SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM 10/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PLANET411.COM INC.
(Exact Name of Registrant as Specified in its charter)
DELAWARE 88-0258277
(State or other jurisdiction of (IRS Employer Identification)
incorporation or organization)
Planet 411
440 Rene Levesque West
Suite 401
Montreal, Quebec Canada H2Z 1V7
(Address of principal offices) (zip code)
(514) 866-4638
(Registrant's telephone number, including area code)
Securities to be registered under Section 12(b)of the Act:
NONE
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $0.001 per share
(Title of class)
<PAGE>
TABLE OF CONTENTS
ITEM 1. BUSINESS
ITEM 2. FINANCIAL INFORMATION
ITEM 3. PROPERTIES
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
ITEM 6. EXECUTIVE COMPENSATION
ITEM 7. CERAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 8. LEGAL PROCEEDINGS
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
ITEM 11. DESCRIPTION OF SECURITIES TO BE REGISTERED
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM. 15 FINANCIAL STATEMENTS AND EXHIBITS
2
<PAGE>
ITEM 1. BUSINESS.
Forward Looking Statements
This document contains forward-looking statements. Please review the information
in light of the cautionary statements identifying important factors that could
cause actual results to differ materially from those in the forward-looking
statements. The descriptions of any agreements contained in this document are
subject in their entireties to the actual text of the agreements that are
attached hereto and made a part hereof.
General
Planet411.com Inc. intends to provide merchants developing their internet
business with the following bundled services and features: store and catalogue
creation, web site hosting, Visa and MasterCard merchant numbers, e-commerce
application software, on-line transaction processing, shipping arrangements and
branding. Management believes that these services and features, when properly
integrated, enable e-merchants to efficiently market their products and process
transactions without the higher costs and long delays frequently associated with
either starting up a business or commencing sales operations via the Internet.
References to the "Company" shall be deemed to mean (a) Planet411.com
Corporation, a Nevada corporation, and its predecessors in interest (as
described in the next sentence) for all periods prior to October 6, 1999, and
(b) Planet411.com Inc., a Delaware corporation, after such date. From 1992 to
1998, the Company was known as (and the aforementioned predecessors include)
Noble Financing Group Inc., which the Company's management believes was a
company seeking investment opportunities. In 1998, the Company's name was
changed to Newman Energy Technologies Incorporated as a show of good faith while
its then current management was negotiating a technology deal (which deal was
never consummated). In 1998, as World Star Asia, Inc., the Company was in the
business of selling franchises to make and distribute mini trucks, until a third
party backed out of a material transaction related to such activities.
(Management does not believe any material transactions were ever consummated by
the Company as World Star.) After the Company's 1998 name change to Comgen
Corp., the Company was seeking (but to the knowledge of the Company's current
management never consummated any) potential investments.
The Company operates its business entirely through 9066-4871 Quebec Inc.
("9066"), which was organized in July 1998. All descriptions of a commercial
nature contained herein relate to the business as conducted by 9066. Two of the
Company's subsidiaries, 3560309 Canada Inc., a corporation existing under the
laws of Canada ("Canco"), and Planet 411 (Nova Scotia) Company, a Nova Scotia
unlimited liability company ("Novaco"), were created in connection with the
reverse takeover through which the shareholders of 9066 acquired a controlling
interest in the Company. These entities do not conduct any material business,
but exist to hold the equity interests in the Company's subsidiaries and to
participate in the Voting and Combination Agreements described herein. See Item
7, "Certain Relationships and Related Transactions." A third subsidiary, Egress
Technologies Inc., no longer conducts any material business.
The Company is nearing the conclusion of the test phase for its products and
services, during which it has continued to refine the combined product offered.
During the test phase, the Company has tested its products and services with
five simulated stores, which are fictional virtual (internet) stores that the
Company has created to conduct a wide variety of sample transactions that are
controlled by the Company. The Company may continue use these simulated virtual
stores to test products and services that it develops from time to time, but
such simulated virtual stores will only be used by the Company and, being
fictional entities, cannot become clients of the Company. The Company does not
plan on allowing parties outside of the Company to have access to these websites
(other than those assisting with the aforementioned tests). The Company has not
yet commenced full scale commercial operations, but anticipates doing so by
Spring 2000. The Company is not yet offering services to third parties, has no
clients at this time (although the principals have spoken with a number of
potential end-users regarding the process) and has derived no revenues from
sales or services provided. The business of the Company as set forth herein is a
description
3
<PAGE>
of the goals that the Company has established for itself. Because the Company
will require additional capital within the next two months to remain viable,
there can be no assurance that it will be able to achieve these goals. The
Company also believes that it will have greater access to capital and/or bank
financing once its shares are once again eligible for listing on the Over the
Counter Bulletin Board. There is no assurance that the shares will become
eligible or that if the Company's goals are achieved, the business reflected
herein will be commercially viable. There is also no assurance that the Company
will have the capacity to create an effective and efficient service department
within the next few months, or that the Company will be able to open up the
business centers described elsewhere herein (estimated to cost $673,000 per
business center, except for the Montreal business center, the prototype for the
Company's other centers, which management estimates will cost $1,000,000).
Delays in the commencement of full scale commercial operations could reduce what
the Company's management believes is its lead time over certain of its
competitors, being the approximately six months that management believes it
would take to develop and implement the requisite technology and to establish
the necessary market relationships to conduct the Company's business operations.
Such a loss in the Company's lead time would likely result in a
smaller-than-expected market share once the Company's intended operations are
commenced.
Products and Services
Products and Services
The Company's core focus is to be an e-business service provider to small and
medium-sized businesses. The Company plans to offer a package of services to
e-merchants that will facilitate the process by which small and medium-sized
businesses establish their virtual stores for on-line transactions. The first
phase of that process is to set up the e-merchant's on-line store. By bundling
store and catalogue creation, web site hosting, the provision of Visa and
MasterCard merchant numbers to its customers, e-commerce application software,
on-line transaction processing, shipping arrangements and branding, the Company
believes it will be able to attract customers looking for an efficient,
broad-based means of engaging in e-commerce. The Company will utilize the
products and services made available through the arrangements described below in
establishing the e-merchant's store.
The second phase of the services provided by the Company will be for the Company
to facilitate these virtual stores being placed in high-traffic portals,
shopping websites and other content providers, so that internet users will be
able to visit the e-merchants stores without specifically knowing about them
prior to going online to make their purchases. The Company has no arrangements
with any of such content providers, but believes that these various content
providers will act in their own interest and place the e-merchants' virtual
stores within their networks. The Company will advise the e-merchants as to
which provider(s) will be best for their respective businesses, based on the
Company's experience and familiarity with the strengths and weaknesses of these
content providers. Estimates as to fees to be paid by the Company's e-merchants
to the portals, websites and other content providers range from $10 to $400 per
month, largely dependent on the popularity of the particular content provider
(in the same way that more popular newpapers can charge higher rates for
advertising space).
The Company has divided its services into three components: strategy, marketing
and performance analysis.
o Strategy: This comprises the first phase of the Company's services, as
described above. The strategy component consists of assisting with the
set-up and implementation of the e-merchant's on-line business model;
determining how much volume the merchant's store is equipped to
handle; identifying opportunities and suggesting new markets for its
e-merchants to pursue; and advising e-merchants with their
relationships with consumers.
o Marketing: This comprises the second phase of the Company's services.
This component consists of working with e-merchants to define a
marketing strategy and identifying the best advertising and promotion
channels for the virtual store; coordinating traditional and/or
on-line marketing techniques; identifying the best communication
channels and determining placement and position of the e-merchant's
products and website on the internet, including which portal(s)
4
<PAGE>
would be most cost-efficient to bring about an increase in sales;
determining how much to spend on having the store's content on which
particular portal; and managing publicity and the promotional budget
requested by merchants.
o Performance Analysis: The Company will assist in extracting pertinent
data about sales generally, and e-merchant visitors and buyers in
particular; analyze results, perform trend analysis and rate store's
performance; and re-orient the on-line store to enhance on-line
traffic and sales volume.
These services can be provided via the internet or at business centers that the
Company is in the process of establishing, which the Company envisions as a
place to "bridge" the real and virtual worlds. Qualified Company personnel will
work face-to-face with e-merchants and create a solution implementing the method
described above. The Company believes that this personal contact and mixing of
traditional and online marketing techniques will attract those who are less
familiar or comfortable with the Internet. See "-- Sales and Marketing."
The Company will also offer 24 hour, seven day customer service to customers of
the Company's e-merchants, which the Company believes will create greater
consumer confidence in the part of the e-merchants' on-line purchasers and
encourage subsequent purchases, all of which should ultimately increase revenues
to the Company.
Third Party Providers
The Company has entered into a number of arrangements with third-party providers
to place itself in a position in which it can provide its e-merchants with all
of these services. The Company has an agreement with Open Market Inc. permitting
the Company's e-merchants to use Open Market's catalogue creation software
(ShopSite(TM)) and back-end commerce application software (Transact4), which
will assist the Company's customers in developing marketing strategies for their
products and tracking and invoicing their products. The Transact4 software
package also contains automated tax and shipping calculations as well as fraud
detection technology. The Company's rights to these Open Market products were
granted pursuant to a perpetual license. The Company needs to pay its final
installation for the license granted under this agreement. The Company has
continuing obligations for support services under the agreement. In addition to
the foregoing costs incurred in installing and servicing the Open Market
products, the Company will also incur variable fees per month per e-merchant
that is using the Open Market software, computed on a sliding scale based upon
each respective e-merchant's revenues. The Company may terminate the agreement
without cause at any time on or after March 18, 2001 upon 90 days written notice
to Open Market. Each of the parties may also terminate for cause if the cause
remains after a 30 day cure period.
The Company has entered into an Internet Services Agreement with EMC2
Corporation ("EMC") to monitor the servers on which the Company hosts its
customers' websites, to prevent disruptions in service and to make repairs, so
as to maintain the host services and availability of the websites for the
Company's e-merchants. The EMC contract requires the Company to make monthly
payments of $21,800 (as a base amount) through May 15, 2001 (aggregating to a
minimum of $370,600 from January 2000 through such date). Under the EMC
contract, charges payable for additional EMC services under the EMC contract
will be determined by the Company and EMC based upon then current rates; the
Company expects this rate to vary based upon the number of customers the Company
has in a given month. No such additional services have been requested to date.
The EMC contract renews automatically for one-year periods unless terminated by
either party (a) at least 90 days prior to the end of the then-current term or
(b) upon a material breach by the other party, subject to a 30-day cure period
for such cause.
The Company is finalizing arrangements with The Toronto-Dominion Bank and the
National Bank of Canada that will allow the Company to provide its customers
with Visa and MasterCard merchant numbers, respectively, within three days, as
opposed to a potential six-to-eight week delay, without the typical upfront
security deposit (for chargebacks) of approximately $3,200 to $13,000. The
Company expects it will ultimately be responsible for the e-merchants'
chargebacks. Instead of requiring a security deposit from e-merchants for
chargebacks, the Company intends to hold "rolling" security for these Visa or
5
<PAGE>
MasterCard merchants, in accordance with an industry-based risk analysis to be
provided by the respective bank. This "rolling security" will be effected
through the Company's holding back as security a percentage of each e-merchant's
sales revenue for the immediately preceding six months; after six months of
holding the relevant security, the Company will release the sales revenue to the
e-merchant and retain a percentage of the current sales revenue in lieu thereof.
The Company will also protect against e-merchant fraud by not paying them until
the Company receives confirmation of delivery of the goods by UPS. The Company
believes that these security measures will foster consumer confidence, leading
to increased sales revenues for the Company's e-merchants and, as a result, the
Company. There is no assurance that these agreements will be finalized with
either bank or that the Company's expectations in connection therewith will be
met.
The Company has entered into an agreement with UPS that allows the Company's
e-merchants to benefit from discounted shipping rates. Under the terms of the
UPS agreement, the Company's e-merchants benefit from price incentives granted
through the Company, as UPS's fees will be based upon the aggregate of all of
the Company's merchants' shipments. The Company is ultimately responsible to UPS
for all amounts owed by its merchants. The Company has agreed to pay for all
shipments in full within 90 days of the invoice date. As part of the agreement,
the Company has agreed to endorse UPS as the recommended delivery company for
the Company and all of the Company's related divisions, subsidiaries and
affiliates. In return, UPS has agreed to support and/or endorse marketing and or
promotional initiative aimed at promoting the Company's services in which the
UPS registered trademark and/or logo appears.
Revenues
The Company's revenues will be based upon the gross sales of its e-merchants.
