SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
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)
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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
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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
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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)
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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 two remaining
installations for the license granted under this agreement. The Company also
pays Open Market for support services under the agreement. Total fixed fees
under the agreement are approximately $680,000. 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. These fees are computed on a sliding scale based upon each
respective e-merchant's revenues, and will be paid by the Company's e-merchants
over and above the percentage of gross revenues that the e-merchant will pay to
the Company. The Company may terminate the Open Market 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
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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
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
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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
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."
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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 continue in the near term. 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
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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
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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
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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
------ ------
Three Months ended December 31, 1998 $ 156,503
Five Months ended December 31, 1998 191,424
Eleven Months ended June 30, 1999 984,546
Three Months ended December 31, 1999 550,818
Six Months ended December 31, 1999 977,532
Seventeen Months ended December 31, 1999 1,962,078
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
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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
December 31, 1999 and for the period ended December 31, 1998 and the six-month
period ended December 31, 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
For the period
For the period July 31, 1998
July 31, 1998 (inception) Six months
(inception) through through ended
June 30, 1999 Dec. 31, 1998 Dec. 31, 1999
------------- ------------- -------------
(unaudited) (unaudited)
Salaries $ 246,733 $ 33,868 $ 376,174
Rent 52,472 21,709 35,161
Internet connection 58,856 8,230 80,545
Advertising 47,950 37,696 126,088
Promotion 26,702 3,795 31,270
Professional fees 213,362 31,746 76,203
Travel 29,993 -0- 15,848
Service Contracts 65,679 -0- 26,080
Interest expense 3,051 1,676 842
Other expenses 239,748 44,117 115,138
--------- --------- ---------
Net loss for the period $(984,546) $(191,424) $(977,532)
--------- --------- ---------
Consolidated Balance Sheet Data June 30, 1999 Dec. 31, 1999
- ------------------------------- ------------- -------------
(unaudited)
Current Assets $ 144,833 $ 174,033
Capital Assets 968,591 975,287
Total Assets 1,127,119 1,149,320
Current Liabilities 348,371 380,664
Total Liabilities 640,616 674,671
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
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<PAGE>
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 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, the Company cannot provide extensive period to period comparisons of
operations. 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.
Periods ended December 31, 1999 and 1998
Operating and administrative expenses incurred through June 30, 1999 and for the
six months ended December 31, 1999 were $984,546 and $977,532, respectively, and
represent the cost of forming the Company, building its infrastructure, hiring
and paying employees, advertising and marketing and expenses connected with
arranging financing. For the approximately five-month period ended December 31,
1998, the Company incurred operating and administrative expenses of only
$191,424. The increases in the December 1999 figures over the December 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 and review of interim financial
statements, the ongoing development of the Company's business plan and
the preparation of securities documents and the Company's efforts to
obtain bank financing and financing from other sources;
o increased advertising and promotion costs were incurred, as the
Company used a significant portion of its resources to revising its
business plan and marketing its intended services, which had not been
fully developed in 1998; and
o increased miscellaneous other costs, commensurate with the Company's
increased planning, research and development, marketing and other
activities.
As of December 31, 1999, the Company had an accumulated deficit of $1,962,078,
compared with $191,424 as of December 31, 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.
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<PAGE>
On October 15, 1999, the Company issued 233,340 Units at a price of $1.50 per
Unit. 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 $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.
On December 30, 1999, the Company issued 111,940 Units at a price of $1.34 per
Unit. 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 $1.34 on
or before December 30, 2001, the one year anniversary of the closing of the
issuance of such Units. The aggregate consideration of $150,000 had previously
been advanced to the Company as part of the same on-going private placement.
The Company has had no other financings. These Units represent the sole source
of the Company's working capital.
On December 31, 1999, the Company had $19,691 in cash available to fund
operations. The Company will require additional financing of $400,000 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
14
<PAGE>
Short-term Investments
Short term investments consist of the following:
Dec. 30, 1999
-------------
Term deposit, 3.75%, maturing April 19, 2000 $ 10,392
Long-term debt
<TABLE>
<CAPTION>
As of June 30, 1999 Expected Maturity Date
Interest included
2000 2001 in 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.$) 10,595 6,460 (2,106) 14,949 Approximately
equal to carrying
value
Average interest rate 16% 16%
Fixed rate (Cdn.$) 15,588 9,504 (3,098) 21,994 Approximately
equal to carrying
value
Average interest rate 16% 16%
</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
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<PAGE>
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
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
Beneficial Owner Beneficially Owned Percentage Ownership(6)
Bank August Roth AG 15,682,401 64.6%
Bellariastrasse 23
Zurich, Switzerland
Joseph Farag 12,385,692(1)(2) 33.3
Stephane Chouinard 12,385,692(1)(2) 33.3
Johnson Joseph 6,079,754(1)(3) 20.0
9064-2448 Quebec Inc. 6,079,754(1)(3) 20.0
Ec-Assiste Inc. 3,300,000 13.6
Varujan Tasci 1,519,939(1) 5.9
Jonathan Levinson 250,800(1)(5) 1.0
Executive Officer and Directors 22,436,185 48.0
As a group (4)(5 Total)
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<PAGE>
(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.
(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.
(6) Percentage is computed assuming the issuance of the 444,280 shares of
Common Stock for which no certificates have been issued to date.
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
17
<PAGE>
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 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.
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<PAGE>
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.
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
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<PAGE>
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 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.
20
<PAGE>
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 $12,670 for the five months ended December 31, 1998) and
$32,108 for the six months ended December 31, 1999 were paid to
Jonathan Levinson for legal work performed on behalf of the Company,
including document review and negotiating agreements. Mr. Levinson
became Vice President of and Legal Counsel to the Company on January 1,
2000; he is also a shareholder of the Company.
Subcontracting fees for support services amounting to $5,293 for the 11
months ended June 30, 1999 (which included $5,198 for the five month
period ended December 31, 1998) and $16,344 for the six months ended
December 31, 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.
High Low
---- ---
(U.S. Dollars)
2000
First Quarter $3.25 $1.50
(through February 18th)
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
21
<PAGE>
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 an aggregate of 444,280 shares). On February 18, 2000, the last published
trading price for the Company's Common Stock was $2.125 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.)
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.
22
<PAGE>
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.
On December 30, 1999, the Company issued 111,940 Units at a price of $1.34 per
Unit. 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 $1.34 on
or before December 30, 2001, the one year anniversary of the closing of the
issuance of such Units. The aggregate consideration of $150,000 had previously
been advanced to the Company as part of the same on-going private placement. The
Company relied on the exemption from registration provided in Regulation S with
respect to this security issuance.
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. 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
23
<PAGE>
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.
24
<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. Exhibit
supercedes previously filed Exhibit 10.2.
