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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1-A to
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR 12(g)
POKER.COM INC.
(Name of small business issuer as specified in its charter)
Florida 98-0199508
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
#1502 - 1166 Alberni Street
Vancouver, British Columbia, Canada, V6E 3Z3
(Address, including postal code, of registrant's principal executive offices)
(604) 689-5998
(Telephone number including area code)
Securities to be registered under Section 12(b) of the Exchange Act: None
Securities to be registered under Section 12(g) of the Exchange Act: Common
Stock
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POKER.COM INC.
Form 10 - SB
TABLE OF CONTENTS
<TABLE>
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Part I
Page
<S> <C>
Item 1 Description of Business 3
Item 2 Management Discussion and or Plan of Operation 21
Item 3 Description of Property 24
Item 4 Security Ownership of Certain Beneficial Owners
Management 25
Item 5 Directors, Executive Officers, Promoters and control persons 25
Item 6 Executive Compensation 26
Item 7 Certain Relationships and Related Transactions 28
Item 8 Description of Securities 28
Part II
Item 1 Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder matters 29
Item 2 Legal Proceedings 30
Item 3 Changes in and Disagreements with Accountants on Accounts 30
Item 4 Recent Sale of Unregistered Securities 30
Item 5 Indemnification of Directors and Officers 31
Part III
Item 1 Index to Exhibits 33
</TABLE>
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PART I
Item 1 Description of Business
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General Development of Business
The company was incorporated in Florida on May 3rd, 1989 as Sparta Ventures
Corp. In 1998 the company entered into an Agreement with Thermal Ablation
Technologies Canada Inc., which had developed a thermal balloon ablation system
to eliminate dysfunctional uterine bleeding. The Company's obligation was to
raise $3 million to pursue the development of a prototype unit. As a result of
this agreement the Company changed its name to Thermal Ablation Technology
Corporation ("Thermal") on October 8th, 1998. The company raised $150,000 in a
Private Placement which it invested into Thermal but was unable to raise any
further capital with a result that the deal collapsed. The company retained a 6%
interest in Thermal with no further obligation.
The Company's Auditors, Pannell Kerr Forster, in conducting their Audit of the
Financial Statements of the Company for the period ending December 31, 1999,
reported to the Directors and Shareholders on March 14th, 2000 that the Company
had minimal capital resources available and had incurred substantial losses of
$386,587 to December 31, 1999 and had an accumulated deficit of $545,518. They
also stated that "the Company must obtain additional financing to meet its cash
flow requirements. "and continued that "These matters raise substantial doubt
about the company's ability to continue as a going concern."
The Company's previous auditors, Grant Thornton, on June 30th, 1999, stated that
the companies liabilities exceeded their assets by $86,201 and expressed
"substantial doubt" that the company had the ability to continue as a going
concern.
In June, 1999 the Company was approached by Mr. Michael Jackson on behalf of
UniNet Technology Inc. ("UniNet") (of which Mr. Michael Jackson is a Director)
to enquire whether the Company was interested in purchasing the URL
www.poker.com from UniNet and developing the Company into a gaming marketing
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company. In early May 1999 UniNet started negotiating to purchase the URL
www.poker.com. from Ala Corp, the owners of the URL. Neither Mr. Jackson nor
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UniNet Technology has any vested interest, directly or indirectly, in Ala Corp.
At a meeting between Mr. Jackson and the Directors of the Company in June 1999,
the Directors supported the idea of the Company purchasing the URL from UniNet
and agreed for Mr. Jackson and his associate Mr. Barbosa to take over management
of the Company, subject to Company acquiring the www.poker.com URL from UniNet,
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and undertaking to develop the Company into an on-line Internet gaming marketing
company. On July 9th, 1999 UniNet Technology Inc. entered into an Agreement to
acquire the URL from Ala Corp on the basis of reselling the rights to the
Company. Mr. Michael Jackson became a Director of the Company on July 16th, 1999
and signed an agreement on behalf of the Company to acquire the URL from UniNet.
The purchase consideration for the URL consisted of a cash payment of $100,000,
250,000 shares of Thermal plus an on-going royalty payment of 4% of gross
monthly profits. Mr Jackson and Mr Barbosa each received 125,000 common shares
from UniNet as compensation for brokering the sale between Ala Corp, UniNet and
Thermal.
Subsequent to purchasing the URL from UniNet, Management started to research the
acquisition of a Casino and/or Poker software license for re-selling. Management
attended the Global Interactive Gaming Conference in Vancouver in July and were
introduced to ASF Software Inc. ("ASF") of Belize, who had developed a multi-
player Poker software program and who were interested in selling a software
license to the company with the rights to re-sell the license. The Company
thereafter purchased a License from ASF for $135,000 on the 10th August 1999.
At the same conference, Management was introduced to Mr. Bob Simmons of Costa
Rica who had a group interested in setting up a gaming operation in Costa Rica.
As the Company's business model was to develop the Company as a Marketing and
re-seller of gaming licenses and not as a Casino and/or Poker card room
operator, the company negotiated to sell to Mr. Simmon's group, Antico Holdings
S.A. ("Antico") a Costa Rican company, a Poker software program sub-license for
$200,000. To capitalize on the marketing potential of the URL www.poker.com,
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the company sold the exclusive world wide rights to use www.poker.com only
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for operating a Casino and/or Card room to Antico. The Company retains all other
rights to the URL for developing the web site as a portal, for advertising, for
marketing the Antico card-room, marketing Casinos, marketing cardrooms and other
gaming software.
The Company earns a marketing fee of 20% of all deposits made to Antico's Poker
card-room by players who log in to play poker and use their credit cards or send
wire transfers to deposit funds to play poker.
On the 29th November 1999, the Company through its wholly owned subsidiary,
Casino Marketing S.A. ("Casino Marketing") purchased a Master Sub-license
Agreement ("MLA") from Gamingtech Corporation ("Gamingtech") (a wholly owned
subsidiary of Chartwell Technologies Inc ("Chartwell") who are software
developers and who had developed a suit of 18 Casino Games) for $100,000 which
provides Casino Marketing the non-exclusive worldwide rights to sell Casino
software program licenses. The Master License software program enables Casino
Marketing to:
a) sell independent Casino software program sub-licenses for up to
$75,000 plus a gross royalty fee of up to 35% of monthly Net operating
profit. This independent sub-license will enable the purchaser to use
the licensor's proprietary software.
b) sell dependant sub-license Casino 'links' for up to $35,000 plus a
gross royalty fee of between 35% and up to 65% of the sub-licensees
net monthly revenue. In this situation the dependant sub-licensee is
linked into an independent sub-licensees proprietary software and does
not have his own proprietary software
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The link connection (similar to an Internet affiliation program) is sold to a
webmaster who would create a new URL/domain and design his/her own casino
webpage. When a customer visits the webmaster's new URL/domain lobby he would be
invited to 'play' for real money and would click onto the 'play' button. The
visitor would seamlessly pass via the links web-page through a 'gateway' into a
'Master Casino' offering numerous games.
To make it as easy and as simple as possible for a prospective Casino sub-
licensee to purchase and operate a Casino, the Company will provide the sub-
licensee with:
. assistance in registering a URL.
. designing their web page.
. providing a link to Visual Casino who would in turn provide:
. technical and administrative support.
. banking.
. server access for bandwidth.
The Casino operator's sole function would then be to market their web site and
direct traffic to their site.
On January 10th, 2000, the Company sold an independent Casino Sub-license to
Antico for $50,000 with the understanding that Antico would assist the company
in providing technical and administrative services from Costa Rica to the
Company's Casino sub-licensees. Antico will pay the Company 35% of the net
profits generated from their Casino, known as Visual Casino. Antico will earn
from web masters who purchase links to Visual Casino from the Company, a 3%
administration fee. (See 'Business of the Company') Management are neither
Directors or shareholders of Antico.
Antico will pay the Company 35% of the net profits generated from their Casino,
known as Visual Casino. Antico will earn from web masters who purchase from the
Company, links to the Visual Casino site, a 3% administration fee (See 'Business
of the Company') Visual Casino will provide the webmaster virtual time
statistics on who is playing, how much has been deposited and how much has been
won by the players.
The Company does not propose to sell any gaming licenses to any USA or Canadian
based company but will only sell sub-licenses to foreign-based corporations in
such jurisdictions that according to management allow Internet gaming such as
Antigua, Dominican Republic Belize, Australia, St Kits, Costa Rica.
On August 10, 1999, the company changed its name to Poker.com, Inc. Poker.com,
Inc. began trading as a publicly listed company on the NASD OTC Bulletin Board
exchange under the symbol 'PKER' on August 19, 1999. Poker.com, Inc. has the
exclusive worldwide rights to market the www.poker.com URL until the year 2098.
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In September, 1999, the Company raised $500,000 in a Private Placement to pursue
the new business model of the company, namely, creating www.poker.com as a
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gaming portal, selling software program sub-licenses and Casino links for on-
line gaming, marketing and selling banner advertising on the www.poker.com
portal. -------------
The company's strategy is to acquire Master Licenses from software developers in
order to resell their software programs to earn licensing fees and royalty fees,
rather than spend time and money on developing proprietary software, which
requires substantial capital and human resources. Management has learnt through
their dealings with Software Developers that some software developers lack the
marketing expertise to take advantage of the market potential for selling sub-
licenses. The Company, based on the marketing expertise of management have been
able to acquire Master Sub-Licensing contracts from these software developers.
The software developers also recognize the fact that the more licenses they
sell, directly or indirectly, the greater their royalty revenue.
As a result the company is now engaged on the Internet in the business of
selling on-line casino sub-licenses and marketing www.poker.com as a poker card
room and a gaming portal. -------------
The company's principal offices are located at Suite 201, 1166 Alberni Street,
Vancouver, British Columbia, V6E 3Z3, Canada. The company's telephone number is
(604) 689-5998, and the fax number is (604) 683-6013.
The Internet Gambling Funding Prohibition Act
The proposed Internet Gambling Funding Prohibition Act (the "Bill") was
introduced to the U.S. House of Representatives on May 10th, 2000. The object of
the Bill is to prevent the use of certain bank instruments for Internet
Gambling, and for other purposes. Section 3 of the Bill would make it illegal to
use bank instruments to pay entry fees, place bets, collect betting winnings or
conduct other gambling activities through the Internet. Covered bank instruments
include credit cards, debit cards, electronic fund transfers through money
transmitting businesses, checks, bank drafts or similar instruments drawn by or
on behalf of a person payable through a financial institution. Section 4 of the
Bill is proposed to encourage enactment and enforcement of laws in those
countries affected with money laundering, corruption and crime issues in order
to prevent Internet gambling and use of financial payment and transfer systems
to facilitate Internet Gambling.