The Company plans to charge e-merchants an industry-dependent fee expected to
average four percent (4%) of gross sales and to require that its merchants pay
at least $200 monthly for additional marketing services (whether or not provided
by the Company). The Company and the e-merchant will jointly determine the
amount above the minimum monthly payment that would be appropriate for the
e-merchant to spend on additional marketing services (some of which will be use
to pay for the placement of the virtual store on a portal, shopping website or
other content provider).
The Company has received over 50 unsolicited offers for franchises in other
jurisdictions. Should the Company decide that it wishes to derive revenues from
franchising its concept (including through having third parties operate its
business centers in cities outside of Canada), it will extensively review these
and any other offers it may receive prior to engaging in such franchising
activities. The Company has not determined under what circumstances, if any, it
will engage in franchising or in joint ventures and no terms or contracts have
been presented to the Company in which it is interested.
Employees
The Company is establishing its base of operations in Montreal. The Company is
in the process of evaluating potential sites for its business center and expects
to open same in April 2000. This facility will be staffed seven days a week
during regular business hours by qualified representatives and customer service
personnel. The Company currently employs 37 people full-time. The Company's
relationship with its employees is good. None of the Company's employees is a
member of a labor union.
The Company is in the process of bolstering its management team by adding senior
executives with a track record in the information technology industry,
e-commerce, and/or transaction processing. The Company also plans to employ 15
regional sales managers, one new sales executive and ten administrative staff
members for the processing of e-commerce merchant applications. On the technical
side, the Company plans to hire two people for each of its technical support and
administrative support staffs. Over the next three years, the Company plans to
open business centers in Toronto, Vancouver, Calgary and Ottawa, where its
qualified representatives and customer service personnel will help the Company's
e-merchants in connection with their getting on and conducting e-commerce on the
Internet. The Company believes that each business center will be staffed by
approximately 35 people, including graphic designers, strategy agents, marketing
agents, performance analysts and computer-security-related personnel. In support
of these centers, the Company believes it will be required to hire an estimated
additional 25 people annually
6
<PAGE>
for a three years to perform general and administrative tasks. There is no
assurance that these estimates will reflect the actual growth of the Company's
business, however.
Market
The Internet began as a source of free information. It is now growing into a
medium for online commerce as well. Estimates vary greatly as to anticipated
Internet-generated revenues in even the near future, but would appear to be a
rapidly developing market. For example, research cited by the chief executive
officer of a well-known computer industry company forecasts that e-commerce
transactions will account for $2 trillion, or about 10 percent of the U.S. gross
domestic product by 2002. According to a report by the Retail Council of Canada
and IBM published in June 1999 entitled "The Race is on: Who Will Win Canada's
Internet Shoppers," the Canadian e-retail market (business to consumers) was
estimated to be $450 million in June 1998 and to be $8.5 billion in 2003 (based
on a conversion rate of Cdn.$1.00=US$0.662). Vice President Gore noted in a
White House report dated June 21, 1999 that growth in e-commerce has far
outpaced even the most optimistic projections, citing early 1998 expert
estimates that Internet retailing would reach $7 billion by year 2000 and later
statistics indicating that by late 1998, online sales had already reached
between $7 billion and $15 billion. Moreover, a study from the Boston Consulting
Group published in Shop.org in July 1999 states that in 1998, the number of
e-commerce transactions increased by 200%.
For Internet use to grow, consumers must be confident in the security measures
taken by providers. According to an article in E-Commerce News, the concern of
Internet users about credit card fraud while shopping online has fallen to 21%
which is about half of what it was in 1997. The Company has addressed the
security issues by utilizing the Transact4 software, which contains antifraud
technology.
Each day new websites are launched that are easier than ever to use and have
increased sophistication and appeal. These websites offer an increasing array of
goods and services including computer hardware and software, travel planning
services, entertainment, financial services, and education. In order to sell
these goods and services successfully, e-merchants must accept and be able to
process transactions on widely held credit cards such as MasterCard and Visa,
have the capability to ship their goods economically (but reliably), and have
the ability to market their products and services and obtain information and
generate reports and invoices from their sales. The Company believes that few
new e-merchants are in a position to establish all of these capabilities
efficiently, and believes that its providing e-merchants with one integrated
source for all of these functions will be more attractive to the Company's
intended market.
The Company believes that primary market for the Company's products and
services, and the companies to which the aforementioned products and services
offer the greatest benefit, are small and medium-sized businesses that are
already established as "brick and mortar" physical locations that can handle a
sharp increase in volume. The Company will initially focus its sales efforts in
Montreal, then direct its efforts to the other larger cities in Canada, namely
Toronto, Vancouver, Calgary and Ottawa, later in 2000 (although business centers
will be built in these cities over a slightly longer timeframe - See "-Sales and
Marketing"). The Company has long-term plans to export its concept to Europe,
the United States, Asia and South America over the next two years. There is no
assurance, however, that such expansion will take place, in light of the
Company's need for immediate capital. The Company will not be focusing on any
particular industry or product; however, management believes that stores selling
moderately to higher priced and easily and inexpensively shipped goods (for
example, perfume) would be good candidates to become e-merchants utilizing the
Company's services.
The Company also believes that large merchants may also be a viable market,
although the Company will market its products and services in a different manner
to such companies. See "Sales and Marketing."
7
<PAGE>
Sales and Marketing
The Company intends to launch a direct selling strategy intended to secure a
strong position in the market place. The marketing campaign will focus on
established, small and medium-sized businesses with the potential for sharp
increases in sales.
In Montreal, the Company has engaged CPM Cartier Promotion Marketing ("CPM") to
help develop the marketing strategy of the Company. CPM also assisted in
planning and producing the required communication tools for the launch campaign
of the Company's e-business solution. CPM relies on the following
multi-disciplinary team of marketing and communication companies to assist in
generating the Company's marketing strategy:
o Leger & Leger for it marketing research;
o Serge Bujold and Associates; and
o Morin des Roberts to plan and manage its public and investor
relations.
An advertising, promotion and public relations campaign was launched in November
1999 and will extend into early 2000. CPM has set up a multi-media marketing
campaign that will be monitored with assistance from and Leger & Leger, who will
also help CPM in gauging and adjusting the marketing strategy with the
perception and attitude of the targeted markets toward the Company's e-business
solution.
Integral to all of these strategies is the hiring of experienced business
development and sales professionals. The Company commenced hiring sales
professionals in August 1999. The sales team will be divided in three sub-teams.
One team will be a "ground force" that will visit potential merchants. A second
team will be located in a call center, as some agents will be responsible for
telemarketing. Initially the Company plans that the sales team will be composed
of 15 representatives, some of whom will focus on particular industries.
The third team, initially staffed by five to ten sales people, will be located
in the Montreal business center, and will direct its efforts at those
e-merchants within the Company's target market that are not computer or Internet
familiar. The Company believes these e-merchants will be attracted by these
"bricks and mortar" business centers, which are also staffed with support
personnel to assist the Company's e-merchants in a "face-to-face" setting. At
these business centers, the Company will work with e-merchants to create a
business development strategy and a marketing plan. Performance analysis is also
offered at these centers after the strategies are implemented. Additionally, the
Company plans to have graphic design and other personnel available so that the
e-merchant and the Company together can generate the integrated product that the
Company is promoting. The Company's first business center will be in Montreal,
with other centers planned for Toronto (June 2000), Vancouver (August 2000),
Calgary (March 2001) and Ottawa (March 2001) within the next two years. The
Company also intends to establish business centers in Europe (December 2000),
the United States (March 2001), and Asia and South America thereafter.
From time to time, the Company's management will personally and directly address
large merchants with respect to the Company's products and services. These large
merchants will be selected by management based upon management's perception that
the Company's business model will not require significant adaptation for
implementation with these merchants, who will generally be sellers of diverse
lines of easily shipped consumer goods. The Company believes that this change in
methodology is appropriate because of, among other things, the technological
sophistication and internal marketing and Internet expertise of these large
merchants.
Competition
The market for small and medium-sized e-merchants who are looking to set up
stores on the Internet is becoming highly competitive, with no substantial
barriers to entry, and the Company expects that competition will continue to
intensify. The market for the Company's products and services aimed at these
merchants has only recently begun to develop, is rapidly evolving and is likely
to be characterized by an
8
<PAGE>
increasing number of market entrants with competing products and services.
Although the Company believes that the diversity of the Internet market may
provide opportunities for more than one provider of products and services
comparable to the Company's, it is possible that one or a few providers may in
the future dominate one or more market sectors. Based upon internet research
performed by the Company, management believes that the Company has approximately
35 competitors in the United States and approximately 15 competitors in Canada.
Management does not believe that there are any companies that dominate the
market for products and services comparable to the Company's, although to the
extent that the Company competes with portals, the portals would dominate based
on name recognition alone. The Company expects that the number of competitors
will grow as e-commerce grows. Management believes that the Company's products
and services, once implemented, will compare favorably to other companies'
products and services with respect to the competitive factors listed below, but
there is no assurance that e-merchants in the Company's target market will make
a similar assessment.
The Company believes that the primary competitive factors for companies seeking
to provide comparable products and services to e-merchants are
o the integration and completeness of the products and services provided
- whether all products and services can be obtained from or through
one provider. These include credit card access, delivery services for
the products sold, ease-of-use of software used to set up store and
transaction-processing software;
o the ability of the provider to customize the products and services
sought;
o marketing and performance analysis assistance;
o fees and fee structure - the percentage of the merchant's sales the
provider receives, if any; the up-front fees (and related financial
risk to the e-merchant) and subsequent transaction costs;
o customer support, particularly technical support; and
o ability of the provider to establish its own brand recognition and to
assist merchants in establishing their own brand recognition.
The Company classifies its competition as follows:
o local suppliers of Internet services;
o consulting firms and manufacturers of computer equipment; and
o suppliers of integrated e-business solutions.
Local Suppliers of Internet Services
Local suppliers of Internet services specialize in the development of Web sites.
A few of them offer e-commerce tools such as "shopping cart" software, hosting
and transaction processing However, the Company believes that none of these
companies offers either an e-business solution that is as complete, integrated
or scalable as the Company's or the service in terms of e-commerce strategy and
marketing offered by the Company (whereas the Company's business model is based
on the selling of technological tools and consulting services). Canadian
companies falling into this category include Performance Net, Business Dynamics,
Digital Commerce SWL, Strategic Profit, IBG Internet Broker Group, Hyper
Connect, Shadez and IrDesign.
Management believes that the main advantage of these companies is that they are
close to their clientele, but that the Company's products and services offer the
following advantages (in addition to that noted in the preceding paragraph):
o the Company provides its merchants with credit card merchant numbers;
o the Company provides customer service, both in the business centers
and the 24-hour seven-day phone answering service;
o the Company has made shipping arrangements for its e-merchants;
o the Company offers assistance in terms of e-commerce strategy and
marketing; and
9
<PAGE>
o the Company's e-business solution integrates all of the foregoing
components and others that the Company believes are needed to do
e-business.
Consulting Firms and Manufacturers of Computer Equipment
These companies offer their clients a customized e-business solution. These
kinds of solutions are of good quality but they are expensive and, the Company
believes, are oriented towards large companies and not targeted nor readily
applicable to small and medium-sized businesses. Competitors fitting into this
group are Dell, DMR-Metalink, BCE Emergis and Bellamy Jordan.
The main advantage of such companies is their ability to develop e-business
solutions that address the specific needs of their clients and that can be
integrated in their current business processes. However, relative to the
integrated solution being offered by the Company, management believes that these
types of e-business solutions involve relatively high development costs and
significant operational costs, while lacking the overall consulting relationship
fostered by the Company.
Suppliers of Integrated E-Business Solutions
These competitors of the Company offer merchants who want to start an online
business integrated e-business solutions that comprise many of the fundamental
components required to do e-commerce. Their business model usually involves a
monthly fee and transaction costs or a free base service and certain fees for
additional services. In the United-States, companies like Yahoo Stores, i-mall,
Lycos, Big Step, Econgo and FreeMerchant are involved in such activities, and
have the greatest name recognition among the Company's competitors. In Canada,
Canada Shop, Clic Shop and nGage are illustrative of this kind of competitor.
One competitive disadvantage with respect to these larger and more established
competitors is that they offer e-merchants the benefit of increased exposure,
with reasonable pricing plus a search engine and a location on a portal. The
Company believes that the focus of such companies has not been on e-commerce in
the same way that the Company has put together a fully-integrated package of
products and services for its e-merchants, which (in addition to the mixing of
traditional and online marketing tools and physical locations for face-to-face
conducting of business) management believes is the way that the Company will
distinguish itself from the majority of these companies. In Canada, the Company
believes that its competitive advantages against these companies are its
providing of customer service, shipping arrangements, assistance in terms of
e-commerce strategy and marketing, and a physical business centre for
e-merchants.
