United states
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[x] Annual report under section 13 0r 15(d) of the securities exchange act of
1934
For the fiscal year ended December 31,1999
-----------------
[ ] transition report under section 13 0r 15(d) of the securities exchange act
of 1934
For the transition period from to
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Commission file number
RADIOTOWER.COM, INC.
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(Name of Small Business Issuer in its charter)
Incorporated in the State of Nevada 91-1921581
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
322 - 425 Carrall Street, Vancouver, British Columbia V6B 6E3
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (604) 605-1357
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Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock - $0.001 par value
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(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the last 12 months (or for such shorter
period that the registrant was required to file such reports) Yes [x] No [ ],
and (2) has been subject to such filing requirements for the past 90 days.
Yes [ ] No [x]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $848.00
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days $15,655,000 as of March 29, 2000
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Class Outstanding at December 31, 1999
----- --------------------------------
Common Stock - $0.001 par value 15,500,000
Documents incorporated by reference: None
Transitional Small Business Disclosure Format (Check one): Yes [x] No [ ]
<PAGE>
INFORMATION REQUIRED IN ANNUAL REPORTS OF
TRANSITIONAL SMALL BUSINESS ISSUERS
PART I
Item 6. Description of Business.
(a) Business Development
RadioTower.com, Inc. ("RadioTower") was incorporated under the laws of the State
of Nevada on May 5, 1998 under the original name "Magnum Ventures Inc."
RadioTower changed its name on May 18, 1999 to "RadioTower.com, Inc."
Initially, RadioTower was in the mining business and on June 4, 1998, acquired
the right to purchase some mineral claims. However, this was the extent of
RadioTower's operation as a mining company and its involvement in the mining
industry. RadioTower did not do any testing on or developing of the mineral
claims. See Note #4 of the December 31, 1999 financial statements for more
information. In March 1999, the board of directors decided to abandon its rights
to the mineral claims and not to make any further option payments, resulting in
the termination of the option. RadioTower ceased all mining industry activities
at this time, and the board of directors decided to enter into the radio
Internet business.
RadioTower has not been involved in any bankruptcy, receivership or similar
proceedings. There has been no material reclassification, merger, consolidation
or purchase or sale of a significant amount of assets not in the ordinary course
of RadioTower's business with the exception of the acquisition of the domain
asset of Radiotower.com from Paul Valkama and Henry Valkama. See "Item 11.
Interest of Management and Others in Certain Transactions".
Prior to the acquisition of the assets and goodwill of RadioTower from the
Valkama brothers, RadioTower was doing business as a sole proprietorship under
the name SoftAd Communications. They operated the radiotower.com site as a hobby
business from which no revenues were generated. They also provided web design
work, under contract, for various small businesses. The first version of the
RadioTower site was launched in June 1996 and has been online since. New station
listings were constantly added as they became available. The site was marketed
online through various free channels. At this point, an advertising agent (Burst
Media) was contracted to solicit advertising on RadioTower's behalf. Version 3.0
of RadioTower's site also involved an interface change along with adding
database backend. An agreement with Global Media Corp. was reached and
RadioTower launched the RadioTower Store in September 1999. See Exhibit 6.2 -
Licensing Agreement with Global for additional information. RadioTower put in
place partnerships with Pronet Enterprises Ltd. (see Exhibit #6.5) and Destiny
Media Technologies Inc. (see Exhibit #6.4) to begin development of the AudioAd
service. Version 4.0 of the site, launched on December 20, 1999, included a new
interface and operated on an in-house Linux Server. RadioTower is constantly
adding new stations to the database with development of new features ongoing.
(b) Business of RadioTower
RadioTower is an Internet company (www. radiotower.com). RadioTower is a pioneer
of Internet audio, being one of the first companies online with a live radio
directory and audio portal. The directory is a free television guide-like
listing of over 1,000 radio stations worldwide. With the use of existing
technology, such as RealPlayer, RadioTower allows listeners to link to and
listen to these radio stations.
For each listing, RadioTower supplies a direct audio link, whereby the user can
listen to the radio station directly from RadioTower's site, and a link to the
station's own website. RadioTower also lists the station's name, call letters,
category and location, and provides a brief description of the radio station.
Site users must have a multi-media computer with free downloadable copy of
RealPlayer installed. Audio quality depends on speed of Internet connection,
computer speed and quality of a particular station's host server. Users can
search for a station by name, country, category or keyword search. Once a
station is located, the user simply clicks on the play button beside each
station to listen. The user is free to continue to browse RadioTower's site,
surf other websites and work at home or in the office while listening to the
radio station. New stations are constantly being added to the RadioTower's
database.
<PAGE>
RadioTower only contains listings for those radio stations that already
broadcast their signals over the Internet using Real Audio.
Principal Products or Services and their Markets
- ------------------------------------------------
RadioTower is a free online directory of Internet audio sites. The directory
currently provides information and easy access to over 1,000 radio stations from
around the world. RadioTower has built a steady user base of 20,000 monthly
listeners with no marketing budget and receives 100,000 page views a month due
to: Positive word-of-mouth, high listings on all major search engines, links
from 100's of other sites to RadioTower's website, favourable reviews (L.A.
Times, HotWired, Vancouver Sun etc.) and numerous awards (Yahoo Picks, Windows
Magazine Site of the Day etc.).
According to the latest statistics from Burst Media, RadioTower's banner and ad
placement agency, RadioTower's current average ad views is 5,800 per day or
174,000 per month. According to RadioTower's ISP server statistics provided by
Eline Technologies Inc., RadioTower's website has an average of 645 site
visitors per day or 20,000 visitors per month.
Search engines such as Yahoo and Altavista are the #1 way that Internet users
find web sites. A high listing on these search engines (on the first page of
results) is a very important marketing tool. According to Positionagent.com, and
actually using the search engines, RadioTower appears at or near the top of the
search listings for keywords relevant to RadioTower such as "Internet Radio" and
"Radio Stations".
Link popularity is the total number of web sites that link to RadioTower's
website. Good link popularity can dramatically increase traffic to RadioTower's
website. According to linkpopularity.com there are 929 websites that currently
have links to RadioTower.
In a typical Internet session a user will go to RadioTower's site and select the
radio station of their preference by name, place and/or genre. The station's
audio signal will be broadcast continually as the user surfs other stations or
sites, works in the office or home, or until they select another station.
A user must have a multi-media computer and a free downloadable copy of the
RealPlayer installed. Audio quality depends on speed of Internet connection and
computer and quality of a particular station's host server. A 28k modem and a
486 computer will provide acceptable results.