If this Act is approved by Congress and brought into law, the company's revenues
from sales of sub-licenses and royalty fees earned from the company's sub-
licensees, will be severally affected. The effect of the proposed act would slow
down the sale of sub-licenses. Reduced revenue from sale of licenses and royalty
fees could have a serious negative effect on the financial status of the Company
and could result in the company being unable to continue in business.
The Internet
It is management's opinion that those websites on the Internet that offer
entertainment-driven content with a high level of interactivity through chat and
multimedia will attract the most traffic. Management believes that providing a
complete entertainment experience and information to visitors will create a
community that will constantly return to the site and remain loyal.
www.poker.com offers all of these components.
It is now common knowledge that the Internet has changed the face of gaming,
taking it beyond the confines of political and physical boundaries and into the
virtual world and therefore the global user base.
Competitive Business
Competition
The online gaming market is new, rapidly evolving and intensely competitive and
the Company expects that competition will further intensify in the future.
Barriers to entry are minimal, and current and new competitors can launch new
sites at a relatively low cost.
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The Company believes that the principal competitive factors in its online market
are brand recognition, selection, variety of value-added services, ease-of-use,
site content, quality of service, and technical expertise. Many of the Company's
potential competitors have longer operating histories, larger customer bases,
greater brand recognition and greater financial, marketing and other resources
than the Company. The Company is aware that certain of its competitors have and
may continue to adopt aggressive policies and devote substantially more
resources to website and systems development than the Company. Increased
competition may result in reduced operating margins, loss of market share and a
diminished brand franchise.
There can be no assurance that the Company will be able to compete successfully
against current and future competitors. New technologies and the expansion of
existing technologies may increase the competitive pressures on the Company.
However, to compete with the existing software developers and direct traffic to
the Company's web site, the Company has established www.poker.com as a gaming
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Portal to encourage potential subscribers to visit the site by offering them
general gaming information, free games, free e-mail, an entry point to visit a
sub-licensees gaming site, a chat line and forum, a retail e-commerce facility.
Based on the web site being developed as a portal the company expects to
generate substantial traffic to its site. The company has also entered into
various contracts to purchase traffic and key words from www.galore.com
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("Galore") and [email protected] ("Excite") respectively which will result in
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a much higher traffic count to the Companies' web site than to most other gaming
sites on the Internet. In fact, the Company has become one of the busiest gaming
sites on the Internet. PCData online, an independent metrix analyst, tracking
the busiest sites on the Internet, ranked Poker.com web site as follows
<TABLE>
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Month Overall Ranking Unique Visitors
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October, 1999 4,110 136,000
November, 1999 3,968 155,000
December, 1999 2,939 179,000
January, 2000 2,018 340,000
February, 2000 1,703 373,000
March, 2000 1,215 598,000
</TABLE>
Traffic is countered in a number of different ways.
- Unique visitors are defined as a person who logs onto the web site and is
countered just once notwithstanding that he may revisit the site daily for
the balance of the month.
- page views are the number of pages that a visitor opens on a web site
- Impressions are the number of times a visitor clicks onto a page which
carries advertising banners.
The Excite contract was entered into on October 18/th/ 1999 and runs from
Janaury 1/st/ 2000 until December 31/st/ 2000. Under the terms of the contract
the Company has purchased a number of key words including Poker, Bingo,
Blackjack, Royal Flush, PaiGow, PaiGow Poker, Sic Bo, Stud Poker, Texas Holdem
and Caribbean Poker on the Excite search engine. The effect is that when a
customer types in the word 'Poker' on the Excite@home search engine, a Poker.com
banner will pop up. The cost of the contract is based on the number of projected
impressions which is estimated at $345,360 for the year.
The Galore agreement is a verbal agreement between the company and Galore.
Galore has undertaken to send a minimum of 30,000 daily visitors to the site for
$7,500 per month. The agreement commenced November 1st, 1999 and can be
terminated at any time by either party on 30 days notice.
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Internet Gaming Companies
As a result of management's research, management believes that there are a
number of public and private companies competing for market share in the
Internet Gaming world, including but not limited to the following companies;.
CryptoLogic Inc. (Toronto Stock Exchange: CRY)
CRY is a public company traded on the Toronto Stock Exchange. Cryptologic
is a well-known licensor in the software/technology side of the industry.
The Company charges licensees an up-front $250,000 licensing fee for use of
its 19 casino games, as well as charging 50% of each licensee's net
revenue. CRY has two primary technologies. "E-cash" software is an
efficient and secure application that utilizes proprietary real-time
cryptographic technology to enable secure Internet commerce and information
transmission. Internet casino software was first released in 1996 and
licensed through the wholly-owned subsidiary Internet Overseas Licensing
Limited (IOLL). IOLL's 12 licensees comprise one of the largest segments
of the online casino market. CRY's expertise consists of: Internet software
development; Internet communications; client/server applications; data
security and random number generation; international banking; mathematics;
3D graphics; and animation.
Poker.com Inc competes with Cryptologic in a number of ways
a) Selling price for a license is offered for less than Cryptologic.
b) Company offers Java based platform that does not require
downloading and is therefore much faster to load.
c) Lower royalty fee charged by the company
d) Ability of the Company to sell links
Cryptologic competes with Poker.com
Because Cryptologic's software is in a download platform, the graphics
are far superior to poker.coms'
Starnet Communications International Inc. (NASD OTC BB: SNMM)
Starnet is primarily a developer, licensor, and provider of online gaming
technology and websites. Starnet currently offers online gaming services
through its own World Gaming Services, Inc. subsidiary that only serves
clientele outside of North America, and through it Softec Systems
Caribbean, Inc. subsidiary that licenses turnkey online gaming packages to
independent licensees. As at the end of June 1999, Starnet had launched
websites for 42 licensees. Virtual casino offerings include more than 22
different games such as blackjack, pai gow poker, roulette, and craps. A
live sports book is also operational.
Starnet charges its licensees a US $100,000 up-front fee, consulting fees,
and a percentage of each licensee's net revenues (based on a graduated
calculation from 40% of the first US $100,000 down to 15% of any net
revenues over US $5,000,000).
Poker.com Inc competes with Starnet in a number of ways
a) Selling price for a license offered by the Company is less than
offered by Starnet
b) Company offers Java based platform that does not require
downloading and is therefore much faster to load
c) Ability of the Company to sell links
d) Poker charges royalty on the net income, Starnet charges royalty
fees on the gross revenue
Starnet competes with Poker.com - Starnets software is in a download
platform and is graphically far superior to Poker.coms'
Starnet charges less Royalty fee percentage.
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Chartwell Technology Inc. (Alberta Stock Exchange: CWH)
Prior to becoming involved in the Internet gaming industry, Chartwell was
an oil and gas exploration and development based in western Canada. With
its acquisition of Gateway Technology Inc. in January 1998, the Company now
licenses Java-based Internet Gaming software. The Company's licensing fee
charges are $100,000.
Poker.com Inc competes with Chartwell
a) By offering licenses at a lower price than Chartwell
b) Being able to offer Casino links
Chartwell charges less Royalty fees than Poker
Atlantic International Entertainment, Ltd. (NASD OTC BB:AIEE)
AIEE develops and markets interactive products and services focused on two
major sectors of the gaming industry - interactive gaming & wagering and
information technology products and services. AIEE develops and markets
worldwide private network and interactive gaming and wagering products
including its proprietary flagship products, Internet Casino Extension,
also known as ICE. AIEE licenses its products to licensed casino operators
and sports wagering businesses for a fee of $250,000 to $350,000, depending
on the types of products licensed. AIEE has entered into eleven license
agreements for the ICE product. The company licenses the "webSports"
sportsbook software system to casino operators and sports book businesses.
AIEE has entered into seven license agreements for the "webSports" product.
Poker.com Inc competes with Atlantic
a) By competing at a lower selling price for a license
Atlantic is able to offer a SportsBook program that Poker does not offer.
You Bet International, Inc. (NASDAQ: UBET)
UBET is a technology company that specializes in live online event
wagering. UBET is an innovator in the areas of content development, network
deployment, and management services. UBET currently provides an interactive
race and sports environment. UBET's Chairman is also the founder and
largest shareholder of Silicon Gaming, Inc. (SGIC).
Youbet.com, Inc., which recently changed from YouBet International, Inc. to
reflect its interest in developing an e-commerce business, is a development
stage company engaged in developing PC-based propriety communications
software technology to be utilized by consumers for online entertainment
purposes. The Company has developed proprietary technology in both the
computer and horse racing industries.
YouBet is a "closed-loop" Intranet system operating in selected states.
Thus, the potential market that YouBet can target is narrow. To place a
wager on YouBet's system, a customer must open an account with YouBet, open
a separate account with Ladbrokes Call-A-Bet, wait for the CD to arrive in
the mail, and install it.
Poker.com does not compete directly with U-Bet who are primarily in the
Sportsbetting business but may do so at such time as Poker.com offers a
Sportsbook license
Boss Media AB (Sweden - www.bossmedia.com)
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Boss Media AB, develops turnkey solutions for online casinos. The Company
grants licenses for products needed to create and maintain an online gaming
business. The Company provides download software, a game server payment
system, website design, a marketing platform and services for a fee of
$250,000. The product line includes "Seven Card Stud" and "Roulette". Its
two subsidiaries are located in Antigua. Boss Casinos Ltd. focuses on the
daily technical maintenance and operation processing of financial
transactions.
Poker.com Inc competes with Boss Media in a number of ways
a) By offering a Casino link for a lower price than offered by Boss Media
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b) By offering Java based platform that does not require downloading
Boss Media software is a download platform and is graphically far superior
to Poker's graphics.
Boss Media charge less for their Royalty fees
Private Companies
MicroGaming - (South Africa)
A private company based in South Africa, MicroGaming develops and sells
turnkey Internet casino systems to casino operators and entrepreneurs for a
licensing fee of $100,000 (five casino-based games). MicroGaming also
assists in the areas banking services, and general consulting/marketing
services.
Poker.com Inc competes with MicroGaming by selling their licenses at a
lower price than MicroGaming.
MicroGaming has marketing offices in Europe and it is managements
understanding that they have sold the most gaming licenses on the Internet
Global InterActive is located in Antigua and Poker.com Inc. is to an
extent, in direct competition to them. The difference between the software
that Global uses and Poker uses is the fact that Global offers a download
version of their Casino games while Poker offers Java based Casino Games.
Management believes that Global sells their Casino links at an asking price
of $39,900. Their Casino links are connected to a "Master Casino" which
uses Starnet Communication International Inc.'s software program.
Risk Factors Associated with the Poker.Com Inc's Operations
Government Regulation of the Internet
The Company may be subject, both directly and indirectly, to various laws
and regulations relating to its business, although there are few laws or
regulations directly applicable to selling on-line gaming software on the
Internet. However, 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 gaming on the Internet. Such laws and regulations
may cover issues such as user privacy, pricing, content, copyrights,
distribution and characteristics and quality of products and services.