The Company also competes to a limited extent with traditional forms of media,
such as newspapers, magazines, radio and television, insofar as advertising
through these media can be viewed as an alternative to a merchant operating a
website. The traditional media companies are likely to have greater capacity
than the Company to invest in or to otherwise acquire the Company's competition.
The Company believes that the principal competitive factors in attracting
merchants to use its products and services instead of traditional media are
o the ease-of-use of the Company's products and services;
o the extent to which the Company can assist the merchant in becoming
comfortable with the internet, including ongoing support;
o the ability of the consumer to execute transactions directly through
the system; and
o the cost-efficiency of the Company's products and services in reaching
and attracting potential consumers, as compared to traditional media
providers.
The Company's existing competition in the internet sector, by virtue of their
already being operational and revenue-generating, all have greater name
recognition, established customer bases and greater financial, technical and
marketing resources than the Company. Traditional media companies have
significantly greater resources. Such competitors are able to undertake more
extensive marketing campaigns for their products and services, and may be able
to adopt more aggressive advertising pricing policies and make
10
<PAGE>
more attractive offers to potential employees, agents and third parties. There
can be no assurance that the package of products and services provided by the
Company will be found to be less useful or cost-efficient than those provided by
other companies. Nor can there can be any assurance that the Company's
competitors and potential competitors will not develop products and services
that are equal or superior to the Company's. There is also no assurance that the
third party providers with which the Company has established strategic
arrangements will not sever or elect to renew these arrangements upon the
respective termination dates thereof, whether due to perceived benefits from
other sources or other currently unknown reasons.
Intellectual Property
The Company does not have any registered patents, trademarks, licenses,
franchises or concessions. The Company may in the future attempt to obtain all
or any of the foregoing. The Company is not currently exploring the viability of
franchising or licensing out its intellectual property interests, and is neither
a franchisee or licensee under any material agreements, other than its
arrangements with Open Market, pursuant to which the Company is granted rights
in the software that it makes accessible to e-merchants to conduct business over
the Internet.
Research and Development
The Company is a development stage company. The following is a summary of the
Company's operating and administrative expenses are attributable to researching
and developing the concept described in this registration statement:
Period Amount
------ ------
Two Months ended September 30, 1998 $ 34,921
Eleven Months ended June 30, 1999 984,546
Three Months ended September 30, 1999 426,714
Fourteen Months ended September 30, 1999 1,411,260
The Company is not aware whether and to what extent its predecessors spent funds
on research and development during the years prior to July 1998. However, as
none of the Company's predecessors was engaged in a business resembling that
described herein, any amounts spent by such predecessors were not used to fund
research and development for the operations of the Company as currently
operated.
The Company
Planet411.com Corporation, the Company's predecessor, was incorporated on April
23, 1990, in the State of Nevada in the United States, as Investor Club of the
United States. The name was changed to Noble Financing Group Inc. (in 1992),
then to Newman Energy Technologies Incorporated (1998), then World Star Asia,
Inc. (1998), Comgen Corp. (1998) and then to Planet411.com Corporation on
February 11, 1999 to reflect its current business objectives. Planet411.com Inc.
was incorporated on July 13, 1999. Planet411.com Corporation was merged with and
into Planet411.com Inc. on October 6, 1999 for the sole purpose of changing the
Company's jurisdiction of incorporation to Delaware.
The Company's headquarters are presently located at 440 Rene Levesque West,
Suite 401, Montreal, Quebec Canada.
11
<PAGE>
ITEM 2. FINANCIAL INFORMATION
Selected Financial Data
The following selected financial data as of June 30, 1999 and for the 11-month
period ended June 30, 1999, are derived from and qualified by the audited
consolidated financial statements of the Company that are included elsewhere in
this registration statement. The following selected financial data as of
September 30, 1999 and for the two month period ended September 30, 1998 and the
three month period ended September 30, 1999 are derived from and qualified by
the unaudited financial statements of the Company that are included elsewhere in
this registration statement. The data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", the audited financial statements, related notes and the other
financial information included elsewhere in this registration statement.
Statement of Consolidated Operations Data
Operating and administration expenses
11 Months ended 2 months ended 3 months ended
June 30, 1999 Sept. 30, 1998 Sept. 30, 1999
------------- -------------- --------------
Salaries $ 246,733 $ 6,751 $ 180,374
Rent 52,472 7,165 23,355
Internet connection 58,856 4,646 6,396
Advertising 47,950 -0- 18,934
Promotion 26,702 628 4,592
Professional fees 213,362 6,596 69,973
Travel 29,993 -0- 7,387
Service Contracts 65,679 -0- -0-
Interest expense 3,051 548 565
Other expenses 239,748 8,587 115,138
--------- --------- ---------
Net loss for the period $(984,546) $ (34,921) $(426,714)
--------- --------- ---------
Consolidated Balance Sheet Data June 30, 1999 Sept. 30, 1999
- ---------------------------------------- ------------- --------------
Current Assets $ 144,833 $ 150,605
Capital Assets 968,591 950,466
Total Assets 1,127,119 1,101,071
Current Liabilities 348,371 404,626
Total Liabilities 640,616 699,903
Management's Discussion and Analysis of Financial Position and Results of
Operations
General
The Company's only material financial transactions have been capital raising,
paying costs of forming the Company and establishing relationships and/or
entering into contracts with marketing and public relations firms, financial
institutions and the various other service providers described herein. The
Company is a corporation with a limited operating history. It (through its
current subsidiary 9066) commenced its present operations on July 31, 1998. It
is a development stage company with no operating revenues to date. The Company's
revenues will be an industry-based percentage of the gross sales of its
e-merchants, which the Company estimates will average four percent (4%). The
Company has insufficient operating history on which to base an evaluation of its
business and prospects. Any such evaluation must be made in light of the risks
frequently encountered by companies in their early stages of development,
particularly for companies
12
<PAGE>
in the rapidly evolving sector related to the Internet. Among the risks faced by
the Company are the absence of an established customer base, lack of a
significant presence in the marketplace, untested operating capacity, an
unproven business model and the immediate and long-term needs for additional
capital. There is no assurance that the Company will be successful in addressing
these risks and if it fails to do so its financial condition and results of
operations would be materially adversely affected.
Results of Operations.
Because the Company's date of inception (for accounting purposes) was July 31,
1998, no period to period comparison of operations is available other than for
the two- and three-month periods ended September 30, 1998 and 1999,
respectively. The Company (through its predecessors) did not conduct any
business that would yield a meaningful analysis of results of operations prior
to July 31, 1998, because these businesses were completely unrelated to that
described in Item 1 of this registration statement. For example, from 1992 to
1998, the Company was known as Noble Financing Group Inc., which the Company's
management believes was a company seeking investment opportunities. In 1998, the
Company's name was changed to Newman Energy Technologies Incorporated as a show
of good faith while its then current management was negotiating a technology
deal (which deal was never consummated). In 1998, as World Star Asia, Inc., the
Company was in the business of selling franchises to make and distribute mini
trucks, until a third party backed out of a material transaction related to such
activities. (Management does not believe any material transactions were ever
consummated by the Company as World Star.) After the 1998 name change to Comgen
Corp., the Company was seeking (but to the knowledge of the Company's current
management never consummated any) potential investments.
Operating and administrative expenses incurred through June 30, 1999 and for the
three months ended September 30, 1999 were $984,546 and $426,714, respectively,
and represent the cost of forming the Company, building its infrastructure,
hiring and paying employees, and advertising and marketing. For the two month
period ended September 30, 1998, the Company incurred operating and
administrative expenses of only $34,921. The increases in the September 1999
figures over the September 1998 figures reflect the following:
o the Company had more employees, and those employees were earning
higher salaries;
o increased professional fees were incurred, primarily in connection
with the Company's year end audit, the preparation of securities
documents and the Company's efforts to obtain bank financing;
o increased advertising and promotion costs were incurred, as the
Company had not yet begun to concentrate on marketing its initial
business plan during its infancy in 1998; and
o increased miscellaneous other costs, commensurate with the Company's
increased activities.
As of September 30, 1999, the Company had an accumulated deficit of $1,411,260,
compared with $34,921 as of September 30, 1998.
Liquidity and Capital Resources.
On September 17, 1999, the Company issued 107,800 Units in consideration of an
aggregate of $539,000. Such consideration had previously been received by the
Company as an advance in respect of such private placement. Each of such Units
consisted of (a) one share of common stock, par value $0.001 ("Common Stock"),
and (b) one warrant to purchase another share of common stock at a strike price
of $5.00.
On October 15, 1999, the Company issued 233,340 Units at a price of $1.50 per
Unit. Each Unit consisted of (a) one share of Common Stock and (b) one warrant
to purchase another share of common stock at a strike price of $1.50. The
aggregate consideration of $350,010 had previously been advanced to the Company
in respect of such private placement. A second subscription for 333,340 of such
Units (at the same price of $1.50 per Unit) was received from the same investor
and accepted by the Company on November 30, 1999. The $500,010 consideration for
such Units had previously been advanced to the Company as part of the same
on-going private offering.
13
<PAGE>
The Company has had no other financings. These Units represent the sole source
of the Company's working capital.
On September 30, 1999, the Company had $15,239 in cash available to fund
operations. The Company will require additional financing of $800,000 through
sales of Units or other securities within two months to continue operations
through April 2000, at which time the Company believes it will begin generating
positive cash flow. The Company also has recently begun looking for alternative
sources of credit, in light of its having terminated its arrangements with a
surety and a reinsurance company when (after all appropriate documentation and
financial support in the form of pledges of shares were delivered by the
Company) reinsurance certificates were never delivered to a commercial lender
who was relying on same for its collateral. The Company is considering what, if
any action, it has available to it in connection with such agreements. In
addition to seeking a new credit facility, the Company is also attempting to
raise approximately $23 million through private transactions involving debt
and/or equity, which amount it believes will be sufficient to fund its
operations through the next 24 months, including the promotion of the Company's
products and services, the establishment of new business centers throughout
Canada (estimated at $673,000 per business center) and the completion of the
Company's required infrastructure in terms of additional equipment and
personnel. The failure to obtain a credit line or additional financing within
the next two months would have a material adverse effect on the financial
position and results of operation of the Company. There is no assurance that the
Company will be able to raise any more working capital through equity financings
or that such credit line is available at commercially reasonable rates. Any such
financing may be at terms that are dilutive to the Company's existing
shareholders.
Market Risk
Credit Risk
Financial instruments that potentially subject the Company to concentrations of
risk consist primarily of capital leases, a term deposit and advances to
directors and shareholders. The cash is held by a high-credit quality financial
institution. The term deposit was purchased from a high-credit quality financial
institution.
Interest Rate Risk
The Company's exposure to interest rate risk is as follows:
Cash Non-interest bearing
Term deposit Fixed interest rate (3.75%)
Receivables from directors and shareholders Non-interest bearing
Accounts payable and accrued liabilities Non-interest bearing
Short-term Investments
Short term investments consist of the following:
Sept. 30, 1999
Term deposit, 3.75%, maturing April 19, 2000 --------------
$ 10,080
Long-term debt
<TABLE>
<CAPTION>
As of June 30, 1999 Expected Maturity Date
Interest included in
2000 2001 payments Total Fair Value
(U.S. Dollar Equivalent)
<S> <C> <C> <C> <C> <C>
Liabilities
Long Term
Obligations under capital lease
Fixed rate (U.S.$) 10,595 6,460 (2,106) 14,949 Approximately
equal to carrying
value
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Average interest rate 16% 16%
Fixed rate (Cdn.$) 15,588 9,504 (3,098) 21,994 Approximately
Average interest rate 16% 16% equal to carrying
value
</TABLE>
Fair Value
Due to their short-term maturity, the carrying values of cash, the term deposit
and the accounts receivable and payable and accrued liabilities are reasonable
estimates of their fair values. Based upon the interest rate, the maturity and
current discount rates, the estimated value of the Company's long-term debt is
approximately equal to its carrying value.
The Company does not hedge against currency exchange rate risks.
Year 2000 Issues.