RadioTower did not have any revenues generated from its business operations
during its last two fiscal years. RadioTower is in the early stages of operation
and just beginning to generate business revenues. Since June 30, 1999,
RadioTower has generated revenues from the sale of advertising.
Revenue is derived from the sale of onsite advertising and affiliated ecommerce
programs. RadioTower has an affiliate e-commerce agreement with Global Media
Inc. See Exhibit 6.2 - Licensing Agreement with Global. Global Media supplies an
e-commerce store that sells CD's, videos and books and takes care of all order
fulfilment. The store is branded as RadioTower. For any visitors to RadioTower's
site who visit the e-commerce store and purchase products, RadioTower will earn
40-60% of the net profit on each sale. The store is open for business, but needs
to be effectively promoted to build customer awareness and trust.
Our advertisers have included Rolling Stone Magazine and Gillette. RadioTower's
ecommerce affiliates have included: Music Previews, Audio Book Club, Beyond.com
(software), IQ (audio software) and Wall Street Journal. Currently, RadioTower's
ecommerce affiliates include only Global Media Corp. See Exhibit 6.2 - Licensing
Agreement with Global Media. Specific RadioTower Web pages will be targeted
towards particular audiences. Users can browse the site by 20 different
categories such as Rock, Classical, Sports or Business. Users who select a
certain category can be targeted on the main page for that category. For
example, visitors to RadioTower's Rock pages will see advertisements and be able
to click directly to the Rock section of RadioTower's e-commerce store.
<PAGE>
The target for RadioTower's products is the individual listener with a personal
computer. Historically, radio stations have targeted precise listeners with
unique profiles. According to the National Association of Broadcasters, online
radio stations plan to acquire a share of the $13.6 billion/year radio business
by tapping into this marketing source. It is management's belief that by
providing individual listeners with what they want in a radio station's web
site, such as information and shopping, radio stations will attract listeners,
which in turn will attract advertisers.
According to Arbitron/Edison Research Study II from July 1998 to January 1999,
Americans who listened to Internet radio spent approximately 1.5 hours listening
to the radio online and online radio listeners increased by 6% to 13%. According
to a BRS Media report dated December 7, 1999, there were 2,934 radio stations
that made there programming available over the Internet with another 5,932
stations that had a web site but did not webcast.
Listeners can bookmark their favourite radio station's web sites and may not
need to return to RadioTower once having done so. However, users will initially
find RadioTower of service in finding these stations. Also, RadioTower will soon
offer a My-Audio feature whereby site users can make as many of their own
presets as they want. This customisation feature will impact on RadioTower's
plan to attract advertisers and revenues from operations by increasing customer
loyalty and page view with a corresponding increase in revenue.
Distribution Methods
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RadioTower will distribute its products and services over the Internet and will
advertise through medium such as newspapers, television and radio. The main
product, RadioTower.com, is distributed over the Internet. AudioAds are
available for online purchase and delivery on the Internet.
RadioTower does sell products on-line through its e-commerce store. RadioTower
has an affiliate e-commerce agreement with Global Media Corp. See Exhibit 6.2 -
Licensing Agreement with Global. Global Media supplies an e-commerce store that
sells CD's, videos, books and magazines, and takes care of all order fulfilment.
The store is branded as RadioTower. For any visitors to RadioTower's site who
visit the e-commerce store and purchase products, RadioTower will earn 40-60% of
the net profit on each sale. RadioTower will receive a referral fee of 40-60% of
net sales that result from a referral to Global Media based on a sliding scale
beginning at 40% for sales of less than $5,000 up to 60% of sales over $25,000.
The store is open for business, but needs to be effectively promoted to build
customer awareness and trust.
Global Media can ship RadioTower's items anywhere in the world via RadioTower's
network of shipping companies. These companies include DHL, UPS, and USPS.
Shipping charges will depend the type of item being shipped, where the item is
being shipped and the priority of the order. When the order is placed, Global
Media examines the shipping order and offers the customer several shipping
options according to the shipping address. Each region has different costs and
options such as Standard Shipping USPS, Second and Next Day Air UPS, and
International Priority DHL.
Status of Publicly Announced New Product or Service
- ---------------------------------------------------
RadioTower' site is constantly under development. RadioTower will work with
other Internet development firms to create more powerful software. RadioTower
will partner with content providers and other Internet sites to maximize the
reach and ability of its offerings. Some features RadioTower plans to offer
include:
o highly targeted rich media ads (audio banners) that increase
the value of our partners' content.
o customizable one-click access to an array of preselected audio
reports and audio updates on specific topics, such as NFL
reports or OTC-BB reports.
o information about the song and artist which is currently
playing, relevant links and one-click album purchase.
o Internet audio hosting services
Expenditures on Research and Development During the Last Two Fiscal Years
- -------------------------------------------------------------------------
$34,000 has have been spent on research and development activities since the
date of RadioTower's incorporation. None of these costs were borne directly by
the customers of RadioTower.
<PAGE>
Number of Total Employees and Number of Full Time Employees
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RadioTower has four employees, all of which are fulltime employees. RadioTower
is in the process of hiring programmers and designers on a consultant basis and
will continue to do so as the need arises.
Requirement for Government Approval of Principal Products or Services
- ---------------------------------------------------------------------
Currently, there is no requirement for RadioTower to obtain any governmental
approval on any of its products or services.
Effect of Existing or Probable Governmental Regulations on RadioTower's Business
- --------------------------------------------------------------------------------
RadioTower is a portal, distribution of radio. There are no existing or probable
government regulations on RadioTower's business. However, there are unforeseen
uncertainties in the future of the Internet radio and audio. As a result of a
lack of regulation, the music industry has a problem with pirating (copying) of
music with the MP3 comparison technologies available over the Internet. As MP3
has no copyright protection built in, Internet users can technically copy
material and distribute it without paying royalties. Although illegal, this
bypasses the music industry and threatens their revenue stream. However, the
technology used by RadioTower does not allow for unauthorized copying. If a
format does appear which satisfies both the music industry and the consumers,
downloadable music can become a vital method of distribution and have a major
impact. While the effect of MP3 is sorted out, the use of streaming audio will
continue to grow, unencumbered by the objections of the music industry. Once an
agreed upon standard appears for downloadable audio, RadioTower can easily
migrate into this market.
Sources, Raw Materials and Principal Suppliers
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The RadioTower site is developed and maintained by RadioTower personnel and then
delivered, via Internet, to Vancouver-based Eline Technologies Inc. for serving.