Furthermore, the growth and development of the market for online commerce
may prompt calls for more stringent consumer protection laws that may
impose additional burdens on those companies conducting business online.
The enactment of any additional laws or regulations may impede the growth
of gaming on the Internet which could, in turn, decrease the demand for the
Company's products and services and increase the Company's cost of doing
business, or otherwise have an adverse effect on the Company.
In July 1998, the US Senate voted to largely prohibit gambling on the
Internet. Under the legislation, operators of illegal Internet gambling
sites based in the USA could be sentenced to up to four years in jail and
fined up to $20,000. Some Internet-based "fantasy" or "rotisserie" sports
league activities would be exempt from the ban. However, in August 1998 the
US House of Representatives overwhelmingly voted down the legislation. On
March 23, 1999, Senator Kyle (R-Arz.) submitted Bill S.692 to the Senate
for consideration. The Bill was passed in November 1999 but is still
required to be passed by Congress.
In the event the Kyle bill is passed by Congress, the effect on revenue
from marketing Antico's card room and Casino could be negatively affected.
However, senator Kyle has indicated that if the Bill is passed, the
intention is not to charge any American wagering on Internet gaming, but to
charge the operator. All the companies sub-licensees operate in off-shore
jurisdictions and would not be subject to any US Law.
To counteract any loss of revenue the Company will increase their marketing
programs to Europe, South America and Asia.
The Company does not propose to sell any gaming licenses to any USA or
Canadian based company but will only sell sub-licenses to foreign based
corporations in such jurisdiction that allows Internet gaming.
There are currently no requirements set out by Government Regulations for
approval of Development and/or sale of gaming software or sale of gaming
licenses.
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The Company does not operate a gaming site and is therefore not subject to
the regulations proposed under the 'Kyl' bill
The move on the part of the federal government to ban Internet gambling is
a departure from gambling policy. The federal government has typically
left the issue up to the authority of the state governments, resulting in
wide range of attitudes towards gambling. However, as Internet gambling
employs interstate telecommunication systems, there is potential for
federal regulations to be promulgated. Most states allow some type of
gambling, whether it be full casinos, card rooms, pari-mutuel tracks or
state-operated lotteries. Only two states, Hawaii and Utah, prohibit all
forms of gaming.
State Role in Prohibition of Internet Gambling
Residents in states prohibiting gambling may circumvent anti-gaming laws by
logging into the Internet. Several states have taken the initiative to
curtail Internet gambling within their borders by taking legal action
against the website operators. However, as the Company does not own nor
operate a Casino or cardroom in the United States of America or in any
other jurisdiction nor does the company sell Casino sub-licenses, links or
card-rooms to U.S based companies, there does not appear to be any legal
liability that could be incurred by the Company as a result of an off-shore
sub- licensee accepting wagering from North American customers.
Limited Operating History
Poker.com, Inc. has a short operating history on which to base an
evaluation of its business and prospects. The Company's prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly
companies in new and rapidly evolving markets such as online commerce.
Such risks include, but are not limited to, possible inability to respond
promptly to changes in a rapidly evolving and unpredictable business
environment and the risk of inability to manage growth. To address these
risks, the Company must, among other things, develop and expand its
customer base, successfully implement its business and marketing
strategies, continue to develop and upgrade website and transaction-
processing systems, provide superior customer service, respond to
competitive developments, and attract and retain qualified personnel. If
the Company is not successful in addressing such risks, it may be
materially adversely affected.
Dependence on Continued Growth of Online Commerce
The Company's long-term viability is substantially dependent upon the
widespread consumer acceptance and use of the Internet as a medium of
commerce. Use of the Internet as a means of effecting monetary transactions
is at an early stage of development, and demand and market acceptance for
recently introduced services and products over the Internet remains
uncertain. The Company cannot predict the extent to which consumers will be
willing to shift their gaming habits to online casinos.
The Internet may not become a viable commercial marketplace for a number of
reasons, including potentially inadequate development of the necessary
network infrastructure, delayed development of enabling technologies and
inadequate performance improvements. In addition, the Internet's viability
as a commercial marketplace could be adversely affected by delays in the
development of services or by increased government regulation. Changes in
or insufficient availability of telecommunications services to support the
Internet also could result in slower response times and adversely affect
usage of the Internet generally and Poker.com, Inc. in
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particular. Moreover, adverse publicity and consumer concern about the
security of transactions conducted on the Internet and the privacy of users
may also inhibit the growth of commerce on the Internet. If the use of the
Internet does not continue to grow or grows more slowly than expected, or
if the infrastructure for the Internet does not effectively support growth
that may occur, the Company would be materially adversely affected.
Need for Additional Funds
The Company's capital requirements depend on several factors, including the
rate of market acceptance, the ability to develop and expand the Company's
customer base, the level of expenditures for sales and marketing, the cost
of website development and upgrades, and other factors. If capital
requirements vary materially from those currently planned, the Company may
require additional financing sooner than anticipated. Regardless of when
needed, there can be no assurance that financing will be available in
amounts or on terms acceptable to the Company, if at all. If equity
securities are issued in connection with a financing, dilution to the
Company's shareholders may result, and if additional funds are raised
through the incurrence of debt, the Company may become subject to
restrictions on its operations and finances.
Rapid Technological Change
To become and remain competitive, the Company intends to develop, enhance
and improve the responsiveness, functionality and features of proposed
sites and develop new features to meet customer needs. The Internet is
characterized by rapid technological change, changes in user and customer
requirements and preferences, frequent new product and service
introductions and the emergence of new industry standards and practices
that could render the Company's proposed websites, technology and systems
obsolete. The Company's success will depend, in part, on its ability to
license leading technologies useful in its business, enhance its proposed
services, develop new services and technology that address the needs of its
proposed customers, and respond to technological advances and emerging
industry standards and practices on a cost-effective and timely basis. If
the Company is unable to use new technologies effectively or develop and
adapt its websites, proprietary technology and transaction-processing
systems to customer requirements or emerging industry standards, it would
be materially adversely affected.
System Damage or Failure
Poker.com, Inc.'s sub-licensees' systems are vulnerable to damage from
earthquake, fire, floods, power loss, telecommunications failures, break-
ins and other unforeseen events. Poker.com, Inc.'s business is dependent
upon its sub-licensees' communications hardware and computer hardware being
operational. A substantial interruption in these systems would adversely
affect Poker.com, Inc.'s business.
Dependence on the Communications Infrastructure of the Internet for
Transmitting Information
Poker.com, Inc. and its sub-licensees utilize electronic communications and
the Internet infrastructure to send and receive information. Poker.com,
Inc.'s future success will depend, in significant part, upon the
maintenance and growth of this infrastructure and any failure or
interruption may have a material adverse effect on Poker.com, Inc.'s
business. To the extent that this infrastructure continues to experience an
increased numbers of users, increased frequency of use and increased
bandwidth requirements of users, Poker.com, Inc. cannot be certain that
this infrastructure will be able to support the demands placed on it or
that the performance or
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reliability of this infrastructure will not be adversely affected. Outages
and delays in sending or receiving data as a result of damage to portions
of this infrastructure could also affect Poker.com, Inc.'s ability to
transmit information.
Online Security Risks
If Poker.com, Inc.'s sub-licensees' systems and controls are unable to
handle online security risks, its business will be adversely affected.
These systems use packet filters, fire-walls, and proxy servers which are
all designed to control and filter the data. However, advances in computer
capabilities, new discoveries in the field of cryptography, or other events
or developments may make it easier for someone to compromise or breach the
technology used by Poker.com, Inc. and its sub-licensees to protect
subscribers' transaction data. If such a breach of security were to occur,
it could cause interruptions in services and loss of data or cessation in
service. This may also allow someone to introduce a "virus", or other
harmful component causing an interruption or malfunction.
To the extent that activities of Poker.com, Inc. involve the storage and
transmission of information such as credit card numbers, security breaches
could damage Poker.com, Inc.`s reputation and expose the Company to a risk
of loss or litigation and possible liability.
Environmental Laws
As the Company business is exclusively conducted on the Internet, the
Company is not impacted by any environmental issues.
Y2K Compliance
The company's software had been programmed for Y2K compliance and
experienced no glitches on or after December 31, 1999.
Business of the Company
The company originally divided their development into three phases. The 3 phases
overlapped and all phases have now been completed and are integrated.
The Company's business has evolved into marketing the www.poker.com URL as a
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Portal, marketing Poker.com's poker card-room and selling poker and Casino sub-
licenses.
As at March, 31, 2000 the Company has sold a total of 11 sub-licenses comprising
8 dependant Casino Links, 1 independent Casino software license and 2 poker
software licenses.
The company purchased a Poker Software Program license from ASF Software Inc.
("ASF") for $135,000 on 10/th/ August, 1999 which entitled the Company to sub-
license ASF's multi-player 'Texas Hold Em' poker software to a third party
operator. The ASF software requires downloading onto a players hard drive which
is permanently displayed on the players screen and can be played at any time
thereafter by the player clicking onto the Poker Logo. ASF earns an ongoing
licensing fee (royalty) of 20% of the rake generated from the card-room. The
definition of the rake is described below.
On the 30/th/ September the Company sold the ASF software program sub-license to
Antico to operate a multi-player poker card-room and casino. The Company also
sold to Antico the exclusive rights to use the URL www.poker.com for the
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purpose of operating an online gaming site only. Under this agreement the
company earns a fee of 20% of each deposit made by each player that signs up to
play poker on Antico's web-site. Antico commenced operating the Poker card room
on October 12/th/, 1999.
The company retained the world wide rights to use the www.poker.com url for
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marketing, advertising and e-commerce.
The ASF software program enables players from anywhere in the world who log onto
the Poker room to play against each other. The players are all seated around a
table which is shown up on the screen. The table accommodates up to 11 players,
hence the term multi-player. The players give themselves a nickname and are able
to chat to each other during the play. 'Texas Holdem' is a poker card game where
the player is dealt two down and the dealer is dealt 5
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cards showing up. The player selects the best 5 of the 7 cards dealt on the
table as his hand and bets against other players at the table. The house/dealer
does not participate as a player in the game. The house takes a charge of 5%
(the 'rake') of the pot of each game played (up to maximum of $3.00 per game).
The Company does not earn any portion of the rake as they earn their fees from a
percentage of the deposits.
On the 29/th/ November 1999, the Casino Marketing purchased a Master Sub-license
Agreement ("MLA") GamingTech which provides Casino Marketing the non-exclusive
world wide rights to sell Casino software program licenses and sell links to a
'Master Casino'.
