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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SURFORAMA.COM, INC.
(Name of small business issuer in its charter)
NEVADA 98-0233878
------ ----------
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 105 - 1010 West 42nd Avenue, Vancouver, British Columbia,
Canada, V6M 2A8; Telephone (604) 727-8402
---------------------------------------------------------------
(Address and telephone number of principal executive offices)
Suite 201 - 1166 Alberni Street, Vancouver, British Columbia
Canada, V6E 3Z3; Telephone (604) 609-7797
------------------------------------------------------------
(Address of principal place of business or
intended principal place of business)
---------------------------------------------------------
(Name, address and telephone number of agent for service)
Approximate date of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. |__|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |__|
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |__|
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. |__|
CALCULATION OF REGISTRATION FEE
---------------------------------------------------------------------
TITLE OF EACH PROPOSED PROPOSED
CLASS OF MAXIMUM MAXIMUM
SECURITIES OFFERING AGGREGATE AMOUNT OF
TO BE AMOUNT TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED UNIT (1) PRICE (2) FEE (2)
---------------------------------------------------------------------
Common 8,008,799 shares $1.00 $8,008,799 $2114.32
----------------------------------------------------------------------
(1) Based on last sales price on June 8, 2000.
(2) Estimated solely for the purpose of calculating the registration
fee in accordance with Rule 457 under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES
THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL
THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.
COPIES OF COMMUNICATIONS TO:
Michael A. Cane, Esq.
2300 W. Sahara Blvd., Suite 500
Las Vegas, NV 89102
(702) 312-6255
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SUBJECT TO COMPLETION, Dated November 28, 2000
PROSPECTUS
SURFORAMA.COM, INC.
8,008,799 SHARES
COMMON STOCK
----------------
The selling shareholders named in this prospectus are offering
all of the shares of common stock offered through this
prospectus. The shares were acquired by the selling shareholders
directly from us in five private offerings that were exempt from
registration under the US securities laws.
Our common stock is presently not traded on any market or
securities exchange.
----------------
The purchase of the securities offered through this prospectus
involves a high degree of risk. See section entitled "Risk
Factors" on pages 4 - 7.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
----------------
The Date Of This Prospectus Is: November 28, 2000
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TABLE OF CONTENTS
PAGE
Summary ............................................................ 3
Risk Factors ....................................................... 4
Use of Proceeds .................................................... 7
Determination of Offering Price .................................... 7
Dilution ........................................................... 7
Selling Shareholders ............................................... 8
Plan of Distribution ............................................... 13
Legal Proceedings .................................................. 15
Directors, Executive Officers, Promoters and Control Persons ....... 15
Security Ownership of Certain Beneficial Owners and Management ..... 16
Description of Securities .......................................... 17
Interests of Named Experts and Counsel ............................. 18
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities ...................................... 18
Organization Within Last Five Years ................................ 19
Description of Business ............................................ 19
Plan of Operation .................................................. 30
Description of Property ............................................ 33
Certain Relationships and Related Transactions ..................... 33
Market for Common Equity and Related Stockholder Matters ........... 34
Executive Compensation ............................................. 35
Index to Financial Statements ...................................... 37
Changes in and Disagreements with Accountants Disclosure ........... 38
Available Information .............................................. 38
Until ______, all dealers that effect transactions in these
securities whether or not participating in this offering, may be
required to deliver a prospectus. This is in addition to the
dealer's obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
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SUMMARY
SURFORAMA.COM, INC.
We were incorporated on October 22, 1999 under the laws of the
State of Nevada. Our principal offices are located at 105 - 1010
West 42nd Avenue, Vancouver, British Columbia, Canada V6M 2A8.
Surforama.com
We operate in the electronic commerce business through two web
sites: surforama.com and rebatetopia.com. Through our
surforama.com web site, we provide consumers and businesses with
the following products and services:
* Free classified advertising to product and service
oriented businesses throughout the United States and
Canada;
* Over 40,000 consumer products ranging from books and
magazines to vehicles and home electronics;
* FREEmail, offering Internet users a free electronic
mail service;
* An affiliate program providing merchant web site owners
the opportunity to enhance their web sites by accessing
our classified advertisement content;
As part of an equity joint venture agreement with SourceTM, a
division of Premier Lifestyles International Corporation, we and
SourceTM have agreed to jointly establish and develop an online
database and tracking system for its SCORE Reciprocal Rebate
program, a pay to surf rewards program and an online shopping
rebate program. Both companies jointly incorporated
Rebatopia.com, Inc., a Nevada corporation. Rebatopia now owns the
web sites located at rebatopia.com and rebatetopia.com. We provide
the operations expertise for tracking member rebates and
developing and maintaining an online user database. SourceTM has
provided the start-up servers and equipment required to host
Rebatopia's web sites and user database, as well as access to its
1,000,000 SCORE member database.
Securities Being Offered Up to 8,008,799 shares of common stock.
The offering price will be determined by
market factors and the independent
decisions of the selling shareholders.
Minimum Number of Shares None.
To Be Sold in This Offering
Securities Issued
And to be Issued 19,828,899 shares of common stock are
issued and outstanding as of the date of
this prospectus. All of the common stock
to be sold under this prospectus will be
sold by existing shareholders.
Use of Proceeds We will not receive any proceeds from the
sale of the common stock by the selling
shareholders.
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RISK FACTORS
An investment in our common stock involves a high degree of risk.
You should carefully consider the risks described below and the
other information in this prospectus and any other filings we may
make with the United States Securities and Exchange Commission in
the future before investing in our common stock. If any of the
following risks occur, our business, operating results and
financial condition could be seriously harmed.
If We Do Not Obtain Additional Financing, Our Business May Fail
As of August 31, 2000, we had cash in the amount of $50,068. Our
business plan calls for significant expenses in connection with
maintaining our surforama.com web site, providing content, and
expanding and improving our offerings. While we have earned a
modest net income since our inception, we expect that we may lose
money in the foreseeable future. We intend to devote substantial
resources to the further development of our business.
Accordingly, we will require additional financing in order to
finance this development expense. We do not have any
arrangements for financing and we can provide no assurance that
we will be able to obtain the required financing when needed.
Obtaining additional financing will be subject to a number of
factors, including:
* Market conditions;
* Investor acceptance of our business plan; and
* Investor sentiment.
These factors may make the timing, amount, terms and conditions
of additional financing unattractive or unavailable to us. If we
are not successful in achieving financing in the amount necessary
to develop and market our web sites, then we will not be able to
achieve revenues and our business will fail.
Because We Have Only Recently Commenced Business Operations, We
Face A High Risk of Business Failure
We were incorporated in October 1999. Our Internet web site was
also developed in 1999. Accordingly, you can evaluate our
business, and therefore our future prospects, based only on a
limited operating history. In addition, you must consider our
prospects in light of the risks and uncertainties encountered by
companies in an early stage of development in new and rapidly
evolving markets.
We acquired the web site address rights to surforama.com in 1999
and the rights to rebatetopia.com and rebatoptia.com in the year
2000. We are presently in the process of developing and
expanding the content on our web sites and offering additional
products and services. Our revenues from inception to August 31,
2000 have been $60,881, earned from advertising, consulting, and
interest income. Accordingly, we have minimal operating history
from which investors can evaluate our business. An investor
should consider the risks, expenses and uncertainties that an
early stage company like ours faces. These risks include our
ability to:
* Develop a functioning and marketable website;
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* Offer products and services that are easy to use and
desired by merchants and consumers;
* Successfully market our existing and planned products and
services;
* Convince potential customers to visit our web sites and
purchase products from our Surforama Store;
* Convince merchants to pay us for accessing classified
advertising content on our surforama.com web site.
* Respond effectively to competitive pressures;
* Continue to develop and upgrade our web sites once
development is complete.
If we are unsuccessful in addressing these risks, our business
will most likely fail.
Because We Have Only Recently Commenced Business Operations, We
Expect to Incur Operating Losses For The Foreseeable Future
We have been marginally profitable since our inception August 10,
1999. As of August 31, 2000, we had retained earnings of
approximately $33,382. In the near future, we anticipate that we
will incur increased operating expenses without obtaining
comparable increases in revenues from sales. We therefore expect
to incur significant losses into the foreseeable future and
recognize that if we are unable to generate significant revenues
from advertising on our web sites, sales from our Surforama
store, sales of access to our Surforama.com affiliate program and
income from rebatopia, we will not be able to achieve
profitability or continue operations.
Because We Are A Development Stage Company, Our Business Has A
High Risk Of Failure
As noted in our financial statements that are included with this
prospectus, we are a development stage company that is currently
developing two web sites. These conditions, as indicated in the
audit report of Morgan & Company, Chartered Accountants, raise
substantial doubt as to our continuance as a going concern. To
date, we have completed only partial development of viable web
sites offering products and services and we can provide no
assurance that the products and services offered and under
development will have a commercial application. The success of
our business operations will depend upon our ability to obtain
further financing to complete successful development of the
program and to attain profitable operations. It is not possible
at this time for us to predict with assurance the outcome of
these matters. If we are not able to complete successful
development of the program and attain sustainable profitable
operations, then our business will fail.
If We Become Subject To Burdensome Government Regulations
Affecting The Internet, Our Business Could Be Adversely Affected
To date, governmental regulations have not materially restricted
use of the Internet in our markets. However, the legal and
regulatory environment that pertains to the Internet is uncertain
and may change. Uncertainty and new regulations could increase
our costs of doing business and prevent us from delivering our
products and services over the Internet. The growth of the
Internet may also be significantly slowed. This could delay
growth in demand for our network and limit the growth of our
revenues. In addition to new laws and regulations being adopted,
existing laws may be applied to the Internet. New and existing
laws may cover issues that include:
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1. sales and other taxes;
2. user privacy;
3. pricing controls;
4. characteristics and quality of products and services;
5. consumer protection;
6. cross-border commerce;
7. libel and defamation;
8. copyright, trademark and patent infringement; and
9. other claims based on the nature and content of Internet
materials.
If We Are Unable To Hire And Retain Key Personnel, Then We May
Not Be Able To Implement Our Business Plan
We depend on the services of our senior management and key
technical personnel. In particular, our success depends on the
continued efforts of our president and chief executive officer,
Edward Yau, and our Vice President and chief operating officer,
Mike Hanson. The loss of the services of Mr. Yau, Mr. Hanson or
any of our key management, sales or technical personnel could
have an adverse effect on our business, financial condition and
results of operations. In addition, our success is largely
dependent on our ability to hire highly qualified managerial,
sales and technical personnel within Canada. These computer
programmers, technical personnel and sales and marketing
personnel with experience in the computer industry are in high
demand and we may not be able to attract the staff we need at a
cost that is within our operating budget. In addition, we may
lose employees or consultants that we hire due to higher salaries
and fees being offered by competitors or other businesses in the
computer and Internet industries.
If We Are Not Able To Effectively Respond To Competition, Our
Business May Fail
The e-commerce industry is intensely competitive in all its
phases. We will face competition from competitors who offer
products and services similar to ours. These competitors have
completed development of their web sites and are presently
marketing their products and services. Accordingly, these
competitors have already begun to establish brand-recognition
with consumers. We will attempt to compete against these
competitors by developing features, ease of use, and enhanced
performance that exceed the features and performance offered by
competing products and services. However, we cannot assure you
that our web site functionality and content will outperform
competing products or that competitors will not develop new or
modified versions of their products and services whose
performance equals or exceeds what we provide. In addition, we
may face competition based on price. If our competitors lower
the prices on their products and services, then it may not be
possible for us to market our products and services at prices
that are economically viable. Increased competition could result
in:
* Lower than projected advertising fees from our web sites;
* Price reductions and lower profit margins on our goods
and services;
* Our inability to develop and maintain our web sites and
offer products and services with features and usability
sought by potential customers.
Any one of these results could adversely affect our business,
financial condition and results
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of operations. In addition, our competitors may develop competing
products and services that achieve greater market acceptance. It
is also possible that new competitors may emerge and acquire
significant market share. Our inability to achieve sales and revenue
due to competition will have an adverse effect on our business,
financial condition and results of operations.
If A Market For Our Common Stock Does Develop, Our Stock Price May
Be Volatile
There is currently no market for our common stock and there is no
assurance that a market will develop. If a market develops, we
anticipate that the market price of our common stock will be
subject to wide fluctuations in response to several factors
including:
* Our ability to complete the development of the Surforama
and Rebatopia web sites;
* Our ability to generate revenues from advertising sales
on our web sites;
* Our ability to generate revenues from the sales of
products and services on the Surforama web site;
* Our ability to convince merchants to pay us for using the
Surforama.com Affiliate Program;
* Our ability to generate brand recognition of our web sites;
* Increased competition from competitors who offer
competing products; and
* Our financial condition and results of our operations.
We can provide no assurance to investors that our common stock
will be traded on any exchange or electronic quotation service.
Forward-Looking Statements
This prospectus contains forward-looking statements that involve
risks and uncertainties. We use words such as anticipate,
believe, plan, expect, future, intend and similar expressions to
identify such forward-looking statements. You should not place
too much reliance on these forward-looking statements. Our
actual results are most likely to differ materially from those
anticipated in these forward-looking statements for many reasons,
including the risks faced by us described in the this Risk
Factors section and elsewhere in this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common
stock offered through this prospectus by the selling
shareholders.