Many currently installed computer systems are not capable of distinguishing 21st
century dates from 20th century dates. As a result, beginning on January 1,
2000, computer systems and software may produce erroneous results or fail unless
they have been modified or upgraded to process date information correctly. Some
uncertainty still exists in the software, internet and other industries
concerning the scope and magnitude of problems associated with the century
change, although the Company has not been notified by any of Open Market, EMC,
UPS or the Canadian banks with respect to any Year 2000 readiness difficulties
they have encountered. The Company believes that its efforts to ensure that its
operations will not be adversely affected by Year 2000 software problems were
successful, although issues may arise when the Company's systems and software
interface with those of its e-merchants later this year.
The Company completed its assessment of the Year 2000 readiness issues in the
software contained in its internal systems and those provided by Open Market
Inc. prior to the turn of the century and had determined that the software and
hardware material to the Company's business are Year 2000 compliant. In light of
the Company's not having received any adverse news from Open Market, the Company
continues to believe that the consequences of the Year 2000 issues with respect
to it will not have a material effect on its business, results of operation or
financial condition.
The assessment of the Company's internal harware and software was completed by
Coss N Crew, a company owned by Varujan Tasci, the Chief Technical Officer of
9066. See Item 7. The assessment of the software and hardware used by Open
Market Inc. was performed by The Toronto-Dominion Bank as part of its due
diligence in connection with establishing the credit card arrangements. See
"Business - Products and Services." The Toronto-Dominion Bank attributed no
incremental costs to the Year 2000 readiness analysis. The amount paid to Mr.
Tasci was under $6,000. All software and systems installed hereafter will be
tested and verified for Year 2000 readiness at the time of installation at
minimal additional cost. The Company has not learned of or experienced any Year
2000 readiness problems with respect to these products either before or after
the century change.
There are many third parties that have not been identified by the Company whose
Year 2000 problems would have a material adverse affect on the Company. For
example, the Company's proposed business depends on the smooth operation of the
Internet. Should Year 2000 problems experienced by any third party materially
impede the operation of the Internet, the Company will be materially adversely
affected. Notwithstanding that after three weeks, to the knowledge of the
Company's management no such issues have arisen, there is no assurance that the
Company will not be materially adversely affected by the Year 2000 problems of
third parties.
The reasonable worst case Year 2000 scenario for the Company would include the
substantial or complete shutdown of the Internet or the banks which provide it
with credit and processing services or the major credit card companies. This
eventuality would cause the Company to cease operations until the Year 2000
15
<PAGE>
problems were corrected. The Company has no contingency plan for dealing with
this scenario and is not planning to develop one. The Company has not learned of
or experienced any Year 2000 readiness problems of this nature either before or
after the century change.
Item 3. PROPERTIES.
The Company does not own any real property. In December 1999, it increased its
total leased office space by approximately 8,000 square feet, to an aggregate of
17,100 square feet, all of which is at the address of the Company's headquarters
in Montreal. The Company's two existing real property leases covering the
initial 9,100 square feet leased were amended to expire concurrently on May 31,
2003. Aggregate payments under the three real property leases are expected to be
$553,691 through such expiration date, with minimum lease payments for the next
four years (the duration of the leases) of $162,056 in 2000, 2001 and 2002, and
$67,523 in 2003. (All of the foregoing amounts assume a conversion rate of
Cdn.$1.00=US$0.673.) The Company has the right to renew the leases for all of
its office space through May 2006. The Company believes that its present
facilities as so increased are adequate to meet its current and foreseeable
business requirements. The Company also believes that suitable facilities will
be available at commercially reasonable rates for its business centers in other
Canadian cities at such time as the Company is prepared to commence operations
outside of Montreal.
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the beneficial ownership of the Company's Common
Stock by (i) each person known by the Company to beneficially own five percent
or more of the Company's outstanding Common Stock, (ii) each of the Company's
executive officers, directors and director nominees and (iii) all of the
Company's executive officers and directors as a group. Except as otherwise
indicated, all shares of Common Stock are beneficially owned, and investment and
voting power is held, by the person named as owner.
Name and Address of Number of Shares Percentage Ownership
Beneficial Owner Beneficially Owned
Bank August Roth AG 15,682,401 66.5%
Bellariastrasse 23
Zurich, Switzerland
Joseph Farag 11,873,814(1)(2) 33.1
Stephane Chouinard 11,873,814(1)(2) 33.1
Johnson Joseph 6,079,754(1)(3) 20.3
9064-2448 Quebec Inc. 6,079,754(1)(3) 20.3
Ec-Assiste Inc. 3,300,000 13.9
Varujan Tasci 1,519,939(1) 6.0
Jonathan Levinson 250,800(1)(5) 1.0
Executive Officer and Directors 22,436,185 48.5
As a group (4)(5 Total)
(1) Other than 800 shares of Common Stock owned by Jonathan Levinson, all of
such shares are Exchangeable Shares in 3560309 Canada Inc., which are
currently exchangeable into shares of Common Stock. Voting rights with
respect to such shares (embodied in one issued and outstanding share of
Special Voting Stock) are jointly held by Joseph Farag, Stephane Chouinard
and Johnson Joseph, as mandataries under the Voting Agreement described
below, which requires the mandataries to adhere to voting instructions
received from those for whom the mandataries hold such voting rights.
(2) Includes (a) 2,200,000 Exchangeable Shares owned personally by each such
beneficial owner, (b) 9,673,814 Exchangeable Shares owned by a holding
company, the equity and control of which is shared equally by such
beneficial owners, and (c) 511,878 Exchangeable Shares owned by a company
in which Messrs. Chouinard and Farag serve as dire ctors and own all of the
voting shares. Each of Messrs. Farag and Chouinard disclaim beneficial
ownership of one-half of the Exchangeable Shares described in clause (b)
and all of the Exchangeable Shares described in clause (c) of the preceding
sentence.
16
<PAGE>
(3) All of such Exchangeable Shares are beneficially owned by 9064-2448 Quebec
Inc., a company that is one-quarter owned by Mr. Joseph and in which he
serves as one of four directors. Mr. Joseph holds legal title to such
Exchangeable Shares as a nominee of such company. Mr. Joseph disclaims
beneficial ownership of all but 1,462,938 of such Exchangeable Shares. (4)
All parties other than Bank August Roth AG, have an address identical to
that of the Company. (ec-Assiste Inc. is owned and controlled by a
non-management employee of the Company and Mr. Joseph is a principal of
9064-2448 Quebec Inc.) Beneficial ownership is disclaimed as to 5,128,694
of such Exchangeable Shares. (5) Includes 250,000 Exchangeable Shares and
800 shares of Common Stock.
Item 5. DIRECTORS AND EXECUTIVE OFFICERS
The names, ages, and offices of directors and executive officers of the Company
are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ---- --- ---------------------
<S> <C> <C>
Joseph Farag 30 President, Director
Stephane Chouinard 29 Vice President, Corporate Development; Secretary; Director
Johnson Joseph 27 Vice President, Product Development; Treasurer; Director
Jonathan R. Levinson 30 Vice President and Legal Counsel (effective January 1, 2000)
Varujan Tasci 37 Chief Technical Officer of the company's operating subsidiary
</TABLE>
All offices and directorships are held for a term of one year or until a
successor is duly elected and qualified.
Joseph Farag is a co-founder of the Company and has been President and a
Director of the Company since July 1998. From 1997 through 1998 Mr. Farag was a
director and executive officer of 3415783 Canada Inc. (doing business as
"CorporationNet"), which was in the business of commercializing an electronic
cash "Smartcard" known as the C.S.I. Vigil. From 1994 to 1997, Mr. Farag served
as a consultant to businesses catering to Montreal's nightlife. Specifically, he
was President of Club Crescent from March 1994 to November 1997 and also Manager
of Operations of Catacombs and "K" from April 1996 to June 1996.
Stephane Chouinard is a co-founder of the Company and has been Secretary and
Vice President, Corporate Development for the Company since July 1998. From 1997
through 1998, Mr. Chouinard was a director and executive officer of 3415783
Canada Inc. (doing business as "CorporationNet"), for whom he negotiated the
exclusive worldwide rights related to the C.S.I. Virgil Smartcard. Between 1995
and 1997, he was an independent marketing/ communication consultant for large
adult movie distributors. From 1994 to 1995, Mr. Chouinard was a sales
representative for a Sauturn/Saab/Isuzu automobile dealership. From 1993 to
1994, Mr. Chouinard was a sales manager for Les Boulangeries St. Augustin, a
major Canadian producer and distributor of baked goods.
Johnson Joseph has been Vice President, Product Development and Treasurer of the
Company since July 1998. Since April 1998, Mr. Joseph has been a director and
executive officer of 9064-2448 Quebec Inc. (which did business as CorporationNet
Web Development), which was intended to be the Web Development division of
CorporationNet, but which now functions as a holding company for the
Exchangeable Shares owned by Mr. Joseph and others. From 1997 through April
1998, he was Development Counselor of an Internet hub called "CityView". From
1996 through 1997, Mr. Joseph was a wide receiver for the Ottawa Roughriders of
the Canadian Football League. From 1993 through 1996, Mr. Joseph attended Texas
Tech University, where he studied business administration and finance.
Jonathan R. Levinson has served as outside counsel to the Company since its
inception in July 1998 and, effective January 1, 2000, will be joining the
Company as a Vice President and in-house Legal Counsel. From 1997 through 1999,
Mr. Levinson has been a practicing attorney in Montreal. From 1995 through 1996
he was employed at Mendelsohn, Rosentzveig Shacter, a law firm in Montreal. From
prior to 1994 through 1995, when he graduated, Mr. Levinson was a law student at
McGill University in Montreal, from
17
<PAGE>
which he received Bachelor of Laws and Bachelor of Civil Law degrees. Mr.
Levinson has been admitted to the bar of New York State, Massachusetts and the
Province of Quebec.
Varujan Tasci has been with the Company as Chief Technical Officer of 9066 (the
Company's operating subsidiary) since July 1998. He is the founder of COSS'N
CREW Corp., a computer consulting firm, which he owns and for which he has
served as President and Director for over five years prior to joining the
Company.
Item 6. EXECUTIVE COMPENSATION.
Directors will not be paid for their attendance at meetings, nor receive a
stated salary as a director over and above their executive salaries.
The Company paid no executive officer more than $100,000 in 1998. Mr. Farag's
salary (paid by 9066) was $993 in 1998 and is $67,300 in 1999. The foregoing
figures are based on a weighted average conversion rate of US$0.662 = Cdn.1.00
for 1998 and a weighted average conversion rate of US$0.673 = Cdn.$1.00 in 1999.
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Merger Agreement
The Company, pursuant to a merger agreement dated as of September 30, 1999, is
the surviving company of the merger of Planet411.com Corporation, a Nevada
corporation ("Mergeco"), with and into Planet411.com Inc., a Delaware
corporation. Pursuant to the merger agreement, the separate legal existence of
Mergeco ceased on October 6, 1999, the effective date of the merger. The total
assets and liabilities of the Company upon the effectiveness of the merger
equalled those of Mergeco immediately prior to the merger. The articles of the
Company are substantially similar to that of Mergeco, with the primary
exceptions being that (a) there are 69,999,999 shares of Common Stock, par value
$0.001 authorized, not 300,000,000 shares, and (b) certain provisions of
Mergeco's articles have been conformed to reflect the Delaware General
Corporation Law. The Company was capitalized upon the consummation of the merger
agreement: each of Mergeco's holders of common stock received one share of
Common Stock in the Company pursuant to the merger agreement for each share of
common stock of Mergeco owned by such stockholder immediately prior to the
merger, and the share of Special Voting Stock issued by Mergeco was exchanged
for one share of Special Voting Stock in the Company. Mergeco's obligations
under outstanding warrants were assumed by the Company. The exchangeable shares
(the "Exchangeable Shares") of 3560309 Canada Inc. ("Canco") formerly
exchangeable into shares of Mergeco common stock are now exchangeable into
shares of the Company's Common Stock.
Combination Agreement and Voting, Support and Exchange Trust Agreement
Pursuant to a Combination Agreement entered into as of April 20, 1999 among
Mergeco, Planet 411 (Nova Scotia) Company (Mergeco's wholly-owned subsidiary,
hereinafter "Novaco"), Canco, 9066-4871 Quebec Inc. ("9066") and the
shareholders of 9066, Canco acquired all of the issued and outstanding shares of
9066 in consideration for the issuance to the former shareholders of 9066 of
25,094,996 Exchangeable Shares and 8,400 Preferred Shares of Canco. The
Preferred Shares of Canco are convertible into Canco Exchangeable Shares on the
basis of one Preferred Share and Cdn.$5.00 ($3.37 based on a weighted average
exchange rate for 1999 of US$0.673 = Cdn.$1.00) for one Exchangeable Share.