The link connection (similar to an Internet affiliation program) is sold to a
webmaster who would create a new url/domain and design his/her own casino
webpage. When a customer visits the webmasters new url/domain lobby he would be
invited to 'play' for real money and would click onto the 'play' button. The
visitor would seamlessly pass via the links web-page through a 'gateway' into a
'Master Casino' offering numerous games. The Master Casino is being operated by
Antico . If the player logged in to play, he/she would be playing on the Master
Casino's software program. The Master Casino would have available to the
webmaster virtual time statistics on who is playing, how much has been deposited
and how much has been won by the players.
Under the terms of the MLA, GamingTech is to receive $50,000 from each
independent Casino License sold plus 15% of the Gross Revenue from all Casino
Marketing's dependant and independent sub-licensees.
Casino Marketing S.A. was incorporated in Costa Rica on 14th November 1999.
The Company's selling strategy includes selling a Casino Link for $1.00 to web
masters who have substantial traffic coming to their site and who could send
this traffic via a Link to Visual Casino and thereby generate revenue. The
Company would earn less licensing fees but potentially greater royalty fees.
This will enable the Company to 'Sell' substantially more sub-licenses at $1
than are sold by other Companies. (See p. 29 paragraph 2)
Management is aware of one other company that sells links similar to the
Company's link program. The company is GlobalInterActive Ltd. of St. Kits who
markets software developed by Starnet Communication International Inc. and it is
management's understanding that they sell their links at an asking price of
$39,900. There are no other companies selling the GamingTech proprietary
software.
This proprietary software was developed by Chartwell in 1998 and upgraded in
1999. The license includes the object code to the software, the Casino-Casino
software and CyberBoss administration system. Casino Casino is a Java based
Internet casino software package that allows customers to set up and operate an
Internet based casino site. The software package includes 18 java based games
and does not require downloading. The Casino Casino software consists of three
main servers, namely, Games, Commerce and Bank. The gaming engine is responsible
for running the randon number generator (RGN) used in all games. The number
generator is based on the 'lagged Fibonacci method" The data base engine keeps
track of all the players gaming transactions and adheres to the orientated
computing environment. The commerce engine is responsible for interfacing to the
credit card processor
The Company maintains the www.poker.com web site which is a gaming portal. The
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Company markets Antico's poker card-room on the portal with a pop up window, a
banner advert and a button which enables a player to transfer directly into
Antico's servers which they own and operates in Costa Rica.
The Company will earn revenue from license fees, royalty fees, banner
advertising and e-commerce. The Company's Master Software Sub-Licensing
Agreement with GamingTech is valid for 3 years commencing November, 1999 with
two automatic renewals of 3 years each for a total period of 9 years provided
that the agreement has not been breached.
The Company coined the term 'Master Casino' to identify the central server
through which all links will connect.
On January 10/th/, 2000, Casino Marketing sold to Antico, a GamingTech Software
program to operate an independent sub-license known as Visual Casino and two
servers to run the Software program. As the Company does not sell sub-licenses
to operators in North America, Casino Marketing set up the Servers, as a matter
of convenience, in Costa Rica at the hosting service facility of Ticonet
Internet Services who were hosting the Poker software program servers for
Antico. Ticonet was introduced to the company by Mr.Bob Simmons who was working
for Ticonet. Antico has agreed to have Visual Casino act as the Master Casino
and provide to the Companies Casino link sub-licensees bandwdth, administrative
and technical support. Antico will earn 3% of the gross profit (deposits less
payout to winners) from the sub-licensees link traffic plus a hosting fee of
$250.00 per month. Casino Marketing will earn a gross royalty fee of 35% of
Antico's net Casino profit. Net profit has been defined as Gross Revenue
(Deposits less Winning pay-outs) less third party credit card processing fees,
less a hosting fee of $250 p.m., less bank charges of approximately $2 per
player, less a 3% administration fee.
To capitalize on the vast pool of potential players worldwide, Poker.com, Inc.
will offer software Casino Games to its sub-licensees in different languages, as
they become available, such as Spanish, German, French, and Japanese.
The GamingTech software program currently offers the following games in English
and Chinese.
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Games
The GamingTech software program currently includes the following games
Pai-gow Caribbean Poker
Blackjack Baccarat
Roulette Craps
Sic Bo Video Poker Games
Slot Games
GamingTech is developing 3D graphics which will enhance the pleasure of playing
at a larger more graphically detailed table. These graphics will be available to
the companies sub-licensees by mid-March, 2000 at no cost to the Company or the
sub-licensee.
With the Companies ability to sell Casino Links at a highly competitive price
and its ability to Identify and contract with web masters who have substantial
traffic flow, Poker.com Inc is in a position to become the leader in gaming
licensing sales.
New Poker software
In December, 1999, after viewing Paradise Poker's card room software program
(who are a major competitor) where Paradise had 300 players while Antico had 40
players, it was patently obvious that the poker card room software that they had
purchased from ASF Software Inc was an old and dated program. The ASF software
program was developed by ASF in 1998 and was the only multi-player software
program available for purchase by the Company in 1999.
It then became urgent that the Company find a new software program. In January,
2000, CasinoM was introduced to TransNet International S.A. ("TransNet") who
were offering a new Poker software program that would enable the Companies sub-
licensees to aggressively compete directly with Paradise Poker and other on-line
Poker card rooms. On February, 15th CasinoM entered into a Master License
Agreement with TransNet which will enable the company to re-sell the new poker
software programs. The software program should be available to the Company by
the end of April, 2000. Under the terms of the Agreement CasinoM will pay to
TransNet $30,000 plus 80,000 shares of Poker.com Inc. TransNet will be entitled
to a Licencing fee of $35,000 for each sub-license sold plus a royalty fee of
20% of each sub-licensee's monthly rake.
The difference between the ASF software and the new software program is the
number of features the program developers have incorporated into the software
program which will
- provide a lobby feature that will allow a player to check out the
other Poker tables without losing his place at his table.
- provide for tournaments.
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- be available to be played on Apple computers. No software program has
yet been developed for the mac platform.
- allow a player to check out the amount of money in the pot on the
table without using the mouse.
- the ability to turn off the chat dialogue.
- provide for a Bad beat jackpot.
- provide for an affiliation program to drive traffic to the casino
site.
sub-licensees the following:
. Initial Internet gaming license - This includes the GamingTech sub-
license and any Government license issued to Antico. As Antico is the
Master Casino' and the links are connected to their servers, any
License that Antico possesses will automatically cover the link
operator. Costa Rica does not at this time require an Internet Gaming
company to pay a License fee to operate an on-line gaming site. In the
event Antico is required to pay for a license they will be at liberty
to request the link operators to pay a proportionate share of the
license fees. In the event Antico moves to a different jurisdiction,
the servers will move with them and therefore maintain continuous
service.
. Registration of a URL
. A virtual casino "theme"
. Sophisticated visual and sound effects to create a total gaming
experience
. Real-time wagering
. Secure encrypted merchant accounts and electronic fund transfers. This
is a service that is provided by an arms length third party Credit
Card Processors located in Belize and by Antico's bank in Costa Rica
who will process all wire transfers.
. Analysis of all gaming data, including win/loss and monitoring of
players' activities
. Administration and complete 24hr, 7 days per week support services
. Monitoring of all fund flows
. Hosting of server software
The services mentioned above will be provided by Antico for a fee. Antico
acquired the servers from the Company, which are located at RACSA (a government
bandwidth provider) in Costa Rica. The service has sufficient bandwidth
available to support a substantial number of links. In the event more bandwidth
is required Antico would have to install more servers.
Revenue Model
Licenses and Sub-Licenses
The Company expects to earn up to $35,000 for each Casino sub-license link
they sell and earn a gross royalty fee of up to 35% from each sub-licensees
monthly net revenue.
The Company started selling Casino Links at the beginning of January 2000
and will also be 'giving away'/'selling' links for $1.00 to webmasters who
control a large subscriber base or who can generate substantial traffic to
a site. In this way the Company will be able to 'sell' a larger number of
Casino sub-licenses ("links") with minimal licensing fees but with a higher
gross royalty fee of up to 65%
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The Company also intends to sell independent software programs for $75,000
plus a 35% royalty fee. For each license sold, the company will be required
to pay GamingTech $50,000 plus 15% of the gross profit from each sub-
license whereas the company earns a royalty fee on the net profit.
---
The Company will earn a sub-licensing fee of up to $40,000 from each new
TransNet poker software program they sell plus a net royalty fee of up to
15% of a sub-licensees monthly rake
generated by their Poker tables
The Portal
The Company completed the development and design of the Portal at the end
of December 1999. The Company is rapidly building market share through the
development of the www.poker.com web-site as the 'Ultimate Gaming Portal"
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on the Internet and proposes to develop the portal as the site of choice
for Internet gaming enthusiasts. It is the Company's goal to offer advanced
and novice players alike, the best in gaming information and software,
variety of entertainment and casino games (both free and for money
wagering) and a friendly easy-to-use interface. With the number of visitors
(in excess of 60,000 visitors a day) coming to the site the Company is able
to generate advertising revenue by selling banners on the portal based on a
CPM rate (so many dollars per 1,000 visitors ) The Company is charging
between $15 and $25 per CPM for banner advertising. The Company has signed
insertion orders to sell $130,000 worth of banner advertising for the month
of March, 2000 and expects to generate in excess of $1,300,000 for the year
2000.
Although the Company is not the first online gaming portal and software
licensing company, Poker.com, Inc. has already made www.poker.com one of
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the most highly trafficked gaming sites on the Internet. With one of the
most widely recognized brand names on the Internet, an aggressive marketing
strategy, and a full spectrum of the best casino games available,
Poker.com, Inc. expects to become the leading gaming portal on the web.
Opt-in newsletter
The Company has also developed an opt-in advertising program, completed in
January 2000, and will earn revenue from sponsors of the opt-in newsletter
program.
The term opt-in means that the respondent has actively subscribed to the
newsletter. Thus, the newsletter is entirely unsolicited and spam-free. It
can also be personalized and include information based on demonstrated
customer preferences and prior usage.
The Company is attracting subscribers through its invitation to subscribe
for a free newsletter which is marketed on the company's portal. The
Company currently has 10,000 new subscribers and expects to increase this
number as new visitors log in to the site as well as by purchasing e-mail
addresses from third party providers. Four newsletter mailings are being
distributed each week. The News Letters are written by two Poker cardplayer
experts, Mike Paullie and John Vorhuis. The Company sells the advertising
space on the News Letter to a sponsor for up to 10c per e-mail subscriber.
10,000 subscribers generate $1,000 per mail out. The opt-in newsletter is
expected to generate revenues of approximately $200,000 for Poker.com, Inc.
for the period June, 1, 2000 to May 31, 2001.