25
<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 18
21-02-2000
<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 Thorton
General Partnership
Chartered Accountants
Montreal, Canada
September 9, 1999
(Except as to Note 15 c), which is as of December 2, 1999)
<PAGE>
3
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
Three-month (inception) (inception) Three-month Six-month (inception)
ended through through ended ended through
1998-12-31 1998-12-31 1999-06-30 1999-12-31 1999-12-31 1999-12-31
----------- ----------- ----------- ----------- ----------- -----------
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATIONS
Revenue -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Operating and administrative expenses
Salaries 27,117 33,868 246,733 195,800 376,174 622,907
Fringe benefits 2,919 4,881 29,130 18,902 37,199 66,329
Subcontracts 5,198 5,413 10,805 10,024 15,593 26,398
Training 1,308 1,308 24,392 442 1,874 26,266
Advertising 37,696 37,696 47,950 107,154 126,088 174,038
Transportation 336 366 1,654 185 1,081 2,735
Promotion 3,167 3,795 26,702 26,678 31,270 57,972
Rent 14,544 21,709 52,472 11,806 35,161 87,633
Internet connection 3,584 8,230 58,856 74,149 80,545 139,401
Equipment rental 1,414 1,949 2,977 2,977
Maintenance and repairs 1,885 1,983 4,688 412 745 5,433
Taxes and permits 4,962 4,962 11,300 2,740 7,232 18,532
Insurance 964 964 2,469 5,440 7,582 10,051
Office supplies and courier 4,885 7,325 52,353 11,661 23,467 75,820
Communications 4,872 5,944 15,553 3,837 12,106 27,659
Professional fees 25,150 31,746 213,362 6,230 76,203 289,565
Bank charges 132 241 1,606 1,003 4,648 6,254
Interest on long-term debt 1,128 1,676 3,051 277 842 3,893
Service contracts 65,679 26,080 26,080 91,759
Travel 29,993 8,461 15,848 45,841
Foreign exchange (30,104) (17,422) (12,490) (42,594)
Amortization of capital assets 15,242 17,368 112,925 56,959 110,284 223,209
----------- ----------- ----------- ----------- ----------- -----------
156,503 191,424 984,546 550,818 977,532 1,962,078
----------- ----------- ----------- ----------- ----------- -----------
Net loss 156,503 191,424 984,546 550,818 977,532 1,962,078
=========== =========== =========== =========== =========== ===========
Basic loss per share 0.01 0.01 0.04 0.01 0.02 0.06
=========== =========== =========== =========== =========== ===========
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 25,094,996 27,942,964 48,994,707 48,997,374 35,407,340
=========== =========== =========== =========== =========== ===========
CONSOLIDATED DEFICIT
Deficit, beginning of period 34,921 1,411,260 984,546
Net loss 156,503 191,424 984,546 550,818 977,532 1,962,078
----------- ----------- ----------- ----------- ----------- -----------
Deficit accumulated during the development
stage, end of period 191,424 191,424 984,546 1,962,078 1,962,078 1,962,078
=========== =========== =========== =========== =========== ===========
===================================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
4
Planet 411.com Corporation
(A Development Stage Company)
Consolidated Cash Flows
(In U.S. dollars)
<TABLE>
<CAPTION>
===================================================================================================================================
Unaudited Unaudited
------------------------- ---------------------------------------
For the For the For the
period period period
1998-07-31 1998-07-31 1998-07-31
Three-month (inception) (inception) Three-month Six-month (inception)
ended through through ended ended through
1998-12-31 1998-12-31 1999-06-30 1999-12-31 1999-12-31 1999-12-31
---------- ---------- ---------- ---------- ---------- ----------
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss (156,503) (191,424) (984,546) (550,818) (977,532) (1,962,078)
Non-cash item
Amortization of capital assets 15,242 17,368 112,925 56,959 110,284 223,209
Changes in non-cash working capital items
Sales taxes receivable (28,756) (34,963) (37,782) (22,112) (10,403) (48,185)
Prepaid expenses (94) (2,649) (31,212) 3,763 (61,601) (92,813)
Accounts payable 23,515 26,509 20,655 (13,272) 2,274 22,929
Accrued liabilities 12,080 13,432 103,790 (11,174) 29,281 133,071
---------- ---------- ---------- ---------- ---------- ----------
Cash flows from operating activities (134,516) (171,727) (816,170) (536,654) (907,697) (1,723,867)
---------- ---------- ---------- ---------- ---------- ----------
INVESTING ACTIVITIES
Cash position of acquired company (Note 3) 263 263
Term deposit (10,196) (10,196)
Advances to directors and shareholders (27,956) (28,098) (3,127) (3,127)
Other advances 4,154 (13,695) 13,695
Capital assets (Note 4) (72,229) (89,748) (859,091) (86,689) (120,497) (979,588)
Effect of exchange rate changes 98 96 3,079 4,282 3,042 6,121
---------- ---------- ---------- ---------- ---------- ----------
Cash flows from investing activities (95,933) (117,750) (882,767) (82,407) (103,760) (986,527)
---------- ---------- ---------- ---------- ---------- ----------
FINANCING ACTIVITIES
Advances from (to) related companies 28,729 37,147 (44,242) (44,242)
Advances from directors 656 9 5,519 6,175
Repayment of long-term debt (1,767) (2,901) (6,953) (795) (3,019) (9,972)
Issuance of preferred shares of a subsidiary
company - non-controlling interest 285,474 285,474
Issuance of capital stock 305,549 344,528 1,014,444 1,014,444
Cancellation of capital stock (35,000) (35,000)
Advance payment on capital stock units 539,000 650,010 1,000,020 1,539,020
Effect of exchange rate changes (16,367) (16,161) (26,472) (25,711) 658 (25,814)
---------- ---------- ---------- ---------- ---------- ----------
Cash flows from financing activities 316,144 362,613 1,761,907 623,513 968,178 2,730,085
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents 85,695 73,136 62,970 4,452 (43,279) 19,691
Cash and cash equivalents, beginning of
period (12,559) 15,239 62,970
---------- ---------- ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period 73,136 73,136 62,970 19,691 19,691 19,691
========== ========== ========== ========== ========== ==========
SUPPLEMENTAL DATA
Cash paid during the period for interest -- 1,676 3,051 277 842 3,893
========== ========== ========== ========== ========== ==========
===================================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
5
Planet 411.com Corporation
(A Development Stage Company)
Consolidated Balance Sheets
(In U.S. dollars)
<TABLE>
<CAPTION>
====================================================================================================================================
Unaudited
1999-06-30 1999-12-31
---------- ----------
$ $
<S> <C> <C>
ASSETS
Current assets
Cash 62,970 19,691
Term deposit, 3.75%, maturing on April 19, 2000 10,196 10,392
Sales taxes receivable 37,782 48,185
Advances to directors and shareholders, without interest 2,673 2,952
Prepaid expenses 31,212 92,813
---------- ----------
144,833 174,033
Other advances, without interest or repayment terms (Note 15c) 13,695
Capital assets (Note 4) 968,591 975,287
---------- ----------
1,127,119 1,149,320
========== ==========
LIABILITIES
Current liabilities
Accounts payable 235,747 238,021
Accrued liabilities 103,790 133,071
Instalments on long-term debt 8,834 9,572
---------- ----------
348,371 380,664
Advances from directors, without interest or repayment terms 656 6,175
Long-term debt (Note 5) 6,115 2,358
Non-controlling interest (Note 6) 285,474 285,474
640,616 674,671
---------- ----------
SHAREHOLDERS' EQUITY
Capital stock (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
December 31, 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 24,158,795 (December 31, 1999) issued and outstanding 24,084 24,159
Contributed surplus (Note 7) 934,437 2,288,382
Advance payment on capital stock units (Note 8) 539,000 150,000
Cumulative translation adjustments (Note 9) (26,472) (25,814)
Deficit accumulated during the development stage (984,546) (1,962,078)
---------- ----------
486,503 474,649
---------- ----------
1,127,119 1,149,320
========== ==========
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
6
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the six-month period ended December 31, 1999
and for the period July 31, 1998 (inception) through December 31, 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).
<PAGE>
7
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the six-month period ended December 31, 1999
and for the period July 31, 1998 (inception) through December 31, 1999 is
unaudited)
- --------------------------------------------------------------------------------
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.