Pursuant to the Combination Agreement, the Company has also issued one share of
Special Voting Stock, which is held for the benefit of the holders of the
Exchangeable Shares of Canco. The share of Special Voting Stock entitles the
holder to such number of votes as is equal to the number of Exchangeable Shares
outstanding from time to time that are not owned by the Company or its
subsidiaries. This agreement has been assigned to and assumed by the Company,
pursuant to the aforementioned merger agreement and an assignment and assumption
agreement.
18
<PAGE>
On May 13, 1999, Mergeco, Canco, 9066, Novaco and the Company's three directors,
in their capacities as mandataries for Mergeco's shareholders, entered into a
Voting, Support and Exchange Trust Agreement (the "Voting Agreement"), as
required under the Combination Agreement. This agreement also has been assigned
to and assumed by the Company, pursuant to the merger agreement and the
aforementioned assignment and assumption agreement. In addition to the rights
with respect to the exchange of the Exchangeable Shares in Canco for shares in
the Company described in the paragraphs below, the Voting Agreement and Canco's
articles each provides that dividends and/or distributions of any kind may not
be paid on or with respect to the Company's Common Stock unless Canco pays the
same amount of dividends and/or distributions, as applicable (or otherwise
distributes the economic equivalent of same), to the holders of Exchangeable
Shares. Record and payment dates for all dividends and distributions by the
Company and Canco are to be identical. Furthermore, the Voting Agreement and
Canco's articles each provide that the Company may not effect (a) any
subdivisions, consolidations or reclassifications of the Company's Common Stock
or (b) any merger of the Company (or other similar corporate event) affecting
the Company's Common Stock, without the prior approval of the holders of the
Exchangeable Shares if such action would cause an economic change in the rights
of the holders of the Exchangeable Shares.
For purposes of the preceding discussion, the three trustees under the Voting
Agreement, Messrs. Farag, Chouinard and Joseph, are acting as mandataries under
a special mandate executed by 9066 and its shareholders. The mandataries'
purposes thereunder are to sell, directly or indirectly, all of the 9066 shares
to the Company, to hold all of the Exchangeable Shares, to hold the share of the
Company's Special Voting Stock (including the exercising the voting rights
attaching thereto), and to exercise the retraction rights attaching to the
Exchangeable Shares. The Voting Agreement provides the mechanisms for carrying
out and administering these purposes.
Canco Exchangeable Shares
In addition to the rights appurtenant to the Exchangeable Shares of Canco
described in the preceding discussion of the Voting Agreement, the Exchangeable
Shares of Canco effectively may be exchanged at any time by their holders, on a
share-for-share basis, for shares of Common Stock of the Company, as follows:
(a) The Exchangeable Shares are redeemable at the option of the holder thereof
in consideration for shares of the Company's Common Stock plus accrued and
unpaid dividends thereon. (b) Alternatively, under the terms of the Voting
Agreement, the Company granted to the Trustee thereunder (as mandatary) for and
on behalf of, and for the use and benefit of, the beneficial owners of
Exchangeable Shares (other than subsidiaries of the Company) the right (the
"Exchange Right"), upon the occurrence and during the continuance of an
insolvency or liquidation event such as a bankruptcy or comparable event, to
require the Company to purchase from each or any of such beneficial owners all
or any part of the Exchangeable Shares held by such beneficial owner, all in
accordance with the provisions of the Voting Agreement. (c) The rights of the
beneficial holders are subject to the right of Novaco to acquire such
Exchangeable Shares from the owner thereof, for generally the same consideration
by virtue of Novaco's call right with respect to the Exchangeable Shares. The
purchase price payable by the Company for each Exchangeable Share to be
purchased by the Company shall be an amount per share equal to (a) the current
price of a share of the Company's common stock on the last business day prior to
the day of closing of the purchase and sale of such Exchangeable Share, which
shall be satisfied in full by causing to be delivered to such holder one share
of the Company's common stock, plus (b) accrued and unpaid dividends, if any.
The purchase price for each such Exchangeable Share so purchased may be
satisfied only by the Company delivering or causing to be delivered to the
Trustee, on behalf of the relevant beneficial owner, one share of the Company's
common stock and a check for the balance, if any, of the purchase price. To
cause the exercise of the Exchange Right by the Trustee, the aforementioned
beneficial owners shall deliver to the Trustee, in person or by certified or
registered mail, the certificates representing the Exchangeable Shares which
such owner desires the Company to purchase, duly endorsed in blank, and
accompanied by such other documents and instruments as may be required to effect
a transfer of Exchangeable Shares under the Canada Business Corporations Act and
such additional documents and instruments as the Trustee or the Corporation may
reasonably require together with (a) a duly completed form of notice of exercise
of the Exchange Right (along with the Exchangeable Share certificates), stating,
inter alia, (i) that such owner is instructing the Trustee to exercise the
Exchange Right so as to require the Company to purchase from such owner the
number of Exchangeable Shares specified therein, (ii) the names in which the new
certificates evidencing the Company's common stock are to be issued and (iii)
the names and addresses of
19
<PAGE>
the persons to whom such new certificates should be delivered and (b) payment of
the taxes (if any) payable as contemplated by the Voting Agreement.
Additional provisions in Canco's articles related to the Exchangeable Shares
include the following:
Restrictions on Canco's Payments of Dividends and Distributions. Without
the consent of the holders of the Exchangeable Shares, for so long as any
Exchangeable Shares are outstanding (unless the conditions set forth in the
preceding discussion of the Voting Agreement are met):
o Canco shall pay no dividends (other than stock dividends paid in such
shares) on, redeem, make capital contributions with respect to, or
purchase junior shares shares ranking junior to the Exchangeable
Shares;
o Canco shall not issue any shares ranking superior to the Exchangeable
Shares;
o Canco shall neither redeem nor purchase other shares of Canco ranking
equally with the Exchangeable Shares with respect to dividends or
liquidation distributions.
Liquidation Preference. Upon the liquidation or dissolution of Canco,
holders of Exchangeable Shares shall be entitled to receive an amount per
share equal to (a) the current price of a share of the Company's common
stock on the last business day prior to the day of closing of the purchase
and sale of such Exchangeable Share, which shall be satisfied in full by
causing to be delivered to such holder one share of the Company's common
stock, plus (b) accrued and unpaid dividends, if any.
Voting Rights. Holders of Exchangeable Shares are only entitled to notice
of and to vote at meetings of Canco's shareholders to the extent that same
relate to the dissolution of Canco or the sale, lease or exchange of all or
substantially all of Canco's property other than in the ordinary course of
business.
Other Related Party Transactions
In addition to the foregoing, Mergeco also entered into the following related
party transactions:
Professional fees of $22,487 for the 11 months ended June 30, 1999
(including $3,913 for the two months ended September 30, 1998) and $15,739
for the three months ended September 30, 1999 were paid to Jonathan
Levinson for legal work performed on behalf of the Company, including
document review and negotiating agreements. Mr. Levinson is a shareholder
of the Company.
Subcontracting fees for support services amounting to $5,293 for the 11
months ended June 30, 1999 (which did not include any amounts for the two
month period ended September 30, 1998) and $2,912 for the three months
ended September 30, 1999 were paid to a company controlled by Varujan
Tasci, an officer of the Company's operating subsidiary and a shareholder
of the Company. See Item 4.
Item 8. LEGAL PROCEEDINGS.
At the date of this registration statement, the Company is not involved in any
litigation and does not have any pending claims against it. The Company's
management is not aware of any threatened claims or the basis therefor.
Item 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The Company's Common Stock (including for purposes hereof the Common Stock of
Mergeco) was quoted on the OTC Bulletin Board under the symbol "PFOO" prior to
becoming ineligible for quotation (see below). Since October, 1999, the Company
has been quoted on the "pink sheets." The following table sets forth the high
and low closing prices for the Common Stock for the periods indicated.
20
<PAGE>
High Low
---- ---
(U.S. Dollars)
2000
- ----
First Quarter $ 3.4844 $ 1.25
(through January 20th)
1999
- ---- 3.062 1.3750
Fourth Quarter 2.5625 1.50
Third Quarter 3.50 1.7812
Second Quarter 4.0625 3.25
First Quarter 5.00 3.4531
1998
- ----
Fourth Quarter 4.375 3.75
On October 7, 1999, pursuant to NASD Rule 6530, the Common Stock became
ineligible for the OTC Bulleting Board because the Company was not required to
file reports under the Securities Exchange Act of 1934, as amended. The Company
is filing this Registration Statement so that the Common Stock will be eligible
for inclusion on the OTC bulleting board. Once the Company's registration
statement becomes effective, the Company's Common Stock will become eligible for
listing after a market maker submits a Form 211 or a 15c2-11 Exemption Form and
clearance has been given to such market maker to quote the issue on the
Over-the-Counter Bulletin Board. In the 30 days immediately following the
granting of clearance to a market maker, other market makers wishing to quote
the Company's common Stock must also submit a Form 211. If the market maker
initially granted clearance publishes quotes on at least 12 days during the
preceding 30 days, with not more than four consecutive days without quotations
(meaning the issue is "active" for OTC BB purposes), other broker-dealers may
quote the issue without registering on Form 211.
On February 7, 2000, there were 47 holders of record of the Company's 23,825,455
issued and outstanding shares of Common Stock (subject to the pending issuance
of 333,340 shares). On February 7, 2000, the last published trading price for
the Company's Common Stock was $2.50 per share.
The Company has not paid any cash dividends on its Common Stock and does not
presently intend to do so. Future dividend policy will be determined by its
Board of Directors on the basis of its earnings, capital requirements, financial
condition and other factors deemed relevant. The Voting Agreement also imposes
certain restrictions on the Company's ability to pay dividends and to make
distributions to the holders of Common Stock. See Item 7, "Certain Relationships
and Related Transactions."
The transfer agent and registrar of the Company's Common Stock is Nevada Agency
and Trust Company.
Item 10. RECENT SALES OF UNREGISTERED SECURITIES.
On March 12, 1998, the Company purchased all of the outstanding equity of Egress
Technologies Inc. in a reverse takeover. In consideration therefor, the Company
issued 11,811,528 shares of Common Stock to the Egress shareholders. The Company
relied on the exemption from registration provided in Regulation D with respect
to this transaction. (These shares were subject to a 40:1 reverse split and a
3:1 share split.)
On June 5, 1998, the Company issued 2,500,000 units for $125,000 in cash. Each
unit consisted of one share of common stock and warrants to purchase two
additional shares. The Company relied on the exemption from registration
provided in Regulation S with respect to this transaction. These securities were
subject to a 3:1 share split.
In August 1998, the Company acquired all the issued and outstanding shares of
CBN World Star Incorporated ("CBN"), a Phillipines company, and a mold plant
license from World Transport Authority Inc. ("WT"), a Nevada company. This
transaction involved the issuance of 1,000,000 common shares to the stockholders
of CBN in exchange for all outstanding shares of CBN. The Company also issued
1,000,000 common shares to WT to indefinitely extend the term of the Master
Lease granted by WT to CBN. The Company also issued an additional 500,000 shares
to WT on grant of the license to build a mold building factory in the
Phillippines. The Company relied on the exemption from registration provided in
Regulation D of the Securities Act with respect to these issuances of
securities. (The 2,500,000 shares were subsequently repurchased for $34,400 upon
the unwinding of this transaction.)
21
<PAGE>
Pursuant to the April 20, 1999 Combination Agreement, the Company (through
Canco) acquired 9066 in a reverse takeover. In connection therewith, the Company
issued one share of Special Voting Stock to be held for the benefit of the
holders of the Exchangeable Shares of Canco in consideration for one dollar
($1.00). See Item 11, "Description of Securities" and Item 7, "Certain
Relationships and Related Transactions." The Company relied on the exemption
from registration provided in Regulations D and S with respect to this
transaction.
In June 1999, the Company's warrantholders (from the June 5, 1998 unit issuance)
exercised their outstanding warrants and purchased a net amount of 15,000,000
shares of Common Stock for $875,000 (after giving effect to the return of
600,000 improperly issued shares for $35,000). The Company relied on the
exemption from registration provided in Regulations D and S with respect to this
share issuance.
On September 17, 1999, the Company issued 107,800 Units in consideration of an
aggregate of $539,000. Such consideration had previously been received by the
Company prior to July 1999 as an advance in respect of such private placement.
Each of such Units consisted of (a) one share of Common Stock, and (b) one
warrant to purchase another share of common stock at a strike price of $5.00.