Affiliations
Poker.com, Inc. intends to partner with some of the largest sites on the
Internet that offer products and services such as www.amazon.com (for books
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on poker, gambling and the strategy of winning), and www.travelocity.com
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(for airfare tickets to gaming destinations and travel in general). Amazon
and Travelocity offer web masters an affiliation program whereby the web
master inserts the advertisers banner/button on the web masters site. When
a visitor clicks onto Amazon or Travelocity and purchases product, the web
master's site is credited with a percentage of revenue from that sale.
Amazon pays 15% for a referral that purchases product and Travelocity pays
$2.00 US for every ticket that is purchased. Poker.com Inc will subscribe
to their affiliation program to earn 'flow-through' revenue. Poker.com has
its own electronic shopping cart system selling books, T-shirts, hats,
cards and numerous other items. The Company has to date not earned any
revenue from any Affiliation Program is expected to commence in June 1,
2000.
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Free E-mail
In conjunction with the development of the portal, Poker.com is offering
free web-based e-mail accounts similar to that of www.hotmail.com. Users
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can log in and check their e-mail from any browser, anywhere in the world.
Revenue will be generated via banner advertising that will appear at the
top of the user's inbox, outbox, saved and sent message screens for maximum
exposure. Advertisers will be charged $5 per 1000 email recipients. The
Company estimates that it will host 10,000 e-mail accounts by the end of
December 2000. Assuming that an average user would be checking his e-mail 4
times a day, this would generate 16 impressions per day (Impressions are
the number of times a visitor clicks onto a page which carries advertising
banner - it is assumed that each visitor checking his/her e-mail would
first log on to the Poker.com web site which would be one impression,
opening their e-mail would create a 2/nd/ impression, reading an average of
2 e-mails a day would result in two further impressions)which would result
in a total of 160,000 impressions a day -generating revenue of
approximately $300,000 per year for the period June, 1, 2000 to May 31,
2001.
General
Internet on-line gaming is a global business operating 365 days a year 24
hours a day and is not subject to seasonal conditions.
As the Company only provides gaming software acquired from and developed by
third party providers, the company carries no inventory nor does it require
research and development capital.
Poker.com Inc. is actively working towards establishing www.poker.com as
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the leading Internet brand name for gaming software. The company is also
utilizing its marketing potential and its widely recognized domain to
position itself as one of the foremost Internet gaming portals.
Poker.com has no intention of owning nor operating any Internet gaming
operation but will act exclusively as marketing agents and software sub-
licensors in order to sell casino sub-licensess and links and multi-player
poker software. The company will derive its revenue from selling gaming
software licenses and from on going monthly royalty payments from sub-
licensees operating their own casinos and multi-player poker card rooms.
Revenue will also be generated from marketing fees, advertising, banner
sales and e-commerce affiliations.
The company is building up a strong infrastructure to achieve its
objectives to become the leading gaming portal and sub-licensor on the
Internet and expects to become the largest Internet software supplier
within 6 months.
Corporate Philosophy
Management of Poker.com, Inc. realized that it would be a costly and lengthy
process to develop its own gaming software and compete with a number of
established software program developers who have the expertise and capital. The
company decided that in order to take advantage of the lucrative on-line gaming
market, it would enter into a Master sub-licensing agreements with software
program developers which would allow the company to sell gaming sub-licenses and
earn licensing fees and royalties without the costs associated with software
development and upgrades as new technology is developed. It is management's
understanding that software developers see the greater potential in selling more
software licenses, directly themselves or indirectly thru a re-seller, and
thereby earn greater royalty fees. This will allow the company to concentrate on
rapidly establishing brand awareness and a commanding Internet presence.
Overview of Operations
Poker.com is presently in its initial growth stage. Key strategic developments
to date have included the purchase of the URL www.poker.com in order to
capitalize on the globally recognized brand name `poker', the purchase of the
ASF Texas Holdem Poker software license that the company sub-licensed to Antico,
the Master sub-license agreement entered into with Gamintech, the development of
Poker.com as a gaming portal and the Master License
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Agreement that the Company has entered into with TransNet to acquire the rights
to re-sell an updfated Poker software program.
The Company sold the world wide rights to use the url www.poker.com to Antico
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for gaming only, and retains the rights to use the url for marketing,
advertising and for e-commerce.
The Master License Agreement with GamingTech enables the company to
a) sell Casino Software programs to independent third party operators for
up to $75,000 plus a gross royalty fee of up to 35% of monthly net
revenue.
b) sell Casino License links to 'dependant' operators who would use their
web page to link into a 'Master Casino' These links will be sold for
up and $35,000 plus a gross royalty fee of up to 65% of monthly net
revenue.
The Company has appointed Antico as a Master Casino. The term has been coined
to identify an independent Casino software program sub-licensee who will operate
the GamingTech software for their own account and provide a link into their
system by the Companies other sub-licensees who do not possess an independent
sub-license and server.
The Company has to date sold the ASF Software program and an independent
GamingTech Casino sub-license to Antico and have 'sold' 7 Casino links, The ASF
Software Program was sold to Antico on September, 30,1999 and the GamingTech
Casino license was sold to Antico on January 10/th/, 2000
The Master License Agreement with TransNet will enable the company to sell a
Poker. Software program for up to $75,000 (of which $35,000 would be retained
by the Company) plus a gross royalty fee of up to 35% of the rake of which 15%
would be retained by the Company.
With the GamingTech Master sub-license agreement and the TransNet Master License
Agreement in place the company expects to achieve rapid market penetration and
earn substantial revenue from on-going royalty fees.
Full Time Employees.
The Company is currently managed by Charlo Barbosa, the President and COO and Mr
Michael Jackson, the CEO and corporate secretary, who works full time in the
affairs of the Company. The company contracts out their Investor Relations
department, accounting department and their technical Department department.
The companies sales department operates out of Casino Marketing S.A.
Mr Jackson and Mr Barbosa have entered into an agreement with the Company
whereby they jointly earn 5% of the gross revenue generated by the Company or
$5,000 per month whichever is the greater. Under the agreement, they will each
be entitled to 100,000 options at $1.00. The agreement is attached as an
exhibit.
Marketing Strategy
The obvious leveraging power of the Poker.com domain will be immediately
utilized at all levels of the marketing strategy. Due to the very nature of the
'portal' the Company will offer each sub-licensee a link directly from the
portal. The company's sub-licensees will be listed on the Top 10 banner page
which will constantly be rotated. The Top 10 has been developed by the Company
as a marketing tool to profile the Company's sub-licensees' Casinos. The portal
will also incorporate a search engine, which the Company is currently having
developed. This will enable the Company to generate more qualified leads from
other companies that have links to the search engine. The search engine should
generate substantial traffic activity, which will allow the company to sell more
banner advertising and at a higher CPM rate. The Company will request each sub-
licensee and affiliate to participate in the advertising campaigns that the
portal coordinates. Each casino sub-licensee will be invited to become a sponsor
of the poker.com newsletter.
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Poker.com, Inc., with its exclusive rights to market the unique www.poker.com
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domain, will derive revenue from marketing the poker.com multi-player poker
card-room and casino, licensing fees, ongoing royalties from gaming software
sub-licensees, banner advertising and retail e-commerce sales.
The Company's management has the expertise to direct traffic to the portal by
purchasing exit traffic from web masters, purchasing key words from search
engines and by exchanging banner ads with other web masters. Mr Barbosa, through
his relationships with web masters has a substantial resource base to acquire
visitor traffic.
As one of the first components of a comprehensive marketing plan, the Company
has contracted with Excite@Home (Nasdaq: ATHM) to position the poker site on the
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www.excite.com search engine with links using ten of the most popular poker and
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gambling key words. The company has also entered into an agreement with
Galore.com, an Internet portal and search engine, which has agreed to direct up
to 900,000 visitors to the www.poker.com web-site per month.
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The marketing plan has been developed to direct traffic to the www.poker.com
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portal site in order to
a) Market the Poker.cardroom
b) Sell banner advertising
c) Sell GamingTech sub-licenses and bring awareness to the company's sub-
licensees
d) have visitors review the site and continue to re-visit the site for
accessing their free e-mail, playing free games, winning prize money,
buying product, checking up on Stock Market prices, checking up on
Gaming and Sports news, accessing the Poker Card room and Casino to
wager real money.
The marketing plan is on-going and includes purchasing visitor traffic from
other web sites. Galore.com amd [email protected] generate substantial traffic to
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the site. The company is negotiating to purchase even more more traffic from
third party providers. The company is also advertising in land based
publications namely CardPlayer and Poker Digest, bi-monthly. These publications
reach in excess of 50,000 card players per insertion.
Poker.com., Inc., by virtue of its widely recognized domain alone, is positioned
to become the dominant poker gaming site on the web. As a portal, it will be a
collaborative gaming website where leading casino operators mutually co-exist
and offer the full spectrum of casino games available. In this way, they are
able to deliver gaming content to the greatest number of participants possible.
The end result is more traffic and additional revenues. As a premier gaming
portal, www.poker.com will eventually lead the way in this emerging growth
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market.
Free E-Mail
Poker.com, Inc.'s free e-mail service to subscribers further encourages them to
return to the site on a daily basis.
Chat Rooms
Poker.com, Inc. will also promote its users to access its chat rooms. Chat rooms
have become a cornerstone of Internet interactivity over the past year. Ninety
five percent of all major websites have chat functionality. Similarly, thirty
percent of all web activity is chat related. According to Jupiter Research, by
2002, the chat room market will grow to 64 million users.
Poker.com, Inc.'s primary strategy is to promote the www.poker.com brand and
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strive for an industry leadership position by:
. Providing an interesting, friendly and high-interest content site
. Focusing on sub-licensing Casino gaming software
. Providing an innovative and easy-to-use software program
. Acquiring customers efficiently
. Maximizing customer retention and loyalty by offering great content
. Constantly expanding its customer base through multiple marketing
channels
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Through the use of multiple marketing channels, the Company believes it will be
able to reduce its reliance on any one source of customers, maximize brand
awareness and lower average customer acquisition costs. The Company will promote
its brands through an aggressive marketing campaign using a combination of
online and traditional advertising.
Online consumers can easily fall into Internet patterns and evidence suggests
that they do not switch online allegiances easily. Poker.com, Inc. will also
work at making www.poker.com a starting point for the novice gambler and will
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capitalize on this opportunity for capturing consumer loyalty. Thus, as traffic
flows to the www.poker.com site, the Company will fully capitalize on the
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interest of these potential players by offering virtually instant access to a
variety of Java-based casino games. The cross-platform nature of Java makes it
possible to play these games on all major operating systems with no downloading
required. This is also a major convenience for users who have slower
connections to the Internet.
Marketing channels include:
Online Advertising
The Company will commence advertising in June 2000 on the sites of major
Internet content and service providers, and targeted gaming-related sites.