DETERMINATION OF OFFERING PRICE
We will not determine the offering price of the common stock.
The offering price will be determined by market factors and the
independent decisions of the selling shareholders.
DILUTION
The common stock to be sold by the selling shareholders is common
stock that is currently issued and outstanding. Accordingly,
there will be no dilution to our existing shareholders.
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SELLING SHAREHOLDERS
The selling shareholders named in this prospectus are offering
all of the 8,008,799 shares of common stock offered through this
prospectus. The shares include the following:
1. 6,420,000 shares of our common stock that the selling
shareholders acquired from us under section 4(2) of the
Securities Act pursuant to a purchase and sale agreement
dated November 1, 1999 between the shareholders of
Surforama.com Portal Services Inc. and us.
2. 1,500,000 shares of our common stock that the selling
shareholders acquired from us in an offering that was exempt
from registration under Regulation S of the Securities Act
of 1933 and completed on November 4, 1999;
3. 12,150 shares of our common stock that the selling
shareholders acquired from us in an offering that was exempt
from registration under Regulation S of the Securities Act
of 1933 and completed on November 30, 1999;
4. 76,649 shares of our common stock that the selling
shareholders acquired from us in an offering that was exempt
from registration under Regulation S of the Securities Act
of 1933 and completed on June 8, 2000;
The following table provides as of November 28, 2000 information
regarding the beneficial ownership of our common stock held by
each of the selling shareholders, including:
1. the number of shares owned by each prior to this offering;
2. the total number of shares that are to be offered for each;
3. the total number of shares that will be owned by each upon
completion of the offering;
4. the percentage owned by each; and
5. the identity of the beneficial holder of any entity that
owns the shares.
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Total Number Total Shares To Percent
Of Shares To Be Owned Upon Owned
Be Offered For Completion Upon
Name Shares Owned Selling Of This Completion
Of Selling Prior To This Shareholders Offering Of This
Stockholder Offering Account Offering
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Steve Allison 1,000 1,000 Nil Nil
RR1 S7A C22
Peachland, B.C.
V0H 1X0
Sandra Brock 100,000 100,000 Nil Nil
11638 Waresley Street
Maple Ridge, B.C.
V2X 8W2
Janine Brunelle 1,250 1,250 Nil Nil
829 East 14th Avenue
Vancouver, B.C.
V5T 2N5
Campus Computers 12,500 12,500 Nil Nil
Beneficial Owner:
Richard Tse
238 - 13500 Verdun Place
Richmond, B.C.
V6V 1V4
John Hanson 436,166 436,166 Nil Nil
103B - 1205 Pipeline
Road
Port Coquitlam, B.C.
V3B 6E3
Julie Hanson 890,000 890,000 Nil Nil
103B - 1205 Pipeline
Road
Port Coquitlam, B.C.
V3B 6E3
Phyllis Hanson 890,100 890,100 Nil Nil
17- 3100 Ozada Dr.
Coquitlam, B.C.
V3B 2T5
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Total Number Total Shares To Percent
Of Shares To Be Owned Upon Owned
Be Offered For Completion Upon
Name Shares Owned Selling Of This Completion
Of Selling Prior To This Shareholders Offering Of This
Stockholder Offering Account Offering
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Steve Hanson 890,100 890,100 Nil Nil
207 - 1199
Westwood Street
Coquitlam, B.C.
V3B 4S6
Cynthia Huie 1,000 1,000 Nil Nil
4715 Village Drive
Burnaby, B.C.
V5G 4V7
Robert Huie 740,000 740,000 Nil Nil
4715 Village Drive
Vancouver, B.C.
V5G 4V7
Rod Jao 29,167 29,167 Nil Nil
7271 Francis Road
Richmond, B.C.
V6Y 1A1
Diane Louie 3,000 3,000 Nil Nil
4762 East Georgia Street
Burnaby, B.C.
V5C 2V6
Kirby Louie 740,000 740,000 Nil Nil
4762 East Georgia St.
Burnaby, B.C. V5C 2V8
Korena Louie 2,000 2,000 Nil Nil
114 - 5860 Dover
Crescent
Richmond, B.C.
V2C 5S6
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Total Number Total Shares To Percent
Of Shares To Be Owned Upon Owned
Be Offered For Completion Upon
Name Shares Owned Selling Of This Completion
Of Selling Prior To This Shareholders Offering Of This
Stockholder Offering Account Offering
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Clark McFadden 100 100 Nil Nil
7 - 2023 West 4th Ave.
Vancouver, B.C.
V6J 1N3
John Reinsma 38,174 38,174 Nil Nil
906 - 888 Pacific Avenue
Vancouver, B.C.
V6Z 2Z6
Ryerson
Corporation AVV. 83,334 83,334 Nil Nil
Beneficial Owner:
Edwin Geerman
1st Independent Trust Curacao
P.O. Box 840, Curacao
7 Abraham-deVeerstraat
Netherlands, Antilles
Chin Kit Tang 1,000 1,000 Nil Nil
3444 Knight Street
Vancouver, B.C.
V5N 3K9
Peter Tang 2,000 2,000 Nil Nil
16727 85th Avenue
Surry, B.C. V4N 4W3
Henry Touwslager 125 125 Nil Nil
829 East 14th Avenue
Vancouver, B.C.
V5T 2N5
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Total Number Total Shares To Percent
Of Shares To Be Owned Upon Owned
Be Offered For Completion Upon
Name Shares Owned Selling Of This Completion
Of Selling Prior To This Shareholders Offering Of This
Stockholder Offering Account Offering
--------------------------------------------------------------------------
Craig Turner 350 350 Nil Nil
208 - 1850 West 8th
Avenue
Vancouver, B.C.
V6J 5G3
Phil Watkins 100 100 Nil Nil
8211 Craigavon Road
Richmond, B.C.
V4N 4W3
June Yau 435,666 435,666 Nil Nil
#5 - 11760 Bird Road
Richmond, B.C.
V6X 1N9
Ken Yau 890,000 890,000 Nil Nil
#5 - 11760 Bird Road
Richmond, B.C.
V5C 2V8
Lawrence Yau 890,000 890,000 Nil Nil
#5 - 11760 Bird Road
Richmond, B.C.
V6X 1N9
Shing Yau 890,000 890,000 Nil Nil
#5 - 11760 Bird Rd.
Richmond, B.C.
V6X 1N9
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Total Number Total Shares To Percent
Of Shares To Be Owned Upon Owned
Be Offered For Completion Upon
Name Shares Owned Selling Of This Completion
Of Selling Prior To This Shareholders Offering Of This
Stockholder Offering Account Offering
--------------------------------------------------------------------------
578265 BC Ltd. 41,667 41,667 Nil Nil
Beneficial Owner:
Charlo Barbosa
1166 Alberni Street
Suite 1502
Vancouver, BC
V6E 3Z3
--------------------------------------------------------------------------
Except as otherwise noted in the above list, the named party
beneficially owns and has sole voting and investment power over
all shares or rights to these shares. The numbers in this table
assume that none of the selling shareholders sells shares of
common stock not being offered in this prospectus or purchases
additional shares of common stock, and assumes that all shares
offered are sold. The percentages are based on 19,828,899 shares
of common stock outstanding on November 28, 2000.
None of the selling shareholders or their beneficial owners:
* has had a material relationship with us other than as a
shareholder at any time within the past three years; or
* has ever been one of our officers or directors or an
officer or director of our predecessors or affiliates.
John Hanson is Mike Hanson's Father.
Julie Hanson is Mike Hanson's Sister.
Phyllis Hanson is Mike Hanson's Mother.
Steve Hanson is Mike Hanson's Brother.
June Yau is Edward Yau's Mother.
Ken Yau is Edward Yau's Brother.
Lawrence Yau is Edward Yau's Brother.
Shing Yau is Edward Yau's Father.
PLAN OF DISTRIBUTION
The selling shareholders may sell some or all of their common
stock in one or more transactions, including block transactions:
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1. On such public markets or exchanges as the common stock
may from time to time be trading;
2. In privately negotiated transactions;
3. Through the writing of options on the common stock;
4. In short sales; or
5. In any combination of these methods of distribution.
The sales price to the public may be:
1. The market price prevailing at the time of sale;
2. A price related to such prevailing market price; or
3. Such other price as the selling shareholders determine
from time to time.
The shares may also be sold in compliance with the Securities and
Exchange Commission's Rule 144.
The selling shareholders may also sell their shares directly to
market makers acting as principals or brokers or dealers, who may
act as agent or acquire the common stock as a principal. Any
broker or dealer participating in such transactions as agent may
receive a commission from the selling shareholders, or, if they
act as agent for the purchaser of such common stock, from such
purchaser. The selling shareholders will likely pay the usual and
customary brokerage fees for such services. Brokers or dealers
may agree with the selling shareholders to sell a specified
number of shares at a stipulated price per share and, to the
extent such broker or dealer is unable to do so acting as agent
for the selling shareholders, to purchase, as principal, any
unsold shares at the price required to fulfill the respective
broker's or dealer's commitment to the selling shareholders.
Brokers or dealers who acquire shares as principals may
thereafter resell such shares from time to time in transactions
in a market or on an exchange, in negotiated transactions or
otherwise, at market prices prevailing at the time of sale or at
negotiated prices, and in connection with such re-sales may pay
or receive commissions to or from the purchasers of such shares.
These transactions may involve cross and block transactions that
may involve sales to and through other brokers or dealers. If
applicable, the selling shareholders may distribute shares to one
or more of their partners who are unaffiliated with us. Such
partners may, in turn, distribute such shares as described above.
We can provide no assurance that all or any of the common stock
offered will be sold by the selling shareholders.
We are bearing all costs relating to the registration of the
common stock. The selling shareholders, however, will pay any
commissions or other fees payable to brokers or dealers in
connection with any sale of the common stock.
The selling shareholders must comply with the requirements of the
Securities Act and the Securities Exchange Act in the offer and
sale of the common stock. In particular, during such times as the
selling shareholders may be deemed to be engaged in a
distribution of the common stock, and therefore be considered to
be an underwriter, they must comply with applicable law and may,
among other things:
1. Not engage in any stabilization activities in connection
with our common stock;
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2. Furnish each broker or dealer through which common stock may
be offered, such copies of this prospectus, as amended from
time to time, as may be required by such broker or dealer;
and
3. Not bid for or purchase any of our securities or attempt to
induce any person to purchase any of our securities other
than as permitted under the Securities Exchange Act.
LEGAL PROCEEDINGS
There are no legal proceedings pending or threatened against us.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our executive officers and directors and their respective ages as
of November 28, 2000 are as follows:
Directors:
Name of Director Age
---------------------- ---
Edward Yau 29
Mike Hanson 38
Gregory S. Yanke 31
Executive Officers:
Name of Officer Age Office
---------------------- --- -------
Edward Yau 29 President, Chief Executive Officer
Mike Hanson 38 Vice-President and Chief Operating Officer
Greg Yanke 31 Secretary and Treasurer
Set forth below is a brief description of the background and
business experience of each of our executive officers and
directors for the past five years.
Mr. Edward Yau is our President, Chief Executive Officer and
Director. Mr. Yau graduated from the University of British
Columbia in 1996 with a Bachelor of Medical Laboratory Sciences
degree. Prior to founding Surforama.com Portal Services Inc., our
wholly owned subsidiary, Mr. Yau founded and acted as President
of Crys Tel Telecommunications, Inc. from 1997-1999, a private
company specializing in the marketing and deployment of IP
telephony products and services across North America and Europe.
He has also acted as President of Global NeTVision Inc. in 1997,
an international marketing company based in Canada. Mr. Yau
spends 100% of his time on our business.
Mr. Mike Hanson is our Vice-President, Chief Operating Officer and
Director. Prior to co-founding Surforama.com Portal Services Inc.
with Mr. Yau, Mr. Hanson acted as Chief Operating
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Officer of a private American long distance telephone company
specializing in the marketing and deployment of IP telephony products
across North America and Europe. He also acted as Vice-President of
Marketing for Canada Telecom Network Inc., one of the largest long
distance resellers in Canada, from 1996 to 1998. Prior to that, Mr.
Hanson was employed for eight years as Vice-President of Operations
with Prestige Advertising Services Ltd., a private promotional
advertising company. Mr. Hanson spends 100% of his time on our
business.
Mr. Gregory S. Yanke is Secretary, Treasurer and a Director. Mr.
Yanke is a self-employed securities lawyer and principal of
Gregory S. Yanke Law Corporation. From May 1996 to February 2000,
he was employed as an associate lawyer with Beruschi & Company,
Barristers and Solicitors, a Vancouver, Canada based law firm that
practices securities and corporate law. Mr. Yanke is a graduate
of the University of British Columbia, receiving Bachelor degrees
in Political Science (1991) and Law (1994). He is a member in
good standing with the Law Society of British Columbia. Mr. Yanke
currently acts as a director of three British Columbia and Alberta
reporting companies: Pacific Topaz Resources Ltd., International
Alliance Resources Inc. and Maximum Ventures Inc. He is also
corporate secretary of LMX Resources Ltd., Randsburg International
Gold Corp., Alberta Star Mining Corp., and Landstar Properties
Inc., all of which are British Columbia and Alberta reporting
companies. Mr. Yanke spends approximately 3% of his time on our
business.
