.35 $ 0.51 $ 0.75 $ 2.55
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA - AS AT MARCH 31:
-------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Working Capital $ 1,483,128 $ 28,690 ($649,329) ($198,830) ($169,649)
(Deficit)
Total Assets $ 2,542,932 $ 259,706 $ 61,541 $ 116,744 $ 134,558
Long Term Liabilities NIL NIL NIL NIL NIL
Total Liabilities $ 220,312 $ 98,290 $ 705,028 $ 234,596 $ 183,437
Shareholders' Equity $ 2,322,620 $ 161,416 ($643,487) ($117,852) ($48,879)
(Deficit)
Number of Shares 4,117,616** 2,832,616xx 1,122,615* 1,086,056* 728,180*
Outstanding
<FN>
* Recalculated on the basis of the 15:1 common share consolidation on October
29, 1998 to make them comparable with the fiscal 1999.
** The number of shares includes 68,300 shares, subscribed and paid for but
not yet issued
xx The number of shares included 700,000 shares to be issued to shareholders
in settlement of their advances of $525,000 at $0.75 per share. Shares were
issued subsequent to the year end.
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The following discussion should be read in conjunction with the financial
Statements of the Company and notes thereto contained elsewhere in this report.
RESULTS OF OPERATIONS
----------------------------------------------------------
Year ended March 31 2000 1999 1998
------------in 000' CDN$----------
Income 31 - -
Expenses 1,421 478 563
----------------------------------
Net Loss for year 1,390 478 563
Deficit at end of year 17,338 15,948 15,470
----------------------------------------------------------
<PAGE>
During fiscal year 1999, the management developed a new business strategy, which
comprised Internet development and fulfillment services. The strategy aims at
internal development and operations of wholly owned Internet business concepts
as well as investing in new and emerging Internet companies whose business
synergies with the Company's new strategy.
During the fiscal year 2000, the Company successfully completed a private
placement and raised about $3.3 million. The management also began reviewing and
investing in various Internet business opportunities. These are discussed in
detail in the Investment section under "Liquidity and Capital requirement"
below.
The Company earned an Interest income of $20,524 during the last quarter of the
fiscal year ended March 31, 2000 mainly from the funds held in money market
accounts with major commercial banks in Canada. No such income was earned in the
fiscal years 1999 and 1998.
The Company also earned $10,000 from operational services comprising financial
and administration services provided to an investee during the fiscal 2000. no
such income was earned during the fiscal years 1999 and 1998.
Total expenses net of losses on investments were $830,272 compared to $477,596
in fiscal 1999 and $ 563,035 in fiscal 1998. The major components of expenses
are as follows:
TRAVEL, PROMOTION AND CONSULTING -
<TABLE>
<CAPTION>
Year ended March 31 2000 1999 1998
------------------------------------------------------------------------------
<S> <C> <C> <C>
Travel, meals and entertainment 102,545 17,310
Consulting 315,376 306,027 311,955
Promotion 49,914
----------------------------
467,835 323,337 311,955
============================
% of operating expenses 56% 68% 55%
</TABLE>
Increase in travel, meals and entertainment costs during the fiscal 2000
compared to the earlier years were due to significant increase in the business
activities involving review and discussions with regards to various business
opportunities.
Consulting costs include a consulting fee of $176,550 charged by a shareholder
under a Consulting agreement. The services provided included arranging
non-interest bearing working capital funds, introduction to business
opportunities and public relations. Fees charged in fiscal 1999 were $177,972
and in fiscal 1998 were $ 168,000. Other consulting fees of $138,826 in fiscal
2000 ($ 128,055 in fiscal 1999 and $143,955 in fiscal 1998) related to fees paid
for general IT, management and corporate services.
<PAGE>
Promotion costs comprised advertisements in magazine and on the Internet,
relating to the Company's business strategy to attract business opportunities.
PROFESSIONAL FEES
Professional fees in fiscal 2000 were $94,688 compared to $39,113 in fiscal 1999
and $75,593 in fiscal 1998. About 114% increase in fee from the last fiscal year
was due mainly to significant increase in the business activities, legal and
related costs of private placement and preparation and submission of
registration statement with Securities and Exchange Commission to acquire fully
reporting company status and maintain the Company's listing on the OTC bulletin
board of NASDAQ.
PROJECTS DEVELOPMENT COSTS
Total costs were $155,370 in fiscal 2000. There were no such costs in the prior
years. These costs related to four projects involving design and development of
web sites, which are fully owned by the Company. Further details of these Sites
are given in the Investment section under "Liquidity and Capital Requirements"
OTHER OPERATING COSTS
These costs include rent, telephone, Internet, transfer agents fees and other
general and administration costs. Other operating costs in fiscal 2000 were
112,379 compared to $115,146 in fiscal 1999 and $165,487 in fiscal 1998 and
reflects the management's continued attention to keeping these costs to minimum.
NET LOSS ON INVESTMENTS
The net loss in fiscal 2000 was $ 590,709 compared to $ nil in the fiscal years
1999 and 1998 respectively since in those years the Company did not have any
investments.
The net loss is made up of three components -
HOLDING LOSS of $ 612,794 related to short term investments in marketable
securities of new and developing companies and resulted from adjusting the costs
of these investments to their quoted market values at March 31, 2000 as per the
stated accounting policy.
PROVISION FOR NON-TEMPORARY IMPAIRMENT in the carrying value of a non-trading
investment of $72,470 as per the stated accounting policy and
GAINS of $94,555 realized on disposal of short term investments in marketable
securities during the year ended March 31, 2000.
<PAGE>
LIQUIDITY AND CAPITAL REQUIREMENTS
CASH AND WORKING CAPITAL
Cash on hand at March 31, 2000 was $425,968 compared to $64,368 at March 31,
1999. Similarly, net working capital at March 31, 2000 was approx. $1.5 million
compared to $100,000 at March 31, 1999.
Significant improvement in the liquidity of the Company in fiscal 2000 was the
result of a successful private placement of approx. $3.3 million and non
interest bearing advances arranged by a shareholder under a consulting contract
of approx. $480,000, $300,000 of which were converted to equity during the year.
Trade and Notes payables at March 31, 2000 were $40,549 compared to $ 90,673 at
March 31, 1999.
The net cash spent on operations during the fiscal 2000 was $678,197 compared to
511,295 in fiscal 1999 and $600,411 in fiscal 1998. Increased spending in fiscal
2000 was mainly related to increased travel and promotion costs to pursue
investment and business opportunities, new web site projects development costs
and increased professional costs as explained earlier.
NEW EQUITY CAPITAL
PRIVATE PLACEMENT
During the fiscal year 2000, the Company completed a private placement to ten
arms-length investees for 885,000 Units at $2.80US each. Each unit consisted of
one common share of the Company and a warrant to purchase one additional common
share at $3.50 US exercisable within twelve months. Most of these warrants will
expire in January 2001. All units were fully subscribed and paid for, resulting
in a gross proceeds of CDN $3.6 million (US$ 2.5 million). Issue expenses
comprising an arrangement fee totaled $359,161 were paid out of the gross
proceeds.