This will include search engines and portals.
Traditional Offline Advertising
Consumers use offline media channels to research, acquire and service what
they spend money for online. The Company will purchase traditional
advertising and may attempt to partner with certain traditional media
companies to attract new customers. Poker.com, Inc.'s traditional
advertising efforts may include radio advertising and print advertising in
gaming-related publications. The Company currently advertises in
Cardplayer and Poker Digest. The Company is also promoting its corporate
image through Internet public relations firms.
Strategic Alliances
Commencing June 1, 2000, the Company will form strategic alliances with
major Internet content and service providers in order to enhance its new
customer acquisition efforts, increase purchases by current customers and
expand brand recognition. The Company will increase the number of alliances
it has established with search engines and negotiate to secure exclusive
rights, where possible, to place gaming banner advertisements and
integrated links to the Poker.com, Inc. sites on certain gaming-related
pages.
Direct Marketing Techniques
Commencing June 1, 2000, the Company will employ direct marketing
techniques to target new and existing customers with communications and
promotions.
Opt-in Newsletter
The Company is using the Opt-in advertising program to create a larger data
base and thereby derive revenue from sponsorships.
19
<PAGE>
Banner Advertisements
Banner advertisements are rectangular graphical/text images that can be
positioned in strategic locations on web pages and search engines on the
Internet. When a potential customer clicks on a banner, the customer's
browser points the customer to the advertiser's homepage. Commencing June
1, 2000, Poker.com, Inc. will pay for banner advertisements on a variety of
web pages and search engines and participate in banner exchange programs.
As well, the Company may enter into agreements with webmasters to place
Company banner advertisements on their homepage in exchange for a
commission for each unique customer who clicks through to the www.poker.com
-------------
homepage, or for a percentage of the profits generated by the webmasters.
Submissions to Search Engines
Potential customers often discover new websites on the Internet from
listings on search engines such as Excite.com, Yahoo.com, and Galore.com.
The Company has submitted its Universal Resource Locator ("URL") and a
brief description of its Internet casino gaming website to various search
engines so that the information is available to potential customers who use
search engines to locate Internet gaming sites. The Company has entered
into a $345,000 Contract with Excite to purchase "key words" such as poker,
blackjack and bingo. The effect of searching a key word such as 'Poker' is
that each time a surfer types in the word 'poker' a www.poker.com banner is
-------------
immediately and prominently displayed.
Retail E-Commerce/Affiliation Programs
By the end of June, 2000, Poker.com, Inc. intends to enter into affiliation
agreements with such popular, high-traffic E-commerce websites as
Amazon.com and Travelocity.com. These alliances will assist in drawing
traffic to the Poker.com, Inc. web-site when gaming-related inquiries are
made through these other high traffic sites. These affiliations will also
become an additional source of revenue, as Poker.com, Inc. will receive a
commission fee for each purchase/transaction made at these affiliate sites
directed from the www.poker.com site.
-------------
Distribution of CD-ROMs
America Online (AOL) became the largest Internet Service Provider in the
United States by distributing millions of its CDs and floppy disks. This
promotional technique worked. AOL now hosts nearly one third of the
Internet users in the United States. Therefore, apart from the ability to
download the game directly off the Internet, a customer will be able to
play the casino games on the www.poker.com website by using a free
-------------
companion CD-ROM. Poker.com, Inc. plans to make this CD-ROM accessible to
potential players. For example, the Company has distributed a number of CD-
ROM discs via CardPlayer Magazine. At the beginning of June 2000, the
Company expects to distribute the updated Poker software on CD-ROM to
potential Poker players by mail and via CardPlayer magazine. At the
beginning of June 2000, the Company expects to distribute the updated Poker
software on CD-Rom to potential Poker players by mail and via CardPlayer
magazine.
Mission Statement
It is Poker.com, Inc.'s mission to become the largest and best developed gaming
portal site on the Internet. With exclusive rights to develop and market the
www.poker.com domain, the Company will leverage its online presence through a
-------------
multitude of marketing programs.
20
<PAGE>
By offering the highest level of gaming content in this sector, a variety of
games and ease of use, Poker.com, Inc. seeks to provide its Internet audience
with a truly entertaining experience that will consistently increase the flow of
traffic to the site over time. The Company will offer the latest games and
software technology and new ways to ensure that sub-licensees and casino
operators maintain a competitive advantage over other Internet gaming providers.
It is also Poker.com, Inc.'s mission to position itself as a strong and credible
name in the Internet gaming industry. The Company is developing relationships
with reputable and established casino software developers who offer fair and
reliable software games. This will help to reassure customers that there are no
trust or security issues.
Outlook
Management is committed to the objective of building shareholder value through
long-term growth in revenues and net income.
The Company's objective is to offer existing and prospective sub-licensees the
most up-to-date technology and games available. This will provide them with a
competitive edge in order to support their growth. Management believes that
there is an extraordinary future for online gaming and that Poker.com, Inc.,
with its unique brand name, is poised to become a dominant force in this market.
The Company is currently positioning itself to capture a substantial share of
the Internet gaming market.
Item 2 Management Discussion and or Plan of Operation
-----------------------------------------------
This Form 10-SB contains forward-looking statements. The words, "anticipate",
"believe", expect", "plan", "intend", "estimate", "project", "could", "may",
"foresee", and similar expressions are intended to identify forward-looking
statements. The following discussion and analysis should be read in conjunction
with Poker.Com's Financial Statements and Notes thereto and other financial
information included elsewhere in this Form 10-SB which contains, in addition to
historical information, forward-looking statements that involve risks and
uncertainties. Poker.Com's actual results could differ materially from the
results discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include those discussed below, as well as those
discussed elsewhere in this Form 10-SB.
The Company has had no active business operation from inception in 1989 to
September 1999 when the Company sold their first Poker card-room sub-license to
Antico Holdings SA ("Antico"). As of September 30, 1999, the Company's
accumulated net loss was $31,737 and the total cash was $31,982.
In September 1999, the Company raised $500,000 through a Private Placement under
a Rule 504 exemption and has recently obtained a commitment from three entities
to invest $360,000 in a private placement under a rule 506 exemption.
As of December 31, 1999, the Company's accumulated loss was $545,518 and the
total cash was $41,132.
The company started generating cash flow from marketing the Poker.com web site
and from banner advertising on the Poker.com Portal from October, 12th 1999. The
company expects to earn approximately $30,000 per month from marketing the poker
card-room and $130,000 per month from Banner Advertising and the news letter
sponsorship. Revenue from these 3 sources is expected to generate approximately
$160,000 per month. The Company expects to sell 2 licenses per month and earn
licensing fees of up to $58,000 net per month and monthly Royalty fees from
Casino sub-licensees to commence in or about April, 2000 which should generate
approximately $30,000 per month. Unless something unforeseen happens, Management
is of the opinion that the company should generate approximately $240,000
revenue per month commencing June 2000.
21
<PAGE>
The Company generated $45,000 from the sale of Casino Link sub-licenses in
February 2000 and have in excess of $130,000 insertion orders for Banner
advertising for the month of March. The Company earned $27,470 from Marketing
the Poker cardroom (20% of $137,351 - deposits) for the month of February 2000.
The Company projects that the expenses incurred to generate the projected
revenue is approximately $130,000 per month.
The Company has made certain commitments as follows:
The Company has entered into an Advertising Contract with Excite@home to
purchase key words: "poker", "blackjack" and "bingo" on their search
engine. The total cost for the year is $345,000 with a monthly cost of
$14,666 for January, February and March. $28,000 per month for April, May
and June, $30,175 per month for months July, August and September and
$39,800 for months October, November and December. The Company has entered
into a verbal agreement with Galore.com to spend $7,500 per month on
purchasing traffic. Galore has undertaken to send 15,000 visitors to the
site per day.
The Company has also contracted with Standard Internet Co. on a month to
month basis to purchase 20,000 visitors per day at a cost of $23,590 per
month.
Subject to the results from Galore and Standard InterNet Co. the Company
will continue to spend a minimum of $55,000 per month on buying traffic.
Traffic is purchased in order to derive revenue from the Advertisers
advertising on the Portal. Advertisers pay the Company up to $25 per 1,000
impressions. The more visitors on the site the greater the number of
impressions, hence the greater the revenue.
The Company is spending approximately $10,000 per month on Investor
Relations services. The Company employs two consultants to deal with
corporate shareholder support and marketing the Company. This includes
making and answering phone calls, creating a database and sending out
Corporate News Releases. The Company has contracted to take space at three
Investment Conferences in April and May 2000 at a cost of $5,000 per
conference. The Investor Relations team will fly to Regina and Winnipeg in
Canada and set up an information booth to promote the company and sell
Casino Licenses.
The consultants also provide the promotional material and arrange the
programs for promotion.
The Company advertisers in two land based publications, Poker Digest and
CardPlayer at a cost of $9,000 per month for 8 insertions in each magazine.
The Company has contracted with GamingTech to pay them $17,500 per quarter
on account of the purchase of their Casino software program.
The Company has contracted with TransNet to pay them $10,000 on completion
of the updated Poker software program expected by the end of April.
The projected expenses for March, April and May are as follows:
<TABLE>
<CAPTION>
March April May
<S> <C> <C> <C>
Office, telephones & General Administration $ 10,000 10,000 10,000
Portal Graphic Designer $ 2,000 2,000 2,000
Investor relations $ 10,000 15,000 15,000
Advertising, News Letters $ 10,000 10,000 10,000
Legal & Accounting $ 3,000 3,000 3,000
Marketing Costs, Excite, Galore & third party traffic $ 55,000 67,000 67,000
License Fees 4% $ 9,600 9,600 9,600
Management Fees 5% $ 12,000 12,000 12,000
Chartwell Technology License Agreement $ 5,800 5,800 5,800
Travel & Entertainment $ 5,000 5,000 5,000
Hardware & Software, Development $ 8,000 10,000 10,000
-------- -------- -------
Total Expenses $130,400 $149,400 149,400
-------- -------- -------
</TABLE>
The Company (through CasinoM) acquired a non-exclusive world wide Software
License from GamingTech to re-sell Casino software sub-licenses.
The Master sub-licensing agreement with GamingTech allows the company to provide
sub-licensees with all technology and gaming upgrades without any further cost
to the Company, the costs being borne by GamingTech and ASF.
The GamingTech technology enables the company to sell multiple Casino links to
third party websites. The company proposes to sell the links for up to $35,000
and also intends to sell for only $1.00, links to web masters whose web sites
have high traffic which they can direct to a Casino Link. In this way the
company will be able to virtually "give away" a substantial number of Casino
links and earn substantial revenue from on going royalty payments.