See Exhibit 6.6 - Contract with Eline Technologies Inc. for more information.
This site can serve over 200,000 customers per hour. Station data is researched
on the Internet, then added to the database on a monthly basis. As a courtesy,
RadioTower notifies each radio station of its inclusion and asks if any changes
are required. To date, only one station has requested removal. Many stations
also contact RadioTower to request a listing or to compliment management on
RadioTower's service.
Dependence on One or a Few Major Customers
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RadioTower does not have any major customers that it depends on. However,
RadioTower's advertising revenue depends on the selling of ad inventory by its
advertising agent, Burst Media, and RadioTower's main e-commerce revenue depends
on order taking and fulfilment by Global Media.
Patents/Trade Marks/Licences/Franchises/Concessions/Royalty Agreements or Labour
Contracts
- ---------
RadioTower currently does not own any patents or trade marks and is not a party
to any licence or franchise agreements, concessions, royalty agreements or
labour contracts.
The Internet site is copyrighted upon uploading. radiotower.com is a registered
domain name of RadioTower. RadioTower will seek trademark protection for
RadioTower as it refers to an internet service and further trademark protection
for the slogans "The Internet Radio Receiver", which RadioTower has used online
since June of 1996, and for "Transmitting YOUR message to the world!", which
RadioTower has used since June of 1997.
Plan of Operation
- -----------------
RadioTower did not have any revenues generated from its business operations
during its last two fiscal years. RadioTower is in the early stages of operation
and just beginning to generate business revenues. Revenue generating programs
include:
o Advertising - Burst Media currently acts as an agent to
place ads on the RadioTower site;
o RadioTower Store - currently operating, it allows visitors
to make online purchases of CD's, videos, DVD's and books; and
o AudioAds - beta site available, full launch set of February
2000 and provides turn-key solution for business' to put audio
on their web site. The final stage of beta testing is
currently under way.
<PAGE>
RadioTower's twelve-month plan of operation is to (i) improve the quality and
quantity of content on its website in order to provide the best online directory
connecting listeners to stations worldwide, (ii) increase site traffic, and
(iii) develop more revenue-generating programs. RadioTower will improve its site
by developing a more dynamic interface and making the site easier to navigate
and more graphically exciting. RadioTower will utilize new technologies and
software such as Flash with Vector graphics to improve the quality of the
website. RadioTower's strategy is to enhance the product design while increasing
brand awareness and loyalty among its listeners.
It is management's intent to continue to add as many stations as possible to its
directory and will also continue to add more contextual and specific information
to RadioTower's website. As technology improves, management plans to provide
more customized features and a much more interactive interface so that the
website will have a user-friendly design and a quick download time and will have
cross-reference capabilities. The site will provide users with more information
on their searches such as better station descriptions, and will highlight
special events, concerts and regularly scheduled features. Management intends to
improve RadioTower's website so that it will also provide a multiple of dynamic
ways for visitors to interact in the site. These developments are currently in
progress and will be released on an ongoing basis.
RadioTower will attempt to generate more revenue by (i) acquiring exclusive
rights to radio personalities and content, and (ii) expanding its e-commerce
store. RadioTower will pursue exclusive arrangements with radio stations to
rebroadcast their content. RadioTower will endeavour to make arrangements with
various radio personalities and shows and recording artists to broadcast their
material on the RadioTower site. This will create exposure for the content
provider and a marketing opportunity for RadioTower to drive traffic to the
site.
The RadioTower Store will be redesigned to integrate better with RadioTower's
new site, offering a better shopping experience. The store is currently up and
running and fully operational. It will be expanded by adding new products as
they become available and providing multiple links throughout the site to
specific store pages. For example, listeners to rock stations will be encouraged
to visit the rock section of the store and will have links to rock content areas
of the store.
In order to increase site traffic, RadioTower will launch an extensive sales and
marketing campaign to promote its website. The campaign will include banner and
audio advertising on the Internet, print ads in relevant print media and spot
ads on radio stations. RadioTower will participate in trade shows that have an
Internet, technology and/or radio focus.
RadioTower cannot satisfy its cash requirements for the next 12 months without
having to raise additional funds. RadioTower's expected cash requirement for the
next 12 months is $180,000. As RadioTower's monthly user base grows, management
expects advertising and e-commerce revenues to grow significantly. RadioTower
also expects to raise any required additional funds by way of equity and/or debt
financing. However, RadioTower may not be able to raise the required funds from
such financings. In that case RadioTower will proceed by approaching current
shareholders for loans to cover operating costs.
RadioTower will not be purchasing any plant or significant equipment. RadioTower
will continue with its research or development by conducting continuous
perceptual studies to monitor what listeners want from its website and by
continuing to explore various e-commerce models to ensure its store and website
continue to meet the listeners' needs.
RadioTower will continue to hire employees as the need arises and finances
allow. Positions will include web programmers, graphic artists, web masters,
multimedia designers, web writers, marketing representatives, sales
representatives and administrators.
<PAGE>
Item 7. Description of Property.
RadioTower's sole assets are its copyrighted site and its registered domain name
"radiotower.com".
As discussed in Item 1(a), RadioTower abandoned all of its interests in mineral
claims in March 1999, and no longer has any right, title or interest in any
mineral claim.
RadioTower operates from its principal executive offices at 322 - 425 Carrall
Street, Vancouver, British Columbia, Canada. RadioTower has leased this premise
for one year renewable on a month to month basis. In the opinion of the
management of RadioTower, this office space will meet the needs of RadioTower
for the foreseeable future. See Note #6 of the audited financial statements for
December 31, 1999 for more details.
Item 8. Directors, Executive Officers and Significant Employees
(a) Identify Directors and Executive Officers
Mr. Alan Brown and Mr. Paul Valkama have been directors of RadioTower since
April 23, 1999. Mr. Jeff Cocks has been a director of RadioTower since September
15, 1999. Each director holds office until (i) the next annual meeting of the
stockholders, (ii) his successor has been elected and qualified, or (iii) the
director resigns.
Mr. Brown has also been the president, secretary and treasurer of RadioTower
since August 9, 1999.
Alan Brown - Mr. Brown (33 years old) is a fifth level Certified General
Accountant and belongs to the Certified General Accountant's Association of
Canada. Mr. Brown is knowledgeable in all aspects of corporate finance. Mr.