816,700 common shares were issued from the treasury under the above private
placements. The balance of 68,300 subscribed common shares has not yet been
issued at the request of the investees.
DEBT CONVERSION INTO EQUITY
The Company 's operating capital requirements were for the past few years met
out of the funds arranged by a consultant under a consulting agreement dated
April 1, 1997. These funds were free of any interest charge, repayable on demand
and were usually converted into equity of the Company at a conversion price of
$0.75 per common share. During fiscal year 1998, total funds arranged, under
this agreement were approx. $640,000. During the fiscal 1999, the amount was
approx. $ 580,000. These funding were converted into equity. Such conversions
were approved by the directors and subsequently ratified by the shareholders in
the Annual General Meeting.
<PAGE>
Net funds received during the fiscal 2000 were approx. $470,000. Of which
$300,000 were converted into equity. As a result, a total of 400,000 common
shares were issued at $0.75 per share to two arms-length entities under two
separate debt conversion agreements dated November 30, 1999 and March 24, 2000.
Both these agreements were approved by directors.
INVESTMENTS
The Company began implementing its new business strategy during the late fiscal
1999. the implementation process was essentially slow owing to limited amount of
funds available after meeting the working capital requirements.
As a result, during the first three quarters of the fiscal 2000, efforts were
made to secure additional funds, which eventually resulted in successful private
placement and raising of about $3.2 million between January and March 2000, as
explained earlier in this report.
Initially the funds were placed in money market accounts with the Company's
bankers, one of the top five commercial banks in Canada, while the management
pursued detailed research and review of various business and investment
opportunities within the frame work of its stated business strategy. Approx.
$2.6 million was invested during the fiscal year 2000 of which $155,935 was
spent on the proprietary Web sites development.
Overall investment strategy of the company during the fiscal 2000 was three-fold
- Short-term investments, acquisition of Internet projects and investments in
Internet oriented companies showing synergies with the Company's core business.
These are explained in detailed below: -
SHORT TERM INVESTMENTS AND SUBSCRIPTION ADVANCE
As at March 31, 2000, short term investments consisted of the following -
<TABLE>
<CAPTION>
Cost Market value
---------in CDN $--------
<S> <C> <C>
Marketable trading securities 976,780 371,918
Non marketable securities* 777,789 777,789
Convertible debentures 36,741 36,741
-------------------------
1,791,310 1,186,447
=========================
<FN>
"*" includes subscription advance of $ 489,173
</TABLE>
Accounts were opened with three independent brokerage firms and funds in the
money market accounts were placed with these firms and invested mainly in new
and emerging Internet oriented companies under development stages, which were
trading publicly. The management 's intention was to keep the funds in a way
whereby they could be realized quickly for long-term business use when needed
while at the same provide opportunity for a significant value growth.
<PAGE>
The holdings under marketable trading securities are intended only for a period
of less than six months and are not part of the long-term business strategy of
the Company.
Non-marketable securities comprised equity investments in the following two
private companies whose business models fell within the frame work of the
Company's business strategy:
<TABLE>
<CAPTION>
Cost Market value
----- in CDN $-----------
<S> <C> <C>
Idealab.com 489,173 489,173
World Vacation Club.com 288,616 288,616
-------------------------
777,789 777,789
=========================
</TABLE>
Idealab.com
The Company agreed to buy and paid for 25,000 common shares of Ideallab.com from
a private purchaser. However, the paperwork processing was lengthy and
meanwhile the management re examined the business strategy of Idealab.com and
felt that the Company might not generate as much value growth as was originally
thought. The management therefore canceled the purchase and full amount was, as
a result, refunded in May 2000.
World Vacation Club.com
The Company was one of the founding members of World Vacation club.com, (W V C)
a Nevada Private Company seeking to develop online vacation properties rental/
management services, currently at a development stage. The Company invested
$64,914 in equity capital of WVC up to March 31, 1999 and acquired further
equity interest during fiscal 2000 raising its investment to 289,616 by January
2000., which constituted about 35% equity interest in WVC. The Company cost of
this investment averaged $0.20 per share or approx. US$0.15 per share. The
company however never intended to exercise any control nor did it have any
representation on the board of WVC. The original intention of the Company was to
benefit from value growth when WVC goes public.
However, in May 2000, the Company received a legal opinion that the proposed
business activity of WVC could amount to trading in securities and that WVC
might have to first comply with various securities and real estate regulations
in the US before it could pursue its business plan. This might considerably
delay WVC plans to go public or launch its proposed activities and also might
entail much more financing than originally envisaged. As a result, the
management decided to dispose of this investment. Investments with the carrying
value of $79,837 were sold at cost to an arms-length purchaser in May 2000 and
the management is currently actively seeking purchase of its remaining equity
interest in WVC. The management believes that the Company will be able to
recover its cost at least, given that WVC is currently preparing for a second
round financing at $0.25US
<PAGE>
The Company invested in Developersnetwork.com (DN) during the fiscal 2000 by way
of convertible debentures. As at March 31, 2000, total amount invested was
$36,741.
DN is an Ontario incorporated private company engaged in developing a web site
which would provide a comprehensive resource for the Internet industry
professional and consumer, producing a wide selection of content and tools that
facilitate the craft and business of web site development and production. The
Company originally made a commitment to invest up to $750,000 in convertible
debenture carrying interest at 5.5% p.a. and convertible into a maximum of 30%
equity interest in DN. DN however, canceled the arrangement subsequently and
repaid the Company's investment in full with interest. In addition, the Company
received an option to purchase 50,000 common shares of DN at $1 per share
exercisable within two years.
INTERNET PROJECTS
One of the business objectives of the Company included internal development and
operations of wholly owned Internet business concepts. One such project was
launched during the late fiscal 1999 and two additional projects began in fiscal
2000. The details of these projects are as follows:
Shellfn.com
The concept was internally developed during the late fiscal 1999 and involved
development of a web site, which would become an electronic advertising medium
for shell companies to attract prospective buyers. An outside web design company
was hired to design and develops a web site. Total of $9,435 were spent up to
March 31, 1999 and a further $68,149 was spent during the fiscal 2000. However
in January 2000, the management was informed that the proposed activities of
Shellfn might amount to trading in securities and required further legal
research. The management therefore put the project on hold for an indefinite
period of time pending further feasibility studies. The total amount incurred
was written off at March 31, 2000 following a conservative business practice.