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.
<PAGE>
8
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the six-month period ended December 31, 1999
and for the period July 31, 1998 (inception) through December 31, 1999 is
unaudited)
- --------------------------------------------------------------------------------
2 - ACCOUNTING POLICIES (Continued)
Revenue recognition
The Company's core focus is to be an e-business service provider to small and
medium-sized businesses (virtual stores for on-line transactions). The Company
has divided its services into three components: strategy - assisting with the
set-up and implementation of the e-merchants on-line business model; marketing -
working with e-merchants to define a marketing strategy identifying the best
advertising and promotion channels for the virtual store; and performance
analysis - provide pertinent data about sales generally and e-merchant visitors
and buyers in particular. Services can be provided via the Internet or at
business centers that the Company is in the process of establishing. The Company
will also offer 24-hour, seven-day customer service to customers of the
Company's e-merchants. The Company plans to charge for its services an
industry-dependent fee based upon the gross sales of its e-merchants. This
revenue is recognized at the time of delivery and acceptance of the e-merchants'
products.
The Company also plans to require its e-merchants to pay a fee for
jointly-determined additional marketing services. This revenue is recognized
when the additional marketing services are performed.
Should the Company decide that it wishes to derive revenue from franchising its
concept, revenue will be recognized when all significant franchising obligations
have been satisfied.
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.
<PAGE>
9
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the six-month period ended December 31, 1999
and for the period July 31, 1998 (inception) through December 31, 1999 is
unaudited)
- --------------------------------------------------------------------------------
2 - ACCOUNTING POLICIES (Continued)
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 December 31, 1999, for
the three-month periods ended December 31, 1998 and 1999 and for the six-month
periods ended December 31, 1998 and 1999 and for the period from July 31, 1998
(inception) through December 31, 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.
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)
=======
<PAGE>
10
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the six-month period ended December 31, 1999
and for the period July 31, 1998 (inception) through December 31, 1999 is
unaudited)
- --------------------------------------------------------------------------------
4 - CAPITAL ASSETS
<TABLE>
<CAPTION>
1999-06-30
---------------------------------
Accumulated
amorti-
Cost zation 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
1999-12-31
---------------------------------
Accumulated
amorti-
Cost zation Net
--------- --------- ---------
$ $ $
<S> <C> <C> <C>
Office equipment, furniture and fixtures 80,706 15,347 65,359
Office equipment, furniture and fixtures under
capital leases 39,644 11,521 28,123
Computer equipment 287,106 68,802 218,304
Computer software 298,099 50,878 247,221
Licenses 499,537 83,257 416,280
--------- --------- ---------
1,205,092 229,805 975,287
========= ========= =========
</TABLE>
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.
<PAGE>
11
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the six-month period ended December 31, 1999
and for the period July 31, 1998 (inception) through December 31, 1999 is
unaudited)
- --------------------------------------------------------------------------------
5 - LONG-TERM DEBT
Unaudited
1999-06-30 1999-12-31
---------- ----------
$ $
Obligations under capital leases, 16%,
payable in monthly instalments of $883,
capital and interest, maturing in February 2001 14,949 11,930
Instalments due within one year 8,834 9,572
------ ------
6,115 2,358
====== ======
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
==========
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.
- --------------------------------------------------------------------------------
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.
<PAGE>
12
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the six-month period ended December 31, 1999
and for the period July 31, 1998 (inception) through December 31, 1999 is
unaudited)
- --------------------------------------------------------------------------------
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 (Note 3) 8,484,315 8,484 (64,407)
June 1999 - exercise of
warrants (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 (600,000) (600) (34,400)
stock (Note 15)
September 1999, capital 107,800 108 538,892
stock units issued (Note
8) October 1999, capital 233,340 233 349,777
stock units issued (Note
8) November 1999,
capital stock units
issued (Note 8) 333,340 334 499,676
---------------- ---------------- ----------------- ---------------- ----------------
Balance December 31, 1999 1 -- 24,158,795 24,159 2,288,382
================ ================ ================= ================ ================
</TABLE>
Transactions during the period July 31, 1998 (inception) through June 30, 1999,
and the six-month period ended December 31, 1999
Special voting stock
Pursuant to the combination agreement (see Note 1), the Company issued one
share of special voting stock.
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.
<PAGE>
13
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the six-month period ended December 31, 1999
and for the period July 31, 1998 (inception) through December 31, 1999 is
unaudited)
- --------------------------------------------------------------------------------
7 - CAPITAL STOCK AND CONTRIBUTED SURPLUS (Continued)
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).
In October 1999, 233,340 capital stock units were issued (Note 8).
In November 1999, 333,340 capital stock units were issued (Note 8).
At December 31, 1999, warrants to purchase 107,800 shares of common stock
for $5, 233,340 and 333,340 shares of common stock for $1.50 and 111,940
shares of common stock for $1.34 are outstanding. The warrants expire
August 30, October 15, November 30 and December 30, 2000 respectively.
- --------------------------------------------------------------------------------
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.
<PAGE>
14
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the six-month period ended December 31, 1999
and for the period July 31, 1998 (inception) through December 31, 1999 is
unaudited)
- --------------------------------------------------------------------------------
8 - ADVANCE PAYMENT ON CAPITAL STOCK UNITS (Continued)
During the six-month period ended December 31, 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.
The units were issued October 1999;
- - The Company received $500,010 with respect to a private placement for
333,340 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, November 30, 1999.
The units were issued November 1999;
- - The Company received $150,000 with respect to a private placement for
111,940 units at $1.34 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 $1.34
within one year from the date of closing of the offer, December 30, 1999.
As of December 31, 1999, no shares of common stock have been issued with
respect to this private placement.
- --------------------------------------------------------------------------------
9 - CUMULATIVE TRANSLATION ADJUSTMENTS
Unaudited
1999-06-30 1999-12-31
---------------- ----------------
$ $
Balance, beginning of period (26,472)
Effect of exchange rate changes (26,472) 658
---------------- ----------------
Balance, end of period (26,472) (25,814)
================ ================
<PAGE>
15
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the six-month period ended December 31, 1999
and for the period July 31, 1998 (inception) through December 31, 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
Three-month (inception) (inception) Three-month Six-month (inception)
ended through through ended ended through
1998-12-31 1998-12-31 1999-06-30 1999-12-31 1999-12-31 1999-12-31
------------ --------------- --------------- ------------- ------------ ---------------
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C>
Professionnal fees for legal services
were paid to a shareholder of the
Company 8,757 12,670 22,487 16,369 32,108 54,595
============ =============== =============== ============= ============ ===============
Subcontracting fees for computer
support services were paid to a
company controlled by a
shareholder of the Company 5,198 5,198 5,293 13,432 16,344 21,637
============ =============== =============== ============= ============ ===============
</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>
16
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the six-month period ended December 31, 1999
and for the period July 31, 1998 (inception) through December 31, 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 $2,018,000 (December 31, 1999) are not recorded in the financial
statements. The operating loss carry-forwards for income tax purposes of
$937,000 (June 30, 1999) and $1,795,000 (December 31, 1999) expire in 2006
and 2007
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 1999-12-31
---------------- ----------------
$ $
<S> <C> <C>
Operating loss carry-forwards 365,430 682,100
Capital assets, due to amortization taken for accounting purposes 44,070 84,700
--------------- ---------------
409,500 766,800
Valuation allowance (409,500) (766,800)
--------------- ---------------
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, 2001 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>
17
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the six-month period ended December 31, 1999
and for the period July 31, 1998 (inception) through December 31, 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 was expected to generate revenues of
$1,193,961 over the next 20 months. As at June 30, 1999, construction of the
Internet portal was 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. Although the change in date has occured, it is not possible to conclude
that all aspects of the Year 2000 Issue that may affect the Company, including
those related to customers, suppliers or other third parties, have been 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.