The Warrant expires August 30, 2000. The Company relied on the exemption from
registration provided in Regulation S with respect to this security issuance.
On October 15, 1999, the Company issued 233,340 Units at a price of $1.50 per
Unit. Each Unit consisted of (a) one share of Common Stock and (b) one warrant
to purchase another share of common stock at a strike price of $1.50. The
aggregate consideration of $350,010 had previously been advanced to the Company
in respect of such private placement. A second subscription for 333,340 of such
Units (at the same price of $1.50 per Unit) was received from the same investor
and accepted by the Company on November 30, 1999. The $500,010 consideration for
such Units had previously been advanced to the Company as part of the same
on-going private offering. A share certificate evidencing the final 333,340
shares of Common Stock is to be issued by the Company's transfer agent in early
February. The Company relied on the exemption from registration provided in
Regulation S with respect to each of these security issuances.
Item 11. DESCRIPTION OF SECURITIES TO BE REGISTERED
The authorized Common Stock of the Company consists of 69,999,999 shares, par
value $0.001 per share. A total of 23,825,455 shares of Common Stock are
presently issued and outstanding. Also outstanding are warrants held by third
parties to purchase an aggregate of 676,480 shares of Common Stock and
25,094,996 Exchangeable Shares in Canco that enable the respective holders
thereof to exchange each such Exchangeable Share for one share of the Company's
Common Stock. See Item 7, "Certain Relationships and Related Transactions" and
Item 1, "Business - The Company" (with respect to the merger into a Delaware
corporation).
Holders of Common Stock are each entitled to one vote for each share standing in
his or her name in the books of the Company on all matters submitted to a vote
of shareholders. The holders of Common Stock may receive cash dividends as
declared by the Board of Directors out of funds legally available therefor. Each
share of Common Stock is entitled to participate pro rata in distribution upon
liquidation. Holders of the Common Stock and Special Voting Stock are entitled
to elect all Directors. The outstanding shares of Common Stock are fully paid
and non-assessable. Holders of the Common Stock do not have subscription,
redemption, conversion or preemptive rights. The holders of the Common Stock do
not have cumulative voting rights, which means that the holders of more than
half of the shares voting form the election of Directors can elect all of the
Directors and the remaining holders will not be able to elect any Directors.
22
<PAGE>
The rights of the holders of Common Stock will also be subject to the rights and
preferences of holders of the Company's shares of preferred stock, par value
$0.001, if and when such rights and preferences are designated by the Board of
Directors.
The voting rights of the holders of Common Stock are subject to the voting
rights appurtenant to the share of Special Voting Stock, issued pursuant to the
aforementioned Combination and Voting Agreements. The Trustee (as defined in the
Voting Agreement) has the right to one vote for each Exchangeable Share of
Canco, the Company's subsidiary, held from time to time by parties other than
the Company and its subsidiaries, with respect to each matter on which holders
of Common Stock are entitled to vote. The share of Special Voting Stock does not
participate in any other operations, dividends or distributions of the Company;
however, pursuant to the Voting Agreement the Company may not declare or pay
dividends and/or distributions to the holders of its Common Stock unless Canco
pays economically equivalent dividends and/or distributions, as applicable, to
the holders of its Exchangeable Shares. See Item 7.
Item 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The personal liability of a director or officer of the Company to the Company or
the stockholders for damages for breach of fiduciary duty as a director or
officer is limited under the Company's articles to acts or omissions which
involve intentional misconduct, fraud or a knowing violation of law, to the
extent permissible under the Delaware General Corporation Law (the "GCL").
The articles also provide that each director and officer of the Company and
other persons permitted under the GCL may be indemnified by the Company, in
connection with a threatened, pending or completed action, suit or proceeding
brought against such person by reason of the fact that he is or was a director,
officer, employee or agent of the Company, against expenses (including attorneys
fees), judgments, fines and amounts paid in settlement, and/or amounts actually
and reasonably incurred by him in connection therewith, if he acted in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interest of the Company, and with respect to any criminal action or
proceeding, if he had no reasonable cause to believe his conduct was unlawful.
In connection with actions by or against the Company or brought in the Company's
name, indemnification may not be made for any claim, issue or matter as to which
such a person has been adjudged to be liable to the Company or for amounts paid
in settlement to the Company, unless and only to the extent that the court in
which the action or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances of the case
the person is fairly and reasonably entitled to indemnity for such expenses as
the court deems proper.
To the extent that a director, officer, employee or agent of the Company has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to above, or in defense of any claim, issue or matter
herein, he must be indemnified by the Company against expenses, including
attorney's fees actually and reasonably incurred by him in connection with the
defense.
Expenses of officers and directors incurred in defending a civil or criminal
action, suit or proceeding must be paid by the Company as they are incurred and
in advance of the final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the Company.
The right to indemnification continues for a person who has ceased to be a
director, officer, employee, or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or third parties controlling the
Company pursuant to Delaware law, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
23
<PAGE>
Item 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See attached financial statements beginning on page F-1
Item 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None
Item 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) See Index to Financial Statements on page F-1
(b) Exhibits*
3.1 Articles of Incorporation (including Certificate of Merger)*
3.2 By-laws*
4.1 Specimen stock certificate*
4.2 Form of Warrant*
9.1 Voting, Support and Exchange Trust Agreement*
9.2 Assignment and Assumption Agreement*
10.1 Internet Services Agreement with EMC Corporation*
10.2 Transact Software Order Form with Terms and Conditions (Open Market)***
10.3 UPS Contract
21 Subsidiaries*
27 Financial Data Schedule*
* = Previously filed.
** = Portions of this document are subject to a confidentiality request.
*** = Supercedes previously filed exhibit.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act or
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
PLANET411.COM INC.
By: /s/ Joseph Farag
-------------------------------
Joseph Farag, President
Dated: February 10, 2000
25
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Consolidated Financial Statements
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Consolidated Financial Statements
Auditors' Report 2
Financial Statements
Consolidated Operations 3
Consolidated Deficit 3
Consolidated Cash Flows 4
Consolidated Balance Sheets 5
Notes to Consolidated Financial Statements 6 to 16
08-02-2000
<PAGE>
Auditors' Report
To the Directors of
Planet 411.com Corporation
(A Development Stage Company)
We have audited the consolidated balance sheet of Planet 411.com
Corporation (A Development Stage Company) as of June 30, 1999 and the
consolidated statements of operations, deficit and cash flows for the
period July 31, 1998 (inception) through June 30, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted 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 of June 30,
1999 and the results of its operations and its cash flows for the period
then ended in accordance with generally accepted accounting principles in
Canada.
/s/ Raymond Chabot
Grant Thornton
General Partnership
Chartered Accountants
Montreal, Canada
September 9, 1999
(Except as to Note 15 c), which is as of December 2, 1999)
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Consolidated Operations
Consolidated Deficit
(In U.S. dollars)
<TABLE>
<CAPTION>
Unaudited Unaudited
-------------- --------------
For the period For the period For the period
1998-07-31 1998-07-31 1998-07-31
(inception) (inception) Three-months (inception)
through through ended through
1998-09-30 1999-06-30 1999-09-30 1999-09-30
-------------- -------------- ------------ --------------
$ $ $ $
<S> <C> <C> <C> <C>
CONSOLIDATED OPERATIONS
Revenue -- -- -- --
----------- ----------- ----------- -----------
Operating and administrative expenses
Salaries 6,751 246,733 180,374 427,107
Fringe benefits 1,962 29,130 18,297 47,427
Subcontracts 215 10,805 5,569 16,374
Training 24,392 1,432 25,824
Advertising 47,950 18,934 66,884
Transportation 30 1,654 896 2,550
Promotion 628 26,702 4,592 31,294
Rent 7,165 52,472 23,355 75,827
Internet connection 4,646 58,856 6,396 65,252
Equipment rental 535 2,977 2,977
Maintenance and repairs 98 4,688 333 5,021
Taxes and permits 11,300 4,492 15,792
Insurance 2,469 2,142 4,611
Office supplies and courier 2,440 52,353 11,806 64,159
Communications 1,072 15,553 8,269 23,822
Professional fees 6,596 213,362 69,973 283,335
Bank charges 109 1,606 3,645 5,251
Interest on long-term debt 548 3,051 565 3,616
Service contracts 65,679 65,679
Travel 29,993 7,387 37,380
Foreign exchange (30,104) 4,932 (25,172)
Amortization of capital assets 2,126 112,925 53,325 166,250
----------- ----------- ----------- -----------
34,921 984,546 426,714 1,411,260
----------- ----------- ----------- -----------
Net loss 34,921 984,546 426,714 1,411,260
=========== =========== =========== ===========
Basic loss per share -- 0.04 0.01 0.04
=========== =========== =========== ===========
Weighted average number of outstanding
shares of common stock (the special voting
stock considered as 25,094,996 shares of
common stock) 25,094,996 27,942,964 49,000,042 32,479,852
=========== =========== =========== ===========
CONSOLIDATED DEFICIT
Deficit, beginning of period 984,546
Net loss 34,921 984,546 426,714 1,411,260
----------- ----------- ----------- -----------
Deficit accumulated during the development
stage, end of period 34,921 984,546 1,411,260 1,411,260
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Consolidated Cash Flows
(In U.S. dollars)
<TABLE>
<CAPTION>
Unaudited Unaudited
-------------- --------------
For the period For the period For the period
1998-07-31 1998-07-31 1998-07-31
(inception) (inception) Three-months (inception)
through through ended through
1998-09-30 1999-06-30 1999-09-30 1999-09-30
-------------- -------------- ------------ --------------
$ $ $ $
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss (34,921) (984,546) (426,714) (1,411,260)
Non-cash item
Amortization of capital assets 2,126 112,925 53,325 166,250
Changes in non-cash working capital items
Sales taxes receivable (6,207) (37,782) 11,709 (26,073)
Prepaid expenses (2,555) (31,212) (65,364) (96,576)
Accounts payable 2,994 20,655 15,546 36,201
Accrued liabilities 1,352 103,790 40,455 144,245
Cash flows from operating activities (37,211) (816,170) (371,043) (1,187,213)
---------- ---------- ---------- ----------
INVESTING ACTIVITIES
Cash position of acquired company 2F(Note 3) 263 263
Term deposit (10,196) (10,196)
Advances to directors and shareholders (142) (3,127) (3,127)
Other advances (4,154) (13,695) 13,695
Capital assets 2F(Note 4) (17,519) (859,091) (33,808) (892,899)
Effect of exchange rate changes (2) 3,079 (1,240) 1,839
---------- ---------- ---------- ----------
Cash flows from investing activities (21,817) (882,767) (21,353) (904,120)
---------- ---------- ---------- ----------
FINANCING ACTIVITIES
Advances from (to) related companies 8,418 (44,242) (44,242)
Advance from a director 656 5,510 6,166
Repayment of long-term debt (1,134) (6,953) (2,224) (9,177)
Issuance of preferred shares of a subsidiary
company - non-controlling interest 285,474 285,474
Issuance of capital stock 38,979 1,014,444 1,014,444
Cancellation of capital stock (35,000) (35,000)
Advance payment on capital stock units 539,000 350,010 889,010
Effect of exchange rate changes 206 (26,472) 26,369 (103)
---------- ---------- ---------- ----------
Cash flows from financing activities 46,469 1,761,907 344,665 2,106,572
---------- ---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents (12,559) 62,970 (47,731) 15,239
Cash and cash equivalents, beginning of
period 62,970
---------- ---------- ---------- ----------
Cash and cash equivalents, end of period (12,559) 62,970 15,239 15,239
========== ========== ========== ==========
SUPPLEMENTAL DATA
Cash paid during the period for interest 375 3,051 565 3,616
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Consolidated Balance Sheets
(In U.S. dollars)
<TABLE>
<CAPTION>
Unaudited
1999-06-30 1999-09-30
$ $
---------- ----------
<S> <C> <C>
ASSETS
Current assets
Cash 62,970 15,239
Term deposit, 3.75%, maturing on April 19, 2000 10,196 10,080
Sales taxes receivable 37,782 26,073
Advances to directors and shareholders, without interest 2,673 2,637
Prepaid expenses 31,212 96,576
---------- ----------
144,833 150,605
Other advances, without interest or repayment terms 13,695
Capital assets 2F(Note 4) 968,591 950,466
---------- ----------
1,127,119 1,101,071
========== ==========
LIABILITIES
Current liabilities
Accounts payable 235,747 251,293
Accrued liabilities 103,790 144,245
Instalments on long-term debt 8,834 9,088
348,371 404,626
Advances from directors, without interest or repayment terms 656 6,166
Long-term debt 2F(Note 5) 6,115 3,637
Non-controlling interest 2F(Note 6) 285,474 285,474
---------- ----------
640,616 699,903
---------- ----------
SHAREHOLDERS' EQUITY
Capital stock 2F(Note 7)
Special voting stock, having a par value of $0.001, holding a number of votes equal to the
number of exchangeable shares of 3560309 Canada Inc. outstanding other than those held
directly or indirectly by the Company, 1 share authorized; 1 share June 30, 1999 and
September 30, 1999 issued and outstanding -- --
Preferred stock, having a par value of $0.001, 10,000,000 shares authorized; none issued -- --
Common stock, having a par value of $0.001, 69,999,999 shares authorized; 24,084,315
(June 30,1999) and 23,592,115 (September 30, 1999) issued and outstanding 24,084 23,592
Contributed surplus 2F(Note 7) 934,437 1,438,929
Advance payment on capital stock units 2F(Note 8) 539,000 350,010
Cumulative translation adjustments 2F(Note 9) (26,472) (103)
Deficit accumulated during the development stage (984,546) (1,411,260)
---------- ----------
486,503 401,168
---------- ----------
1,127,119 1,101,071
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the three-month period ended September 30,
1999 and for the period July 31, 1998 (inception) through September 30, 1999 is
unaudited)
1 - INCORPORATION AND NATURE OF OPERATIONS
The Company was formed on April 23, 1990 in the State of Nevada, USA, as
Investor Club of the United States. The Company changed its name to Noble
Financing Group Inc. in 1992, and then changed its name to Newman Energy
Technologies Incorporated on April 21, 1998, to World Star Asia, Inc. on June
15, 1998, to Comgen Corp. on November 16, 1998 and to Planet 411.com Corporation
on February 11, 1999 to reflect its current business interest.