IRCheck.com
The concept was internally developed during the fiscal 2000 and involves
developing a web site which will provide a comprehensive data base of investors
relation firms to facilitate an informed decision for the prospective public
companies desiring to outsource its investors relation and media relation work
to an independent firm. The Company spent $10,000 up to March 31, 2000 in
getting the web site design completed by an independent design firm. It has
currently hired consultants to collate and develop contents and have to date
gathered information on about 500 IR firms in North America. The web site
development work is in progress and the commercial lauch is expected in
September 2000. The Company expects to spend about $ 150,000 on web site and
content development and further $100,000 on marketing. Revenue is expected from
the listing fee to be charged to IR firms and other sponsorship on the site. No
significant revenue is expected until the end of the fiscal 2001.
<PAGE>
EduVu.com
EduVu.com web site is intended to become a comprehensive educational portal
providing reference materials to students, teachers and parents. The Company
acquired the concept and the business plan for $25,000 during the fiscal
2000.and hired consultants who began collecting contents for the site. However,
the management realized that for the Web Site to become a dominant educational
portal, it will require significant capital investment. The management is
therefore currently seeking other investors who may be interested in
participating in this project. Until such partners are found, the contents and
the web site development work has been put on hold. The cost of $33,500 incurred
to March 31, 2000 was written off following a conservative business practice.
LONG TERM INVESTMENTS
As part of the Company's Internet strategy, the Company invested in certain new
and emerging Internet businesses that have demonstrated significant potential
for growth in the long run. While these investments reflect only a small
fraction of the investee companies' equity, the management believes that they
are likely to provide much higher return on the investment and offer
opportunities for synergistic business relationship among the other companies
and projects within the Company's portfolio. The details of these investments
are as follows:
Hotlamp Interactive Technologies Inc. $55,802
Hotlamp is a Nevada based private company engaged in software development and
multimedia products. The Company's equity investment is less than 1% of the
Hotlamp's equity.
Ouryearbook.com Inc. $72,470
Ouryearbook is a private Delaware Corporation engaged in placing school
yearbooks on line, sale of printed yearbooks and other personalized products in
partnership with yearbook publishers, school unions and other businesses dealing
in educational materials. Ouryearbook has so far spent around $2 million US in
developing and commercially launching content rich web site and also signed up
strategic partnership with Epals.com, which has over two million registered
students and PlanetAlumni with four million registered former classmates.
However, Ouryearbook is currently having a going concern problem and requires
further funding to enable it to sustain its operations until a regular revenue
stream could begin.
The management therefore followed a conservative business approach and has
decided to provide fully against this investment at March 31, 2000. The
management is however working with other investors of Ouryearbook to ensure that
the assets and strategic agreements that have been achieved so far are
profitably deployed or sold at a value.
Dataloom Inc. $726,885
This is a significant investment made by the Company. As at March 31, 2000, it
constituted about 30% of the total assets of the Company.
<PAGE>
The Company's investment comprises 500,000 Series B preferred stock convertible
at the Company's option at any time, into equal number of Common shares of
Dataloom Inc. The company's holding, if converted now would represent
approximately 5% equity interest in Dataloom Inc.
Dataloom Inc. was formed as a corporation in August 1999 in the State of
Washington, US for the purpose of providing state-of-the-art web based business
service solutions for small office home office enterprises. Dataloom, Inc. has
developed a framework to deploy an exceptional information management solution
for small to medium enterprise users (SME's). Comprising a full suite of
powerful web-available applications and information management systems, this
solution changes the way on-the-go professionals conduct business--anytime,
anywhere, from any Internet connected device.
Dataloom's application services framework (xLoom) utilizes XML (Extensible
Markup Language) and a proprietary Application Services Directory that enables
web-based application interfaces to be delivered to any wired or wireless device
in real time. xLoom enables a new generation of fast, flexible productivity
tools.
While the company's investment does not entitle the Company to exercise any
influence over the management of Dataloom Inc., the management remains in
constant contact with the management of Dataloom Inc. to ensure its investment
value is not impaired. Dataloom Inc. has attracted certain high profile
investors and also is currently in final negotiations with major Japanese
Companies to launch its products in the Japanese market.
The management believes that the investment value will increase significantly
once Dataloom Inc. goes public.
CAPITAL EXPENDITURE
The Company spent $9,896 on capital assets, mainly comprising computers, during
the year ended March 31, 2000 compared to $20,921 in fiscal 1999 and $1,164 in
fiscal 1998.
FUTURE CAPITAL REQUIREMENT
The management plans to make couple of strategic acquisitions during fiscal 2001
mainly from the disposal of its short-term investments and /or from the cash
flow from exercise of the warrants attached to the Units under the fiscal 2000
private placement. It will also focus on fully developing IRCheck.com site and
ensure its commercial launch during the fiscal year 2001.
The management estimates that its working capital requirements to remain at
around $600,000 for the next twelve months, which it hopes to cover from the
funds raised in the private placement during the fiscal 2000. The management
believes that the ten private placement investees will exercise their warrants
during the fiscal 2001, which will generate a further cash flow of about $4.5
million (approx. $3 million US).
<PAGE>
In the event warrants are not exercised or further capital is not raised, the
Company may dispose of part or whole of its investment in Dataloom Inc. It is
the intention of the management to keep enough liquidity to meet its operating
requirements for the following eighteen months.
FORWARD LOOKING STATEMENTS.
The foregoing Management's Discussion and Analysis contains "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Act of 1934, as amended, and as
contemplated under the Private Securities Litigation Reform Act of 1995,
including statements regarding, among other items, the Company's business
strategies, continued growth in the Company's markets, projections, and
anticipated trends in the Company's business and the industry in which it
operates. The words "believe," "expect," "anticipate," "intends," "forecast,"
"project," and similar expressions identify forward-looking statements. These
forward-looking statements are based largely on the Company's expectations and
are subject to a number of risks and uncertainties, certain of which are beyond
the Company's control. The Company cautions that these statements are further
qualified by important factors that could cause actual results to differ
materially from those in the forward looking statements, including, among
others, the following: reduced or lack of increase in demand for the Company's
products, competitive pricing pressures, changes in the market price of
ingredients used in the Company's products and the level of expenses incurred in
the Company's operations. In light of these risks and uncertainties, there can
be no assurance that the forward-looking information contained herein will in
fact transpire or prove to be accurate. The Company disclaims any intent or
obligation to update "forward looking statements".
ITEM 10 DIRECTORS AND OFFICERS OF THE COMPANY
------------------------------------------
The following table sets forth all current directors and executive officers of
the Company, with each position and office held by them in the Company, and the
period of service as such:
<TABLE>
<CAPTION>
----------------------------------------------------------
Name and Position Commencement of
With the Company age Service
----------------------------------------------------------
<S> <C> <C>
Terence Edward Robinson 40 October 1, 1991
Chairman and
Chief Executive Officer
John David Robinson 39 June 5, 1992
Director and President
Kam Shah 49 January 3, 1999
Director and
Chief Financial Officer
----------------------------------------------------------
</TABLE>
<PAGE>
TERENCE ROBINSON is Chairman of the Board and Chief Executive Officer of the
Company. Mr. Robinson is responsible for the shareholders relations, arranging
the required financing, reviewing investment opportunities and overall operating
strategies for the Company. He has over 18 years of experience as merchant
banker and venture capitalist and has successfully secured financing for a
number of start up and small cap companies.