<PAGE>
18
Planet 411.com Corporation
(A Development Stage Company)
Notes to Consolidated Financial Statements
(In U.S. dollars; information for the six-month period ended December 31, 1999
and for the period July 31, 1998 (inception) through December 31, 1999 is
unaudited)
- --------------------------------------------------------------------------------
15 - SUBSEQUENT EVENTS (Continued)
c) As at June 30, 1999, the Company had advanced $13,695 to 3574661 Canada
Inc., the Company with whom the agreement described in Note 13 was made.
The Company's interest in 3574661 Canada Inc. was to sell them portal
technology it was developing for itself on an ongoing basis and to
associate itself with what was felt at the time to be a potentially very
successful speciality portal. As a result, they did not charge interest or
stipulate repayment terms on the advances.
The agreement has been rescinded. All costs incurred by the Company
relating to this agreement of $24,923 which include the write-off of the
$13,695 advanced to 3574661 Canada Inc. have been included in the statement
of operations. No revenues have been generated from this agreement. In
management's opinion, no revenues or other expenses are expected from this
agreement.
<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 21, 2000
EXHIBIT 10.2
[OPEN MARKET, INC. LOGO]
TRANSACT SOFTWARE ORDER FORM
(With Terms and Conditions)
9066-4871 Quebec Inc. (dba "PLANET 411")
Full Legal Name of Licensee
440 Rene Levesque West, Suite 400
Montreal, Quebec H2Z 1V7 CANADA
Address of Principal Place of Business
Contact Person: Varujan Tasci
Telephone: 514-866-4638 Fax: 514-866-5020 Email: [email protected]
(Please provide Ship-To/Bill-To information below if different from above)
Ship to -- Planet411 440 Rene Levesque Ouest #400
Bill to - Same
Purchase Order # (if applicable) ______________________
Licensee is incorporated in the province of: Quebec, Canada
Effective Date: March 18, 1999
BY SIGNING THIS ORDER FORM, LICENSEE AGREES TO ALL THE TERMS AND CONDITIONS
ATTACHED (collectively, the "AGREEMENT"). UPON EXECUTION BY THE PARTIES,
LICENSEE SHALL HAVE THE RIGHT TO USE TRANSACT AND ALL RELATED SOFTWARE PROVIDED
HEREUNDER IN ACCORDANCE WITH THE AGREEMENT.
Executed by authorized representatives of the parties as of the Effective Date.
OPEN MARKET, INC. LICENSEE
By: /s/ Eric Pyerson By: /s/ Joseph Farag .
-------------------------
(Signature) (Signature)
Name: Eric Pyerson Name: Joseph Farag
(Print) (Print)
Title: Legal Counsel, Open Market, Inc. Title: President
Agreement Consists Of:
1. TRANSACT Software Order Form
2. Attachment A - Products and Fees
3. Attachment B - Terms and Conditions
<PAGE>
Attachment A
PRODUCTS and FEES
I. Fees
****INFORMATION IN THE COLUMNS MARKED WITH AN ASTERISK IS SUBJECT TO A REQUEST
FOR CONFIDENTIAL TREATMENT. A COPY OF THE CONFIDENTIAL PORTION OF THIS DOCUMENT
HAS BEEN FILED SEPARATELY WITH THE COMMISSION.***
Please indicate currently required items only. Promptly following the Effective
Date, Licensee shall issue a purchase order to OPEN MARKET for these items.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item # Product Description Database Hardware Qty List Net Extended Support Type Annual
Platform Platform Price/Unit Price/Unit Lic. Fees (B or P) Support
Fees
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 CSP Transact License Oracle Sun 1 $* $* $* P $*
2 Sales Tax Server Oracle Sun 1 $* $* $* P $*
3 Fax Server Oracle Sun 1 $* $* $* P $*
4 Production Oracle Database Oracle Sun 1 $* $* $* P $*
5 Transact Development License Oracle Sun 1 $* $* $* P $*
6 Development Oracle Database Oracle Sun 1 $* $* $* P $*
7 Netscape Web Servers n/a Sun 3 $* $* $* P $*
8 BattleStar Application
Monitoring SW n/a Sun 1 $* $* $* P $*
9 ShopSite Lite n/a Sun 100 $* $* $* P $*
10 ShopSite Mgr n/a Sun 100 $* $* $* P $*
11 Best Practices Program n/a n/a 1 n/a n/a n/a n/a $*
Total $504,885 Total Support $174,650
Product Fees: Fees:
</TABLE>
<PAGE>
II. Payment Terms:
A. TRANSACT and all other software products:
Due and payable as follows:
3/18/99 $*
3/26/99 $*
5/3/99 $152,442.50
6/3/99 $152,442.50
B. Merchant Licenses:
Due and payable in full Net Thirty (30) days from shipment
C. SUPPORT Services and Best Practices Program Fees:
Due and payable according to the follow schedule:
Date Due Amount
5/15/99 $*
7/15/99 $*
9/15/99 $43,662.50
11/15/99 $43,662.50
*THE PAYMENT INFORMATION IN SECTIONS II.A AND II.C ARE SUBJECT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH
THE COMMISSION.
All fees payable hereunder are non-refundable.
III. Entitlements:
Base license fee includes the following: one (1) Production copy of TRANSACT
containing the TRANSACT Core Modules, one (1) copy of SecureLink
CommerceOperator for Windows NT, one (1) copy of SecureLink CommerceOperator for
UNIX, one (1) copy SecureLink SDK and one (1) Merchant License as defined in
Exhibit 4.2. In addition, the base license fee entitles Licensee to all required
initial training courses. Licensee shall pay all reasonable travel and lodging
expenses incurred and documented by OPEN MARKET in connection with the delivery
and installation of TRANSACT.
Any third party software provided to Licensee by OPEN MARKET shall be subject to
the terms and conditions of the separate shrinkwrap end user license agreement
accompanying each copy of the applicable software that Licensee may obtain from
OPEN MARKET hereunder. The foregoing also applies to OPEN MARKET's ShopSite
software. Each TRANSACT Production License requires one (1) Netscape Enterprise
Server per hardware platform and each TRANSACT Development License requires one
(1) Netscape Enterprise Server.
Terms applicable to optional SalesTax Module: In addition to the then-current
fees and rates for the optional SalesTax Module, Licensee is subject to an
annual subscription fee for monthly tax updates at the then-current published
rates. OPEN MARKET and its third party supplier do not warrant the accuracy of
the data or other tax calculations made by the SalesTax Module. For purposes of
this paragraph, "data" means any and all representations and/or compilations of
facts, concepts, instructions and other similar information and materials,
including without limitation sales and use tax information and compilations of
such information owned or acquired by OPEN MARKET's third party supplier.
Licensee bears full responsibility for the determination of the accuracy and
applicability of the output from the SalesTax Module and acknowledges that tax
calculations often involve interpretation and that the data of many
jurisdictions can change rapidly. OPEN MARKET and its third party supplier are
not providing specific tax advice and Licensee should obtain the advice of
qualified tax professionals with respect to all tax issues.