On November 9, 1998, the Company increased its authorized capital from
100,000,000 shares of common stock having a par value of $0.001 to 300,000,000
shares of common stock having a par value of $0.001.
On March 30, 1999, the Company authorized one share of special voting stock
having a par value of $0.001.
Pursuant to a combination agreement entered into as of April 20, 1999 among the
Company, the Company's wholly-owned subsidiary, Planet 411 (Nova Scotia)
Company, the Company's indirect wholly-owned subsidiary, 3560309 Canada Inc.,
9066-4871 Quebec Inc. and the shareholders of 9066-4871 Quebec Inc., 3560309
Canada Inc. acquired all of the issued and outstanding shares of 9066-4871
Quebec Inc. in exchange for 25,094,996 exchangeable shares and 8,400 preferred
shares of 3560309 Canada Inc. The preferred shares of 3560309 Canada Inc. may be
converted into exchangeable shares of that corporation on the basis of one
preferred share and CDN$5 for one exchangeable share. The exchangeable shares of
3560309 Canada Inc. may be exchanged at any time by their holders, on a
share-for-share basis, for shares of common stock of the Company. Pursuant to
the combination agreement, the Company has also issued one share of special
voting stock which is held for the benefit of the holders of the exchangeable
shares of 3560309 Canada Inc. The share of special voting stock entitles the
holder to such number of votes as is equal to the number of exchangeable shares
outstanding from time to time.
Since the shareholders of 9066-4871 Quebec Inc. controlled the Company
thereafter, 9066-4871 Quebec Inc. was considered to be the acquirer. As result
of the reverse takeover, the consolidated financial statements are a
continuation of the financial statements of 9066-4871 Quebec Inc. There are no
comparative figures since 9066-4871 Quebec Inc. was incorporated on July 31,
1998.
The Company is a publicly traded company trading on the over the counter
bulletin board with stock symbol PFOO.
The Company, in its development stage, is involved in the e-business industry.
It provides end-to-end quality e-business solutions to businesses interested in
doing e-tailing (selling of retail goods on the Internet).
2 - ACCOUNTING POLICIES
Financial statements
The financial statements have been prepared in accordance with generally
accepted accounting principles in Canada and conform in all material respects
with the generally accepted accounting principles in the United States.
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 reporting period.
Actual results could differ from those estimates.
Principles of consolidation
These financial statements include the accounts of the Company and all its
subsidiary companies. The Company has a 100% controlling interest in all its
subsidiary companies.
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the three-month period ended September 30,
1999 and for the period July 31, 1998 (inception) through September 30, 1999 is
unaudited)
Reporting currency and translation of foreign currencies
The Company has adopted the United States dollar as its reporting currency. The
Company's financial statements have been translated from their functional
currency, the Canadian dollar, into the reporting currency as follows: assets
and liabilities have been translated at the exchange rate in effect at the end
of the period and revenues and expenses have been translated at the weighted
average exchange rate for the period. All cumulative translation gains or losses
from the translation into the Company's reporting currency have been included as
a separate component of shareholders' equity in the balance sheet. The changes
in the cumulative translation adjustments account, from period to period, result
solely from the application of this translation method.
Transactions concluded in currencies other than the functional currency have
been translated as follows: monetary assets and liabilities are translated at
the exchange rate in effect at the end of the period, non-monetary assets and
liabilities are translated at rates in effect on the dates of the related
transactions and revenues and expenses have been translated at the weighted
average exchange rate for the period. Exchange gains and losses arising from
such transactions have been included in the statement of operations.
Revenue recognition
The Company recognizes revenue from fixed fees when they are billed and from
services when they are used by customers. Revenue from pre-determined
industry-dependent fees charged to e-merchants as a percentage of gross sales is
recognized at the time of delivery and acceptance of the e-merchants' products.
Additionally, the Company recognizes revenue, from contracts when all
significant contractual obligations have been satisfied and collection of the
resulting receivable is reasonably assured.
2 - ACCOUNTING POLICIES (Continued)
Amortization
Capital assets are amortized on a straight-line basis over their estimated
useful lives as follows:
Office equipement, furniture and fixtures 5 years
Office equipment, furniture and fixtures
under capital leases 5 years
Computer equipment and software 3 years
Licenses 3 years
Management periodically reviews the carrying value of capital assets through an
assessment of estimated undiscounted future cash flows from the assets. In the
period that an impairment in value occurs, the capital assets are written down
to their net recoverable amounts.
Financial instruments
The estimated fair value of cash, term deposit, accounts payable and accrued
liabilities approximates their carrying value due to their short-term maturity.
The estimated fair value of other advances, determined by discounting future
cash flows at current rates, is approximately $11,000 as of June 30, 1999.
Cash and cash equivalents
The Company's policy is to present cash, bank overdrafts and temporary
investments having a term of three month or less from the acquisition date as
cash and cash equivalents.
Unaudited interim financial statements
The unaudited financial information included herein as of September 30, 1999,
for the three-month period ended September 30, 1999 and for the period from July
31, 1998 (inception) through September 30, 1999, have been prepared in
accordance with generally accepted accounting principles for interim financial
statements. In the opinion of the Company, these unaudited financial statements,
reflect all adjustments necessary, consisting of normal recurring adjustments,
for a fair presentation of such data on a basis consistent with that of the
audited data presented herein. The results of operations for interim periods are
not necessarily indicative of the results expected for a full year.
3 - BUSINESS ACQUISITION
On April 20, 1999, the Company executed a combination agreement (see Note 1). As
a result, the shareholders of 9066-4871 Quebec Inc. controlled Planet 411.com
Corporation after the share for share exchange and 9066-4871 Quebec Inc. was
considered to be the acquirer. Consequently, the operations of the Company are
included in earnings from the date of acquisition.
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the three-month period ended September 30,
1999 and for the period July 31, 1998 (inception) through September 30, 1999 is
unaudited)
3 - BUSINESS ACQUISITION
(Continued)
As at the date of acquisition, the fair value of net assets acquired were
accounted for as follows:
$
--------
Cash 263
Loans payable to shareholders (454)
Accounts payable (55,732)
--------
Excess of liabilities over assets acquired (55,923)
Consideration:
8,484,315 common shares, at par value 8,484
--------
Contributed surplus (64,407)
--------
4 - CAPITAL ASSETS
<TABLE>
<CAPTION>
1999-06-30
----------
Cost Amortization Net
--------- ------------ ----------
$ $ $
<S> <C> <C> <C>
Office equipment, furniture and fixtures 59,366 8,030 51,336
Office equipment, furniture and fixtures under
capital leases 38,894 7,413 31,481
Computer equipment 207,777 34,831 172,946
Computer software 288,467 24,889 263,578
Licenses 490,091 40,841 449,250
--------- ------- -------
1,084,595 116,004 968,591
========= ======= =======
<CAPTION>
Unaudited
1999-09-30
----------
Cost Amortization Net
--------- ------------ ----------
$ $ $
<S> <C> <C> <C>
Office equipment, furniture and fixtures 76,299 11,665 64,634
Office equipment, furniture and fixtures under
capital leases 38,453 9,252 29,201
Computer equipment 214,443 47,369 167,074
Computer software 304,668 39,084 265,584
Licenses 484,540 60,567 423,973
--------- ------- -------
1,118,403 167,937 950,466
========= ======= =======
</TABLE>
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the three-month period ended September 30,
1999 and for the period July 31, 1998 (inception) through September 30, 1999 is
unaudited)
4 - CAPITAL ASSETS (Continued)
During the period July 31, 1998 (inception) through June 30, 1999, capital
assets were acquired at an aggregate cost of $1,084,595 of which $44,242 were
acquired by means of advances from related companies and $21,902 by means of
long-term debt, and of which $159,360 still remain in accounts payable. Cash
payments of $859,091 were made to purchase capital assets.
One of the Company's licenses allows customers to use third-party software in
developing marketing strategies for their products and tracking and invoicing
their products. Another licence provides a host for the Company's Web sites.
5 - LONG-TERM DEBT
<TABLE>
<CAPTION>
Unaudited
----------
1999-06-30 1999-09-30
---------- ----------
$ $
<S> <C> <C>
Obligations under capital leases, 16%, payable in monthly
instalments of $883, capital and interest, maturing in February 2001 14,949 12,725
Instalments due within one year 8,834 9,088
------ ------
6,115 3,637
====== ======
As of June 30, 1999, the instalments on long-term debt for the next years are as
follows:
$
------
2000 10,595
2001 6,460
------
Total minimum lease payments 17,055
------
Interest included in minimum lease payments 2,106
14,949
======
</TABLE>
The estimated fair value of the Company's long-term debt, determined by
discounting future cash flows at current rates, is approximately equal to its
carrying value.
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the three-month period ended September 30,
1999 and for the period July 31, 1998 (inception) through September 30, 1999 is
unaudited)
6 - NON-CONTROLLING INTEREST
Non-controlling interest of $285,474 consists of 8,400 preferred shares issued
by a subsidiary company, non-voting, non-participating, non-cumulative
preferential dividend of 80% of the prime rate on commercial loan charges by the
financial institution of the Company, redeemable at a price equal to the fair
market value of the consideration received upon issuance, issued for cash. The
holders of the preferred shares have been granted an option to convert one
preferred share for one exchangeable share (exchangeable for shares of the
Company) at CDN$5 per share. No preferred dividends have been declared.
7 - CAPITAL STOCK AND CONTRIBUTED SURPLUS
<TABLE>
<CAPTION>
Special Common Contributed
voting stock stock surplus
-------------------------------------------- -----------
Number of Number of
shares Amount shares Amount
--------- -------- --------- ------ -----------
$ $ $
<S> <C> <C> <C> <C> <C>
Special voting stock
(25,094,996 votes) 1 104,444
Balance outstanding on
April 20, 1999, date of
reverse takeover 2F(Note 3) 8,484,315 8,484 (64,407)
June 1999 - exercise of
warrants 2F(Note 15) 15,600,000 15,600 894,400
--- ------ ---------- -------- ---------
Balance June 30, 1999 1 -- 24,084,315 24,084 934,437
August 1999, cancellation of
common stock 2F(Note 15) (600,000) (600) (34,400)
September 1999, capital
stock units issued 2F(Note 8) 107,800 108 538,892
--- ------ ---------- -------- ---------
Balance September 30, 1999 1 -- 23,592,115 23,592 1,438,929
=== ====== ========== ======== =========
</TABLE>
Transactions during the period July 31, 1998 (inception) through June 30, 1999,
and the three-month period ended September 30, 1999
Special voting stock
Pursuant to the combination agreement (see Note 1), the Company issued one
share of special voting stock.