During the last five years, Mr. Robinson acted as a CEO of Dealcheck.com Inc and
an executive officer of Current Capital Corp., a private Ontario corporation,
having its head office in Toronto. CCC provides venture capital financing to
start up companies and investors' relations services to public companies.
Mr. Robinson was also an executive producer of a children's film , "Beethoven
Lives Upstairs" which won him an Emmy Award in 1992.
JOHN ROBINSON is a director and president of the Company. Mr. Robinson is
responsible for investment strategy and day to day operations of the Company and
administration of its business plans. He has over fifteen years of experience as
venture capitalist.
Mr. Robinson is a graduate of University of Toronto and Toronto French School.
During the past five years, Mr. Robinson acted as a president of Dealcheck.com
Inc. and as an executive officer of Current Capital Corp . John can fluently
communicate in French, Italian and Russian apart from English.
Mr. Terence Robinson and Mr. John Robinson are related to each other as
brothers.
KAM SHAH joined the Company as a Chief Financial Officer and was appointed to
the Board on January 3, 1999. He worked with Pricewaterhouse Coopers LLP and
Ernst & Young. He is a US Certified Public Accountant and a Canadian Chartered
Accountant. He has over fifteen years of international experience in corporate
financial analysis, mergers & acquisitions. Mr. Shah is responsible for the
financial and statutory matters of the Company and will also assist the Chairman
in reviewing investment opportunities and strategic planning.
Directors may be appointed at any time in accordance with the by-laws of the
Company and then re-elected annually by the shareholders of the Company.
Directors receive no compensation for serving as such, other than stock option
and reimbursement of direct expenses. Officers are elected annually by the Board
of Directors of the Company and serve at the discretion of the Board of
Directors.
<PAGE>
The Company has not set aside or accrued any amount for retirement or similar
benefits to the directors.
MANAGEMENT TEAM
The Company 's current management team consists of the following individuals:
Mr. Terence Robinson - see above for his background
Mr. John Robinson - see above for his background
Mr. Kam Shah - see above for his background
MR. ED ALVES was Chief technology Officer of the Company until January 31,
2000. He is no longer associated with the Company.
The Company presently has no permanent employees. It uses the services of
consultants from time to time. No formal consulting contracts have been signed
for such services.
ITEM 11 COMPENSATION OF DIRECTORS AND OFFICERS
------------------------------------------
The compensation payable to directors and officers of the Company and its
subsidiary is summarized below:
1. GENERAL
-------
The Company does not compensate directors for acting solely as directors. Except
as described below, the Company does not have any arrangements pursuant to which
directors are remunerated by the Company or its subsidiary for their services in
their capacity as directors, other than options to purchase shares of the
Company which may be granted to the Company's directors from time to time and
the reimbursement of direct expenses.
The Company does not have any pension plans
2. DIRECTORS AND OFFICERS OF THE COMPANY
------------------------------------------
During the fiscal year ended March 31, 2000, the aggregate cash remuneration
paid or payable by the Company and its subsidiary to its directors and executive
officers for services rendered was $114,592 and total expenses reimbursed were
$108,249.
ITEM 12 OPTIONS TO PURCHASE SECURITIES FROM COMPANY OR SUBSIDIARY
----------------------------------------------------------------
In the Annual General Meeting held on November 15, 1999, the shareholders
approved the creation of the "1999 Stock Option Plan" pursuant to which the
directors were authorized to issue stock options from time to time to employees,
officers, consultants and directors of the Company up to 10% of the issued and
outstanding common shares of the Company at the time of such issue, at a minimum
price allowed under the applicable securities laws. No options have been granted
under this Plan.
<PAGE>
ITEM 13 INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
---------------------------------------------------
The following is a summary of related party transactions and balances:
(a) Consulting fee paid to a person related to a director during the year
was $12,000
(b) Transactions with companies under the significant influence of a
common director
--------------------------------------------------------------------------------
2000 1999
$ $
---------------------------------------------------------------------------
Expenses recovered at cost 43,106 -
Funds advanced during year 49,800 -
Interest charged during year 1,669
Balance due from 59,901
Expenses relating to the shared premises and consultants were recharged to
the affiliated entities at cost.
Funds advanced are repayable on demand and carry an interest of 5% p.a.
PART II
--------
ITEM 14 DESCRIPTION OF SECURITIES TO BE REGISTERED
-----------------------------------------------
Not Applicable
PART IV
--------
ITEM 17 FINANCIAL STATEMENTS
---------------------
See "Item 19. Financial Statements and Exhibit" for a list of those financial
statements of the Company which follows.
ITEM 18 FINANCIAL STATEMENTS
---------------------
Inapplicable
<PAGE>
ITEM 19 FINANCIAL STATEMENTS AND EXHIBIT
-----------------------------------
(a) Financial Statements
---------------------
1. Audited Consolidated financial statements of the Company for the
years ended March 31, 2000 and 1999
- Auditors Report
- Consolidated Balance Sheet
- Consolidated Statement of Operations and Deficit
- Consolidated Statement of Cash Flows
- Notes to Consolidated Financial Statements
(b) Exhibits
--------
1(i) Summary of the history of name changes since inception of the Company
Incorporated herein by reference to Exhibit 1(i) to the Company's
Registration Statement on Form 20-F filed on June 12, 2000
1(ii) Certificate of Incorporation of Kamlo Gold Mines Limited. -
Incorporated herein by reference to Exhibit 1(ii) to the Company's
Registration Statement on Form 20-F filed on June 12, 2000
1(iii) Certificate of name change from Kamlo Gold Mines Limited to NRT
Research Technologies Inc. - Incorporated herein by reference to
Exhibit 1(iii) to the Company's Registration Statement on Form 20-F
filed on June 12, 2000
1(iv) Certificate of name change from NRT Research Technologies Inc. to NRT
Industries Inc. - Incorporated herein by reference to Exhibit 1(iv)
to the Company's Registration Statement on Form 20-F filed on June 12,
2000
1(v) Certificate of name change from NRT Industries Inc. to CUDA
Consolidated Inc. - Incorporated herein by reference to Exhibit 1(v)
to the Company's Registration Statement on Form 20-F filed on June
12, 2000
1(vi) Certificate of name change from CUDA Consolidated Inc. to Foodquest
Corp. - Incorporated herein by reference to Exhibit 1(vi) to the
Company's Registration Statement on Form 20-F filed on June 12,
2000
1(vii) Certificate of name change from Foodquest Corp. to Foodquest
International Corp. - Incorporated herein by reference to Exhibit
1(vii) to the Company's Registration Statement on Form 20-F filed on
June 12, 2000
<PAGE>
1(viii) Certificate of name change from Foodquest International Corp. to
Dealcheck.com Inc. - Incorporated herein by reference to Exhibit
1(viii) to the Company's Registration Statement on Form 20-F filed on
June 12, 2000
1(ix) Articles of Incorporation of the Company - Incorporated herein by
reference to Exhibit 1(ix) to the Company's Registration Statement on
Form 20-F filed on June 12, 2000
1(xi) By-Laws of the Company - Incorporated herein by reference to Exhibit
1(xi) to the Company's Registration Statement on Form 20-F filed on
June 12, 2000
2(i) Specimen Common Share certificate - Incorporated herein by reference to
Exhibit 2(i) to the Company's Registration Statement on Form 20-F filed
on June 12, 2000
3(ii)(a) A consulting agreement with Snapper Inc. dated April 1, 1997
together with a letter dated October 1, 1999 extending the term by
another year - Incorporated herein by reference to Exhibit 3(ii)(a)
to the Company's Registration Statement on Form 20-F filed on June
12, 2000
3(ii)(b) IRCheck.com web site development contract with React Digital Arts
dated February 25, 2000 - Incorporated herein by reference to Exhibit
3(ii)(b) to the Company's Registration Statement on Form 20-F filed
on June 12, 2000
3(ii)(c) An agreement dated May 29, 2000 with Mr. Hannah regarding sale of
WVC investment - Incorporated herein by reference to Exhibit 3(ii)
(c) to the Company's Registration Statement on Form 20-F filed on
June 12, 2000
<PAGE>
SIGNATURES
----------
PURSUANT TO THE REQUIREMENTS OF SECTION 12 OF THE SECURITIES EXCHANGE ACT OF
1934, THE COMPANY CERTIFIES THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON
FORM 20-F AND HAS DULY CAUSED THIS (REVISED) REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED
----------------------
Terence Robinson
-----------------
Chairman & CEO
Dealcheck.com Inc.
