UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission file number 0-27737
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eSportbike.com, Inc.
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(Exact name of small business issuer as specified by its charter)
NEVADA 77-0454856
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(State or other jurisdiction of (IRS Employer Identification No.)
Incorporation or organization)
Suite #6 - 8415 Granville Street, Vancouver, B.C., Canada, V6P 4Z9
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(Address of principal executive offices)
(604) 687-6627
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(Issuers telephone number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date: May 11, 2000 16,400,000
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Transitional Small Business Disclosure Format (check one). Yes [ ] No [x]
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PART I
Item 1. Financial Statements
REVIEW ENGAGEMENT REPORT
To the Shareholders of
eSportbike.com, Inc.
I have reviewed the balance sheet of eSportbike.com, Inc. as at September 30,
2000 and the statements of operations, deficit and cash flows for the nine-month
period then ended. My review was made in accordance with generally accepted
standards for review engagements and accordingly consisted primarily of enquiry,
analytical procedures and discussion related to information supplied to me by
management.
A review does not constitute an audit and consequently I do not express an audit
opinion on these financial statements.
Based on my review nothing has come to my attention that causes me to believe
that these financial statements are not, in all material respects, in accordance
with generally accepted accounting principles.
The balance sheet as at December 31, 1999 and the statements of operations,
deficit and cash flows for the period then ended were reviewed by other
accountants.
Vancouver, Canada
/s/ JAMES STAFFORD C.A.
October 31, 2000 Chartered Accountant
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<TABLE>
<CAPTION>
eSportbike.com, Inc.
(A Development Stage Company)
Balance Sheet
(Unaudited)
(Expressed in U.S. dollars)
==================================================================================================
As at As at
September 30 December 31
2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash $ 1,241 $ -
Accounts receivable 3,151 6,677
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4,392 6,677
Capital assets 8,163 -
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$ 12,555 $ 6,677
==================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 7,460 $ 2,751
Due to shareholders 180,110 -
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187,570 2,751
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Shareholders' equity
Capital stock
Authorized
100,000,000 common shares with a par value of $.001 per share
Issued
16,400,000 common shares at September 30, 2000 and
5,400,000 shares at December 31, 1999 16,400 5,400
Additional paid-in capital 3,812 3,812
Deficit (195,227) (5,286)
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(175,015) 3,926
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$ 12,555 $ 6,677
==================================================================================================
</TABLE>
Approved by the Board:
_____________________________Director _____________________________Director
These accompanying notes are an integral part of these financial statements.
1
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eSportbike.com, Inc.
(A Development Stage Company)
Statement of Operations and Deficit
(Unaudited)
(Expressed in U.S. dollars)
===================================================================
For the period from
The date of
For the Inception of the
Nine-month Development Stage
Period ended On July 9, 1999 to
September 30 December 31
2000 1999
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REVENUE
Advertising $ 3,614 $ -
Interest income 672 -
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4,286 -
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EXPENSES
Accounting and legal 4,420 -
Advertising and promotion 84,685 -
Amortization 5,275 -
Automotive 750 -
Bank charges and interest 405 -
Consulting fees 8,279 -
Insurance 1,020 -
Meals and entertainment 501 -
Office and miscellaneous 9,001 5,286
Rent 7,644 -
Salaries and wages 53,882 -
Telephone 1,841 -
Transfer fees 1,262 -
Travel 15,262 -
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194,227 5,286
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Net loss for the period (189,941) (5,286)
Deficit, beginning of period (5,286) -
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Deficit, end of period $ (195,227) $ (5,286)
===================================================================
Loss per share $ (0.01) $ (0.00)
===================================================================
The accompanying notes are an integral part of these financial statements.
2
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<TABLE>
<CAPTION>
eSportbike.com, Inc.
(A Development Stage Company)
Statement of Cash Flows
(Unaudited)
(Expressed in U.S. dollars)
=================================================================================================
For the period from
The date of
For the Inception of the
Nine-month Development Stage
Period ended On July 9, 1999 to
September 30 December 31
2000 1999
-------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities
Net loss for the period $ (189,941) $ (5,286)
Item not affecting cash
Amortization of capital assets 5,275 -
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(184,666) (5,286)
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Changes in non-cash working capital items
Accounts receivable (3,151) (6,677)
Accounts payable and accrued liabilities 4,709 2,751
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1,558 (3,926)
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(183,108) (9,212)
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Cash flows from investing activities
Purchase of capital assets (13,438) -
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Cash flows from financing activities
Due to shareholders 186,787 -
Issuance of capital stock 11,000 5,400
Increase in additional paid-in capital - 3,812
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197,787 9,212
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Increase in cash, being cash end of period $ 1,241 $ -
=================================================================================================
Cash paid during the period for interest $ - $ -
=================================================================================================
Cash paid during the period for franchise and income taxes $ - $ 250
=================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
eSportbike.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
For the nine-month period ended September 30, 2000
================================================================================
1. Nature of Operations
The Company was incorporated under the laws of the state of Nevada on April
7, 1997. The Company was inactive from its date of incorporation on April
7, 1997 to July 9, 1999. The Company is developing an Internet website
which provides community, content and commerce for the sport bike and
motorcycle enthusiast.