<PAGE>
IV. Merchant Business Customer ("Merchant") license fees
For each Merchant Business Customer subscribing to the services of the TRANSACT
system, there is an annual Merchant License fee based on actual Merchant
Business Customer revenue. Licensee may order Merchant Licenses (see Exhibit
4.2) from OPEN MARKET in accordance with the following rate table:
*INFORMATION IN RIGHT-MOST COLUMN BELOW IS SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. A COPY OF THE CONFIDENTIAL PORTION OF THIS DOCUMENT HAS BEEN FILED
SEPARATELY WITH THE COMMISSION.
Merchant Tier Monthly Merchant Revenue Monthly per Merchant fee
- ------------- ------------------------ ------------------------
Tier 1 up to $5k/month $*/month
Tier 2 >$5k/mo up to $33k/month $*/month
Tier 3 >$33k/mo up to $167k/month $*/month
Tier 4 >$167k/mo $*/month
Merchant Reporting and Payment Terms
A. Reporting. Within five (5) business days of the end of each calendar quarter
during the term of this Agreement, Licensee shall furnish Open Market with a
report (using the Transaction Report from TRANSACT) for each such quarter
setting forth the details of all new Merchants in each Tier receiving services
from Licensee's TRANSACT including the following information: (i) the number of
Active Accounts in each tier receiving services from Licensee's TRANSACT at
quarter end and (ii) the maximum number of Active Accounts in each tier during
such quarter. Should Open Market develop an automated reporting tool to trace
merchant details, the parties shall review and mutually agree on use.
B. Payment. The report shall be accompanied by payment in full of all Merchant
license fees for each Merchant in each Tier for each such quarter based upon the
Transaction Report. If payment is not made in full at such time, interest shall
accrue on monies outstanding from the due date of payments at the lesser of the
rate of one and one-half percent per month (1.5%) or the maximum legal rate
allowed.
C. Records/Audit Right. Licensee shall maintain complete and accurate records of
all documentation relating to the number of Merchants receiving services from
Licensee's TRANSACT during the term of this Agreement and shall provide Open
Market (or its designated independent certified public accountant) with
information upon reasonable request relating to such records in connection with
audits that OPEN MARKET may conduct. Audits may not be conducted more frequently
than every six (6) months. If such audits should disclose any under-reporting,
Licensee shall promptly pay Open Market such amount, together with interest
thereon in accordance with subsection (b) above. If the amount under-reported by
Licensee is equal to or greater than ten percent (10%) of the total payment due
Open Market for the payment period so audited, then the cost of the audit shall
be borne by Licensee.
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Attachment B
TRANSACT TERMS AND CONDITIONS
[CSP - International]
Defined terms used herein are listed in Exhibit 1.
In consideration of the mutual promises herein contained and other valuable
consideration, the parties hereto agree as follows:
1. LICENSES.
1.1 OPEN MARKET Grant of Licenses. OPEN MARKET hereby grants Licensee the
following non-exclusive, non-transferable, non-assignable, perpetual (subject to
Section 8.2) worldwide licenses, for the term of this Agreement:
a. To use the licensed copy(ies) of TRANSACT, on Licensee's designated
computer system, in Executable Code form only, in order to provide Internet
transaction services to TRANSACT End User Customers;
b. To use the licensed copy(ies) of TRANSACT, on Licensee's designated
computer system, in Executable Code form only, in order to conduct
demonstrations to prospective TRANSACT End User Customers; and
c. To make one (1) back-up copy of TRANSACT solely for archival or
recovery purposes, as long as the Production copy is in active use.
(If Licensee elects to receive a Development copy of TRANSACT):
d. To use the Development copy of TRANSACT, on the computer system which
it is installed, in Executable Code form only, solely for internal development,
testing and staging purposes and with all standard TRANSACT Payment Modules and
Fulfillment Modules and for no other purpose and to make one backup copy of the
Development copy solely for archival purposes.
a. (If Licensee elects to receive a Cold Spare Back-Up copy of TRANSACT):
e. e. To use the Cold Spare Back-Up copy of TRANSACT, on the computer system on
which it is installed, in Executable Code form only, solely in order to provide
emergency back-up to the Production copy of TRANSACT licensed hereunder for the
duration of such emergency and for no other purpose and to make one backup copy
of the Cold Spare Back-Up copy solely for archival purposes.
1.2 Option to License Optional Modules. OPEN MARKET hereby grants
Licensee an option to purchase licenses and an option to obtain related
installation services at any time during the term of this Agreement for any of
the optional modules of TRANSACT made available by OPEN MARKET at OPEN MARKET's
then-current fees and rates. If the option to license any optional modules of
TRANSACT is exercised by Licensee pursuant to this Section 1.2, each such
additional module shall thereupon be deemed included in TRANSACT and in the
applicable license grants set forth in Section 1.1.
1.3 No Implied License. Licensee acknowledges and agrees that this
Agreement in no way shall be construed to provide to Licensee, or any third
party, any express or implied license to use, copy or otherwise exploit TRANSACT
or any portion thereof, (including any intellectual property embodied therein)
other than as specifically set forth in this Agreement. Without limiting the
foregoing, Licensee may not sublicense or otherwise distribute TRANSACT or any
portion thereof to any
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<PAGE>
third party, including any subsidiary or affiliate of Licensee, unless otherwise
authorized by OPEN MARKET in writing.
1.4 Trademarks. OPEN MARKET hereby grants Licensee the non-exclusive,
non-transferable, non-assignable (except as otherwise expressly provided
herein), worldwide license solely during the Term to use the OPEN MARKET's trade
and service marks (collectively, the "Marks") solely in connection with
Licensee's use of TRANSACT pursuant to this Agreement. Licensee acknowledges
that OPEN MARKET owns all rights to the Marks. Licensee shall not during the
Term of this Agreement and anytime thereafter use or attempt to use or register
anywhere in the world a tradename or mark or service name or mark or symbol
which in any way is identical or confusingly similar to any one of the Marks.
2. CERTAIN LICENSEE OBLIGATIONS.
2.1 Proprietary Markings. Licensee agrees that it will not remove any
copyright, trademark or other proprietary notices of OPEN MARKET or its
suppliers affixed to or displayed on TRANSACT or the Documentation.
2.2 Compliance with Laws. Licensee shall comply with all applicable laws,
rules and regulations in its performance of this Agreement. In particular,
Licensee shall not transfer, either directly or indirectly, TRANSACT or the
Documentation, either in whole or in part, to any destination subject to export
restrictions under U.S. law, unless prior written authorization is obtained from
the appropriate U.S. agency and shall otherwise comply with all other applicable
import and export laws, rules and regulations.
2.3 OPEN MARKET Acknowledgment and HTML Link. Licensee may insert the
following acknowledgment on a Web page(s) presented by Licensee's Transaction
Service to TRANSACT End User Customers: "This software infrastructure powered by
TRANSACT, a product of Open Market, Inc." This text may contain the URL of OPEN
MARKET's Web site.
2.4 Publicity. Licensee and OPEN MARKET shall mutually agree to a news
release regarding Licensee's purchase of the TRANSACT licenses under this
Agreement. Neither Licensee nor OPEN MARKET shall make any public statements,
including without limitation, press releases or public announcements regarding
TRANSACT, without the prompt prior review and approval of the other party, which
shall not be unreasonably withheld or delayed. Notwithstanding the foregoing,
OPEN MARKET may include Licensee in any general listing of TRANSACT customers.
3. SUPPORT AND MAINTENANCE SERVICES.
3.1 OPEN MARKET Support and Maintenance. During the term of this
Agreement, Licensee may purchase annual support and maintenance from OPEN MARKET
at either the Basic or Premier levels, at the applicable annual support fee, in
accordance with the terms and conditions of OPEN MARKET's standard Agreement for
Annual Software Support (the "Support Agreement") available on OPEN MARKET's Web
site.