Term of Office
Our Directors are appointed for a one-year term to hold office
until the next annual general meeting of our shareholders or
until removed from office in accordance with our bylaws. Our
officers are appointed by our board of directors and hold office
until removed by the board.
Significant Employees
We have no significant employees other than the officers and
directors described above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each
person known to us to own more than 5% of our outstanding common
stock as of November 13, 2000, and by the officers and directors,
individually and as a group. Except as otherwise indicated, all
shares are owned directly.
Name and address Amount of Percent
Title of class of beneficial owner beneficial ownership of class
-------------- ------------------- -------------------- --------
Common Stock Edward Yau 5,910,000 29.8 %
12191 McNeely Drive
Richmond, British Columbia
V6V 2S1
Common Stock Mike Hanson 5,910,000 29.8 %
105 - 1010 West 42nd Avenue
Vancouver, British Columbia
V6M 2A8
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Common Stock Gregory S. Yanke 100 <0.01%
200 - 675 West Hastings Street
Vancouver, British Columbia
V6B 1N2
Common Stock All executive officers and 11,820,100 59.6%
directors as a group
--------------------------------------------------------------------------
The percent of class is based on 19,828,899 shares of common
stock issued and outstanding as of November 28, 2000.
DESCRIPTION OF SECURITIES
General
Our authorized capital stock consists of 70,000,000 shares of
common stock at a par value of $0.001 per share.
Common and Preferred Stock
As at the date of this Registration Statement, 19,828,899 shares
of common stock are issued and outstanding and held by 30
shareholders.
Holders of our common stock are entitled to one vote for each
share on all matters submitted to a stockholder vote. Holders of
common stock do not have cumulative voting rights. Therefore,
holders of a majority of the shares of common stock voting for
the election of directors can elect all of the directors.
Holders of our common stock representing a majority of the voting
power of our capital stock issued and outstanding and entitled to
vote, represented in person or by proxy, are necessary to
constitute a quorum at any meeting of our stockholders. A vote
by the holders of a majority of our outstanding shares is
required to effectuate certain fundamental corporate changes such
as liquidation, merger or an amendment to our Articles of
Incorporation.
Holders of common stock are entitled to share in all dividends
that the board of directors, in its discretion, declares from
legally available funds. In the event of a liquidation,
dissolution or winding up, each outstanding share entitles its
holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of
stock, if any, having preference over the common stock. Holders
of our common stock have no pre-emptive rights, no conversion
rights and there are no redemption provisions applicable to our
common stock.
Preferred Stock
Our articles of incorporation also provide that we are authorized
to issue up to 5,000,000 shares of preferred stock with a par
value of $0.001 per share. As at the date of prospectus, there are
no shares of preferred stock issued and outstanding. Our Board of
Directors has the authority, without further action by the
shareholders, to issue from time to time the preferred stock in
one or more series for such consideration and with such relative
rights, privileges, preferences and restrictions that the Board
may determine. The preferences, powers, rights and restrictions
of different series of preferred stock may differ with respect to
dividend rates, amounts payable on liquidation, voting
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rights, conversion rights, redemption provisions, sinking fund
provisions and purchase funds and other matters. The issuance of
preferred stock could adversely affect the voting power or other
rights of the holders of common stock.
Warrants
There are no outstanding warrants to purchase our securities.
Options
There are no options to purchase our securities outstanding. We
may in the future establish an incentive stock option plan for our
directors, employees and consultants.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared
or certified any part of this prospectus or having given an
opinion upon the validity of the securities being registered or
upon other legal matters in connection with the registration or
offering of the common stock was employed on a contingency basis,
or had, or is to receive, in connection with the offering, a
substantial interest, direct or indirect, in the registrant or any
of its parents or subsidiaries. Nor was any such person connected
with the registrant or any of its parents or subsidiaries as a
promoter, managing or principal underwriter, voting trustee,
director, officer, or employee.
Michael A. Cane of Cane & Company, LLC, our independent legal
counsel, has provided an opinion on the validity of our common
stock.
The financial statements included in this prospectus and the
registration statement have been audited by Morgan & Company,
chartered accountants, to the extent and for the periods set
forth in their report appearing elsewhere herein and in the
registration statement, and are included in reliance upon such
report given upon the authority of said firm as experts in
auditing and accounting.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Our directors and officers are indemnified as provided by the
Nevada Revised Statutes and our Bylaws. We have been advised that
in the opinion of the Securities and Exchange Commission
indemnification for liabilities arising under the Securities Act
is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities is asserted by one of
our directors, officers, or controlling persons in connection
with the securities being registered, we will, unless in the
opinion of our legal counsel the matter has been settled by
controlling precedent, submit the question of whether such
indemnification is against public policy to a court of
appropriate jurisdiction. We will then be governed by the
court's decision.
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ORGANIZATION WITHIN LAST FIVE YEARS
We were incorporated on October 22, 1999 under the laws of the
state of Nevada. Our wholly-owned subsidiary, Surforama.com
Portal Services Inc., was organized as a corporation under the
Canada Business Corporations Act on August 15, 1999.
Rebatopia.com, Inc., a private company in which we possess a
49.07% interest, was organized as a Nevada corporation on March
27, 2000.
On October 22, 1999, the date of our incorporation, Gregory S.
Yanke was appointed as our sole director. He also became our
president, secretary, and treasurer on that date as well. On
November 1, 1999, in connection with our acquisition of a 100%
interest in Surforama.com Portal Services Inc., Edward Yau and
Mike Hanson were appointed to the our Board of Directors. In
addition, Mr. Yau was appointed a director, President, and Chief
Executive Officer, and Mike Hanson was appointed a director, Vice-
President, and Chief Operating Officer. Since November 1, 1999,
Greg Yanke has continued as Secretary, Treasurer and a director.
DESCRIPTION OF BUSINESS
Our business plan is to sell advertising, products, services and
web links on the Internet. We were created to give product and
service oriented businesses an alternative source of advertising
and exposure that is more cost effective and reaches a larger
audience than traditional methods. We combine Internet-based
direct marketing and advertising services with programs that
reward consumers with cash when they perform actions desired by
our advertising and marketing clients. These cash-based online
incentive programs are intended to provide flexible, incentive-
marketing solutions for our clients. Our advertising and
marketing clients are only charged when our members execute
specific predefined actions. This provides these clients with a
known cost to achieve the desired response to their advertising
campaigns. By leveraging our member database and our targeting
capabilities, we are able to offer our clients customized,
targeted advertising solutions designed to improve response rates
and reduce the cost of acquiring new customers.
Acquisition of Surforama.com Portal Services Inc.
By a purchase and sale agreement dated November 1, 1999, we agreed
to acquire from Edward Yau, Mike Hanson, Shing Yau, June Yau, John
Hanson, Phyllis Hanson, Kirby Louie, and Robert Huie, an undivided
100% interest in Surforama.com Portal Services Inc. This sale was
made in consideration for the issuance of 17,240,000 shares of our
common stock at a deemed price of $0.001 that we issued as
follows:
Name of Vendor Number of Shares Issued
-------------- -----------------------
Mike Hanson 5,410,000
Edward Yau 5,410,000
Julie Hanson 890,000
Phyllis Hanson 890,000
Steve Hanson 890,000
Ken Yau 890,000
Lawrence Yau 890,000
Shing Yau 890,000
Robert Huie 540,000
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Kirby Louie 540,000
-------------------------------------------
Total 17,240,000
Products and Services
Through our acquisition of Surforama.com Portal Services Inc., we
acquired 100% ownership of the surforama.com web site and its
contents.
Our web site offers the following services:
1. Free Internet classified advertising;
2. On-line shopping through the Surforama Store;
3. Free e-mail; and
4. The Surforama Affiliate Program.
1. Free Classified Advertising Services
We have developed and operate an Internet electronic commerce web
site located at www.surforama.com that offers classified
advertisement services to the public. Through this web site,
businesses and individuals may place advertisements 24 hours a day
under any of the following current classification categories:
vehicles, employment, rentals, real estate, computers, personals,
pets and animals, collectibles, opportunities and general. Each
classification category has between three and 23 subcategories.
Advertisements may consist of text messages and digitally
reproduced pictures provided by the user.
As part of our introductory pricing strategy, users may post and
view classified advertisements on our web site free of charge.
Our pricing policy may change as the web site develops greater
public exposure. We intend to offer our customers the opportunity
to feature their advertisements on our home page, or on the front
page of each classification category, on a fee basis. We will
offer additional features such as boldfacing, the attachment of
icons, multiple photographs, audio files and multimedia files to
advertisements on a fee basis.
2. The Surforama Store
Our web site also includes the Surforama store, an online shopping
service that currently offers more than 100,000 products including
vehicles, books, magazines, recorded music products, motion
picture videos, clothing and accessories, computers, electronic
goods, flowers, gifts, health and beauty products, home office and
business products, pets, toys and games for sale to the public.
When a customer accesses the Surforama Store by pressing an icon
on the web site, the customer is linked to an independent web site
operated by an affiliate company. If a consumer makes a purchase
from an affiliate company via our web site, we receive a payment
from the affiliate company equal to 20% to 25% of the value of the
item or items purchased. This arrangement allows us to offer our
users a wide variety of consumer products with low overhead and no
inventory.
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3. FREEmail
We offer our web site users the ability to subscribe for a free e-
mail account that can be accessed from any computer connected to
the Internet. Users simply log on to our web site and enter a
password in order to access their e-mail accounts. As with
standard e-mail accounts, the user is able to send, receive and
store messages. Each e-mail account permits the user to save up
to six megabytes worth of memory.
Internet users typically obtain e-mail accounts through their
Internet service provider. However, when users change their
Internet service provider, they usually have to change e-mail
addresses as well. For a transition period they have to retrieve
e-mail messages from their old address and notify friends, family
and associates of their new address. With FREEmail, users access
their e-mail through the Surforama web site rather than through
the Internet service provider.
We intend to develop the FREEmail service into a distinct revenue
stream by encouraging e-mail account holders to sign up for
feature product specials and promotions sponsored by advertisers
or us.
We are offering free classified advertising and free e-mail to the
public in order to attract customer traffic to our web site. Our
advertising revenue is directly linked to the number of Internet
users who access our web site.
4. Information Source
We provide our web site users with search engine links, current
news, weather, sports, technology and movies in order to attract
traffic. Because our web site uses links to other web site
domains established by companies such as CNN, ABC, NBC and BBC, we
do not incur the prohibitive costs that would be associated with
providing and updating such information.
We also offer the following services and information to our web
site customers:
Service Website Link
------- ------------
Travel (car rental, flight booking, hotel reservations) travelnow.com
White pages and yellow pages (phone listings) infousa.com
Ask an expert service askme.com
Surforama AutoGuide carprices.com
stoneage.com
5. The Surforama Affiliate Program
Through our affiliate program, merchant web site owners have the
opportunity to enhance their web sites by accessing the classified
advertisement content of surforama.com. Many web site owners do
not have the means to create their own classified advertising
section. Through our affiliate program, we provide these owners a
link to our web site content. Thus, when an Internet user clicks
on the classified advertisement section of a Surforama affiliate,
the user is sent to the classified advertisement section of our
web site. However, the user is not aware that he or she has
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left the original web site because the merchant owner's name or logo
remains at the top of the web page.
Our affiliate program provides us with an additional stream of
revenue. The merchant owners agree to pay us a percentage of the
dollar amount of products sold through the web site link or a
fixed rate per visitor sent to our web site. The amount and
method of payment varies from merchant to merchant. In addition,
by having affiliate web site users access our web site and
increase traffic, the amount that businesses are willing to pay to
advertise on our web site increases.
6. Future Products and Services
We intend to expand our business by creating a rebate program that
rewards customers for accessing the surforama.com web site, using
our e-mail and purchasing products and services through our web
site. We also plan to add products and services to our web site
such as online coupons and auctions, to increase our presence
through regional and national advertising and to further develop
the content of our web site by including information on stocks,
business, health, computers, games, banking, newspapers and MP3s.
7. ECoupons
We plan to offer ECoupons. ECoupons will allow customers to
access a variety of coupons for products and services. Consumers
will have access to discount coupons and promotions on selected
products and services 24 hour a day from any computer connected to
the Internet. Users simply type in their zip code or the name of
the city to display coupons for businesses located in the
geographical area they have specified. Users then print coupons
displayed on their computer screens and take them to the
sponsoring businesses.
We intend to offer the coupon service to businesses free of
charge. We expect to generate revenue from the increased traffic
to our web site created by the ECoupons.