Brown attended Malaspina University College. In the past five years, Mr. Brown
has worked for Hazelwood Group as a controller (May-95 to April-99) and for
Purtzki Carle Thiesson, Chartered Accountants as a public accountant
(November-93 to April-95).
Paul Valkama - Mr. Valkama (35) has been envisioning interactive solutions for
over 12 years while working with a variety of clients. Mr. Valkama has created a
13 web sites - nine for clients, one for demonstration (SoftAd Communications)
and three versions of RadioTower's site. For each client site, Mr. Valkama was
responsible for consulting with the client and designing/developing the site and
marketing them on the Internet. These sites were promotional sites for the
following clients: Mountain Shadow Pub, Design Sportswear Ltd., Smart-Text
Solutions Inc., Sundance Trampolines, Donovan Sales, 777 Online, Trimseal
Plastics, Reef RV Rentals, and Pacific Coach Lines. Mr. Valkama also has a broad
range understanding of all aspects of the Internet, including design, graphics,
scripting, serving, testing and marketing. Mr. Valkama has been the President of
SoftAd Communications Inc., a web site design firm in Vancouver, British
Columbia, since 1996. His educational background includes a BA in Communications
from Simon Fraser University and a Diploma in Information Technology from
Capilano College, both located in British Columbia. From 1994 to 1996 Mr.
Valkama worked as an independent owner-operator in the courier industry, under
contract to Loomis Rush Messengers.
Jeff Cocks - Mr. Cocks (37) has an extensive financial and administrative
background. He presently serves as a private financial consultant for a number
of publicly traded companies and serves as a director for two CDNX listed
companies - Maracote International Resources Ltd. and Oromin Explorations Ltd.
Mr. Cocks completed the Canadian Securities Course in 1985. In the last five
years, Mr. Cocks has worked for Madison Enterprises as a financial consultant.
(b) Identify Significant Employees
RadioTower has four significant employees, Alan Brown, Paul Valkama, Henry
Valkama, and Emanuel Hajek, all of which are full time employees.
<PAGE>
Henry Valkama - Mr. Valkama (38) received his degree in Business Administration
from Simon Fraser University in 1986. Mr. Valkama has an extensive background in
computers and the Internet. Mr. Valkama began working for RadioTower full time
as of January 1998, primarily focusing on marketing and product development.
Previous to that, Mr. Valkama worked as an independent small business consultant
in marketing, promotion and sales with numerous firms such as Komodo Electric
Ltd., Blue Steel Ltd., and Accidentally Bent Collision Repairs Ltd.
Emanuel Hajek - Mr. Hajek (30) began working at RadioTower in September 1999 as
Vice President of Corporate Development. In the previous five years he worked
extensively in the film and music industry. Mr. Hajek served as the Vice
President of Corporate Affairs for Adam Records (March 1995 to February 1997)
and for International Entertainment Group ("IEG") (March 1997 to June 1999). He
also served as producer and production manager of two independent short films
for IEG. In 1987, Mr Hajek attended Capilano College for the first year of a two
year marketing program.
(c) Family Relationships
With the exception of Paul Valkama and Henry Valkama, who are brothers, there
are no family relationships among the directors, executive officers, persons
nominated or chosen by RadioTower to become directors or executive officers, or
any significant employees.
(d) Involvement in Certain Legal Proceedings
(1) No bankruptcy or insolvency petition has been filed by or
against a director, a person nominated to become a director,
or an executive officer of RadioTower, or a receiver, fiscal
agent or similar officer was appointed by a court for the
business property of such person, or any partnership in which
he was general partner at or within two years before the time
of such filing, or any corporation or business association of
which he was an executive officer at or within two years
before the time of such filing.
(2) No director, person nominated to become a director, or
executive officer of RadioTower has been convicted in a
criminal proceeding and is not subject to a pending criminal
proceeding (excluding traffic violations and other minor
offences).
Item 9. Remuneration of Directors and Officers.
RadioTower paid an aggregate CDN$27,000 and accrued an aggregate $20,000 to its
named executive officers during its 1999 fiscal year.
<TABLE>
<CAPTION>
================================================================================
<S> <C> <C>
Name of Individual Capacities in which Aggregate remuneration
or identity of group remuneration was received
================================================================================
Alan Brown Director and President $20,000
================================================================================
Paul Valkama Employee $27,000
================================================================================
Jeff Cocks Director $5,000
================================================================================
</TABLE>
Currently, there are no arrangements between RadioTower and any of its directors
whereby such directors are compensated for any services provided as directors
other than the oral arrangement between RadioTower and each of Alan Brown and
Jeff Cocks. In September 1999, RadioTower agreed to pay Mr. Brown a monthly
salary of $4,000 and to pay Mr. Cocks a monthly salary of $1,000 for acting as a
director of the Company. The parties agreed that the salaries would accrue at no
interest and be payable in the future when the funds are available. There is no
term to these agreements as they were oral agreements and can be terminated at
any time. As of the end of February 2000, Mr. Brown has accrued an aggregate
$28,000, of which $6,000 has been paid by the issuance of 600,000 shares at
$0.01 per share. As for Mr. Cocks, he has accrued an aggregate $7,000, of which
$5,000 has been paid by the issuance of 500,000 shares at $0.01 per share. See
Note #3 and Note #5 of the audited financial statements for December 31, 1999
for more details.
In April 1999, RadioTower agreed with each of Paul Valkama and Henry Valkama to
retain them as employees and to pay each of them CDN$3,000 per month. There is
no term to these agreements as they were oral agreements and can be terminated
at any time.
<PAGE>
Except for the oral agreements with each of Paul Valkama and Henry Valkama,
there are no other employment agreements between RadioTower and any named
executive officer, and there are no employment agreements or other compensating
plans or arrangements with regard to any named executive officer which provide
for specific compensation in the event of resignation, retirement, other
termination of employment or from a change of control of RadioTower or from a
change in a named executive officer's responsibilities following a change in
control.
Item 10. Security Ownership of Management and Certain Securityholders.
<TABLE>
<CAPTION>
================================================================================
(1) (2) (3) (4)
<S> <C> <C> <C>
Title of Class Name and Address of Owner Amount and Nature of Percent
Beneficial Ownership of Class [4]
================================================================================
Common Stock Alan Brown 600,000 3.2%
2838 Neyland Road
Nanaimo, B.C.
================================================================================
Common Stock Paul Valkama 6,500,000 [1] 42%
================================================================================
Common Stock Jeff Cocks 515,000 [3] 3.3%
================================================================================
Common Stock Directors and Executive 7,515,000 48.5%
Officers (as a group)
================================================================================
</TABLE>
[1] These shares are beneficially owned 66.67% by Paul Valkama and 33.33% by
Henry Valkama.