4. FEES.
4.1 License Fees. Licensee shall pay OPEN MARKET the License Fees in US
Dollars in accordance with the terms and conditions set forth in Attachment A.
4.2 Option to Purchase Merchant Licenses. OPEN MARKET hereby grants
Licensee an option to purchase Merchant Licenses in accordance with the terms
and conditions set forth in Exhibit 4.2.
4.3 Net of Taxes. All amounts payable by Licensee to OPEN MARKET
hereunder are exclusive of any sales, use and/or all other taxes or duties,
however designated, including without
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<PAGE>
limitation, withholding taxes or royalties, or know-how payments, customs,
privilege, excise, sales, use, value-added and property taxes (collectively
"Taxes") except for Taxes on OPEN MARKET's net income. Licensee shall pay any
such Taxes, unless Licensee provides to OPEN MARKET an appropriate certificate
of exemption from the applicable taxing authority, and shall not withhold any
Taxes from any amounts due OPEN MARKET.
5. OWNERSHIP AND TRADE SECRETS; CONFIDENTIALITY.
5.1 OPEN MARKET Ownership Rights. Except for the licenses granted
hereunder, all rights, title and interests, including without limitation all
copyright, patent, trademark, trade secret and any other intellectual property
rights, in and to TRANSACT and the Documentation are retained by OPEN MARKET.
5.2 No Decompilation. Except as expressly provided in the applicable
local laws of Canada and Quebec, if any, and then only in strict accordance
with, and solely for the purposes specified in, such laws, Licensee shall not
attempt to (i) obtain the Source Code of TRANSACT or any Optional Component,
Update or Upgrade or any trade secret or know-how embodied in any of the
foregoing, whether through decompilation, disassembly or other means or (ii)
modify, enhance, translate or create derivative works of any of the same.
Licensee shall not duplicate any portion of TRANSACT or any Optional Component,
Update, Upgrade or Documentation, except as expressly authorized in this
Agreement.
5.3 Confidentiality. Licensee and OPEN MARKET shall each safeguard the
other's Proprietary Information in the same manner as they safeguard their own
valuable proprietary information. The parties each agree that the terms of this
Agreement, including without limitation the amount of license or other fees
payable hereunder and the payment terms, shall be deemed Proprietary
Information. Results of benchmark tests run by Licensee shall not be disclosed
unless OPEN MARKET consents to such disclosure in writing. Each of the parties
acknowledges that the other's Proprietary Information constitutes such party's
valuable proprietary information and trade secrets. Each of the parties
expressly agrees and acknowledges that it is entering into this Agreement, and
providing the other party copies of its Proprietary Information hereunder, in
reliance upon the other's foregoing promise of confidentiality.
5.4 Nondisclosure. During the term of this Agreement, and for a period of
five (5) years thereafter, neither party shall use, disclose, make or have made
any copies of the other party's Proprietary Information in whole or in part,
except as provided herein, without the prior express written authorization of
the other party. The parties shall only disclose or otherwise allow access to
the Proprietary Information of the other party, to employees, consultants or
contractors who (i) have a need to obtain access thereto in order to give effect
to the rights granted to Licensee under this Agreement, and (ii) are legally
bound to maintain the proprietary and confidential nature of such materials
under a written agreement.
5.5 Exceptions. Any provisions herein concerning non-disclosure and
non-use of confidential information of a party shall not apply to any such
information which (a) is already rightfully known to the other party when
received, (b) is or becomes publicly known through publication or otherwise and
through no wrongful act of the other party, contrary to the foregoing terms of
the present section on confidentiality, (c) is received from a third party
without similar restriction and without breach of this Agreement, (d) is
approved for release or use by written authorization of the other party, (e) is
required to be disclosed pursuant to any government statute, regulation or
order.
6. WARRANTY.
6.1 Warranties. (a) OPEN MARKET warrants to Licensee that TRANSACT shall
perform substantially in accordance with its then-current
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<PAGE>
Documentation during the ninety (90) day period following installation (the
"Warranty Period"). OPEN MARKET shall have no liability with respect to any
failure of TRANSACT to perform as warranted under this Section 6.1 if such
failure results from improper use or any changes or modifications made to
TRANSACT by Licensee or any third party. This warranty is made solely to
Licensee and Licensee shall be solely responsible for any warranty to, or claims
by, Licensee's TRANSACT End User Customers or any other third parties.
(b) OPEN MARKET further represents and warrants that (i) the occurrence in or
use by TRANSACT of dates on or after January 1, 2000 ("Millennial Dates") will
not adversely affect its performance at any level with respect to date-dependent
data, computation, output, or other functions (including without limitation,
calculating, comparing and sequencing); and (ii) TRANSACT will create, store,
receive, process and output information related to or including Millennial Dates
without error or omissions. OPEN MARKET shall cooperate with Licensee as may be
reasonably necessary and appropriate to facilitate Licensee's review of OPEN
MARKET's Year 2000 compliance processes and procedures.
6.2 Licensee Remedies. Licensee's sole and exclusive remedy and OPEN
MARKET's sole and exclusive obligation under the warranty set forth in Section
6.1 shall be, at OPEN MARKET's sole discretion, (i) for OPEN MARKET to correct
any material failure of TRANSACT to perform as warranted (remedies may include,
without limitation, software patches or workarounds as required) or (ii) for
OPEN MARKET to replace TRANSACT with a new copy or Update; provided that such
failure is reported to OPEN MARKET within the Warranty Period.
6.3 Warranty Exclusions. SUBJECT TO ANY STATUTORY PROVISIONS OR
LIMITATIONS UNDER CANADIAN AND QUEBEC LAW THAT ARE MADE APPLICABLE TO THIS
AGREEMENT NOTWITHSTANDING SECTION 9.6, THE WARRANTIES UNDER SECTIONS 6.1 AND
7.1.1 ARE THE ONLY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, THAT ARE
MADE BY OPEN MARKET AND OPEN MARKET DISCLAIMS ALL OTHER WARRANTIES, INCLUDING
BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE
AND MERCHANTABILITY. OPEN MARKET shall have no liability in contract, tort,
negligence or otherwise arising out of the use of any root key certificates or
any related certificate authority technology or services provided by Licensee or
any third party to OPEN MARKET for use with TRANSACT.
6.4 Limitations of Remedy. Neither OPEN MARKET nor anyone else who has
been involved in the creation, production or delivery of TRANSACT shall be
liable Licensee or any third party for any liquidated, indirect, consequential,
exemplary or incidental damages (including damages for loss of business profits,
business interruption, loss of business information, and the like) arising out
of this Agreement or the use or inability to use TRANSACT even if OPEN MARKET
has been advised of the possibility of such damages. OPEN MARKET and its
suppliers shall have no liability whatsoever to any third party, including but
not limited to, TRANSACT End User Customers, and Licensee shall use reasonable
efforts to disclaim all liability of OPEN MARKET and its suppliers in any
applicable third party agreements. In no case shall OPEN MARKET's aggregate
liability for all matters arising out of the subject matter of this Agreement,
whether in contract, tort or otherwise, exceed the amounts actually received by
OPEN MARKET under this Agreement.