8. Rebatopia.com
We entered into an equity joint venture agreement dated February
24, 2000 with SourceTM, a division of Premier Lifestyles
International Corporation. The parties agreed to jointly
establish and develop an online database and tracking system for
Source's SCORE Reciprocal Rebate program, a pay-to-surf rewards
and an online shopping rebate program. In accordance with the
terms of this agreement, we jointly incorporated Rebatopia.com,
Inc., a Nevada corporation. Rebatopia now owns the web sites
located at rebatopia.com and rebatetopia.com.
Pursuant to the terms of the agreement, we provide the operations
expertise for tracking member rebates and developing and
maintaining an online user database. Source has provided the
start-up servers and equipment required to host Rebatopia's web
sites and user database, and has provided Rebatopia with access to
its 1,000,000 SCORE member database.
Through SCORE's Reciprocal Rebate program, consumers may apply
for free rebate shopping network memberships. Members receive
rebates when they purchase products or use services offered on the
Rebatopia web sites. Members also receive money for downloading
Rebatopia's
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PaytoSurf Navigator, a Windows based program that
displays advertisements on the member's computer screen. The
member may browse the Internet, work on a document and send e-mail
while using the PaytoSurf Navigator.
On March 27, 2000, along with Source, we entered into an agreement
with EuroCapital Holdings AVV, Telquest Technologies, Inc. and
Uwantcash.com, Inc. We refer to these entities collectively as the
Eurocapital Group. The Eurocapital Group agreed to invest
$2,000,000 in Rebatopia and sell to Rebatopia a 100% interest in
its proprietary pay to surf tracking software. On August 8, 2000,
we, Source and the Eurocapital Group agreed to terminate the March
27, 2000 purchase and sale agreement. At the date of termination,
the Eurocapital Group had advanced $100,000 to us, and $125,000 to
Source, or $225,000 in total. In consideration of these payments,
we agreed to transfer 1,395 shares of common stock in Rebatopia to
Eurocapital Holdings AVV. Source did the same.
Share Structure of Rebatopia
----------------------------
Rebatopia's Articles of Incorporation currently provide that it is
authorized to issue up to 70,000,000 shares of common stock with a
par value of $0.001 per share and up to 5,000,000 shares of
preferred stock with par value of $0.001. As at the date of this
registration statement, 300,000 shares of common stock are issued
and outstanding in the capital of Rebatopia. No preferred shares
of common stock are issued and outstanding.
The shareholders of Rebatopia are as follows:
Percentage of
Name of Shareholder Number of Shares Owned Shares Owned
---------------------- ---------------------- -------------
Surforama.com, Inc. 147,210 49.07%
Source 147,210 49.07%
Eurocapital Holdings AVV 5,580 1.86%
Source's Business
Source is a retail and marketing services company that offers a
variety of services to individuals and business including rebate
shopping network memberships, point of sale systems management,
debit card processing and web site development and hosting. As
part of its operations, Source contracts with companies to offer
participation in its rebate shopping network. Members or
employees of these participating companies are then eligible to
receive rebates averaging 2.5% on products purchased from
participating merchants. On each purchase, a portion of the price
paid by the rebate network member is remitted to the member's
sponsoring organization and to the organization that recruited the
participating merchant.
Currently, the Source rebate-shopping network consists of 21 North
American independent sales organizations. These organizations
have signed agreements with Source to market Source's benefits and
services to their membership.
Through Score's Reciprocal Rebate program, consumers may apply for
free rebate shopping network memberships. Members receive rebates
when they purchase products or use services offered on Rebatopia's
web sites. They also receive money for downloading Rebatopia's
PaytoSurf
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Navigator, a Windows based program that displays
advertisements on the member's computer screen. The member may
browse the Internet, work on a document and send e-mail while
using the PaytoSurf Navigator.
A member receives 10 points for each banner advertisement that is
shown while that member is using his or her computer. A portion
of Rebatopia's advertising proceeds is distributed on a pro rata
basis to members each month based on the number of points each has
accumulated. This system encourages members to view
advertisements and provides the advertiser with a source of
exposure to consumers.
Rebatopia's revenue will be derived exclusively from advertising
proceeds. The amount of revenue that Rebatopia generates will
depend on the number of individuals who access its web site to
make online purchases or to view the number of Score rebate points
they have earned.
Research and Development
We have been developing online products and services since the
middle of 1999. We began with the development of a personal
rewards community portal and rewards program featuring a number
of revenue generating services such as our classifieds section,
free email, rebate mall, and affiliate program.
During this development stage we were in the process of creating
an online shopping and tracking technology for our existing
users/members. This enabled us to offer progressive and valuable
technology to numerous market segments, allowing us to become an
applications service provider.
We have spent the following amounts on research and development
activities:
Inception to
August 31, 2000
Research and Development Operating Expenditures: $ 193,281.37
Market For Our Products and Services
1. The Internet Economy
The Internet has dramatically changed the way that millions of
people worldwide share information, communicate and conduct
business. International Data Corporation, or IDC, an independent
technology research organization, estimates that the total number
of Internet users worldwide will grow from approximately 196
million at the end of 1999 to approximately 602 million by the
end of 2003. IDC further estimates that worldwide electronic
commerce over the Internet will increase from $111 billion in
1999 to $1.6 trillion in 2003. Similarly, Forrester Research
estimates that U.S. business e-commerce revenue will grow from
$109 billion in 1999 to $1.3 trillion in 2003. The availability
of a broad range of content and the acceptance of electronic
commerce has driven rapid Internet adoption by businesses and
consumers alike,
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which has in turn stimulated the proliferation of additional
content and electronic commerce.
According to the Computer Industry Almanac, there were more than
148 million Internet users in the world at the end of 1998. Of
these, 83 million users, or 56.08%, were residents of the United
States of America and Canada, our target market. It is projected
that there will be 720 million Internet users worldwide by at the
end of 2005.
According to surveys conducted by NUA Internet, United States
Internet users tend to be affluent, earning an average of $59,000
per year. Many companies advertise on web sites such as
surforama.com in order to advertise their goods and services to
these high-income Internet users.
2. Expansion Strategy
We intend to expand our free classified advertisement service on a
regional basis beginning with British Columbia, Washington,
Oregon, Alberta and California. We chose British Columbia as the
first region in which to develop our classified advertisement
content due to its Internet user base, its population and its
proximity to our executive offices. British Columbia has a
population of four million people and also has the largest per
capita Internet user base in Canada. In addition, British
Columbia has the fastest and least expensive hosting and bandwidth
facility in the country. We believe that British Columbia is a
suitable geographical region for us to ensure that its search
engine and portal is fully functional before targeting larger
markets.
Our expansion into other regions will depend on the success of our
test marketing in British Columbia and our ability to raise
additional financing.
3. Advertising and Sales Strategy
Our web site must attract and maintain user traffic to generate
revenue. The amount of revenue that we generate is directly
proportional to the number of times that Internet users access our
web site and view its contents. We intend to use a combination of
Internet, e-mail and traditional advertising to promote our web
site and increase traffic.
Internet advertising will include traditional banner
advertisements, buttons and hyperlinks placed at high traffic web
sites, as well as reciprocal advertisements and affiliate
programs. We will allocate 20% of our advertising budget to
Internet advertising. Due to the Internet's vast size, it is
often difficult to target regional clientele on a mass scale.
Therefore, selective regional Internet advertising with an
emphasis on niche clientele will be our highest priority.
We will direct the majority of our advertising budget to print,
radio and television media, as well as to having a presence at
trade shows. Initially, we intend to place advertisements in
various sections of all major newspapers and magazines in British
Columbia. Such advertisements will target prospective buyers, as
well as individuals and businesses that will be placing future
advertisements.
Revenue
We expect to generate a significant portion of our revenue by
charging businesses a fee to advertise on our web site.
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Forrester Research, an independent technology research
organization, projects that online advertising expenditures
worldwide will increase tenfold from $3.3 billion in 1999 to
$33.1 billion in 2004. Currently, online advertising consists
primarily of banner advertisements and sponsorships on frequently
visited portals and other Web sites. However, as the number of
Web sites and amount of advertising on the Internet has
proliferated, we believe decreasing consumer response to banner
advertising has led advertisers and marketers to question the
effectiveness of such advertising and marketing campaigns.
According to NetRatings, click-through rates used by advertisers
to measure the effectiveness of their online efforts were 0.61%
in June 1999. These trends are causing marketers to consider
alternative marketing solutions that encourage consumers not only
to pay greater attention to marketing messages but also to
increase response rates to those messages. Conversely, many
consumers prefer to limit the number of advertisements to which
they are exposed and prefer to be exposed only to those
advertisements for products or services in which they are
interested. We believe that the inability of traditional banner
advertising to maximize the powerful one-to-one relationships
enabled by the Internet has led advertisers to place greater
emphasis on online direct marketing as a more effective means to
convert Internet users into customers. The Direct Marketing
Association estimates that spending on Internet direct marketing
will grow from $603 million in 1998 to $5.3 billion in 2003,
representing a compound annual growth rate of 54%.
There are generally two types of advertising: (a) brand
advertising and (b) response-oriented advertising. Brand
advertising is intended to generate awareness of and create a
specific image for a particular company, product or service. In
contrast, response-oriented advertising, or direct marketing, is
intended to generate a specific response action from the consumer
after exposure to an advertisement. Response-oriented advertisers
focus on the short-term benefit of advertising and seek to
maximize the number of desired responses per advertising dollar.
The Internet is particularly well suited to response-oriented
advertising because it is easier for consumers to read and respond
to an advertisement than traditional direct response media such as
toll-free numbers or business reply cards. In addition, measuring
response rates, an essential element for response-oriented
advertisers, is easier with Internet advertising than in
traditional media, enabling advertisers to modify campaigns
quickly to increase response rates.
Our banner advertising program enables the advertiser to
seamlessly track the performance of an advertising campaign from
banner advertisements, to the user's decision to "click" on the
banner and through to any type of "back-end" transaction, such as
registrations, sales orders or downloads. This service allows the
advertiser to evaluate its advertising campaign on its own
predetermined criteria as the advertiser can track a user's entire
path through the back-end to help understand where in the cycle
the consumer decides to purchase. In order to enhance banner
response and maximize performance, our web site supports HTML,
JavaTM, EnlivenTM, Comet CursorTM, Real AudioTM, Real VideoTM, The
Thinking MediaTM, AudiobaseTM, Unicast SuperstitialsTM, BlueStreak,
E*BannerTM, First Virtual VADzTM, audio, video and more.
We integrate the data from our banners with critical event
tracking on the back-end and provide the advertiser with one
distilled, simple, customized report. The advertiser may access
the report information they want by logging in to our password
protected banner site.
Over one hundred different businesses currently advertise on our
web site. Depending on the
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advertising arrangement, we either receive revenue from these
businesses each time an Internet user clicks on their advertisement,
or each time an Internet user purchases something from the business
as a result of a click-through from our web site. While these
advertisement agreements vary, we typically receive from $0.20 to
$0.40 for each "click-through and a 10% to 20% commission on each
click-through that leads to a sale.
Operations
The development of our web site is continuing, although it is
currently accessible. Beta testing has been completed and we are
now in the process of adding products and services. Currently
our web site is generating minimal revenues. We are currently
devoting most of our efforts to establishing our business. Our
plan is to complete development of our web site as soon as
practicable.
Competition
Our main competitors in our classified services are local
newspapers and classifieds2000.com in Canada, and adquest.com in
the United States.
1. Local Newspapers
In our initial target area of British Columbia, our main
competitors will be local daily newspapers with extensive
classified sections. Most classified advertisements in these
local newspapers are extremely brief and expensive for the
consumer. Websites created by such local newspapers duplicate
content of the actual advertisements that customers have placed in
the newspapers.
We anticipate that we will be able to overcome competition from
local newspapers because we offer free advertising to consumers
while they charge for these services.
2. Classifieds2000
Classifieds2000 was initially a supplier of classified advertising
content to Netscape and several well-known Internet search
engines. One of the biggest advantages of using Classifieds2000
is the enormous content available in each advertising category.
However, the vast size of the web site makes it difficult to
maintain. Some advertisements on the Classifieds2000 web site are
over 18 months old.
Our web site automatically purges old advertisements from 30 to 90
days from the original date of the posting depending on user
preference.
3. Adquest
Adquest displays classified advertisements from all major
newspapers in the United States on the Internet. However, since
only newspaper advertisements are listed, the advertisements tend
to be short and do not include pictures, audio or multimedia.
Because Adquest only provides content, users are not able to list
their own advertisements, which translates into a low number of
repeat users.
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Both Classifieds2000 and Adquest are established businesses in the
classified advertisement field with far greater market recognition
and financial resources than us. In order for us to succeed, we
will have to successfully compete with Classifieds2000 and
Adquest, as well as numerous smaller competitors, in their
established markets, or develop new markets.
Hotmail.com, Mail.com, and Yahoomail.com are our three largest
competitors in the free email market. Almost every web site on the
Internet offers a free email service and the average user has more
than three email addresses each, however, we do not compete
directly with any one company for this business. The primary
objective of offering this service is to encourage users to use
the site and visit more often, and to add value to our website.