The sub-licenses being sold by the company comprise
a) sell independent Casino software program sub-licenses for up to
$75,000 plus a gross royalty fee of up to 35% of monthly Net
operating profit. This independent sub-license will enable the
purchaser to use the licensor's proprietary software.
b) sell dependant sub-license Casino 'links' for up to $35,000 plus
a gross royalty fee of between 35% and up to 65% of the sub-
licensees net monthly revenue. In this case the dependant sub-
licensee is linked into an independent sub-licensees proprietary
software and does not have his own proprietary software
22
<PAGE>
The Company has sold 9 Casino sublicenses and 2 poker sub-licenses up to the end
of March 2000.
The Company believes that with the proposed injection of $360,000 from a Private
Placement the Company is positioned to finance its development pending positive
cash flow revenue from operations starting in May 2000.
The Company's main expense during the next 12 months is for marketing and
operating costs. In the event revenue from existing and future sub-licensees
does not reach the projections contemplated in this business model, the Company
would cut back on their advertising/marketing and promotion costs by re-selling
portion of the keywords purchased on excites search engine and reduce the office
staff and costs associated with Investor relations which does not generate
revenue to the company. The company could possibly reduce overhead costs to
$15,000 per month.
With the unique knowledge and networking ability of the Company's management the
Company believes that they will have sold and/or given-away more Casino licenses
than any other gaming software supplier on the Internet by the end of June,
2000. There are no other software sellers 'giving away' licenses or links to
webmaster who can generate substantial traffic to a Casino web site. Management
believes that Global Interactive has sold approximately 75 Casino links to date.
Management has a database of over 2,000 qualified webmasters to whom the Company
will offer 'free' licenses. The Company expects up to 5% of these webmasters to
contract for a 'free' license. The web masters will pay the company a higher
royalty fee of up to 60% of net sales. The Company is waiting for Antico to
confirm that they can provide the administrative and technical service to these
new Casino links. If the Company is successful in signing up 100 web masters by
the end of June, 2000 the Company will be the largest sub-licensor on the
Internet.
The Company anticipates selling a minimum of 2 Casino Links for up to $35,000
each and expects to sell a minimum of 1 Poker software license in each month
commencing May 2000.
The Company purchased a Master License Agreement from TransNet on February 15th
2000, which will enable the Company to sell updated Poker software program sub-
licenses to potential third party card-room operators. This will enable the
Company to earn greater licensing fees and substantially higher royalty fees.
The cost of the new software is $30,000 in cash plus 80,000 shares of stock.
The company does not expect any change to their projected revenue stream from
inflation. The company may decide to discount the selling price of the Casino
links if sales of licenses slowed down.
The company does not expect to significantly increase their number of total
employees or contractors during the next 12 months.
There are certain risks associated with Internet on-line gaming which may affect
the company's projected revenue stream such as the following
The Kyl Bill
In the event the Kyl bill is passed by Congress, the effect on revenue from
marketing Antico's card room and Casino could be negatively affected.
However, senator Kyle has indicated that if the Bill is passed, the
intention is not to charge any American wagering on Internet gaming, but to
charge the operator.
All the companies sub-licensees operate in off-shore jurisdictions and
would not be subject to any US Law.
To counteract any loss of revenue the Company is working on a Marketing
Plan to advertise for players in other jurisdictions in Europe, South
America and Asia. The Company will also introduce Poker Tournaments which
are played by players depositing a fee to play in order to win a tournament
Prize. This is a very popular way to play poker and does not contravene the
prohibitions proposed under the Kyl Bill.
23
<PAGE>
Key Personnel
The Company's success is currently dependent on the ability and experience
of its senior management namely; Charlo Barbosa, its President/Chief
Operating Officer and Michael Jackson its CEO. In order to manage
anticipated growth, the Company has outsourced Investor relations,
marketing and administration. Competition for personnel, particularly
persons having Internet marketing development and other technical
expertise, is intense, and there can be no assurance that the Company will
hire additional, qualified personnel. The inability of the Company to
retain and attract the necessary personnel or the loss of services of any
of its key contractors could have a material adverse effect on the Company.
Other Risk Factors
The Company operates in a rapidly changing environment that involves
numerous other risks, many of which are beyond the Company's control and
which could have a material adverse effect on business, revenues, operating
results and financial condition.
However, Poker.com, Inc.'s management believes that it is taking necessary
steps, wherever possible, to address the key risks to which it will be
exposed as it progresses with its planned course of action.
Penny Stock.
Poker.com's securities are subject to the SEC "penny stock" regulations which
may limit the ability of broker-dealers to sell Poker.Com's securities and
shareholders' ability to sell their shares in the secondary market. The
Securities and Exchange Commission has adopted a number of rules to regulate
"penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4,
15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934.
The rules require broker-dealers to make certain disclosures regarding penny
stocks to potential buyers, and make a determination based upon information
provided by the potential buyer about such buyer's suitability for investing in
penny stocks. There may be a limited market for penny stocks, due to the
regulatory burdens on broker-dealers. The market among dealers may not be
active. Investors in penny stock often are unable to sell stock back to the
dealer that sold them the stock. The mark ups or commissions charged by the
broker-dealers may be greater than any profit a seller may make. Because of
large dealer spreads, investors may be unable to sell the stock immediately back
to the dealer at the same price the dealer sold the stock to the investor. In
some cases, the stock may fall quickly in value. Investors may be unable to reap
any profit from any sale of the stock, if they can sell it at all.
Item 3 Description of Property
-----------------------
The Company's headquarters and executive offices are located at #1502-1166
Alberni Street, Vancouver, British Columbia, Canada and the telephone number is
(604) 689-5998. The company leases on a month to month basis, approximately
1,500 sq,ft of space at the aforementioned office, from Virtualynx Internet Inc.
a company which is owned by Charlo Barbosa, President of the Company. The
monthly rental including reception, administration and technical services is
approximately US$3,500 per month.
24
<PAGE>
Item 4 Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The following table sets forth the outstanding Common Stock of the company owned
of record or beneficially owned by each person of record, or was known by the
company to own beneficially more than 5% of the company's common stock, and the
name of the shareholding of each Officer and Director and all officers and
Directors as a group
<TABLE>
<CAPTION>
Name Shares Owned Percentage of shares Owned
<S> <C> <C>
Charlo Barbosa (1) (2) 332,500 7.07%
1605-7281 Cambie Street
Vancouver V6P 3H4
Michael Jackson (1)(3) 225,000 4.79%
1574 Angus Drive,
Vancouver V6J 4H3
ALL EXECUTIVE OFFICERS
AND DIRECTORS AS A GROUP 557,500 11.86%
(Two Individuals)
</TABLE>
All shares are held beneficially and of record and each record shareholder has
sole voting and investment power.
(1) These individuals are Officers and Directors of the Company and may be
deemed to be "parents or founders" of the Company as that term is defined
in the Rules and regulations promulgated under the 1933 Act.
(2) Includes 70,000 stock options.
(3) Includes 100,000 stock options.
Item 5 Directors, Executive Officers, Promoters and control persons
------------------------------------------------------------
The following table sets forth the name, age and position of each Director of
the Company.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Charlo Barbosa 29 President, Chief Operating Officer,
Member of the board of Directors
Michael Jackson 55 Secretary, Chief Executive Officer
Member of the board of Directors
</TABLE>
Mr. Barbosa and Mr. Jackson have served as Directors of Poker.com since July 16,
1999. Each Director will serve until the next annual meeting of shareholders and
their respective successors are elected and qualified. Charlo Barbosa currently
devotes part time to the operation of the business. Michael Jackson currently
devotes full time to the operation of the business.
25
<PAGE>
Officers and Directors of the Company
-------------------------------------
Charlo Barbosa, Director. President and COO
Mr. Barbosa is the president of Virtualynx Internet Inc., a successful web-
hosting company with offices in Vancouver, BC, San Jose, Ca and Irvine, Ca.
The principal place of business of Virtualynx is #1502-1166 Alberni Street,
Vancouver. Virtualynx has in excess of 800 web-hosting clients with over
3000 domains registered. The Company has been in business since April,
1996. Mr. Barbosa has been President of VirtualYnx since April, 1996. Mr.
Barbosa was a senior in-house Accountant with Samoth Capital Corporation,
a publicly traded company on the Toronto Stock Exchange, April 6/th/ 1991
until April, 1996. Mr Barbosa has been a Director, COO and President of
the Company since July 16/th/1999.
Michael Jackson, Director, Secretary, CEO
Mr. Jackson began his career as a corporate and securities lawyer in South
Africa before immigrating to Canada in 1978. In November, 1979 Mr. Jackson
incorporated Hillcon Developments Ltd ("Hillcon") as a real estate
development Company which he operated until January, 1983. In March, 1983
Mr. Jackson joined Geneva Capital as an investment banker until January,
1988. From January, 1988 until January, 1993 Mr. Jackson invested in a
number of business ventures. In March, 1993 Mr. Jackson re-launched Hillcon
and has acted as a Director and President of Hillcon since then. The
principal place of Business for Hillcon is 3830 Bridgeport Road, Richmond.
BC. Mr. Jackson has acted as in-house counsel for a number of public and
private companies but has not been a director of any publicly traded
company during the past 5 years. Mr. Jackson has been a Director, CEO and
Secretary of the Company since July 16, 1999.
Item 6 Executive Compensation
----------------------
Compensation of Directors and Officers
The President and CEO are earn a joint management fee of 5% of the gross
revenue generated by the company or $5,000 per month whichever is the
greater. The President and CEO may be paid a Salary as soon as the Company
is in a positive cash flow position.
The President, Mr. Charlo Barbosa and Secretary, Mr. Jackson, both received
125,000 common shares of the company as compensation for structuring the
deal between Ala Corp, UniNet and Thermal.