[3] 15,000 of these shares are registered in the name of West Isle Ventures
Ltd., of which Jeff Cocks is the sole shareholder.
[4] Based on 15,500,000 shares of common stock issued and outstanding as of
February 29, 2000.
Non-Voting Securities
- ---------------------
RadioTower has not issued any of its non-voting securities.
Options, Warrants and Rights
- ----------------------------
Since RadioTower's incorporation, no stock options, stock appreciation rights,
or long-term incentive plans have been granted, exercised or repriced.
Item 11. Interest of Management and Others in Certain Transactions.
(a) Relationships with Insiders
One material transaction undertaken by RadioTower since its incorporation is its
acquisition of the domain asset of Radiotower.com from Paul Valkama and Henry
Valkama pursuant to a Purchase Agreement among RadioTower, Paul Valkama and
Henry Valkama dated March 12, 1999. The domain asset included the domain name, a
database of radio stations and a website, which RadioTower has completely
redeveloped since the acquisition. As full consideration for the domain asset,
RadioTower issued an aggregate 6,500,000 shares of common stock at $0.001 per
share to Paul Valkama and Henry Valkama, as joint tenants. See Exhibit 6.1 -
Purchase Agreement for more details.
Another material transaction between RadioTower and its insiders involved cash
advances made to RadioTower. In December 1998, two shareholders lent RadioTower
$64,975. The loan was evidenced by a non-interest bearing promissory note
payable on December 31, 2000. See Note #5 of the audited financial statements
for December 31, 1999 for more information.
<PAGE>
Also, in December 1998, B-Mac Trading Inc., Barry Clemiss, Thomas Gardner,
Leslie Rutledge and Sharon Ivancoe advanced an aggregate $15,000 to RadioTower
to pay management fees, a legal retainer and to reduce a payable to a related
party. RadioTower repaid the advances in full by issuing an aggregate 1,500,000
shares to the lenders at $0.01 per share. See Notes #3 and #5 of the audited
financial statements for December 31, 1999 for more information.
Except as stated above or as stated elsewhere, no member of management,
executive officer or security holder had any direct or indirect interest in any
other transaction with RadioTower.
(b) Transactions with Promoters
Alan Brown and Jeff Cocks are the promoters of RadioTower. The promoters have
provided and continue to provide services for the organization of RadioTower and
for the development of RadioTower's website. To date, there have been no
transactions with either promoter.
PART II
Item 1. Market Price of Dividends on the Registrant's Common Equity and Other
Shareholder Matters.
(a) Market Information
RadioTower's common stock is quoted on the pink sheets under the symbol "RTOW".
<TABLE>
<CAPTION>
================================================================================
<S> <C> <C> <C>
Quarter Period High Bid Low Bid Source
================================================================================
July - September 1998 $0.01 $0.01 Quicken.com
================================================================================
October - December 1998 $0.01 $0.01 Quicken.com
================================================================================
January - March 1999 [1] $0.01 $0.01 Quicken.com
================================================================================
April - June 1999 $4.38 $0.02 Quicken.com
================================================================================
July - September 1999 $1.75 $0.375 Quicken.com
================================================================================
October - December 1999 $0.27 $0.02 Quicken.com
================================================================================
January - February 2000 $1.84 $0.17 Stockwatch.com
================================================================================
</TABLE>
[1] Any stock prices reflected prior to March 12, 1999 are those of Magnum
Ventures Inc. and are not representative of the current business
activities reflected throughout this Form 10-KSB.
Quotations for RadioTower's common shares reflect inter-dealer prices, without
retail markup, markdown or commission and may not represent actual transactions.
(b) Holders
RadioTower has approximately 12 holders of record of common stock as of February
29, 2000.
(c) Dividends
No dividends have been declared on RadioTower's common stock.
Except for the lack of funds, there are no restrictions that limit the ability
of RadioTower to pay dividends on RadioTower's common stock.
Item 2. Legal Proceedings.
RadioTower is not a party to any pending legal proceedings, and to the best of
RadioTower's knowledge, none of RadioTower's assets are the subject of any
pending legal proceedings.
<PAGE>
Item 3. Changes In and Disagreements With Accountants.
RadioTower's principal independent accountant, Stark Tinter & Associates, LLC,
has not changed since the date of incorporation and there have been no
disagreements with RadioTower's principal independent accountant.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders, through the solicitation
of proxies or otherwise, during the fourth quarter of the fiscal year covered by
this report.
Item 5. Compliance with Section 16(a) of the Exchange Act.
Each of Alan Brown, Jeff Cocks, Paul Valkama and Henry Valkama were late in
filing their Form 3 - Initial Statement of Beneficial Ownership and their Form 5
- - Annual Statement of Changes in Beneficial Ownership. These forms were filed
with the SEC on March 8, 2000. Each person had only one transaction that was not
reported on a timely basis, with the exception of Mr. Cocks who had two
transaction that were not reported on a timely basis. RadioTower is not aware of
any failures to file a required Form.
Item 6. Reports on Form 8-K.
There were no reports on Form 8-K filed by the Company during the quarter ended
December 31, 1999.
<PAGE>
Part F/S
RadioTower.com Inc.
fka Magnum Ventures Inc.
(A Development Stage Company)
As of and for the year ended
December 31, 1999,
the period May 5, 1998 (inception)
to December 31, 1998 and
the period May 5, 1998 (inception)
to December 31, 1999
Table of Contents
Report of Independent Auditors
Balance Sheet
Statements of Operations
Statement of Changes in Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
RadioTower.com, Inc.
322 - 425 Carrall Street
Vancouver, British Columbia V6B 6E3
We have audited the accompanying balance sheet of RadioTower.com, Inc. (a
development stage company) fka Magnum Ventures Inc. as of December 31, 1999, and
the related statements of operations, changes in stockholders' equity, and cash
flows for the year ended December 31, 1999, the period from May 5, 1998
(inception) to December 31, 1998 and the period from May 5, 1998 (inception) to
December 31, 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of RadioTower.com, Inc. (a
development stage company) fka Magnum Ventures Inc. as of December 31, 1999, and
the results of its operations, and its cash flows for the year ended December
31, 1999, the period from May 5, 1998 (inception) to December 31, 1998 and the
period from May 5, 1998 (inception) to December 31, 1999, in conformity with
generally accepted accounting principles.