AOL.com, and Yahoo.com, are two of the largest e-commerce sites
and competitors on the Internet. However, with regard to our store
operations, we are also in competition with any web enabled e-
commerce site on the Internet. Since, our core business is the
co-branding of our classified services, our Surforama Store is
primarily an added value service we are providing to our members
in order to create stickiness on our website. In our industry,
stickiness refers to the ability of a web site and the web site
content to retain users/members. A web site's core products and
services, along with added value products and services that are
usually free, offer a form of incentive to user/members to
repeatedly visit a web site and encourage longer visits.
Rebatopia faces significant competition from online incentives-
based advertising and marketing programs and providers of micro-
payment systems. We expect competition to increase due to the
lack of significant barriers to entry for online business
generally and for online incentives-based direct marketing
programs and micro-payment transactions in particular. Currently,
several companies offer competitive online incentives programs,
including MyPoints.com Inc., and Cybergold.com Inc.
1. MyPoints Network
The MyPoints Network is a system of participating web sites,
which offers members the opportunity to earn points at locations
on the Internet other than the MyPoints web site. They provide
participating web sites with a supply of rewards points to
distribute to their visitors as a loyalty and incentive tool in
exchange for the opportunity to enroll their visitors into their
service. These partnerships are co-branded with each partner. In
these partnerships, the currency always retains the MyPoints
brand and they retain direct marketing rights to the members
generated by the service.
2. CyberGold Inc.
CyberGold is a leading provider of Internet-based direct
marketing and advertising solutions. They combine Internet-based
direct marketing and advertising services with programs that
reward consumers with cash when they perform actions desired by
advertising and marketing clients. These cash-based online
incentive programs are designed to improve advertisement response
rates and reduce the cost of acquiring new customers for their
clients. Their business revolves around what they call the Earn &
Spend Community - places on the Internet where consumers can earn
cash incentives for responding to online marketing offers
presented by their
28
<PAGE>
advertising and marketing clients and then spend the cash with
merchants. This company had more than 4.1 million members through
January 2000.
On April 17, 2000, My Points Inc. acquired 100% interest in
CyberGold Inc. for $157 million in stock. Through this
acquisition, the My Points network has over 10 million subscribers
base; hence, making them our largest competitor in this service.
Rebatopia offers a much more lucrative program to users than any
other program in the market. Besides CyberGold Inc. there isn't
any other portal offering cash incentives to their users and
absolutely no company is offering a 6-tier program. This means
that users can sign up their friends and family, which will also
earn cash rebates while the user earns residual rebates for
referring them. This cash incentive will be paid up to six levels
deep. In addition, Rebatopia will be the only provider that will
be signing up point of sale merchants that are not currently
online to also participate in the SCORE Reciprocal Program and
allow users to get cash rebates while buying from these merchants
offline. This will require our user to be upgraded to a Score
Card member for an additional fee.
Government Regulation
Due to the increasing popularity and use of the Internet, it is
possible that a number of laws and regulations may be adopted
with respect to the Internet generally, covering issues such as
user privacy, pricing, and characteristics and quality of
products and services. Similarly, the growth and development of
the market for Internet commerce may prompt calls for more
stringent consumer protection laws that may impose additional
burdens on those companies conducting business over the Internet.
The adoption of any such laws or regulations may decrease the
growth of commerce over the Internet, increase our cost of doing
business or otherwise have a harmful effect on our business.
To date, governmental regulations have not materially restricted
the use or expansion of the Internet. However, the legal and
regulatory environment that pertains to the Internet is uncertain
and may change. New and existing laws may cover issues that
include:
* Sales and other taxes;
* User privacy;
* Pricing controls;
* Characteristics and quality of products and services;
* Consumer protection;
* Cross-border commerce;
* Libel and defamation;
* Copyright, trademark and patent infringement; and
* Other claims based on the nature and content of Internet
materials.
These new laws may impact our ability to market our products and
services offered on our web site in accordance with our business
plans.
We may have to qualify to do business in other jurisdictions. If
we make sales of our products or services, we anticipate that
sales and our customers will be in multiple states and foreign
29
<PAGE>
countries. As our customers may reside in such states and
foreign countries, such jurisdictions may claim that we are
required to qualify to do business as a foreign company in each
such state and foreign country. Failure to qualify as a foreign
company in a jurisdiction where required to do so could subject
us to taxes and penalties.
We are not aware of any environmental laws that will be
applicable to the operation of our business.
Employees
As of the date of this Registration Statement, we do not have any
employees other than our directors and officers. We retain
independent consultants on a contract basis to develop and market
our web site.
PLAN OF OPERATIONS
Our plan of operations for the twelve months following the date
of this registration statement is to complete the following
objectives within the time period specified, subject to our
obtaining our revenue goals for the continued development of our
web site, the rebatopia web site, and business activities related
to the web site and carrying out our marketing plan:
* Complete development of our web site and the
rebatopia web site. We anticipate that this
process will be finished by August 31, 2001.
However, with continuous maintenance and the
addition of new products and services, actual
completion is an ongoing effort. We anticipate
that the cost of this development will be
approximately $19,000.
* We plan to undertake an advertising and marketing
campaign by September 30, 2001. We anticipate
that the cost of these marketing expenses will be
approximately $15,500.
* We plan to purchase and lease additional equipment
for our web site development at an approximate
cost of $18,000.
* We anticipate spending approximately $3,100 in
ongoing general and administrative expenses per
month.
* We anticipate our monthly operating costs of our
web site will be approximately $2,225 per month.
We have completed the first phase of our business plan by
establishing our classified advertisement web site service. Our
present focus is to build our web site by adding products,
services and additional content. We intend to commence a
marketing campaign to promote our web site's services and
products, including our involvement in the SCORE reciprocal rebate
program, a rebate card program where the card holder can earn
rebates by shopping with participating merchants.
In building our internal administrative and managerial
organization, we will seek to minimize the
30
<PAGE>
hiring of full-time employees. With additional revenues, we plan
to retain staffing levels sufficient to achieve our goals. This
additional staffing may include full-time and part-time employees,
and consultants. Without sufficient revenues, we will continue
limiting our employees to our president and vice-president. Neither
our president nor vice-president receives a salary at this time.
Completion of our plan of operation is subject to attaining
adequate revenue. We intend to increase our revenue by
concentrating on the marketing, co-branding and private labeling
of our products and services to others business and individuals.
However, we cannot assure investors that adequate revenues will be
generated. In the absence of our projected revenues, we may be
unable to proceed with our plan of operation. Even without
significant revenues within the next twelve months, we still
anticipate being able to continue with our present activities, but
we will require financing to potentially achieve our goal of
profit, revenue and growth.
We anticipate that our operational and administrative expenses for
the next 12 months will total $116,400. A breakdown of these
anticipated expenses are as follows:
Equipment Costs
Equipment for Further Website Development $19,000
Equipment Leasing Costs: $18,000
Sales and Marketing Costs:
Advertising & Promotion: $15,500
Operational and Administrative Costs:
Website Development: $37,200
General Office/Professional Expenses $26,700
-------
Total: $116,400
========
The foregoing represents our best estimate of our cash needs based
on current planning and business conditions. The exact
allocation, purposes and timing of any monies raised in subsequent
private financings may vary significantly depending upon the exact
amount of funds raised and status of our business plan.
In the event we are not successful in reaching our initial
revenue targets, additional funds may be required and we would
then not be able to proceed with our business plan for the
development and marketing of the our core products and services.
Should this occur, we would likely seek additional financing to
support the continued operation of our business.
We anticipate that depending on market conditions and our plan of
operations, we could incur operating losses in the foreseeable
future. We base this expectation, in part, on the fact that we
run on a very tight budget in completing the development of our
software and website and do not anticipate earning any
substantial revenues until sometime next year. Our future
financial results are also uncertain due to a number of factors,
some of which are outside our control. These
31
<PAGE>
factors include, but are not limited to:
* our ability to develop a commercially marketable product and
service with the features and functionality sought by
potential customers;
* our ability to successfully market co-brand and private
label our site to potential customers;
* our ability to charge customers a license fee that will
enable us to generate revenues exceeding operating costs;
* the introduction and availability of competing products by
competitors.
Results of Operations
From the date of Surforama.com Portal Services Inc.'s
incorporation to August 31, 2000, management has focused on the
development of the surforama.com and rebatopia.com web sites. One
computer programmer and two web site developers have spent a total
of approximately 4,350 hours constructing our classified
advertisement portal. These individuals have not charged us for
their services.
From the date of Rebatopia's incorporation to August 31st, 2000,
management focused on the development of the rebatopia.com web
site. One computer programmer and two web site developers have
spent a total of approximately 3300 hours constructing our
shopping and tracking portal.
In connection with the development of our surforama.com web site
through August 31, 2000, we had net income of $33,798 and expenses
consisting of consulting fees of $80,947, office and sundry
expenses of $7,890, travel expenses of $2,557, professional fees
of $1,500, amortization costs of $229, and web development costs
of $13,974.
Since incorporation, we have funded our operations through private
equity financings and common share issuances in exchange for
services. We have raised a total of $125,280 from selling or
exchanging our securities in this time frame. As at August 31,
2000, our assets were $156,407 consisting of cash of $50,068,
accounts receivable of $21,114, accrued interest receivable of
$1,916, and investment in and advances to Rebatopia.com, Inc. of
$81,505. In the period from our incorporation on August 10, 1999
to August 31, 2000, we earned revenue totaling $60,881. This
revenue is derived largely from a banner advertising arrangement
with Flycast Advertising and a co-branding arrangement with
Autofusion Inc., the owner of carprices.com.
At August 31st, 2000, our liabilities consisted of accounts payable
totaling $645.
We believe that the above discussion contains a number of
forward-looking statements. Our actual results and our actual
plan of operations may differ materially from what is stated
above. Factors which may cause our actual results or our actual
plan of operations to vary include, among other things, decisions
of our board of directors not to pursue a specific course of
action based on its re-assessment of the facts or new facts,
changes in the Internet business or general economic conditions
and those other factors identified in this prospectus.
32
<PAGE>
DESCRIPTION OF PROPERTY
Our executive offices are located at 105 - 1010 West 42nd Avenue,
Vancouver, British Columbia, Canada. We are a party to an office
rental agreement dated November 1, 1999 with Mr. Mike Hanson, one
of our officers and directors, whereby we pay Mr. Hanson $600 per
month for rent and office services.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as noted below, none of the following parties has, since
our date of incorporation, had any material interest, direct or
indirect, in any transaction with us or in any presently proposed
transaction that has or will materially affect us:
* Any of our directors or officers;
* Any person proposed as a nominee for election as a director;
* Any person who beneficially owns, directly or indirectly,
shares carrying more than 10% of the voting rights attached
to our outstanding shares of common stock;
* Any of our promoters;
* Any relative or spouse of any of the foregoing persons who
has the same house as such person.
By an agreement dated November 1, 1999, we acquired an undivided
100% interest in Surforama.com Portal Services Inc. for 17,240,000
shares of our common stock. As part of the acquisition, we
appointed two of the vendors of Surforama.com Portal Services
Inc., Mr. Edward Yau and Mr. Mike Hanson, to our Board of
Directors. In addition, Mr. Yau and Mr. Hanson received
5,410,000 vendor shares each for selling their respective
interests in Surforama.com Portal Services Inc. to us. Moreover,
the following relatives of Mr. Yau and Mr. Hanson received our
shares in exchange for their shares of Surforama Portal Services
Inc.:
Name of Relative Number of Shares Relationship to Director
---------------- ---------------- ------------------------
Mr. Shing Yau 890,000 Father of Edward Yau
Ms. Phyllis Hanson 890,000 Mother of Mike Hanson
Mr. Steve Hanson 890,000 Brother of Mike Hanson
Ms. Julie Hanson 890,000 Sister of Mike Hanson
Mr. Ken Yau 890,000 Brother of Edward Yau
Ms. Lawrence Yau 890,000 Brother of Edward Yau
The securities issued to Mr. Yau and Mr. Hanson are subject to a
one-year hold period from the date of issuance. After the one-
year hold period is over, Mr. Yau and Mr. Hanson may each sell
these shares in accordance with Rule 144. Rule 144 provides that
shares equal to 1% of our issued and outstanding capital may be
sold in a given three-month period. The share certificates issued
to Mr. Yau and Mr. Hanson representing these shares of common
stock are affixed with a legend restricting their transfer.
Shares were sold in private offerings to the following relatives
of Mr. Yau and Mr. Hanson:
33
<PAGE>
Name of Relative Number of Shares Relationship to Director
---------------- ---------------- ------------------------
Ms. June Yau 435,666 Mother of Edward Yau
Mr. John Hanson 436,166 Father of Mike Hanson
Ms. Phyllis Hanson 100 Mother of Mike Hanson
Mr. Steve Hanson 100 Brother of Mike Hanson
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No Public Market for Common Stock
There is presently no public market for our common stock. We
anticipate applying for trading of our common stock on the over
the counter bulletin board upon the effectiveness of the
registration statement of which this prospectus forms a part.
However, we can provide no assurance that our shares will be
traded on the bulletin board or, if traded, that a public market
will materialize.
Holders of Our Common Stock
As of the date of this registration statement, we had 30
registered shareholders.