August 21, 2000
<PAGE>
DEALCHECK.COM INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
<PAGE>
DAREN, MARTENFELD, CARR, TESTA AND COMPANY LLP
CHARTERED ACCOUNTANTS
20 Eglinton Avenue West Telephone: 416-480-0160
Suite 2100 Facsimile: 416-480-2646
Toronto, Ontario
M4R 1K8
AUDITORS' REPORT
To the Shareholders of
Dealcheck.com Inc.
-------------------
We have audited the consolidated balance sheets of DEALCHECK.COM INC. as at
MARCH 31, 2000 AND 1999 and the consolidated statements of operations and
deficit and cash flows for the years then ended. These financial statements are
the responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in Canada. Those standards require that we plan and perform an audit to obtain
reasonable assurance 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.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at MARCH 31, 2000
AND 1999 and the results of its operations and cash flows for the years then
ended in accordance with Canadian generally accepted accounting principles.
Canadian generally accepted accounting principles vary in certain significant
respects from accounting principles generally accepted in the United States.
Application of accounting principles generally accepted in the United States
would have affected results of operations for the year ended March 31, 2000 and
the shareholders' equity as at that date to the extent summarised in Note 16 to
the consolidated financial statements.
The consolidated financial statements as at March 31, 1998 and for the years
ended march 31, 1998 and 1997 were audited by other auditors who expressed an
opinion without reservation on those statements in their report dated August 7,
1998.
DAREN, MARTENFELD, CARR, TESTA AND COMPANY LLP
August 8, 2000
A Member Firm of
Midsnell International 1.
<PAGE>
<TABLE>
<CAPTION>
DEALCHECK.COM INC.
CONSOLIDATED BALANCE SHEET
(CANADIAN DOLLARS)
MARCH 31, 2000 AND 1999
=====================================================================================
NOTE 2000 1999
-------------------------------------------------------------------------------------
ASSETS
Current
-------
<S> <C> <C> <C>
Cash $ 425,968 $ 64,368
Short-term Investments 4 697,274 64,914
Subscription advance 5 489,173 -
Amounts receivable and prepaid expenses 12 91,025 62,612
-------------------------------------------------------------------------------------
1,703,440 191,894
LONG-TERM INVESTMENTS 4 782,687
WEB SITES 6 10,000 9,435
CAPITAL ASSETS 7 46,805 58,377
-------------------------------------------------------------------------------------
$ 2,542,932 $ 259,706
=====================================================================================
LIABILITIES
Current
-------------------------------------------------------------------------------------
Accounts payable and accrued liabilities $ 40,549 $ 67,423
Note payable 23,250
Advance from shareholder, non-interest
bearing 179,763 7,617
220,312 98,290
-------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
CAPITAL STOCK 8 19,660,724 16,109,063
DEFICIT (17,338,104) (15,947,647)
-------------------------------------------------------------------------------------
2,322,620 161,416
-------------------------------------------------------------------------------------
$ 2,542,932 $ 259,706
-------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
APPROVED BY THE BOARD Terence Robinson Director Kam Shah Director
----------------- --------
2.
<PAGE>
<TABLE>
<CAPTION>
DEALCHECK.COM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(CANADIAN DOLLARS)
FOR THE YEARS ENDED MARCH 31, 2000, 1999 AND 1998
======================================================================================
NOTE 2000 1999 1998
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income
--------------------------------------------------------------------------------------
Operational services to an Investee $ 10,000 $ - $ -
Interest 20,524 - -
30,524 - -
EXPENSES
Travel, promotion and consulting 467,835 323,337 311,955
Professional fees 94,688 39,113 75,593
Net loss on investments 13 590,709 -
Projects development costs 155,370 - -
Bank charges and interest 3,905 - -
Rent 23,548 24,800 43,163
Telephone, Internet and courier 26,673 26,942 24,244
Transfer agents fees 21,047 14,684 10,757
Shareholders information 6,268 11,350 5,860
Amortization 21,468 18,386 16,300
Office and general 9,470 18,948 65,163
--------------------------------------------------------------------------------------
1,420,981 477,596 553,035
--------------------------------------------------------------------------------------
LOSS BEFORE UNDERNOTED ITEM (1,390,457) (477,596) (553,035)
WRITE OFF OF INVESTMENT - - 10,000
--------------------------------------------------------------------------------------
NET LOSS FOR YEAR (1,390,457) (477,596) (563,035)
DEFICIT AT BEGINNING OF YEAR (15,947,647) (15,470,051) (14,907,016)
--------------------------------------------------------------------------------------
DEFICIT AT END OF YEAR $(17,338,104) $(15,947,647) $(15,470,051)
--------------------------------------------------------------------------------------
Net loss per share 9 $ (0.52) $ (0.35) $ (0.51)
======================================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
3.
<PAGE>
<TABLE>
<CAPTION>
DEALCHECK.COM INC.