/s/ Stark Tinter & Associates, LLC
Denver, Colorado
February 4, 2000
<PAGE>
RadioTower.com Inc.
fka Magnum Ventures Inc.
(A Development Stage Company)
Balance Sheet
December 31, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash $ 1,762
Other assets:
Domain asset, net 54,167
Property, plant & equipment 4,079
---------------------
$ 60,008
=====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 29,289
---------------------
Other liabilities:
Loans payable - stockholders 64,975
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value,
1,000,000 shares authorized, none outstanding -
Common stock, $0.001 par value,
50,000,000 shares authorized,
12,500,000 shares issued 12,500
Additional paid in capital 110,618
Common stock subscriptions 30,000
Deficit accumulated during the
development stage (187,107)
Accumulated other comprehensive income:
Cumulative translation adjustment (267)
---------------------
(34,256)
---------------------
$ 60,008
=====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RadioTower.com Inc.
fka Magnum Ventures Inc.
(A Development Stage Company)
Statements of Operations
For the Period For the Period
May 5, 1998 May 5, 1998
For the Year Ended (inception) to (inception) to
December 31, 1999 December 31, 1998 December 31, 1999
---------------------------- ------------------------ -------------------------
<S> <C> <C> <C>
Revenue $848 $- $848
Costs and expenses:
Selling, general and administrative 143,680 25,956 169,636
Amortization 11,536 109 11,645
Loss on investment in mineral property - 5,000 5,000
---------------------------- ------------------------ -------------------------
Total operating expenses 155,216 31,065 186,281
---------------------------- ------------------------ -------------------------
Operating (loss) (154,368) (31,065) (185,433)
Other income (expense)
Interest expense (327) - (327)
Other expense (1,347) - (1,347)
---------------------------- ------------------------ -------------------------
Net (loss) (156,042) (31,065) (187,107)
Other comprehensive income:
Foreign currency translation adjustment (267) - (267)
Comprehensive (loss) $(156,309) $(31,065) $(187,374)
============================ ======================== =========================
Per share information:
Weighted average number of common shares 9,452,055 2,362,500 6,628,713
outstanding - basic and diluted
============================ ======================== =========================
Net (loss) per common share $ (0.02) $(0.01) $(0.03)
- basic and diluted
============================ ======================== =========================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Radio Tower.com Inc.
fka Magnum Ventures Inc.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
May 5, 1998 (inception) through December 31, 1999
Deficit
Common Accumulated Cumulative
Common Stock Additional Stock During the Translation
Shares Amount Paid in Capital Subscriptions Development Stage Adjustment Total
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of stock for
cash at $0.01 per share
(net of issuance costs) 2,000,000 $2,000 $16,118 $ - $ - $ - $ 18,118
Issuance of stock for
repayment of advances
at $0.01 per share 1,500,000 1,500 13,500 - - - 15,000
Net (loss) for the period - - - - (31,065) - (31,065)
Balance at December 31, 1998 3,500,000 3,500 29,618 - (31,065) - 2,053
Issuance of stock for
purchase of goodwill 6,500,000 6,500 58,500 - - - 65,000
Issuance of stock for
cash at $0.01 per share 2,500,000 2,500 22,500 - - - 25,000
Issuance of stock subscriptions
for cash at $0.01 per share - - - 19,000 - - 19,000
Issuance of stock subscriptions
As payment of accrued wages - - - 11,000 - - 11,000
Foreign currency translation
adjustment - - - - - (267) (267)
Net (loss) for the year - - - - (156,042) - (156,042)
--------------------------------------------------------------------------------------------------
Balance at December 31, 1999 12,500,000 $12,500 $110,618 $30,000 $(187,107) $(267) $(34,256)
==================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RadioTower.com
fka Magnum Ventures Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Period For the Period
May 5, 1998 May 5, 1998
For the Year Ended (inception) to (inception) to
December 31, 1999 December 31, 1998 December 31, 1999
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $ (156,042) $ (31,065) $ (187,107)
Adjustments to reconcile net (loss) to net
cash used in operating activities:
Amortization 11,536 109 11,645
Increase in accounts payable and accrued liabilities 35,850 4,439 40,289
Loss on investment - 5,000 5,000
Cumulative translation adjustment (267) - (267)
Net cash (used in) operating activities (108,923) (21,517) (130,440)
--------------------- ---------------------- ---------------------
Cash flows from investing activities:
Purchase of fixed assets (4,079) - (4,079)
Organization costs - (812) (812)
Investment in mineral claims - (5,000) (5,000)
Net cash (used in) investing activities (4,079) (5,812) (9,891)
--------------------- ---------------------- ---------------------
Cash flows from financing activities:
Proceeds from loans payable - shareholders 64,975 - 64,975
Proceeds from related party advances - 15,000 15,000
Proceeds from stock sales, net of issuance costs 25,000 18,118 43,118
Proceeds from stock subscriptions 19,000 - 19,000
Net cash provided by financing activities 108,975 33,118 142,093
--------------------- ---------------------- ---------------------
Increase in cash (4,027) 5,789 1,762
Beginning cash 5,789 - -
Ending cash $ 1,762 $ 5,789 $ 1,762
--------------------- ---------------------- ---------------------
Supplemental cash flow information:
Cash paid for interest $ (327) $ - $ (327)
Noncash transactions:
Issuance of stock for repayment of advances $ - $ (15,000) $ (15,000)
Issuance of stock for purchase of goodwill $ (65,000) $ - $ (65,000)
Issuance of stock subscriptions in repayment of
accrued wages $ (11,000) $ - $ (11,000)
</TABLE>
<PAGE>
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated on May 5, 1998, in the State of Nevada as Magnum
Ventures Inc. On May 18, 1999 the Company changed its name to RadioTower.com,
Inc. The Company is in the development stage. During the period, the Company
purchased a domain asset, the domain name RadioTower.com, and will utilize the
website as its own internet portal which provides free online directories of
live radio stations.
Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's management to
make estimates and assumptions that affect the amounts reported in these
financial statements and accompanying notes. Actual results could differ from
those estimates.
Cash and Cash Equivalents
For purposes of balance sheet classification and the statements of cash flows,
the Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
Financial Instruments
The carrying amounts for the company's cash and cash equivalents, accounts
payable and loans payable - stockholders approximate fair value.
Property and Equipment
Property and equipment are being depreciated by the straight-line method over
lives of five years. The depreciation methods are designed to expense the cost
of the assets over their estimated useful lives.