Rule 144 Shares
A total of 19,752,250 shares of our common stock will be
available for resale to the public after November 30, 2000, in
accordance with the volume and trading limitations of Rule 144 of
the Act. In general, under Rule 144 as currently in effect, a
person who has beneficially owned shares of a company's common
stock for at least one year is entitled to sell within any three
month period a number of shares that does not exceed the greater
of:
1. 1% of the number of shares of the company's common stock
then outstanding which, in our case, will equal approximately
198,289 shares as of the date of this prospectus; or
2. the average weekly trading volume of the company's common
stock during the four calendar weeks preceding the filing of a
notice on form 144 with respect to the sale.
Sales under Rule 144 are also subject to manner of sale
provisions and notice requirements and to the availability of
current public information about the company.
Under Rule 144(k), a person who is not one of the company's
affiliates at any time during the three months preceding a sale,
and who has beneficially owned the shares proposed to be sold for
at least 2 years, is entitled to sell shares without complying
with the manner of sale, public information, volume limitation or
notice provisions of Rule 144.
As of the date of this prospectus, persons who are our affiliates
hold 11,820,100 of the 19,752,250 shares that may be sold
pursuant to Rule 144 after November 30, 2000.
34
<PAGE>
Stock Option Grants
To date, we have not granted any stock options.
Registration Rights
We have not granted registration rights to the selling
shareholders or to any other persons.
Dividends
There are no restrictions in our articles of incorporation or
bylaws that prevent us from declaring dividends. The Nevada
Revised Statutes, however, do prohibit us from declaring dividends
where, after giving effect to the distribution of the dividend:
1. we would not be able to pay our debts as they become due
in the usual course of business; or
2. our total assets would be less than the sum of our total
liabilities plus the amount that would be needed to
satisfy the rights of shareholders who have preferential
rights superior to those receiving the distribution.
We have not declared any dividends, and we do not plan to declare
any dividends in the foreseeable future.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below summarizes all compensation awarded to, earned by,
or paid to our executive officers by any person for all services
rendered in all capacities to us from the date of our inception
until October 31, 2000.
Annual Compensation Long Term Compensation
------------------- ----------------------
Other Restricted All
Annual Stock Options/* LTIP Other
Name Title Year Salary Bonus Compen- Awarded SARs (#) pay- Compen-
sation outs($) sation
---- ----- ----- ------ ----- ------ ---------- ------- ------- -------
Edward
Yau President,
CEO and
Director 1999 $0 0 0 0 0 0 0
Michael
Hanson Vice-
President,
COO and
Director 1999 $0 0 0 0 0 0 0
Gregory
Yanke Secretary
and
Director 1999 $0 0 $1,050.98Cdn 0 0 0 0
None of our directors have received monetary compensation since
our incorporation to the date of this registration statement. We
currently do not pay any compensation to our directors serving on
our Board of Directors.
35
<PAGE>
Stock Option Grants
We did not grant any stock options to the executive officers
during our most recent fiscal year ended November 30, 1999. We
have also not granted any stock options to the executive officers
since November 30, 1999.
Employment Agreements
We do not have an employment or consultant agreement with Mr.
Edward Yau, our president and a director. We do not pay any
salary to Mr. Yau. Mr. Yau spends 100% of his time working for
us.
We do not have an employment or consultant agreement with Mr.
Michael Hanson, our vice-president, chief operations officer and
a director. We do not pay any salary or consulting fees to Mr.
Hanson. Mr. Hanson spends 100% of his time working for us.
We do not have an employment or consultant agreement with Mr.
Gregory Yanke, our secretary and a director. We do not pay any
salary to Mr. Yanke. However, Mr. Yanke has rendered legal
services and related disbursements to companies related to
Surforama.com, Inc. totaling Cdn$1,776,44; Cdn$1050.98 of this
amount has been paid to date. Mr. Yanke spends approximately 3%
of his time working on matters for us.
36
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Our audited financial statements, as described below, are attached
hereto.
1. Audited financial statements for the fiscal year ended November
30, 1999, including:
(a) Auditors' Report
(b) Consolidated Balance Sheet;
(c) Consolidated Statement of Loss and Deficit;
(d) Consolidated Statement of Cash Flows;
(e) Consolidated Statement of Stockholders' Equity; and
(f) Notes to Consolidated Financial Statements.
2. Un-audited financial statements for the 9 month period ended
August 31, 2000, including:
(a) Consolidated Balance Sheet;
(b) Consolidated Statement of Income and Retained Earnings;
(c) Consolidated Statement of Cash Flows;
(d) Consolidated Statement of Stockholders' Equity; and
(e) Notes to Consolidated Financial Statements.
37
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1999
(Stated in U.S. Dollars)
<PAGE>
AUDITORS' REPORT
To the Directors
Surforama.com, Inc.
We have audited the consolidated balance sheet of Surforama.com,
Inc. (a development stage company) as at November 30, 1999 and the
consolidated statements of loss and deficit accumulated during the
development stage, cash flows, and stockholders' equity for the
period then ended. These consolidated financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with United States and
Canadian generally accepted auditing standards. 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.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as at November 30, 1999 and the results of its operations
and cash flows for the period then ended in accordance with United
States generally accepted accounting principles.
Vancouver, B.C.
/s/ Morgan & Company
February 15, 2000 Chartered Accountants
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
NOVEMBER 30, 1999
(Stated in U.S. Dollars)
ASSETS
Current
Cash $ 26,629
LIABILITIES
Current
Accounts payable $ 645
SHAREHOLDER'S EQUITY
Share Capital
Authorized:
70,000,000 common shares, par value $0.001 per share
5,000,000 preferred shares, par value $0.001 per share
Issued and outstanding:
19,752,250 common shares 19,752
Additional paid in capital 26,738
Deficit Accumulated During The Development Stage (20,591)
Cumulative Translation Adjustment 85
---------
25,984
----------
$ 26,629
==========================================================================
Approved by the Directors:
________________________________ _________________________________
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF LOSS AND DEFICIT
(Stated in U.S. Dollars)
--------------------------------------------------------------------------
PERIOD FROM
DATE OF
ORGANIZATION INCEPTION
AUGUST 10, AUGUST 10,
1999 TO 1999 TO
NOVEMBER 30, NOVEMBER 30,
1999 1999
--------------------------------------------------------------------------
Expenses
Consulting fees $ 17,148 $ 17,148
Office and sundry 3,036 3,036
--------------------------
Net Loss For The Period 20,184 $ 20,184
==========
Deficit Accumulated During The Development
Stage, Beginning Of Period -
-----------
20,184
Net Asset Deficiency Of Legal Parent At
Date Of Reverse Take-Over Transaction 407
-----------
Deficit Accumulated During The
Development Stage, End Of Period $ 20,591
===========================================================
Net Loss Per Share $ 0.01
===========================================================
Weighted Average Number Of Shares Outstanding 19,742,835
===========================================================
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Stated in U.S. Dollars)
--------------------------------------------------------------------------
PERIOD FROM
DATE OF
ORGANIZATION INCEPTION
AUGUST 10, AUGUST 10,
1999 TO 1999 TO
NOVEMBER 30, NOVEMBER 30,
1999 1999
--------------------------------------------------------------------------
Cash Flows From Operating Activities
Net loss for the period $ (20,184) $ (20,184)
Adjustments To Reconcile Net Loss To Net
Cash Used By Operating Activities
Change in accounts payable 645 645
--------------------------
(19,539) (19,539)
--------------------------
Cash Flow From Financing Activities
Share subscriptions 46,490 46,490
--------------------------
Cash Flows From Investing Activities
Net asset deficiency of legal parent at
date of reverse take-over transaction (407) (407)
--------------------------
Effect Of Exchange Rate Changes On Cash 85 85
--------------------------
Increase In Cash 26,629 26,629
Cash, Beginning Of Period - -
--------------------------
Cash, End Of Period $ 26,629 $ 26,629
==========================================================================
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING
ACTIVITIES:
Effective November 1, 1999, the Company acquired 100% of the
issued and outstanding shares of Surforama.com Portal Services
Inc. by issuing 17,240,000 common shares at an ascribed value of
$Nil.
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NOVEMBER 30, 1999
(Stated in U.S. Dollars)
COMMON STOCK
---------------------------------
ADDITIONAL
PAID-IN
SHARES AMOUNT CAPITAL DEFICIT TOTAL
-----------------------------------------------------
Shares Issued For Cash
And Services 17,240,000 $ 17,240 $ - $ - $ 17,240
Exchange Of Shares To
Acquire Subsidiary
Surforama.com Portal
Services Inc. (17,240,000) - - - -
Surforama.com, Inc. 17,240,000 - - - -
Net Asset Deficiency Of
Legal Parent At Date
Of Reverse Take-Over
Transaction - - - (407) (407)
Shares Issued For Cash
At $0.001 2,000,000 2,000 - - 2,000
Shares Issued For Cash
At $0.03 500,000 500 14,500 - 15,000
Shares Issued For Cash
At $1.00 12,250 12 12,238 - 12,250
Translation Adjustment - - - - 85
Net Loss - - - (20,184) (20,184)
------------------------------------------------------
Balance,
November 30, 1999 19,752,250 $ 19,752 $ 26,738 $(20,591) $ 25,984
======================================================
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1999
(Stated in U.S. Dollars)
1. NATURE OF OPERATIONS
a) Organization
The Company was incorporated in the State of Nevada, U.S.A.
on October 22, 1999. The Company's wholly owned subsidiary,
Surforama.com Portal Services Inc., was incorporated under
the Canada Business Corporations Act on August 10, 1999.
b) Development Stage Activities
The Company intends to develop and market end to end online
advertising and classifieds solutions for service providers,
corporations and individuals. The Company was created to
give product and service oriented businesses an alternative
source of advertising and exposure that will be more cost
effective, and reach a much larger audience than traditional
methods. The Company will offer consumers a popular and fast
way to find job searches, vehicles, personals, real estate,
apartment rentals, daily news and the ability to purchase
products directly from their corporate website.
2. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of the Company has been
prepared in accordance with generally accepted accounting
principles in the United States. Because a precise
determination of many assets and liabilities is dependent upon
future events, the preparation of consolidated financial
statements for a period necessarily involves the use of
estimates which have been made using careful judgement.
The consolidated financial statements have, in management's
opinion, been properly prepared within reasonable limits of
materiality, and within the framework of the significant
accounting policies summarized below:
a) Consolidation
These consolidated financial statements include the accounts
of the Company and its wholly owned Canadian subsidiary,
Surforama.com Portal Services Inc.
b) Development Stage Company
The Company is a developed stage company as defined in the
Statements of Financial Accounting Standards No. 7. The
Company is devoting substantially all of its present efforts
to establish a new business and none of its planned principal
operations have commenced. All losses accumulated since
inception have been considered as part of the Company's
development stage activities.
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1999
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
c) Income Taxes
The Company has adopted Statement of Financial Accounting
Standards No. 109 - "Accounting For Income Taxes" (SFAS 109).
This standard requires the use of an asset and liability
approach for financial accounting and reporting on income
taxes. If it is more likely than not that some portion, or
all if a deferred tax asset, will not be realized, a
valuation allowance is recognized.
d) Foreign Currency Translation
The operations of the Company's subsidiary, Surforama.com
Portal Services Inc., are located in Vancouver, Canada and
its functional currency is the Canadian dollar. The
consolidated financial statements have been translated using
the current method whereby the assets and liabilities are
translated at the year end exchange rate, capital accounts at
the historical exchange rate, and revenues and expenses at
the average exchange rate for the period. Adjustments
arising from the translation of the Company's consolidated
financial statements are included as a separate component of
shareholders' equity.
e) Financial Instruments
The Company's financial instruments consist of cash and
accounts payable.
Unless otherwise noted, it is management's opinion that this
Company is not exposed to significant interest or credit
risks arising from these financial instruments. The fair
value of these financial instruments approximate their
carrying values, unless otherwise noted.
f) Net Loss Per Share
Net loss per share is based on the weighted average number of
common shares outstanding during the period plus common share
equivalents, such as options, warrants and certain
convertible securities. This method requires primary
earnings per share to be computed as if the common share
equivalents were exercised at the beginning of the period or
at the date of issue, and as if the funds obtained thereby
were used to purchase common shares of the Company at its
average market value during the period.
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1999
(Stated in U.S. Dollars)
3. ACQUISITION OF SUBSIDIARY
Effective November 1, 1999, Surforama.com, Inc. acquired 100%
of the issued and outstanding shares of Surforama.com Portal
Services Inc. by issuing 17,240,000 common shares. Since the
transaction resulted in the former shareholders of
Surforama.com Portal Services Inc. owning the majority of the
issued shares of Surforama.com, Inc., the transaction, which is
referred to as a "reverse take-over", has been treated for
accounting purposes as an acquisition by Surforama.com Portal
Services Inc. of the net assets and liabilities of
Surforama.com, Inc. Under this purchase method of accounting,
the results of operations of Surforama.com, Inc. are included
in these consolidated financial statements from November 1,
1999.