LICENSEE ACKNOWLEDGES THAT OPEN MARKET'S LIABILITY AND WARRANTY LIMITATIONS OR
EXCLUSIONS SET FORTH HEREIN
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ARE REASONABLE UNDER THE CIRCUMSTANCES AND THAT THE LICENSEE'S CONSENT THERETO
AND AGREEMENT THERWITH IS FAIRLY REFLECTED IN THE LICENSE FEES AND CONSTITUTES A
MATERIAL INDUCEMENT FOR OMI'S ENTRY INTO THIS AGREEMENT. HOWEVER NOTHING IN THIS
AGREEMENT SHALL BE DEEMED TO RESTRICT OMI'S POSSIBLE LIABILITY FOR PERSONAL
INJURY, DEATH OR TANGIBLE PROPERTY DAMAGE UNDER APPLICABLE LAW.
7. INDEMNIFICATION.
7.1 Infringement.
7.1.1 Warranty. OPEN MARKET warrants to Licensee that TRANSACT will not
infringe any copyright, U.S. patent, trademark, trade secret or mask work right
of any third party.
7.1.2 Defense. In the event of any claim or allegation against Licensee
of any infringement or misappropriation of any third party copyright, U.S.
patent, trademark, trade secret, or mask work rights by reason of the use by
Licensee of TRANSACT as permitted hereunder, OPEN MARKET shall, at its expense
defend such claim, and pay any costs, expenses and finally awarded damages
actually awarded in connection therewith, including the fees and expenses of the
attorneys engaged by OPEN MARKET for such defense provided that (i) Licensee
shall promptly notify OPEN MARKET of such claim or action, (ii) OPEN MARKET
shall have the sole and exclusive authority to defend and/or settle any such
claim or action and (iii) Licensee will reasonably cooperate with OPEN MARKET in
connection therewith.
7.1.3 Certain Actions in Response to Infringement. If the use of TRANSACT
by Licensee has become, or in OPEN MARKET's opinion is likely to become, the
subject of any claim of infringement, OPEN MARKET may at its option and expense
(i) procure for Licensee the right to continue using TRANSACT as set forth
hereunder, (ii) replace or modify TRANSACT to make it non-infringing, (iii)
substitute an equivalent for TRANSACT or, if options (i)-(iii) are not
reasonably practicable, (iv) terminate this Agreement and refund to Licensee all
License Fees paid by Licensee under Article 4.
7.1.4 Limitation of Indemnification for OPEN MARKET.
(a) OPEN MARKET shall have no liability or obligation hereunder with
respect to any infringement claim if such infringement is caused by (i)
compliance with designs, guidelines, plans or specifications of Licensee; (ii)
use of TRANSACT by Licensee in an application or environment other than as
specified in applicable Documentation; (iii) modification of TRANSACT by any
party other than OPEN MARKET; or (iv) the combination, operation or use of
TRANSACT with other product(s) or services not supplied by OPEN MARKET where
TRANSACT would not by itself be infringing. Licensee agrees to defend OPEN
MARKET from and against all liabilities, obligations, costs, expenses and
judgments, including court costs, reasonable attorneys fees and expert fees,
arising out of any of the circumstances stated in subsections (i) - (iv) above.
(b) THIS ARTICLE 7 STATES OPEN MARKET'S ENTIRE AND EXCLUSIVE LIABILITY
AND OBLIGATION, AND LICENSEE'S EXCLUSIVE REMEDY, WHETHER STATUTORY, CONTRACTUAL,
EXPRESS, IMPLIED OR OTHERWISE, FOR CLAIMS OF INTELLECTUAL PROPERTY INFRINGEMENT.
7.2 By Licensee. Licensee shall defend OPEN MARKET against any and all
claims, damages, losses, liabilities, costs and expenses (including reasonable
attorney's fees) directly or indirectly brought against OPEN MARKET by any third
party arising out of Licensee's or a Merchant
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Business Customer's products or services or arising out of Licensee's breach of
this Agreement. Licensee shall have the sole and exclusive authority to defend
any such claim or action, provided that (i) OPEN MARKET shall promptly notify
Licensee of such claim or action, (ii) Licensee shall have the sole and
exclusive authority to defend and/or settle any such claim or action and (iii)
OPEN MARKET will reasonably cooperate with Licensee in connection therewith.
8. TERMINATION.
8.1 Term. The term of this Agreement shall commence on the Effective Date
and shall continue perpetually unless terminated pursuant to Section 8.2 hereof.
8.2 Termination. Licensee may terminate this Agreement without cause at
any time after a period of two (2) years from the Effective Date upon ninety
(90) day prior written notice. Either party may terminate this Agreement in the
event the other party (i) commits any material and substantial breach or default
and fails to provide an acceptable remedy of such breach or default within
thirty (30) days after written notice of such breach or default from the
non-breaching or non-defaulting party or (ii) ceases to carry on business as a
going concern, becomes the object of the institution of voluntary or involuntary
proceedings in bankruptcy or liquidation, or a receiver is appointed with
respect to a substantial part of its assets. Notwithstanding the foregoing,
either party may terminate this Agreement immediately in the event of a material
breach by the other party of its obligations under Article 6. Overdue payments
shall bear interest at the lesser of twelve percent (12%) per annum or the
highest legal rate.
8.3 Licensee Obligations on Termination. Upon termination of this
Agreement, for any reason except OPEN MARKET's uncured material breach, all
licenses granted hereunder shall immediately terminate and Licensee shall return
all portions of TRANSACT and the Documentation in its possession or control to
OPEN MARKET. Termination of this Agreement shall not relieve Licensee from
paying all fees accruing prior to termination. After termination, Articles 5, 6,
7 and 9 shall survive for a period of two (2) years.
9. GENERAL.
9.1 No Assignment. Licensee shall not assign this Agreement (or any of
its rights hereunder), or delegate its obligations hereunder without the prior
written consent of OPEN MARKET.
9.2 Amendment; Waiver. No amendment or modification to this Agreement,
nor any waiver of any rights hereunder, shall be effective unless assented to in
writing by both parties. The waiver of any breach or default shall not
constitute a waiver of any other right hereunder or any subsequent breach or
default.
9.3 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.4 Relationship. Nothing contained herein shall in any way constitute
any association, partnership, agency, employment or joint venture between the
parties hereto, or be construed to evidence the intention of the parties to
establish any such relationship. The parties' relationship is solely that of
independent contractors.
9.5 Unenforceability. If a court of competent jurisdiction determines
that any provision of this Agreement is invalid, illegal, or otherwise
unenforceable, such provision shall be enforced as nearly as possible in
accordance with the stated intention of the parties, while the remainder of this
Agreement shall remain in full force and effect and bind the parties according
to its terms. To the extent any provision cannot be enforced in accordance with
the stated intentions of the parties, such provision shall be deemed not to be a
part of this Agreement.
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9.6 Governing Law. (a) This Agreement shall for all purposes be governed
by, construed and enforced solely in accordance with the laws of the
Commonwealth of Massachusetts USA, without reference to its conflict of laws
rules. The United Nations Convention on International Sale of Goods shall not
apply to this Agreement. (b) Any and all disputes between the parties arising
under or in connection with this Agreement or TRANSACT, which cannot amicably be
resolved by the parties, shall be resolved solely and exclusively in the courts
located in the Commonwealth of Massachusetts USA. Licensee hereby expressly
consents to the service of process in connection therewith and irrevocably
waives any objections to the jurisdiction of such courts on any grounds,
including without limitiation, forum non conveniens. Any judgment or award by
such courts may be entered and enforced by any court having jurisdiction over
the parties or their assets.