Research and Development Costs
Research and development costs are charged to operations when incurred and are
included in selling, general and administrative expenses. The amount charged to
operations for the year ended December 31, 1999, the period May 5, 1998
(inception ) to December 31, 1998, and the period May 5, 1998 (inception) to
December 31, 1999 were approximately $34,000, nil and $34,000 respectively.
Foreign Currency Exchange and Translation
The functional currency of the Company is the U.S. dollar. The Company also has
a Canadian dollar bank account it uses for some operations. For reporting
purposes, the financial statements are presented in U.S. dollars in accordance
with Statement of Financial Accounting Standard No. 52, Foreign Currency
Translation. The balance sheet is translated into U.S. dollars at the exchange
rates prevailing at the balance sheet date and the statement of operations and
cash flows at the average rates for the relevant periods. The Company does not
use foreign exchange contracts, interest rate swaps, or option contracts.
Translation gains and losses are not included in operations but are accumulated
in a separate component of shareholders' equity. Foreign currency transaction
gains and losses, which for the year ended December 31, 1999 and the period May
5, 1998 (inception) to December 31, 1999 were nil, are included in the results
of operations.
Intangibles
The domain asset represents the cost of a domain name acquired and is being
amortized using the straight-line method over five years. Amortization of the
domain asset expensed to operations for the year ended December 31, 1999 and the
period May 5, 1998 (inception) to December 31, 1999 was $10,833.
<PAGE>
Product and website development costs incurred in developing the Company's
website are accounted for in accordance with SOP 98-1. Product and website
development costs include amounts incurred by the Company to develop, enhance,
manage, monitor and operate the Company's website. Product development costs,
preliminary project and past implementation product costs are expensed as
incurred.
Net loss per common share
The Company follows Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("SFAS No. 128"). Basic earnings per common share ("EPS")
calculations are determined by dividing net income by the weighted average
number of shares of common stock outstanding during the year. Diluted earnings
per common share calculations are determined by dividing net income by the
weighted average number of common shares and dilutive common share equivalents
outstanding.
Comprehensive income
The Company follows Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income." SFAS 130 establishes standards for reporting
and displaying comprehensive income, its components and accumulated balances.
SFAS 130 is effective for periods beginning after December 15, 1997. The Company
adopted SFAS 130 in 1998.
Impairment of long-lived assets
The Company periodically reviews the carrying amount of property, plant and
equipment and its identifiable intangible assets to determine whether current
events or circumstances warrant adjustments to such carrying amounts. If an
impairment adjustment is deemed necessary, such loss is measured by the amount
that the carrying value of such assets exceeds their fair value. Considerable
management judgement is necessary to estimate the fair value of assets,
accordingly, actual results could vary significantly from such estimates. Assets
to be disposed of are carried at the lower of their financial statement carrying
amount or fair value less costs to sell. As of December 31, 1999, management
does not believe there is any impairment of the carrying amounts of assets.
Revenue Recognition
The Company's revenue is primarily related to advertising and electronic
commerce transaction revenues. Advertising revenues represent sales of online
advertising. Electronic commerce transaction revenues consist of referrals to an
advertiser's website where an individual may conduct an electronic commerce
transaction. The Company recognizes advertising revenues over the period the ads
are displayed on the website. The Company recognizes electronic commerce
transaction revenues upon notification from the advertiser of revenues earned by
the Company.
Advertising Costs
The cost of advertising is expensed as incurred. For the year ended December 31,
1999, the period May 5, 1998 (inception) to December 31, 1998 and the period May
5, 1998 (inception) to December 31, 1999, the Company incurred advertising
expense of $11,316, nil and $11,316, respectively, which is included in selling,
general and administrative expenses.
Segment Information
Effective in 1999, the Company adopted SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." Certain information is disclosed, per
SFAS No. 131, based on the way management organizes financial information for
making operating decisions and assessing performance. The Company currently
operates in a single segment and will evaluate additional segment disclosure
requirements as it expands its operations.
<PAGE>
Recent Pronouncements
The FASB recently issued Statement No 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB Statement
No. 133". The Statement defers for one year the effective date of FASB Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities". The
rule now will apply to all fiscal quarters of all fiscal years beginning after
June 15, 2000. In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which is required to be adopted
in years beginning after June 15, 1999. The Statement permits early adoption as
of the beginning of any fiscal quarter after its issuance. The Statement will
require the Company to recognize all derivatives on the balance sheet at fair
value. Derivatives that are not hedges must be adjusted to fair value through
income. If the derivative is a hedge, depending on the nature of the hedge,
changes in the fair value of derivatives will either be offset against the
change in fair value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings. The Company has not
yet determined if it will early adopt and what the effect of SFAS No. 133 will
be on the earnings and financial position of the Company.
SOP 98-9, "Modification of SOP 97-2, Software Revenue Recognition, With Respect
to Certain Transactions" was issued in December 1998 and addresses software
revenue recognition as it applies to certain multiple-element arrangements. SOP
98-9 also amends SOP 98-4, "Deferral of the Effective Date of a Provision of SOP
97-2", to extend the deferral of application of certain passages of SOP 97-2
through fiscal years beginning on or before March 15, 1999. All other provisions
of SOP 98-9 are effective for transactions entered into in fiscal years
beginning after March 15, 1999. The Company will comply with the requirements of
this SOP as they become effective and this is not expected to have a material
effect on the Company's revenues and earnings.
Note 2. DOMAIN ASSET
On March 12, 1999, the Company entered into an agreement to purchase the domain
name RadioTower.com in exchange for 6,500,000 shares of restricted common stock
at a fair value of $0.01 per share. The Company has utilized the domain name for
its own internet portal, which provides free online directories of live radio
stations. This transaction will be accounted for as the purchase of a domain
asset. The Company will conduct business under the name Radiotower.com.
The following is a summary of the domain asset as of December 31, 1999, less
accumulated amortization:
Domain asset $ 65,000
Less accumulated amortization (10,833)
---------
Net domain asset $ 54,167
========
Note 3. STOCKHOLDERS' EQUITY
During the period May 5, 1998 (inception) to December 31, 1998, 2,000,000 shares
of common stock $0.001 par value were issued to various investors for cash of
$20,000 in a private placement pursuant to Regulation D, Rule 504. Issuance
costs were $1,882.
During the period May 5, 1998 (inception) to December 31, 1998, 1,500,000 shares
of common stock $0.001 par value were issued in exchange for repayment of
advances aggregating $15,000.