Consolidated Statements of Cash Flows
(CANADIAN DOLLARS)
FOR THE YEARS ENDED MARCH 31, 2000, 1999 AND 1998
==================================================================================
2000 1999 1998
----------------------------------------------------------------------------------
Operating activities
-------------------------------------------
<S> <C> <C> <C>
Net loss $ (1,390457) $ (477,596) $(563,035)
Amortization 21,468 18,386 16,300
Write-off of investment - - 10,000
Write-off of web site development costs 155,370 - -
Net loss on investments 590,709 - -
Amounts receivable and prepaid expenses (28,414) (62,615) 10,741
Accounts payable and accrued liabilities (26,873) 10,530 (74,417)
----------------------------------------------------------------------------------
(678,197) (511,295) (600,411)
----------------------------------------------------------------------------------
Investing activities
----------------------------------------------------------------------------------
Purchase of capital assets (9896) (20,921) (1,164)
Settlement of Note payable (23,250) - -
Investments (2,494,930) (41,664) -
Web site development costs (155,935) (9,435) -
----------------------------------------------------------------------------------
(2,684,011) (72,020) (1,164)
----------------------------------------------------------------------------------
Financing activities
Net advances from shareholder 472,147 641,984 582,249
Common shares issued 3,251,661 - -
----------------------------------------------------------------------------------
3,723,808 641,984 582,249
----------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH DURING YEAR 361,600 58,669 (19,326)
CASH AT BEGINNING OF YEAR 64,368 5,699 25,025
----------------------------------------------------------------------------------
CASH AT END OF YEAR $ 425,968 $ 64,368 $ 5,699
----------------------------------------------------------------------------------
Supplemental disclosures
------------------------
NON-CASH INVESTING AND FINANCING ACTIVITIES
Conversion of debts to equity $ 300,000 $1,282,500 $ 37,400
Note issued on acquisition of investment 23,250
----------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
4.
<PAGE>
DEALCHECK.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CANADIAN DOLLARS)
MARCH 31, 2000 AND 1999
--------------------------------------------------------------------------------
1. NATURE OF OPERATIONS
Dealcheck.com Inc. ("the Company") is an Internet development and
fulfilmentservices Company. The Company's Internet strategy includes
internal development and operations of wholly owned Internet business
concepts as well as investing in new and emerging Internet companies that
have demonstrated synergies with the Company's core business. The Company's
strategy also envisions and promotes opportunities for synergistic business
relationships among the companies within its portfolio.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada and do not materially differ
from accounting principles generally accepted in the United States (U.S. GAAP)
except as described in Note 16 "Differences from United States Accounting
Principles".
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary, Foodquest International Inc. All
intercompany balances and transactions have been eliminated on
consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
INVESTMENTS
SHORT-TERM INVESTMENTS
-----------------------
Short-term investing activities include clearly demonstrated intentions
to dispose of the investments in due course. Events occurring during the
holding period may result in the Company having the right to exercise
control or significant influence. However, such control or significant
influence may be waived or rectified and is not intended to continue.
Accordingly, the accounts of the investee companies in which the Company
holds an interest which allow for control or significant influence are not
consolidated or accounted for according to the equity method.
Short-term investments which have quoted market values and are publicly
traded on a recognized exchange are recorded at a value based on the quoted
market price at the balance sheet date. Short-term investments which do not
have a quoted market value are recorded at cost. The holding losses of the
short-term investment are recorded in the Statement of Operations.
5.
<PAGE>
DEALCHECK.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CANADIAN DOLLARS)
MARCH 31, 2000 AND 1999
--------------------------------------------------------------------------------
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Cont'd.)
LONG-TERM INVESTMENTS
Long-term investing activities include investments in new and emerging
Internet companies whose business models, in the opinion of the management,
reflect the Company's Internet strategy. Long term investments are normally
held for a period over a year.
Investments with an other than temporary impairment in carrying value are
written-down to fair value. In order to determine if there is an other than
temporary impairment in carrying value the company compares the carrying
value of the investment with the financial condition and expected income
from the investment.
WEB SITES
The costs relating to the development of the web sites, which are intended
to generate revenue in future are deferred and amortized on a straight-line
basis over the estimated economic life of the web site not exceeding three
years. Amortization commences when the web site becomes commercially
active. The development costs will be written off when it is determined
that they are not recoverable or when the project is abandoned.
CAPITAL ASSETS
Capital assets are carried at cost, less accumulated amortization, which is
based on management's estimates of the assets' useful lives. Amortization
is provided for on a straight line method at annual rate of 20% for
furniture, computer equipment and other office equipment. Leasehold
improvements are amortized over five years on a straight line basis.
Amortization on the assets acquired during year is calculated at half the
applicable rate. No amortization is charged on assets disposed of during
year.
FOREIGN CURRENCY TRANSLATION
Monetary assets and liabilities are translated at exchange rates in effect
at the balance sheet date. Non-monetary assets are translated at exchange
rates in effect when they were acquired. Revenue and expenses are
translated at the approximate average rate of exchange for the year, except
that amortization is translated at the rates used to translate related
assets. The resulting gains or losses on translation are included in the
consolidated statement of operations.
6.
<PAGE>
<TABLE>
<CAPTION>
DEALCHECK.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CANADIAN DOLLARS)
MARCH 31, 2000 AND 1999
=====================================================================================================
4. INVESTMENTS
I. SHORT TERM INVESTMENTS
AS AT MARCH 31, 2000
-------------------------------------------------------------------------------------------
MARKET
# OF COST VALUE
SHARES CDN CDN$
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MARKETABLE TRADING SECURITIES $ 976,780 $ 371,918
NON MARKETABLE SECURITIES
World Vacation Club.com (i) 1,415,000 288,616 288,616
CONVERTIBLE DEBENTURES
DevelopersNetwork.com (ii) 36,741 36,740
-------------------------------------------------------------------------------------------
$ 1,302,137 $ 697,274
-------------------------------------------------------------------------------------------
AS AT MARCH 31, 1999
NON MARKETABLE SECURITIES
World Vacation Club.com (i) 350,000 64,914 64,914
-------------------------------------------------------------------------------------------
II. LONG TERM INVESTMENTS
AS AT MARCH 31, 2000
-------------------------------------------------------------------------------------------
Hotlamp Interactive Inc. (iii) 77,000 $ 55,802
Ouryearbook.com Inc. (iv) 135,728 72,470
Less: Provision for non-temporary impairment
in value (72,470)
Dataloom Inc. (v) 500,000 726,885
-------------------------------------------------------------------------------------------
$ 782,687
-------------------------------------------------------------------------------------------
</TABLE>
I. WORLD VACATION CLUB.COM
As at March 31, 2000, the Company held approximately 35% (1999 - 8.75%)
equity interest in World Vacation Club.com (WVC), a Nevada registered
private Corporation, seeking to develop Online Vacation properties
Rental/Management services. The Company however never exercised any
significant influence over the affairs of WVC nor is it represented on the
Board of directors of WVC. In May 2000, the management decided to dispose
of the entire investment in WVC and sold 450,000 common shares of WVC at
cost on May 19, 2000 (Note 16) and is actively seeking a buyer for the
remaining shares.