Surforama.com, Inc. had a net asset deficiency at the
acquisition date, therefore, the 17,240,000 shares issued on
acquisition were issued at an ascribed value of $Nil with the
net asset deficiency of $407 charged to deficit. Surforama.com
Portal Services Inc. is deemed to be the purchaser for
accounting purposes. Accordingly, its net assets are included
in the consolidated balance sheet at their previously recorded
amounts.
The acquisition is summarized as follows:
Current Liabilities
Accounts payable $ 407
---------
Net Asset Deficiency $ (407)
=========
4. NEW ACCOUNTING STANDARDS
a) Effective December 15, 1995, Statement of Financial
Accounting Standards No. 123 ("SFAS-123") "Accounting For
Stock-Based Compensation" was adopted for United States GAAP
purposes. SFAS-123 enables a company to elect to adopt a
fair value methodology for accounting for stock based
compensation. The Company has determined that the fair value
of stock options is similar to the issue price at the time of
granting. The Company does not expect to elect to adopt the
fair value methodology, although the pro-forma results of
operations and earnings per share determined as if the fair
value methodology had been applied will be disclosed as
required under SFAS-123 in future years.
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1999
(Stated in U.S. Dollars)
4. NEW ACCOUNTING STANDARDS (Continued)
b) In March, 1995, Statement of Financial Accounting Standards
No. 121 ("SFAS-121") "Accounting For Impairment Of Long-Lived
Assets And For Long-Lived Assets To Be Disposed Of" was
issued. Certain long-lived assets held by the Company must
be reviewed for impairment whenever events, or changes in
circumstances, indicate the carrying amount of an asset may
not be recoverable. Accordingly, the impairment loss is
recognized in the period it is determined. The Company has
adopted these standards. There was no material effect on its
financial position or results of operations of the Company
from its adoption.
5. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems
use two digits rather than four to identify a year. Date-
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using year
2000 dates is processed. In addition, similar problems may
arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year
2000 Issue may be experienced before, on, or after January 1,
2000, and, if not addressed, the impact on operations and
financial reporting may range from minor errors to significant
systems failure which could affect an entity's ability to
conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the
entity, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Stated in U.S. Dollars)
------------------------------------------------------------------------
AUGUST 31 NOVEMBER 30
2000 1999
------------------------------------------------------------------------
(Unaudited) (Audited)
ASSETS
Current
Cash and term deposit $ 50,068 $ 26,629
Accounts receivable 21,114 -
Accrued interest receivable 1,916 -
------------------------
73,098 26,629
Investment In And Advances To
Rebatopia.com, Inc. 81,505 -
Capital Assets, net of accumulated
amortization of $229 1,804 -
------------------------
$ 156,407 $ 26,629
========================================================================
LIABILITIES
Current
Accounts payable $ 645 $ 645
------------------------
SHAREHOLDERS' EQUITY
Share Capital
Authorized:
70,000,000 common shares, par value
$0.001 per share
5,000,000 preferred shares, par value
$0.001 per share
Issued and Outstanding:
19,828,899 common shares at August 31, 2000 and
19,752,250 common shares at November 30, 1999 19,829 19,752
Additional paid in capital 103,310 26,738
Retained Earnings Accumulated During
The Development Stage 33,382 (20,591)
Cumulative Translation Adjustment (759) 85
------------------------
155,762 25,984
------------------------
$ 156,407 $ 26,629
========================================================================
Nature Of Operations (Note 1)
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
(Unaudited)
(Stated in U.S. Dollars)
------------------------------------------------------------------------------
THREE NINE INCEPTION
MONTHS MONTHS AUGUST 10
ENDED ENDED 1999 TO
AUGUST 31 AUGUST 31 AUGUST 31
2000 2000 2000
------------------------------------------------------------------------------
Revenue
Advertising $ 1,310 $ 3,098 $ 3,098
Consulting (Note 6(a)) 55,809 55,809 55,809
Interest income 1,974 1,974 1,974
--------------------------------------
59,093 60,881 60,881
--------------------------------------
Expenses
Amortization 69 229 229
Consulting services 24,129 63,799 80,947
Office and sundry 2,762 4,854 7,890
Professional fees - 1,500 1,500
Travel (1,023) 2,557 2,557
Website development 13,974 13,974 13,974
--------------------------------------
39,911 86,913 107,097
--------------------------------------
19,182 (26,032) (46,216)
Gain On Disposal Of Interest In
Rebatopia.com, Inc. 99,972 99,972 99,972
Equity In Loss Of Rebatopia.com, Inc. (19,967) (19,967) (19,967)
--------------------------------------
Net Income For The Period 99,187 53,973 $ 33,789
============
Deficit Accumulated During The
Development Stage, Beginning Of Period (68,046) (20,591)
-------------------------
Retained Earnings Accumulated During
The Development Stage, End Of Period $ 31,141 $ 33,382
=================================================================
Net Income Per Share $ 0.01 $ 0.01
=================================================================
Weighted Average Number Of
Shares Outstanding 19,794,307 19,794,307
=================================================================
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
------------------------------------------------------------------------------
THREE NINE INCEPTION
MONTHS MONTHS AUGUST 10
ENDED ENDED 1999 TO
AUGUST 31 AUGUST 31 AUGUST 31
2000 2000 2000
------------------------------------------------------------------------------
Cash Flows From Operating Activities
Net income for the period $ 99,187 $ 53,973 $ 33,789
Items not involving cash
Amortization 69 229 229
Gain on disposal of interest
in Rebatopia.com, Inc. (99,972) (99,972) (99,972)
Equity in loss of Rebatopia.com, Inc. 19,967 19,967 19,967
-------------------------------------
19,251 (25,803) (45,987)
Adjustments To Reconcile Net Loss To Net
Cash Used By Operating Activities
Accounts receivable (21,114) (21,114) (21,114)
Accrued interest receivable (1,916) (1,916) (1,916)
Accounts payable 1 - 645
Advance due from director 10,000 - -
-------------------------------------
6,222 (48,833) (68,372)
-------------------------------------
Cash Flow From Financing Activities
Common stock issued 100 76,469 123,139
Proceeds on disposal of interest in
Rebatopia.com, Inc. 100,000 100,000 100,000
-------------------------------------
100,100 176,649 223,139
-------------------------------------
Cash Flows From Investing Activities
Acquisition of computer equipment 81 (2,033) (2,033)
Investment in Rebatopia.com, Inc. (1,500) (1,500) (1,500)
Advanced to Rebatopia.com, Inc. (100,000) (100,000) (100,000)
Net asset deficiency of legal parent
at date of reverse take-over
transaction - - (407)
-------------------------------------
(101,419) (103,533) (103,940)
-------------------------------------
Effect Of Exchange Rate Changes On Cash (369) (844) (759)
-------------------------------------
Increase In Cash 4,534 23,439 50,068
Cash, Beginning Of Period 45,534 26,629 -
-------------------------------------
Cash, End Of Period $ 50,068 $ 50,068 $ 50,068
==============================================================================
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING
ACTIVITIES:
Effective November 1, 1999, the Company acquired 100% of the
issued and outstanding shares of Surforama.com Portal Services
Inc. by issuing 17,240,000 common shares at an ascribed value of
$Nil.
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
AUGUST 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
COMMON STOCK
---------------------------
Additional Cumulative
Paid-In Translation
Shares Amount Capital Deficit Adjustment Total
--------------------------------------------------------
Shares Issued For
Cash And Services 17,240,000 $17,240 $ - $ - $ - $ 17,240
Exchange Of Shares
To Acquire
Subsidiary
Surforama.com
Portal Services
Inc. (17,240,000) - - - - -
Surforama.com, Inc. 17,240,000 - - - - -
Net Asset Deficiency
Of Legal Parent At
Date Of Reverse
Take-Over
Transaction - - - (407) - (407)
Shares Issued For
Cash At $0.001 2,000,000 2,000 - - - 2,000
Shares Issued For
Cash At $0.03 500,000 500 14,500 - - 15,000
Shares Issued For
Cash At $1.00 12,250 12 12,238 - - 12,250
Translation
Adjustment - - - - 85 85
Net Loss - - - (20,184) - 20,184)
--------------------------------------------------------
Balance,
November 30, 1999 19,752,250 19,752 26,738 (20,591) 85 25,984
Shares Issued For
Cash At $1.00 76,649 77 76,572 - - 76,649
Translation
Adjustment - - - - (844) (844)
Net Income - - - 53,973 - 53,973
--------------------------------------------------------
Balance,
August 31, 2000 19,828,899 $19,829 $103,310 $ 33,382 $ (759) $155,762
========================================================
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
1. NATURE OF OPERATIONS
a) Organization
The Company was incorporated in the State of Nevada, U.S.A.
on October 22, 1999. The Company's wholly owned subsidiary,
Surforama.com Portal Services Inc., was incorporated under
the Canada Business Corporations Act on August 10, 1999.
b) Development Stage Activities
The Company intends to develop and market end to end online
advertising and classifieds solutions for service providers,
corporations and individuals. The Company was created to
give product and service oriented businesses an alternative
source of advertising and exposure that will be more cost
effective, and reach a much larger audience than traditional
methods. The Company will offer consumers a popular and fast
way to find job searches, vehicles, personals, real estate,
apartment rentals, daily news and the ability to purchase
products directly from their corporate website.
2. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of the Company has been
prepared in accordance with generally accepted accounting
principles in the United States. Because a precise
determination of many assets and liabilities is dependent upon
future events, the preparation of consolidated financial
statements for a period necessarily involves the use of
estimates which have been made using careful judgement.
The consolidated financial statements have, in management's
opinion, been properly prepared within reasonable limits of
materiality, and within the framework of the significant
accounting policies summarized below:
a) Consolidation
These consolidated financial statements include the accounts
of the Company and its wholly owned Canadian subsidiary,
Surforama.com Portal Services Inc. The Company owns 49.07%
of Rebatopia.com, Inc., a company incorporated in Nevada,
U.S.A., and has the ability to exercise significant influence
over the entity, therefore its investment is accounted for
using the equity method.
b) Amortization
Capital assets are amortized over their economically useful
lives at the following rate:
Computer equipment 30% declining balance
In the year of acquisition of an asset, amortization is
provided at one half of the above rate.
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
c) Development Stage Company
The Company is a developed stage company as defined in the
Statements of Financial Accounting Standards No. 7. The
Company is devoting substantially all of its present efforts
to establish a new business and none of its planned principal
operations have commenced. All losses accumulated since
inception have been considered as part of the Company's
development stage activities.
d) Income Taxes
The Company has adopted Statement of Financial Accounting
Standards No. 109 - "Accounting For Income Taxes" (SFAS 109).
This standard requires the use of an asset and liability
approach for financial accounting and reporting on income
taxes. If it is more likely than not that some portion, or
all if a deferred tax asset, will not be realized, a
valuation allowance is recognized.
e) Foreign Currency Translation
The operations of the Company's subsidiary, Surforama.com
Portal Services Inc., are located in Vancouver, Canada and
its functional currency is the Canadian dollar. The
consolidated financial statements have been translated using
the current method whereby the assets and liabilities are
translated at the year end exchange rate, capital accounts at
the historical exchange rate, and revenues and expenses at
the average exchange rate for the period. Adjustments
arising from the translation of the Company's consolidated
financial statements are included as a separate component of
shareholders' equity.
f) Financial Instruments
The Company's financial instruments consist of cash and
accounts payable.
Unless otherwise noted, it is management's opinion that this
Company is not exposed to significant interest or credit
risks arising from these financial instruments. The fair
value of these financial instruments approximate their
carrying values, unless otherwise noted.
g) Net Income Per Share
Net income per share is based on the weighted average number
of common shares outstanding during the period plus common
share equivalents, such as options, warrants and certain
convertible securities. This method requires primary
earnings per share to be computed as if the common share
equivalents were exercised at the beginning of the period or
at the date of issue, and as if the funds obtained thereby
were used to purchase common shares of the Company at its
average market value during the period.
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
3. JOINT VENTURE
a) Formation of the Rebatopia joint venture
Effective March 27, 2000, Source, a division of Premier
Lifestyles International Corporation ("Source"), and the
Company contributed their respective databases and
operational expertise into an incorporated joint venture,
Rebatopia.com, Inc., ("Rebatopia"), originally owned 50% by
Source and 50% by the Company. Joint control of the
operations was to be exercised by a board of directors
consisting of five members. The Company has the right to
appoint at least two directors.
The Company has committed to fund Rebatopia up to $1,000,000
within twelve months of the formation of Rebatopia.
An amount of 30% of the net after tax profits each year will
be distributed annually to each co-venturer proportionate to
their equity interest.
The term of the joint venture is for 99 years from March 27,
2000, with provisions for early termination.
b) Purchase Sale Agreement
Effective March 27, 2000, Source and the Company agreed to
sell a 33.33% of their joint venture interest in Rebatopia to
a group collectively known as EuroCapital for $2,000,000 (1/2
to Source and 1/2 to the Company) to be financed by a note
payable as follows:
- $25,000 upon signing of agreement (not paid);
- $75,000 within 10 days from signing (not paid);
- $150,000 within 30 days from signing (not paid);
- $550,000 within 80 days from signing;
- $500,000 within 90 from signing; and
- $700,000 within 120 days from signing.