These financial statements have been prepared in accordance with Canadian
generally accepted accounting principles with the assumption that the
Company will be able to realize its assets and discharge its liabilities in
the normal course of business rather than through a process of forced
liquidation. Continued operations of the Company are dependent on the
Company's ability to receive continued financial support, complete public
equity financing, or generate profitable operations in the future.
2. Significant Accounting Policies
Cash and cash equivalents
Cash and cash equivalents represent highly liquid market investments with
original maturity of three months or less.
Capital assets and amortization
Capital assets are recorded at cost and amortization is calculated using
the straight-line method over the estimated economic useful lives of the
related assets as follows:
Furniture 5 years straight line
Computer hardware 3 years straight line
Computer software 1 year straight line
Intangibles 2 years straight line
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions which affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amount of revenue and
expenses during the reporting period. Actual results may differ from these
estimated amounts.
Financial instruments
Financial instruments are initially recorded at historical costs. If
subsequent circumstances indicate that a decline in fair value of a
financial instrument is other than temporary, the financial asset is
written-down to its fair value.
4
<PAGE>
eSportbike.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
For the nine-month period ended September 30, 2000
================================================================================
Loss per share
Loss per share is calculated using the weighted average number of shares
outstanding during the period. For the nine-month period ended September
30, 2000, the weighted average number of common shares outstanding was
16,400,000.
Foreign exchange
The functional currency of the Company is Canadian dollars. Income
statement items are translated into U.S. dollars at the average exchange
rate during the period.
At the balance sheet date, monetary items are adjusted to reflect the
exchange rate in effect at that time.
Exchange gains and losses arising on the translation or settlement of
foreign currency denominated monetary items are included in the
determination of net income for the current period.
3. Asset Acquisition
On March 2, 2000 the Company entered into an agreement whereby the Company,
in a reverse merger, purchased the assets of eSportbike.com, Inc. The
Company also changed its name to eSportbike.com, Inc. The purchase price
consisted of CDN$10,000 (US$6,793) and the assumption of liabilities in the
amount of CDN$113,000. The assumption of liabilities was later renegotiated
to CDN$1.
4. Capital assets
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Accumulated
Cost Amortization Net book value
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Computer equipment $ 4,506 $ 1,127 $ 3,379
Furniture and equipment 225 34 191
Intangibles 6,793 3,396 3,397
Software 1,914 718 1,196
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$ 13,438 $ 5,275 $ 8,163
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5. Due to Shareholders
Amounts due to shareholder are non-interest bearing, unsecured and have no
fixed terms of repayment.
5
<PAGE>
eSportbike.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
(Expressed in U.S. dollars)
For the nine-month period ended September 30, 2000
================================================================================
6. Capital Stock
===========================================================================
Number of
Shares Amount
---------------------------------------------------------------------------
Authorized
100,000,000 common shares with a par value of $0.001 each
Issued
Balance at December 31, 1999 5,400,000 $ 5,400
Additional paid-in capital - 3,812
Stock issuance 11,000,000 11,000
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Balance at September 30, 2000 16,400,000 $ 20,212
===========================================================================
On May 6, 1999 the Board of Directors authorized a 1,000 to 1 stock split
and changed the authorized number of shares to 100,000,000 shares and the
par value to $.001 for the Company's common stock. As a result of the
split, 999,000 shares were issued.
On February 23, 2000 the Board of Directors authorized the acceptance of
800,000 restricted common shares returned to the Company by its former
Officer and Director. The shares were canceled immediately upon receipt.
On February 23, 2000 the Board of Directors authorized a 27 to 1 stock
split. As a result of this split the Company has issued 5,200,000 common
shares. All references in the accompanying financial statements to the
number of common shares and per-share amounts for 1999 have been restated
to reflect the stock split and cancellation of shares.
7. Related party transactions
During the period, the Company signed employment contracts with two of its
current shareholders. The Company has issued 10,000,000 common shares with
a total value of $10,000 as compensation for these employment contracts.
8. Comparative Figures
Certain prior period's figures have been restated to conform to the current
period's presentation.
9. United States Generally Accepted Accounting Policies
These financial statements have been prepared in accordance with generally
accepted accounting principles in Canada. These financial statements also
comply, in all material aspects, with accounting principles generally
accepted in the United States and the rules and regulations of the
Securities and Exchange Commission.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Plan of Operation
Since re-launching eSportbike.com in March of 2000, the site has enjoyed
significant growth. Monthly banner ad views increased from approximately
500,000 in June 2000 to over 1,300,000 in September 2000. We expect to enjoy
continued growth as we execute on our plan to be the webs largest community and
e-commerce destination for the sport bike and motorcycle enthusiast.
eSportbike was not in full operations during 1999 and 1998 and thus, the
revenues generated are not representative of those that will be generated once
eSportbike becomes fully operational. Revenues are not yet sufficient to
support eSportbike's operating expenses and are not expected to reach such
levels until the first or second quarter of 2001. Since eSportbike's formation,
it has funded its operations and capital expenditures primarily through private
placements of debt and equity securities eSportbike expects that it will be
required to seek additional financing in the future. There can be no assurance
that such financing will be available at all or available on terms acceptable to
eSportbike.