9.7 Government Contracts. TRANSACT and the Documentation are provided
with restricted and limited rights for purposes of government contracting and
subcontracting. TRANSACT and the Documentation provided by OPEN MARKET hereunder
to any agency of the U. S. Government or U. S. Government subcontractor shall be
subject to restrictions as set forth in FAR 52.227-19 or DFARS
252.227-7013(c)(1) or success or regulations. Contractor/manufacturer is Open
Market, Inc., 1 Wayside Road, Burlington, Massachusetts 01803.
9.8 Notices. Any notice required or permitted to be given hereunder shall
be given in writing to the party at the address specified above by personal
delivery, certified mail, return receipt requested, or by overnight delivery.
9.9 Entire Agreement. This Agreement, including all attached Exhibits
referenced herein, is the entire agreement between Licensee and OPEN MARKET with
respect to its subject matter, and supersedes all prior and contemporaneous
proposals, statements and agreements (oral and written) with respect to such
subject matter, including but not limited to any inconsistent or conflicting
terms contained in any Licensee purchase order issued in connection with this
Agreement. No oral or written information or advice given by OPEN MARKET, its
agents or employees shall create a warranty or in any way increase the scope of
the warranties in this Agreement.
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EXHIBIT 1
DEFINITIONS
"Active Account" means either a Buyer Consumer or Merchant Business Customer
account that has been established in the TRANSACT system and is registered
appropriately in the TRANSACT account database. Once established, the Active
Account is enabled for use by the applicable Buyer Consumer or Merchant Business
Customer.
"Buyer Consumer" means any customer either of Licensee or a Merchant Business
Customer, who establishes an Active Account with either Licensee or a Merchant
Business Customer with respect to transaction services provided via TRANSACT.
"Documentation" means the documentation, manuals or similar materials relating
to TRANSACT and all applicable Upgrades and generally made available by OPEN
MARKET to its TRANSACT licensees.
"Executable Code" means a form of computer program or portion thereof which can
be executed by a computer without further translation or modification. Examples
include binary code and code which can be directly executed by an interpreter.
"Merchant Business Customer" means any customer of Licensee who establishes an
Active Account with Licensee in order to provide transaction services to Buyer
Consumers via TRANSACT.
"Proprietary Information" is the confidential and valuable information of the
respective parties which the parties desire to protect against disclosure or
competitive use and which is either in written form and designated as
proprietary or confidential or is disclosed orally and is designated in writing
as being proprietary or confidential within ten (10) days of disclosure. OPEN
MARKET's Proprietary Information includes, without limitation, Source Code and
other proprietary information, trade secrets and know-how embodied in TRANSACT
and any results of benchmark tests run on TRANSACT.
"Source Code" means a form of computer program or portion thereof written in a
programming language employed by computer programmers which must be translated
into the language of a machine before it can be executed.
"TRANSACT" means OPEN MARKET's proprietary TRANSACT software, including the Core
Module bundle for the "Production", "Cold Spare Back-Up" and "Development"
licenses of TRANSACT, Upgrades and all optional Add-On Module components
("Optional Components")
"TRANSACT End User Customer" means any Merchant Business Customer or Buyer
Consumer to whom Licensee (or Licensee's Merchant Business Customer) will
provide products or services using TRANSACT. In each case, Merchant Business
Customers and Buyer Consumers must establish Active Accounts.
"Updates" means any modification by OPEN MARKET of TRANSACT that OPEN MARKET may
hereafter develop and make generally available to its TRANSACT Licensees in
accordance with OPEN MARKET's support program. Updates are represented by a
release number one or more places to the right of the decimal point.
"Upgrades" means all new versions, new releases and enhancements of TRANSACT
that OPEN MARKET may hereafter develop and make generally available to its
TRANSACT Licensees in accordance with OPEN MARKET's support program. Upgrades
are represented by a release number one or more places to the left of the
decimal point.
12
<PAGE>
EXHIBIT 4.2
MERCHANT LICENSES
I. Merchant Licenses
Initial Merchant License Fee includes the following: one (1) gold master of
SecureLink CommerceOperator for Windows NT and associated Documentation Frame
Source Code; one (1) gold master of SecureLink CommerceOperator for UNIX and
associated Documentation Frame Source Code; and one (1) gold master of
SecureLink SDK and associated Documentation Frame Source Code (collectively,
"SecureLink software").
Subject to the terms of this Agreement, Licensee is granted the non-exclusive
right to provide transaction services to Buyer Consumers via TRANSACT on behalf
of licensed Merchant Business Customers. Licensee may redistribute the
SecureLink software, in Executable Code form only, to licensed Merchant Business
Customers under terms substantially similar to Open Market's standard shrinkwrap
end user SecureLink license agreement.
Licensee may grant each Merchant Business Customer the non-exclusive,
non-transferable, non-sublicensable right to the following: one (1) StoreID on
Licensee's TRANSACT and SecureLink software and documentation as needed.
Licensee may customize and redistribute SecureLink software and documentation to
licensed Merchant Business Customers as needed to support StoreIDs. Licensee is
responsible for first and second line support of Merchant licenses and
associated software. Open Market will provide back-up support only to Licensee.
For purposes hereunder, "Store ID" means a number that identifies a registered
store to the TRANSACT administrator, which is provided to the Merchant Business
Customer when it registers a store and which will appear on the appropriate
registration screens.
SecureLink for Windows NT gold master ("SecureLink Gold Master") Use
Restrictions
Use and Distribution Rights
Licensee can use the SecureLink Gold Master solely for the purpose of
customization and redistribution of SecureLink software to its Merchant Business
Customers in Executable Code form only. Proprietary rights to the Licensed
Programs described hereunder shall be governed by Article 4 of this Agreement.
Under no circumstances shall Licensee develop products that, either directly or
indirectly, are competitive with the SecureLink software licensed hereunder
based on access to and use of such SecureLink Gold Master as authorized
hereunder.
SecureLink Documentation Frame Source Code ("SecureLink Documentation") Use
Restrictions
Use and Distribution Rights
Licensee can use the SecureLink Documentation solely for the purposes of
customization and redistribution to its Merchant Business Customers in
Executable Code form only. Open Market shall have final review and approval
authority on all customized SecureLink Documentation to confirm technical
accuracy. Proprietary rights to the Licensed Programs described hereunder shall
be governed by Article 5 of the Agreement.
Under no circumstances shall Licensee develop products that, either directly or
indirectly, are competitive with the SecureLink Documentation licensed hereunder
based on access to and use of such SecureLink Documentation as authorized
hereunder.
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF PLANET411.COM CORPORATION DATED JUNE 30,
1999 AND THE UNAUDITED FINANCIAL STATEMENTS OF PLANET411.COM INC. DATED DECEMBER
31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUN-30-1999
<PERIOD-END> DEC-31-1999
<CASH> 19,691<F1>
<SECURITIES> 0
<RECEIVABLES> 2,952
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 174,033
<PP&E> 1,205,092
<DEPRECIATION> 229,805
<TOTAL-ASSETS> 1,149,320
<CURRENT-LIABILITIES> 380,664
<BONDS> 6,175
0
0
<COMMON> 24,159
<OTHER-SE> 1,125,161
<TOTAL-LIABILITY-AND-EQUITY> 1,149,320
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 976,690
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 842
<INCOME-PRETAX> (977,532)
<INCOME-TAX> (977,532)
<INCOME-CONTINUING> (977,532)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (977,532)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
<FN>
(1) The Company's consolidated financial statements from which this table has
been derived have been prepared in accordance with generally accepted
accounting principles in Canada and conform in all material respects with
the accounting principles generally accepted in the United States.
</FN>
</TABLE>