During the year ended December 31, 1999, 6,500,000 shares of common stock $0.001
par value were issued in consideration for the domain asset and domain name
RadioTower.com.
During 1999, 2,500,000 shares of common stock $0.001 par value were issued to
various investors for cash of $25,000 in a private placement pursuant to
Regulation D, Rule 504.
In 1999, stock subscriptions for 1,900,000 shares of common stock were issued
for cash of $19,000. Common stock was issued in February 2000 pursuant to
Regulation S, Rule 144.
Also in 1999, stock subscriptions for 1,100,000 shares of common stock were
issued in exchange for payment of accrued wages of $11,000. Common stock was
issued in February 2000 pursuant to Regulation S, Rule 144.
Note 4. LOSS ON INVESTMENT IN MINERAL PROPERTY
The Company entered into an Option to Purchase agreement on June 4, 1998, to
acquire the rights to mineral property claims located in the Liard Mining
Division, British Columbia. The agreement was made with an unrelated party. The
terms of the agreement required the Company to make an initial cash payment to
the party in the amount of $5,000, which it made during the period. Further
required payments were not made and during the period, the agreement was voided.
Therefore, the initial cash investment was charged to expense as a loss on
investment.
Note 5. RELATED PARTY TRANSACTIONS
During the period from May 5, 1998 (inception) to December 31, 1998, business
associates of the sole officer and director of the Company ("sole officer"),
advanced to the Company $15,000. The funds were used to pay for management fees,
a legal retainer and to reduce the other payable to a related party. The sole
officer's associates were repaid through the issuance of 1,500,000 shares.
During the year ended December 31, 1999, shareholders of the Company loaned to
the Company $64,975 in exchange for promissory notes. The notes bear no interest
and are due at various dates through May 2000.
Note 6. OPERATING LEASE
The Company leases office space under an operating lease, which expires in June
2000.
Minimum future rental payments under this non-cancellable operating lease which
has a remaining term of six months is $8,400 at December 31, 1999. Rent expense
was $4,914 for the year ended December 31, 1999 and the period May 5, 1998
(inception) to December 31, 1999.
Note 7. INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 (FAS 109), `Accounting for Income Taxes", which requires use
of the liability method. FAS 109 provides that deferred tax assets and
liabilities are recorded based on the differences between the tax basis of
assets and liabilities and their carrying amounts for financial reporting
purposes, referred to as temporary differences. Deferred tax assets and
liabilities at the end of each period are determined using the currently enacted
tax rates applied to taxable income in the periods in which the deferred tax
assets and liabilities are expected to be settled or realized.
The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to income before provision for income taxes.
The sources and tax effects of the differences are as follows:
Income tax provision at
the federal statutory rate 35%
Effect of operating losses (35)%
----
As of December 31, 1999, the Company has a net operating loss carryforward of
approximately $176,000 for tax purposes that will be available to offset future
taxable income. If not used, these carryforwards will expire in 2019. The tax
benefit of these net operating and capital losses has been offset by a full
allowance for realization. This carryforward may be limited upon the
consummation of a business combination under IRC Section 381.
<PAGE>
PART III
Items 1 and 2. Index to Exhibits.
(a) Exhibits
Exhibit Description
- ------- -----------
Exhibit 2.1 Corporate Charter filed as an Exhibit to
RadioTower's registration statement on
filed Form 10-SB filed on March 17, 2000,
and incorporated herein by reference. Filed
Exhibit 2.2 Articles of Incorporation filed as an
Exhibit to RadioTower's registration
statement on Form 10-SB on March 17, 2000,
and incorporated herein by reference. Filed
Exhibit 2.3 Certificate of Amendment of Articles of
Incorporation filed as an Exhibit to Radio
Tower's registration statement on filed
Form 10-SB filed on March 17, 2000, and
incorporated herein by reference. Filed
Exhibit 2.4 By-Laws filed as an Exhibit to
RadioTower's registration statement on
filed Form 10-SB filed on March 17, 2000,
and incorporated herein by reference. Filed
Exhibit 3 Instruments defining the rights of
security holders None
Exhibit 5 Voting Trust Agreement None
Exhibit 6.1 Purchase Agreement filed as an Exhibit to
RadioTower's registration statement on
filed Form 10-SB filed on March 17, 2000,
and incorporated herein by reference. Filed
Exhibit 6.2 RadioTower's registration statement on
filed Form 10-SB filed on March 17, 2000,
and incorporated herein by
reference.Licensing Agreement with Global
Media filed as an Exhibit to RadioTower's
registration statement on filed Form 10-SB
filed on March 17, 2000, and incorporated
herein by reference. Filed
Exhibit 6.3 Site Contract with Burst Media filed as an
Exhibit to RadioTower's registration
statement on filed Form 10-SB filed on
March 17, 2000, and incorporated herein by
reference. Filed
Exhibit 6.4 Interim Licensing Agreement with Destiny
Media Technologies Inc. filed as an
Exhibit to RadioTower's registration
statement on filed Form 10-SB filed on
March 17, 2000, and incorporated herein by
reference. Filed
Exhibit 6.5 Master Distributor Agreement with Pronet
Enterprises Ltd. filed as an Exhibit to
Radio Tower's registration statement on
filed Form 10-SB filed on March 17, 2000,
and incorporated herein by reference. Filed
Exhibit 6.6 Contract with Eline Technologies Inc.
filed as an Exhibit to RadioTower's
registration statement on filed Form 10-SB
filed on March 17, 2000, and incorporated
herein by reference. Filed
Exhibit 7 Material Foreign Patents None
Exhibit 12 Additional Exhibits None
Exhibit 27 Financial Data Schedule filed as an Exhibit to s
RadioTower's registration statement on
filed Form 10-SB filed on March 17, 2000,
and incorporated herein by reference. Filed
<PAGE>
Signatures
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
RadioTower has caused this report to be signed on its behalf by the undersigned,
who is duly authorized.
RADIOTOWER.COM, INC.
By: /s/ Alan Brown
--------------------------------------
Name and Title: Alan Brown - President,
Secretary and Treasurer
Dated: March 30, 2000
------------------------------------
In accordance with the Securities Exchange Act of 1934, this report to be signed
below by the following persons on behalf of RadioTower.com, Inc. and in the
capacities and on the dates indicated.
By: /s/ Paul Valkama
-------------------------------------
Name and Title: Paul Valkama - Director
Dated: March 30, 2000
------------------------------------
By: /s/ Jeff Cocks
Name and Title: Jeff Cocks - Director
Dated: March 30, 2000
------------------------------------