As at March 31, 2000, the carrying value approximates the fair value of
this investment.
7.
<PAGE>
DEALCHECK.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CANADIAN DOLLARS)
MARCH 31, 2000 AND 1999
================================================================================
II. DEVELOPERSNETWORK.COM INC.
The Company agreed to provide financing to developersNetwork.com Inc., an
Ontario private Corporation, up to $ 750,000 in the form of a debenture
carrying interest at 5.5% and convertible, at the option of the Company,
into the common shares of DevelopersNetwork.com Inc. which would give a
maximum of 30% equity interest to the Company under a Memorandum of
Agreement dated February 23, 2000.
As at March 31, 2000, the carrying value approximates the fair value of
this investment.
III. HOTLAMP INTERACTIVE TECHNOLOGIES INC.
The Company's investment represents less than 1% of the equity interest in
Hotlamp Interactive Technologies Inc., a private Nevada Corporation. It is
a software development company focused on multimedia products.
As at March 31, 2000, the carrying value approximates the fair value of
this investment
IV. OURYEARBOOK CORPORATION
The Company's investment represents less than 1% of the equity interest in
Ouryearbook.com , a private Delaware Corporation, Ouryearbook.com places
school year books on line and seeks to earn revenue from online sale of
printed books and other personalized products in partnership with yearbook
publishers, school unions and other businesses dealing in educational
materials.
Ouryearbook.com is currently seeking more funds in order to support its
business strategy and operations.
In the light of the current financial situation of the investee, the
management decided to take a conservative approach and provide against its
investment in full at the year end.
V. DATALOOM INC.
The Company's investment comprises 500,000 Series B preferred stock
convertible, at the Company's option at any time, into equal number of
Common shares of Dataloom Inc. The company's holding, if converted now
would represent approximately 5% equity interest in Dataloom Inc.
Dataloom Inc. was formed as a corporation in August 1999 in the State of
Washington, US for the purpose of providing state-of-the-art web based
business service solutions for small office home office enterprises.
8.
<PAGE>
DEALCHECK.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CANADIAN DOLLARS)
MARCH 31, 2000 AND 1999
================================================================================
5. SUBSCRIPTION ADVANCE
The Company agreed to purchase shares in Idealab.com from an individual
shareholder. Funds were forwarded to and were held by the seller's lawyer
in escrow pending the completion of the paperwork. The agreement was
subsequently cancelled and funds fully refunded (Note 16).
<TABLE>
<CAPTION>
6. WEB SITES
-------------------------------------------------------------------------
Balance at Incurred Written Balance at
--------------------------------------------------------------------------------
MARCH 31, DURING OFF DURING MARCH 31,
1999 YEAR YEAR 2000
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shellfn.com (a) $9,435 $68,149 $(77,584) $ -
IRCheck.com (b) - 10,000 - 10,000
EduVu.com (c) - 33,500 (33,500) -
Dealcheck.com - 44,286 (44,286) -
--------------------------------------------------------------------------------
$9,435 $155,935 (155,370) $10,000
================================================================================
<FN>
(a) SHELLFN.COM web site was intended to become an electronic advertising
medium for shell companies to attract prospective buyers. During the
year, the management decided to put a hold on this project for an
indefinite period of time. The costs incurred to date were therefore
fully written off.
(b) IRCHECK.COM web site will provide a comprehensive data base of
investors relation firms to facilitate an informed decision for the
prospective public companies desiring to outsource its investors
relation and media relation work to an independent firm. The costs
incurred to date represent costs towards web site design.
(c) EDUVU.COM web site was intended to become a comprehensive educational
portal providing reference materials to students, teachers and
parents. The costs incurred to date comprised primarily the cost of
acquisition of concept and a business planDuring the year, the
management decided to put a hold on this project for an indefinite
period of time. The costs incurred to date were therefore fully
written off.
(d) DEALCHECK.COM web site is a corporate web site, which provides
information about the Company, its management, its investments, press
release and other corporate information useful for investors,
shareholders and other. While the basic design and development work of
the site was completed during the year, the site will be continually
updated. The costs relating to this site is expensed as incurred.
</TABLE>
9.
<PAGE>
<TABLE>
<CAPTION>
DEALCHECK.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CANADIAN DOLLARS)
MARCH 31, 2000 AND 1999
=================================================================
7. CAPITAL ASSETS
=============================================================
<S> <C> <C> <C>
ACCUMULATED NET
Cost Amortization 2000
=================================================================
Office furniture $ 47,378 $ 30,383 $16,995
Office equipment 57,007 29,567 27,440
Leasehold improvements 7,900 5,530 2,370
---------------------------------------------------------------
$ 112,285 $ 64,908 $46,805
---------------------------------------------------------------
---------------------------------------------------------------
ACCUMULATED NET
Cost Amortization 1999
=================================================================
Office furniture $ 45,289 $ 21,116 $24,173
Office equipment 49,199 18,945 30,254
Leasehold improvements 7,900 3,950 3,950
---------------------------------------------------------------
$ 102,388 $ 44,011 $58,377
---------------------------------------------------------------
</TABLE>
8. SHARE CAPITAL
A. AUTHORIZED
Unlimited number of common shares
B. ISSUED
<TABLE>
<CAPTION>
2000 1999
--------------------------------------------------------------------
COMMON Common
Shares Amount SHARES AMOUNT
===========================================================================
<S> <C> <C> <C> <C>
Beginning of year 2,832,616 $16,109,064 1,122615 $14,826,564
On conversion of debt(i) 400,000 300,000 1,010,000 757,500
Issued for cash (ii) 885,000 3,251,660
On conversion of debt (iii) 700,000 525,000
---------------------------------------------------------------------------
4,117,616 $19,660,724 2,832,616 $16,109,064
---------------------------------------------------------------------------
</TABLE>
10.
<PAGE>
DEALCHECK.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CANADIAN DOLLARS)
MARCH 31, 2000 AND 1999
================================================================================
8. SHARE CAPITAL - (Cont'd.)
i) During the year, the company converted $300,000 of shareholders'
advances into 400,000 shares. The issuance of the shares was approved
by directors.
ii) During the year, the company completed a private placement to
arms-length placees for 885,000 Company units, each unit priced at
$2.80 US and comprised of one Company common share and one share
purchase warrant, each such warrant is exercisable to purchase one
further Company common share at the price of $3.50 US within 12
months.
All units were fully paid. Expenses of issue of $359,161 were charged
to the gross proceeds of $3,610,821.
885,000 shares and related warrants were issued up to March 31, 2000.
No warrant was exercised during the year.
iii) On March 31, 1999, the Company converted $525,000 of shareholder
advances into 700,000 post-consolidated common shares. The shares were
issued subsequent to the end of the year. The issuance of the shares
was approved by directors and also at the shareholders meeting of
November 15, 1999.