Plan of Operation
eSportbike was organized for the purpose of creating a corporate vehicle to
seek, investigate and, if such investigation warrants, acquire an interest in
one or more business opportunities presented to it by persons or firms who or
which desire to seek perceived advantages of a publicly held corporation.
eSportbike may incur significant post-merger or acquisition registration
costs in the event management wishes to register a portion of their shares for
subsequent sale. eSportbike will also incur significant legal and accounting
costs in connection with the acquisition including the costs of preparing
post-effective amendments, Forms 8-K, agreements and related reports and
documents.
eSportbike will not have sufficient funds (unless it is able to raise funds
in a private placement) to undertake any significant development, marketing and
manufacturing of the products acquired. Accordingly, following the acquisition,
eSportbike will, in all likelihood, be required to either seek debt or equity
financing or obtain funding from third parties, in exchange for which eSportbike
may be required to give up a substantial portion of its interest in the acquired
product. There is no assurance that eSportbike will be able either to obtain
additional financing or interest third parties in providing funding for the
further development, marketing and manufacturing of any products acquired.
The e-commerce industry is an intensely competitive one, where brand
recognition, quality of site content, merchandise selection, convenience,
prices, and service are critical factors. eSportbike has many established
competitors, ranging from similar local single unit operations to large
multi-national operations. Some of these competitors have substantially greater
financial resources and may be established or indeed become established in areas
where eSportbike operates. The industry may be affected by changes in customer
tastes, economic, and demographic trends. Factors such as inflation, increased
supplies costs and the availability of suitable employees may adversely affect
the entertainment industry in general and eSportbike in particular. In view of
eSportbike's limited financial resources and management availability, eSportbike
will continue to be at a significant competitive disadvantage vis-a-vis
eSportbike's competitors.
Results of Operations
From April 7, 1997 to July 9, 1999 eSportbike was an inactive corporation.
From July 9, 1999 eSportbike was a development stage company and had not begun
principal operations. Accordingly, comparisons with prior periods are not
meaningful.
Liquidity and Capital Resources
eSportbike has met its capital requirements through the sale of its Common
Stock .
Since eSportbike's re-activation in July 9, 1999, eSportbike's principal
capital requirements have been the funding of the development of eSportbike.
7
<PAGE>
After the completion of its expansion plans, eSportbike expects future
development and expansion will be financed through cash flow from operations and
other forms of financing such as the sale of additional equity and debt
securities, capital leases and other credit facilities. There are no assurances
that such financing will be available on terms acceptable or favorable to
eSportbike.
Government Regulations
eSportbike is subject to all pertinent Federal, State, and Local laws
governing its business. eSportbike is subject to licensing and regulation by a
number of authorities in its Province (State) or municipality. These may include
health, safety, and fire regulations. eSportbike's operations are also subject
to Federal and State minimum wage laws governing such matters as working
conditions and overtime.
Competition
eSportbike faces competition from a wide variety of sport bike specific web
sites, many of which have substantially greater financial, marketing and
technological resources than eSportbike.
The marketplace for Sport Bike specific web sites is still in its infancy.
Many of the web sites are not commercial, and the biggest commercial sites are
almost all strictly relying on advertisers and not e-commerce sales. Several
sites compete in this market, but no one has emerged as an industry leader. We
have identified competition in terms of specific content and e-commerce
applications that are relevant to our industry.
Employees
At September 30, 2000, eSportbike had 2 full-time employees.
8
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
eSportbike is not a party to any pending legal proceedings, and to the best
of eSportbike's knowledge, none of eSportbike's assets are the subject of any
pending legal proceedings.
Item 2. Change in Securities
During the third quarter of the fiscal year covered by this report, (i)
eSportbike did not modify the instruments defining the rights of its
shareholders, (ii) no rights of any shareholders were limited or qualified by
any other class of securities, and (iii) eSportbike did not sell any
unregistered equity securities.
Item 3. Defaults Upon Senior Securities
During the third quarter of the fiscal year covered by this report, no
material default has occurred with respect to any indebtedness of eSportbike.
Also during this quarter, no material arrearage in the payment of dividends has
occurred.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the second quarter of the fiscal
year covered by this report
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
There were no reports on Form 8-K filed by eSportbike during the quarter
ended September 30, 2000.
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
ESPORTBIKE.COM, INC.
(Registrant)
Date: October 31, 2000 By: /s/ Robert Eyre McLauchlan
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Name: Robert Eyre McLauchlan
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Title: CEO, Secretary and Director
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Date: October 31, 2000 By: /s/ Kent Douglas Courtice
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Name: Kent Douglas Courtice
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Title: President and Director
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10
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