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the three-month period ended September 30,
1999 and for the period July 31, 1998 (inception) through September 30, 1999 is
unaudited)
7 - CAPITAL STOCK AND CONTRIBUTED SURPLUS (Continued)
Common stock
On July 31, 1998, there were 2,828,105 issued and outstanding shares of common
stock of the Company.
In August 1998, the Company acquired all the issued and outstanding shares of
CBN World Star Incorporated ("CBN"), a Philippines company, and a mold plant
license from World Transport Authority Inc. ("World Transport"), a Nevada
Company. This transaction involved the issuance of 1,000,000 shares of common
stock to the stockholders of CBN in exchange for all outstanding
shares of CBN. The Company also issued 1,000,000 shares of common stock to World
Transport, to indefinitely extend the term of the Master License granted by
World Transport to CBN. The Company also issued an additional 500,000 shares of
common stock to World Transport on grant of the license to build a mold building
factory in the Philippines.
In October 1998, the August 1998 transaction was reversed, the Company
repurchased from CBN and World Transport the 2,500,000 shares of common stock
for $34,400 and returned all the issued and outstanding shares of CBN, the
indefinite extension of the term of the Master License granted by World
Transport to CBN and the grant of the license to build a mold building factory
in the Philippines.
In November 1998, the outstanding 2,828,105 shares of common stock were split 3
for 1 resulting in 8,484,315 shares of common stock outstanding.
Pursuant to the combination agreement (see Note 1), the Company acquired
9066-4871 Quebec Inc. (see Note 3), which resulted in a reverse takeover. At the
date of the reverse takeover, the shareholders of the Company owned 8,484,315
shares of common stock and the fair value of the net assets amounted to
($55,923) (see Note 3).
In June 1999, shareholders exercised their outstanding warrants and purchased
15,600,000 shares of common stock for $910,000 cash. In August 1999, the Company
cancelled 600,000 shares of common stock and $35,000 cash was returned to the
original investors.
In September 1999, 107,800 capital stock units were issued (Note 8).
At September 30, 1999, warrants to purchase 107,800 shares of common stock for
$5, are outstanding. The warrants expire August 30, 2000.
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the three-month period ended September 30,
1999 and for the period July 31, 1998 (inception) through September 30, 1999 is
unaudited)
8 - ADVANCE PAYMENT ON CAPITAL STOCK UNITS
During the period July 31, 1998 (inception) to June 30, 1999, the Company
received $539,000 with respect to a private placement for 107,800 units at $5,00
per unit. Each unit consists of one share of common stock and one share purchase
warrant. Each warrant will entitle the holder to purchase one additional share
of common stock of the Company for $5.00 within one year from the date of
closing of the offer, August 30, 1999. The units were issued September 1999.
During the three-month period ended September 30, 1999, the Company received
$350,010 with respect to a private placement for 233,340 units at $1.50 per
unit. Each unit consists of one share of common stock and one share purchase
warrant. Each warrant will entitle the holder to purchase one additional share
of common stock of the Company for $1.50 within one year from the date of
closing of the offer, October 15, 1999. As of September 30, 1999, no shares of
common stock have been issued with respect to this private placement.
9 - CUMULATIVE TRANSLATION ADJUSTMENTS
Unaudited
1999-06-30 1999-09-30
---------- ----------
$ $
Balance, beginning of period (26,472)
Effect of exchange rate changes (26,472) 26,369
------- ------
Balance, end of period (26,472) (103)
======= ======
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the three-month period ended September 30,
1999 and for the period July 31, 1998 (inception) through September 30, 1999 is
unaudited)
10 - RELATED PARTY TRANSACTIONS
During the period, the Company entered into the following related party
transactions concluded in the normal course of operations, at exchange value:
<TABLE>
<CAPTION>
Unaudited Unaudited
-------------- -------------------------------
For the period For the period For the period
1998-07-31 1998-07-31 1998-07-31
(inception) (inception) Three-months (inception)
through through ended through
1998-09-30 1999-06-30 1999-09-30 1999-09-30
-------------- -------------- ------------ --------------
$ $ $ $
<S> <C> <C> <C> <C>
Professionnal fees for legal services
were paid to a shareholder of the
Company 3,913 22,487 15,739 38,226
===== ====== ====== ======
Subcontracting fees for computer
support services were paid to a
company controlled by a shareholder of
the Company -- 5,293 2,912 8,205
===== ====== ====== ======
</TABLE>
The estimated fair value of advances to directors and shareholders approximates
the carrying value due to their short-term maturity.
The estimated fair value of advances from directors, determined by discounting
future cash flows at current rates, is approximately equal to the carrying
value.
The advances to directors and shareholders are short-term loans and advances
from directors are for items purchased for use in the business which have not
been reimbursed. These advances will be repaid in the year 2000.
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the three-month period ended September 30,
1999 and for the period July 31, 1998 (inception) through September 30, 1999 is
unaudited)
11 - INCOME TAXES
a) The tax benefits arising from operating losses and capital assets
amortization for income tax purposes of approximately $1,050,000 (June 30,
1999) and $1,470,000 (September 30, 1999) are not recorded in the financial
statements. The operating loss carry-forwards for income tax purposes of
$937,000 (June 30, 1999) and $1,302,000 (September 30, 1999) expire in 2006
and 2007.
11 - INCOME TAXES (Continued)
b) The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets are as follows:
<TABLE>
<CAPTION>
Unaudited
1999-06-30 1999-09-30
---------- ----------
$ $
<S> <C> <C>
Operating loss carry-forwards 365,430 494,760
Capital assets, due to amortization taken for accounting purposes 44,070 63,800
------- -------
409,500 558,560
Valuation allowance (409,500) (558,560)
------- -------
Net deferred tax assets -- --
======= =======
</TABLE>
12 - COMMITMENTS
The Company has entered into long-term lease agreements expiring on February 28,
2003 and August 31, 2003 which call for lease payments of $256,717 for the
rental of office space. Minimum lease payments for the next five years are
$32,812 in 1999, $65,625 in 2000, 2001 and 2002, and $27,030 in 2003.
The Company has entered into service contracts for its main Website, which
expire March 31, 2000 and April 30, 2000 and are described as follows:
<TABLE>
<CAPTION>
Minimum payments
----------------------------------------------
Nature
Licenses of services 2000 2001 Total
----------- ------- ------- -------
$ $ $
<S> <C> <C> <C> <C>
EMC Internet Management Services Support 261,600 218,000 479,600
Open Market Inc. Hosting 130,987 130,987
Vignette Corporation Maintenance 50,101 50,101
------- ------- -------
442,688 218,000 660,688
======= ======= =======
</TABLE>
<PAGE>
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the three-month period ended September 30,
1999 and for the period July 31, 1998 (inception) through September 30, 1999 is
unaudited)
13 - INTERNET PORTAL
On January 28, 1999, the Company entered into an agreement to design, create,
maintain and commercialize a state-of-the art Internet portal, for the health
and high-technology industry, to be the electronic reference for information as
well as for the commercialization, sale and purchase of products and to provide
a regularly updated periodical providing the latest news, developments and
research. This portal will facilitate real-time communication between health
professionals all over the world, assist emerging health related companies in
obtaining financing and provide access not only to biomedical information but
also to published documents. The contract will generate revenues of $1,193,961
over the next 20 months. As at June 30, 1999, construction of the Internet
portal is in progress (See Note 15 c)).
14 - UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers, suppliers or other
third parties, will be fully resolved.
15 - SUBSEQUENT EVENTS
a) Subsequent to June 30, 1999, the Company entered into a merger agreement to
which the Company will be merged with Planet 411.com Inc., a Delaware
Corporation and shall cease to exist. The surviving company, whose total
assets and liabilities will equal those of the Company prior to the merger,
will issue shares to the shareholders of the Company in the ratios provided
within the agreement.
b) Subsequent to June 30, 1999, the Company discovered that 600,000 shares of
common stock on exercise of 15,600,000 warrants, as disclosed in Note 7,
were issued in error. The Company has cancelled the 600,000 shares of
common stock and returned $35,000 to the original investors.
c) The agreement described in Note 13 has been rescinded. All costs incurred
by the Company relating to this agreement have been included in the
statement of operations. In management's opinion, no other revenues or
expenses are expected fom this agreement.
EXHIBIT 10.3
[LOGO - UPS CANADA LTD.]
Johnson Joseph February 4, 2000
VP Product Development
9066-4871 Quebec Inc. d.b.a. "Planet411"
440 Rene-Levesque West
Suite 400
Montreal, Qc.
H2Z 1V7
This Agreement and all UPS Service Guides in effect at the time of shipment
contain the basic terms under which United Parcel Service will provide pickup
and delivery service.
UPS and Planet411 agree to the following:
General Terms And Conditions
Account Numbers: UPS will make available to Planet411 a range of UPS account
numbers. Planet411 at its sole discretion will have the right to assign any and
all of the UPS account numbers reserved for Planet411 to any Planet411 client so
long as Planet411 notifies UPS of such assignment by fax or email prior to the
newly assigned UPS account number being used by the aforementioned Planet411
client to ship letters, documents, paks or packages. Only letters, documents,
paks, and packages shipped under the account number(s) listed on Addendum A are
eligible to participate in these designated incentives, and only these letters,
documents, paks, and packages will be used to determine whether Planet411 has
reached the minimum requirements of this Agreement. If a shipment's UPS waybill
does not indicate one of the specified account numbers from Addendum A, UPS
cannot apply the incentive in billing Planet411. UPS, on a daily basis, will
send by Electronic File Transfer or make available to Planet411 via login and
password the details of all shipping orders completed by UPS on behalf of
Planet411's clients; details such as ship to address, total weight of shipment,
date of shipment, service level requested and total cost of shipment for each of
the reserved Planet411 UPS account numbers. Account numbers may be added or
deleted only by mutual written Agreement by both UPS and Planet411. Additions to
Addendum A require five business days advance notice to become effective.
Billing: UPS will bill Planet411 for shipments made using any of the UPS account
numbers specifically reserved for Planet411 and its clients according to the
rate schedule included in Addendum A of the present agreement. Planet411 agrees
to supply package level shipping detail to UPS in a form acceptable to UPS.
Requests for invoice adjustments due to an overcharge or requests for refunds
due to a duplicate payment must be received within 90 days from invoice date.
/a/JJ
----------------------------
Customer's Authorized
Representative's Initials
Endorsement: Planet411 agrees to endorse UPS as the recommended delivery company
for Planet411 and its related divisions, subsidiaries, and affiliates. Subject
to final written approval by UPS, UPS agrees
1
<PAGE>
to support and/or endorse marketing and/or promotional initiatives aimed at
promoting Planet411's services in which the UPS registered trademark and/or logo
appears.
Payment Terms: Planet411 agrees to pay for all shipments in full within the time
period required by UPS.
Confidentiality: Planet411 agrees that the rates, incentives, and terms of this
Agreement are only applicable to Planet411 and its subsidiaries as described in
Addendum A - Eligible Accounts and Incentive Levels, as end users and may not be
used for resale to any other party without prior written Agreement between UPS
and Planet411. Planet411 understands that breach of this clause of this
Agreement between UPS and Planet411 may result in immediate cancellation of this
Agreement. Planet411 agrees to maintain the Confidentiality of this program,
both its existence and the conditions, unless disclosure is required by law.
Planet411 agrees not to post or otherwise publicly display the confidential
incentives covered by this Agreement.
Term of Contract: This Agreement may be terminated by either party for any
reason upon 30 calendar days prior written notice.
Incentive Program: The specific details of the incentives provided in this
program covered by this Agreement are included in Addendum A.
Implementation: UPS will provide the incentive program as set forth in this
Agreement and the attached addenda. These incentivesWE_Start_Date will commence
Monday March 6, 2000 and remain in effect until Saturday March 10, 2001. This
contract is subject to periodic review for customer compliance.
Language: The Parties hereto hereby acknowledge that they have required this
agreement and all related documents to be drawn up in the English language. Les
parties reconnaissent avoir demande que le present contrat ainsi que les
documents qui s'y rattachent soient rediges en langue anglaise.
Other Documents: This agreement is subject to the terms of the "UPS Rate Guide"
shipping document and service explanations in existence at the date of shipment.
<TABLE>
<CAPTION>
/s/ Edward Muha Date: 2/7/2000 /s/ Johnson Joseph Date: 2/7/2000
- -------------------------------- --------- ----------------------------------- --------
<S> <C>
Edward Muha Johnson Joseph
National Accounts Manager Vice-President Product Development
United Parcel Service Canada Ltd Planet411
</TABLE>
This contract offer is void if an executed copy is not returned to UPS by
February 25, 2000
2