STOCK OPTION PLAN
In the Annual General Meeting held on November 15, 1999, the
shareholders approved the creation of the "1999 Stock Option Plan"
pursuant to which the directors were authorized to issue stock options
from time to time to employees, officers, consultants and directors of
the Company up to 10% of the issued and outstanding common shares of
the Company at the time of such issue, at a minimum price allowed
under the applicable securities laws. No options have been granted
under this Plan.
9. LOSS PER SHARE
Loss per share is calculated on the weighted average number of
post-consolidated common shares outstanding during the year, which was
2,690,266 shares for the year ended March 31, 2000 (1999 - 1,435,949).
Fully diluted earnings per share information has not been presented as
potential conversions are anti dilutive.
11.
<PAGE>
DEALCHECK.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CANADIAN DOLLARS)
MARCH 31, 2000 AND 1999
================================================================================
10. INCOME TAXES
Management estimates that the Company has carry forward tax losses of
approximately $9,100,000, which may be applied against future taxable
income and expire as detailed below. The benefit arising from these losses
has not been included in the financial statements.
2001 698,000
2002 5,000,000
2003 1,100,000
2004 617,000
2005 536,000
2006 460,000
2007 700,000
-----------------------------
9,111,000
=============================
Deferred income taxes reflect the net effect of temporary differences
between the carrying value of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The
management estimates that the Company has deferred tax assets of
approximately $650,000 at March 31, 2000, which have not been recognized in
the financial statements due to the uncertainty of realizing the benefits
of the assets.
11. COMMITMENTS AND CONTINGENCIES
(a) The Company entered into a consulting agreement with a corporate
shareholder on April 1, 1997. The agreement requires the shareholder
to source new business opportunities and perform general public
relations and financial consulting work for the Company. The
consulting fee is US $10,000 per month payable in advance. The
agreement expired on September 30, 1999 and was renewed for another
year up to September 30, 2000.
In addition, the shareholder is also entitled to a success fee equal
to 10% of the new investment introduced into the Company.
(b) Rental payable under operating leases for premises, net of expected
recoveries is $66,320 for each of the years ending March 31, 2001,
2002, 2003, 2004 and $27,634 for the year ending March 31, 2005.
12.
<PAGE>
DEALCHECK.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CANADIAN DOLLARS)
MARCH 31, 2000 AND 1999
--------------------------------------------------------------------------------
12. RELATED PARTY TRANSACTIONS
The following is a summary of related party transactions and balances:
(a) A consulting fee of $176,550 (1999 - $177,972) and a fee of $359,161 (1999
- $nil) relating to the private placements were charged by a shareholder
under an agreement dated April 1, 1997 (Note 10a)
(b) Consulting fees paid to directors during the year were $ 114,592 (1999 -
$36,390)
(c) Consulting fee paid to a person related to a director during the year was
$12,000 (1999 - $nil)
(d) Expenses reimbursed to directors during the year were $108,249 (1999 -
$36,144)
(e) Transactions with companies under the significant influence of a common
director
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
2000 1999
--------------------------------------------------------------------------------
<S> <C> <C>
Expenses recovered at cost $ 43,106 $ -
Funds advanced during year 49,800 -
Interest charged during year 1,669 -
Balance due from 59,901 -
</TABLE>
Expenses relating to the shared premises and consultants were recharged to
the affiliated entities at cost.
Funds advanced are repayable on demand and carry an interest of 5% p.a.
Balances as at year end are included in "Amounts Receivable and prepaid
expenses"
<TABLE>
<CAPTION>
13. NET LOSS ON INVESTMENTS
2000 1999 1998
=======================================================
<S> <C> <C> <C>
Holding losses $612,794 $ - $ -
Provision for non-temporary
Impairment in value 72,470 - -
Realized gains (94,555) - -
-------------------------------------------------------
$590,709 $ - $ -
=======================================================
</TABLE>
14. SEGMENTED INFORMATION
The Company operates in one business segment, Internet development and
fulfilment services, from only one office in Canada. All of the Company's
capital assets are located in Canada for the periods presented.
13.
<PAGE>
DEALCHECK.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CANADIAN DOLLARS)
MARCH 31, 2000 AND 1999
================================================================================
15. COMPARATIVE FIGURES
Certain figures presented for comparative purposes have been reclassified
to conform to the current year's method of presentation.
16. POST BALANCE SHEET EVENTS
(a) The Company, on May 29, 2000, sold 450,000 common shares in World
Vacation Club.com to an unaffiliated purchaser for the sum of $79,837.
No gain or loss was realized on the disposal.
(b) The Company cancelled its subscription in the common shares of Idealab
on April 17, 2000 and received the full refund of funds invested of $
489,173.
(c) The Company called its debentures in DevelopersNetwork.com Inc. as a
result of a decision by all the related parties to cancel the
Memorandum of Understanding dated February 23, 2000. The Company's
investment with interest was fully refunded on May 29, 2000. The
Company also received an option to acquire 50,000 common shares in
DevelopersNetwork.com Inc. at $1 each exercisable within two years.
17. CANADIAN AND UNITED STATES ACCOUNTING PRINCIPLES
WEB SITE COSTS
The costs of developing the commercial web sites are allowed to be deferred
under the Canadian Generally Accepted Accounting Principles. However, these
costs should be expensed under US GAAP. Accordingly, under the US GAAP, net
loss for year would be $1,400,457 (1999 - $ 487,031). Total assets would be
$2,532,932 (1999 - $250,271) and deficit would be $17,348,104 (1999 -
$15,957,082).
INVESTMENTS
Investments in marketable equity securities that are classified as
short-term investments under Canadian GAAP, are grouped into trading and
available-for-sale categories and accounted for at fair value under the US
GAAP. Unrealized holding gains or losses on trading securities are included
in the income. Unrealized holding gains and losses on available-for-sale
securities are included in shareholders' equity.
Investments in equity securities that are classified as long term
investments under the Canadian GAAP, are accounted for at fair value under
the US GAAP. Unrealized holding gains and losses are included in
shareholders' equity.
No significant adjustment would be required in the net loss for year, total
assets and deficit under the US GAAP.
14.
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DEALCHECK.COM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CANADIAN DOLLARS)
MARCH 31, 2000 AND 1999
================================================================================
17. CANADIAN AND UNITED STATES ACCOUNTING PRINCIPLES - (Cont'd.)
RECENT ACCOUNTING DEVELOPMENT
-------------------------------
In June 1998, the Financial Accounting Standard Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities". In June 1999, the FASB
issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the effective date of FASB Statement No. 133",
which deferred the required date of adoption of SFAS No. 133 for one year,
to fiscal years beginning after June 15, 200. This Standard is applicable
for the Corporation's 2001 fiscal year and currently its impact, if any has
not been determined.
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