The payments will be accelerated if Rebatopia becomes a
publicly traded company before the 90 day payment is due.
The 33.33% ownership position is to be held in escrow pending
the completion of the financing by the EuroCapital group,
upon which each of the parties will hold a 33.33% interest in
the joint venture. Joint control of the operations is to be
exercised by a board of directors consisting of three
members. The Company has the right to appoint one director
and to name the chairman of the board of directors.
On August 8, 2000 the parties to the Purchase Sale agreement
agreed to the termination of the agreement. As a result of
the termination the Company received a cash payment of
$100,000 and now holds a 49.07% interest in Rebatopia.com,
Inc.
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
4. ACQUISITION OF SUBSIDIARY
Effective November 1, 1999, Surforama.com, Inc. acquired 100%
of the issued and outstanding shares of Surforama.com Portal
Services Inc. by issuing 17,240,000 common shares. Since the
transaction resulted in the former shareholders of
Surforama.com Portal Services Inc. owning the majority of the
issued shares of Surforama.com, Inc., the transaction, which is
referred to as a "reverse take-over", has been treated for
accounting purposes as an acquisition by Surforama.com Portal
Services Inc. of the net assets and liabilities of
Surforama.com, Inc. Under this purchase method of accounting,
the results of operations of Surforama.com, Inc. are included
in these consolidated financial statements from November 1,
1999.
Surforama.com, Inc. had a net asset deficiency at the
acquisition date, therefore, the 17,240,000 shares issued on
acquisition were issued at an ascribed value of $Nil with the
net asset deficiency of $407 charged to deficit. Surforama.com
Portal Services Inc. is deemed to be the purchaser for
accounting purposes. Accordingly, its net assets are included
in the consolidated balance sheet at their previously recorded
amounts.
The acquisition is summarized as follows:
Current Liabilities
Accounts payable $ 407
---------
Net Asset Deficiency $ (407)
=========
5. NEW ACCOUNTING STANDARDS
a) Effective December 15, 1995, Statement of Financial
Accounting Standards No. 123 ("SFAS-123") "Accounting For
Stock-Based Compensation" was adopted for United States GAAP
purposes. SFAS-123 enables a company to elect to adopt a
fair value methodology for accounting for stock based
compensation. The Company has determined that the fair value
of stock options is similar to the issue price at the time of
granting. The Company does not expect to elect to adopt the
fair value methodology, although the pro-forma results of
operations and earnings per share determined as if the fair
value methodology had been applied will be disclosed as
required under SFAS-123 in future years.
b) In March, 1995, Statement of Financial Accounting Standards
No. 121 ("SFAS-121") "Accounting For Impairment Of Long-Lived
Assets And For Long-Lived Assets To Be Disposed Of" was
issued. Certain long-lived assets held by the Company must
be reviewed for impairment whenever events, or changes in
circumstances, indicate the carrying amount of an asset may
not be recoverable. Accordingly, the impairment loss is
recognized in the period it is determined. The Company has
adopted these standards. There was no material effect on its
financial position or results of operations of the Company
from its adoption.
<PAGE>
SURFORAMA.COM, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
6. RELATED PARTY TRANSACTIONS
During the period, the Company entered into transactions
(recorded at exchange values) with related parties as follows:
a) The Company recorded management, programming and website
development fees from Rebatopia.com, Inc. totaling $55,809.
b) As at August 31, 2000, accounts receivable of $21,114 and
accrued interest receivable of $1,916 was due from
Rebatopia.com, Inc.
c) Management fees paid to certain directors for services
rendered to the Company totaled $63,799
<PAGE>
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have had no changes in or disagreements with our accountants.
AVAILABLE INFORMATION
We have filed a registration statement on form SB-2 under the
Securities Act of 1933 with the Securities and Exchange
Commission with respect to the shares of our common stock offered
through this prospectus. This prospectus is filed as a part of
that registration statement and does not contain all of the
information contained in the registration statement and exhibits.
Statements made in the registration statement are summaries of
the material terms of the referenced contracts, agreements or
documents of the company and are not necessarily complete. We
refer you to our registration statement and each exhibit attached
to it for a more complete description of matters involving the
company, and the statements we have made in this prospectus are
qualified in their entirety by reference to these additional
materials. You may inspect the registration statement and
exhibits and schedules filed with the Securities and Exchange
Commission at the Commission's principle office in Washington,
D.C. Copies of all or any part of the registration statement may
be obtained from the Public Reference Section of the Securities
and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, NY 10048 and 500
West Madison Street, Suite 1400, Chicago, IL 60661. Please call
the Commission at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. The Securities and
Exchange Commission also maintains a web site at
http://www.sec.gov that contains reports, proxy statements and
information regarding registrants that file electronically with
the Commission. Our registration statement and the referenced
exhibits can also be found on this site.
38
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the
Nevada Revised Statutes and our bylaws.
Under the Nevada Revised Statutes, director immunity from
liability to a company or its shareholders for monetary
liabilities applies automatically unless it is specifically
limited by a company's Articles of Incorporation. Our Articles
of Incorporation do not specifically limit our directors'
immunity. Excepted from that immunity are: (a) a willful failure
to deal fairly with the company or its shareholders in connection
with a matter in which the director has a material conflict of
interest; (b) a violation of criminal law, unless the director
had reasonable cause to believe that his or her conduct was
lawful or no reasonable cause to believe that his or her conduct
was unlawful; (c) a transaction from which the director derived
an improper personal profit; and (d) willful misconduct.
Our bylaws provide that we will indemnify our directors and
officers to the fullest extent not prohibited by Nevada law;
provided, however, that we may modify the extent of such
indemnification by individual contracts with our directors and
officers; and, provided, further, that we shall not be required
to indemnify any director or officer in connection with any
proceeding, or part thereof, initiated by such person unless such
indemnification: (a) is expressly required to be made by law, (b)
the proceeding was authorized by our board of directors, (c) is
provided by us, in our sole discretion, pursuant to the powers
vested us under Nevada law or (d) is required to be made pursuant
to the bylaws.
Our bylaws also provide that we may indemnify a director or former
director of subsidiary corporation and we may indemnify our
officers, employees or agents, or the officers, employees or
agents of a subsidiary corporation and the heirs and personal
representatives of any such person, against all expenses incurred
by the person relating to a judgment, criminal charge,
administrative action or other proceeding to which he or she is a
party by reason of being or having been one of our directors,
officers or employees.
Our directors cause us to purchase and maintain insurance for the
benefit of a person who is or was serving as our director,
officer, employee or agent, or as a director, officer, employee or
agent or our subsidiaries, and his or her heirs or personal
representatives against a liability incurred by him as a director,
officer, employee or agent.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and
control persons pursuant to the foregoing provisions or otherwise,
we have been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public
policy, and is therefore unenforceable.
39
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs of this offering are as follows:
Securities and Exchange Commission registration fee $ 2,114.32
Federal Taxes $ NIL
State Taxes and Fees $ NIL
Transfer Agent Fees $ 2,500.00
Accounting fees and expenses $ 2,000.00
Legal fees and expenses $ 15,000.00
Blue Sky fees and expenses $ NIL
Miscellaneous $ NIL
-----------
Total $ 21,614.84
===========
------------------------------------------------------------------
All amounts are estimates other than the Commission's registration
fee.
We are paying all expenses of the offering listed above. No
portion of these expenses will be borne by the selling
shareholders. The selling shareholders, however, will pay any
other expenses incurred in selling their common stock, including
any brokerage commissions or costs of sale.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
We issued 17,240,000 shares of common stock on November 1, 1999
to the vendors of Surforama.com Portal Services Inc. Two of
these vendors were Mr. Yau and Mr. Hanson, both now directors of
our company. Mr. Yau is our president and CEO and Mr. Hanson is
vice-president, and COO. These shares were issued pursuant to
Section 4(2) of the Securities Act of 1933 in exchange for a 100%
interest in Surforama.com Portal Services Inc. Surforama.com
Portal Services Inc. owns a 100% interest in all and assets and
intellectual property that comprise the surforama.com website.
The 17,240,000 shares of common stock are restricted shares as
defined in the Securities Act.
We completed an offering of 2,500,000 shares of our common stock
at a price of $0.001 per share to a total of eleven purchasers on
November 4, 1999. The total amount received from this offering
was $2,500. 1,000,000 of these shares were sold to our officers
and directors. We completed the offering pursuant to Regulation S
of the Securities Act. Each purchaser represented to us that he
was a non-U.S. person as defined in Regulation S. We did not
engage in a distribution of this offering in the United States.
Each purchaser represented his intention to acquire the
securities for investment only and not with a view toward
distribution. Appropriate legends were affixed to the stock
certificate issued to each purchaser in accordance with
Regulation S. Each investor was given adequate access to
sufficient information about us to make an informed investment
decision. None of the securities were sold through an
underwriter and accordingly, there were no underwriting discounts
or commissions involved. No registration rights were granted to
any of the purchasers.
We completed an offering of 12,250 shares of our common stock at
a price of $1.00 per share to
40
<PAGE>
a total of thirteen (13) purchasers on November 30, 1999. The total
amount received from this offering was $12,250. 100 of these shares
were sold to an officer and director. We completed the offering pursuant
to Regulation S of the Securities Act. Each purchaser represented to us
that he was a non-U.S. person as defined in Regulation S. We did not
engage in a distribution of this offering in the United States.
Each purchaser represented his intention to acquire the
securities for investment only and not with a view toward
distribution. Appropriate legends were affixed to the stock
certificate issued to each purchaser in accordance with
Regulation S. Each investor was given adequate access to
sufficient information about us to make an informed investment
decision. None of the securities were sold through an
underwriter and accordingly, there were no underwriting discounts
or commissions involved. No registration rights were granted to
any of the purchasers.
We completed an offering of 76,649 shares of our common stock at
a price of $1.00 per share to a total of eight (8) purchasers on
June 8, 2000. The total amount received from this offering was
$76,649. We completed the offering pursuant to Regulation S of
the Securities Act. Each purchaser represented to us that he was
a non-U.S. person as defined in Regulation S. We did not engage
in a distribution of this offering in the United States. Each
purchaser represented his intention to acquire the securities for
investment only and not with a view toward distribution.
Appropriate legends were affixed to the stock certificate issued
to each purchaser in accordance with Regulation S. Each investor
was given adequate access to sufficient information about us to
make an informed investment decision. None of the securities
were sold through an underwriter and accordingly, there were no
underwriting discounts or commissions involved. No registration
rights were granted to any of the purchasers.
ITEM 27. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
-------- --------------------
3.1 Articles of Incorporation
3.2 By-Laws
3.3 Incorporation documents for Surforama.com Portal
Services, Inc.
4.1 Share Certificate
5.1 Opinion of Cane & Company, LLC, with consent to use
10.1 Equity Joint Venture Agreement dated February 24, 2000
with Source
10.2 Agreement of Purchase and Sale dated November 1, 1999
between Vendors and Surforama.com, Inc.
10.3 Termination of Purchase and Sale Agreement dated
August 25, 2000.
10.4 Office Services Agreement dated November 1, 1999
between Surforama.com, Inc. and Mike Hanson.
10.5 Web Advertising Sales Agreement dated October 20, 1999
between Flycast Network and Surforama.com
Portal Services, Inc.
23.1 Consent of Morgan & Company
27.1 Financial Data Schedule
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ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(a) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(b) To reflect in the prospectus any facts or events
arising after the effective date of this registration
statement, or most recent post-effective amendment,
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
registration statement; and
(c) To include any material information with respect to the
plan of distribution not previously disclosed in this
registration statement or any material change to such
information in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered hereby which
remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the provisions above, or
otherwise, we have been advised 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.
In the event that a claim for indemnification against such
liabilities, other than the payment by us of expenses incurred or
paid by one of our directors, officers, or controlling persons in
the successful defense of any action, suit or proceeding, is
asserted by one of our directors, officers, or controlling person
sin connection with the securities being registered, we will,
unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification is against
public policy as expressed in the Securities Act, and we will be
governed by the final adjudication of such issue.
42
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
SB-2 and authorized this registration statement to be signed on
its behalf by the undersigned, in the City of Vancouver, Province
of British Columbia on November 28th, 2000.
SURFORAMA.COM, INC.
/s/ Edward Yau
By: _________________________
Edward Yau, President
POWER OF ATTORNEY
ALL MEN BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints Edward Yau, his true and
lawful attorney-in-fact and agent, with full power of
substitution and re-substitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all pre- or
post-effective amendments to this registration statement, and to
file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any one of them, or
their or his substitutes, may lawfully do or cause to be done by
virtue hereof.
In accordance with the requirements of the Securities Act of
1933, this registration statement was signed by the following
persons in the capacities and on the dates stated.
SIGNATURE CAPACITY IN WHICH SIGNED DATE
/s/ Edward Yau President and Chief Executive November 28th, 2000
----------------- Officer and Director
Edward Yau
/s/ Mike Hanson Vice President and Chief November 28th, 2000
----------------- Operating Officer, and
Mike Hanson Director
/s/ Gregory Yanke Secretary, Treasurer November 28th, 2000
----------------- and Director
Gregory Yanke
43