SUMMARY COMPENSATION TABLE
The following table sets forth compensation awarded to, earned by or paid
to Mr. Barbosa and Mr. Jackson for the designated fiscal years. No
executive officer had an annual salary and bonus in excess of $100,000
during the past three fiscal years. Pursuant to paragraph (a)(5) of Item
402 of Regulation S-B, the table omits columns that are not applicable to
Mr. Barbosa or Mr. Jackson's compensation.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d)
Name and Principal Year Other Annual Securities,
Position Compen Underlying
-sation ($) Options
/SARs (#)
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
</TABLE>
26
<PAGE>
<TABLE>
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charlo Barbosa 1999 $16,250 70,000 Options
President and Director 125,000 Common Shares
-----------------------------------------------------------------------------------------------------------------------------
1998
-----------------------------------------------------------------------------------------------------------------------------
1997
-----------------------------------------------------------------------------------------------------------------------------
Michael Jackson, Chief 1999 $16,250 100,000 Options
Operating Officer and 125,000 Common Shares
Director
-----------------------------------------------------------------------------------------------------------------------------
1998
-----------------------------------------------------------------------------------------------------------------------------
1997
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of
stock options pursuant to stock option plans to the named Executive
Officers during the year ended December 31, 1999.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Name Number of % of Total Exercise or Base Expiration Date
Securities Options/SARS Price
Underlying Granted to ($/Sh)
Options/SARS Employees in Fiscal
Granted Year
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charlo Barbosa 70,000 14.89% $1.00 December, 31, 2004
President and
Director
------------------------------------------------------------------------------------------------------------------------
Michael Jackson, 100,000 21.2% $1.00 December, 31, 2004
Chief Operating
Officer and Director
------------------------------------------------------------------------------------------------------------------------
</TABLE>
Aggregated Option/SAR Exercise in Last Fiscal Year and FY-End Option/SAR Values
The following table sets forth certain information concerning exercises of
stock options pursuant to stock option plans by the named Executive Officer
during the year ended December 31, 1999 and stock options held at year end.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Name Shares Acquired on Value Realized ($) Number of Value of
Exercise (#) Securities Unexercised In-the-
Underlying Money
Unexercised Options/SARs at
Options/SARs at FY-End ($)
FY-End (#)
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charlo Barbosa nil nil nil nil
------------------------------------------------------------------------------------------------------------------------
Michael Jackson nil nil nil nil
------------------------------------------------------------------------------------------------------------------------
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Stock Options Granted
27
<PAGE>
On December 15, 1999, Poker.Com granted options on 470,000 common stock,
with an exercise price of $1 per share, 300,000 of which expire June 30,
2001, and 170,000 of which expire December 31, 2004.
No options have been exercised to date.
The Company may in the future create retirement, pension, insurance and
reimbursement plans covering its Officers and Directors. At the present
time, no such plans exist. No advances have been made by the Company to any
of its Officers and Directors.
Item 7 Certain Relationships and Related Transactions
----------------------------------------------
In July, 1999 Poker.com Inc acquired the world wide rights to the URL
www.poker.com from UniNet in exchange for $100,000 plus 500,000 restricted
-------------
shares of the common stock of Poker.com Inc plus a 4% royalty on gross income.
Michael Jackson, a Company Director is also a Director of UniNet.. UniNet
acquired the world wide rights to the url www.poker.com from Alacorp in an arms
-------------
length transaction and agreed to pay Alacorp $100,000 plus 250,000 restricted
shares plus a 4% royalty. Michael Jackson and Charlo Barbosa (both Directors of
Poker.com Inc) each earned 125,000 restricted shares from UniNet as a finders
fee and for orchestrating the deal. UniNet holds in trust 250,000 restricted
shares which are the property of
Alacorp and are being transferred.
Item 8 Description of Securities
-------------------------
The description, following, is a summary which highlights all of the material
provisions of the Capital stock of the Company.
Common Stock
------------
The authorised Common Stock of the Company consists of 100,000,000 shares of
Common Stock at $0.01 par value per share. And 5,000,000 shares of preferred
stock, par value $0.01
The preferred stock may be issued from time to time, with such designations,
preferences, conversion rights, qualifications, limitations, restrictions
thereof as shall be stated and expressed in the resolution or resolutions
provided for the issuance of such Preferred Stock adopted by the Board of
Directors pursuant to the authority of this paragraph given. No preferred shares
have been issued to date.
The Company trades on the NASD, OTC BB under the symbol PKER
The holders of common stock are entitled to dividends, out of funds legally
available therefore, when and as declared by the Board of Directors of the
Company (the "Board of Directors"). The Board of Directors has never declared a
dividend and does not anticipate declaring a dividend in the future. Each
outstanding share of common stock entitles the holder thereof to one vote per
share on all matters and cumulative voting is not provided for in connection
with the election of the Board of Directors. The holders of common stock have no
pre-emptive or subscription rights.
Warrants
--------
28
<PAGE>
The Company has authorised the issuance of 500,000 warrants which were part of
the Units sold under the Private Placement 24/th/ September, 1999. The Units
comprised on 1 share at $1 plus 1 warrant convertible into I share exercisable
at $1. The warrants are exercisable commencing March 1 2000 until December,
30/th/, 1999.
No Cumulative Voting
--------------------
The holders of shares of Common Stock of the Company do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
shares, voting for the election of Directors, can elect all of the Directors to
be elected, if they so choose, and, in such event, the holders of the remaining
shares will not be able to elect any of the Company's Directors.
Change of Control
-----------------
In terms of the Section 7 of the by-laws of the corporation, a person acquiring
control shares of the Corporation must file an acquiring person statement with
the Corporation, failing which the Corporation may, at the discretion of its
Board of Directors, redeem the control shares at the fair market value thereof,
at any time during the 60 day period after the last acquisition of such control
shares.
PART II
Item 1 Market Price of and Dividends on the Company's Common Equity and other
----------------------------------------------------------------------
Shareholder Matters
-------------------
There is a limited public market for the common stock of the company, which
currently trades of the NASD OTC.BB under the symbol "PKER". The company's
common stock has traded on the OTC B.B. as PKER since the 19/th/ August, 1999.
The shares have traded within the last two fiscal years as follows;
High Low
----- ---
1998
1st Quarter 75c 37c
2nd Quarter 56c 25c
3rd Quarter $2.06 50c
4th Quarter $2.31 67c
1999 1st Quarter 75c 37c
2nd Quarter 50c 31c
3rd Quarter 2.93 49c
4th Quarter 1.28 60c
29
<PAGE>
The above quotations have been provided by Bloomberg Professional and reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.
As of December 1, 1999 there were 4,700,000 shares of common stock outstanding,
held by 45 shareholders of record and by various broker/dealers on behalf of an
indeterminate number of street name shareholders. There were 500,000 shares
subscribed for in September, 1999 under a Reg 504 Private Placement offering
which shares were issued in February, 2000.
To date the company has not paid any dividends on such Common Stock and does not
expect to pay any dividends in the foreseeable futures. Payment of any dividends
will be dependent upon future earnings, if any, the financial condition of the
Company, and other factors as deemed relevant by the Company's Board of
Directors.
Item 2 Legal Proceedings
-----------------
The Officers and Directors of the Company certify that to the best of their
knowledge and belief, neither the Company nor any of its Officers and Directors
are parties to any legal processing of litigation. Further, the Officers and
Directors know of no threatened or contemplated legal proceedings or litigation.
Item 3 Changes in and Disagreements with Accountants
---------------------------------------------
The former accountants Grant Thornton resigned on March, 1, 2000 stating that
their decision was attributable to the company's change in business focus and
not due to a negative assessment of the company's management and/or
stakeholders.
The former accountants, Grant Thornton, Auditor's report dated July 8, 2000
contained the following adverse opinion;
"The accompanying financial statements have been prepared assuming the
company will continue as a going concern. As discussed in note 2 to the
financial statements, the Company has no established source of revenue and is
dependant on its ability to raise substantial amounts of equity funds. This
raises substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that may result from the
outcome of these uncertainties."
The current accountants of the Company Pannell Kerr & Forster, in their Auditors
report dated March 14, 2000 contained the following adverse opinion;
"The accompanying consolidated financial statements have been prepared
assuming the company will continue as a going concern. As discussed in note 2 to
the consolidated financial statements, the Company has minimal capital resources
available and has incurred substantial losses to December 31, 1999. The Company
must obtain additional financing to meet its cash flow requirements. These
matter raise substantial doubt about the Company's ability to continue as a
going concern. These financial statements do not include any adjustments that
might result from the outcome of this uncertainty."
The Board of Directors accepted the resignation of the former accountants.
(Resolution attached as Exhibit 6.8)
It is managers understanding that during the two most recent fiscal years there
was no disagreements with the former accountants on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
The Company engaged a new firm of Accountants, namely Pannell Kerr Forster on
March 2, 2000.
Item 4 Recent Sale of Unregistered Securities
--------------------------------------
Set forth below is information regarding the issuance and sales of securities of
the Company without registration since formation of the Company. No such sales
involved the use of an underwriter and no commissions were paid in connection
with the sales of any securities.
a) On June, 27, 1998 the Company authorised the issuance of a total of
3,000,000 common shares of Thermal Ablation Technology Corporation (now
"Poker.com Inc.") to certain subscribers under a Private placement under
Rule 504 of Regulation D whereby the company raised the sum of $150,000.
The issuance of the common stock was exempt from registration under Rule
504 of Regulation D and Section 3(b) of the Securities Act of 1933 as
amended.
b) On February, 26/th/ 1999, the company issued a total of 200,000 shares of
restricted common stock at a subscription price of $0.50c per share to a
certain subscriber to a Private placement under Rule 504 of Regulation D
whereby the company raised the sum of $100,000. The issuance of the
common stock was exempt from registration under Rule 504 of Regulation D
section 4(6) and Section 3(b) and 4(2) of the Securities Act of 1933 as
amended.
Date Subscriber Number Share Price Total
---- ---------- ------ ----------- -----
Feb 26, 1999 Saint Hilaire Limited 200,000 $0.50c $100,000
30
<PAGE>
c) Based on the Agreement between UniNet and the Company on the 16/th/
July, 2000, the Company, on September 17, 1999 issued a total of
500,000 shares of restricted common stock to UniNet Technology, Inc.,
in respect of the purchase of the URL/Domain www.poker.com at a value
-------------
of $0.50 cents per share being the market value of the shares at the
time the transaction was consummated. The offer and the sale of the
stock were exempt from registration under Rule 504 of Regulation D
under Section 3(b) of the Securities Act of 1933, as amended. If the
exemption under Rule 504 of Regulation D is not available, then
Poker.Com believes that this offering is also exempt under Rule 506
and under Section 4(2) of the Securities Act of 1933, as amended. The
management of Uninet was intimately familiar with Poker.com's
financial condition and its status as a development stage company, and
had access to all relevant financial information concerning the
company.
If the foregoing exemptions are not available, then management
believes that the offer and sale was also exempt under Regulation S
and beyond the jurisdiction of Section 5 of the Securities Act of
1933, as amended. Both Poker.Com and Uninet Technologies, Inc. have
their principal executive offices in Vancouver, British Columbia,
Canada. All aspects of the transaction, and all communications
concerning the transaction, took place in Vancouver, British Columbia,
Canada.
d) On September, 24/th/ 1999, the Company authorized the issuance of a
total of 500,000 common shares of Poker.com Inc at $1.00 per share
plus 1 warrant per share exercisable at $1 to certain subscribers to a
Private Placement under Rule 504 of Regulation D whereby the Company
raised the sum of $500,000. The issuance of the common stock was
exempt from registration under Rule 504 of Regulation D and Section
3(b) and 4(2) of the Securities Act of 1933 as amended and the
Washington Administrative Code 460-44A-300 and 460-44A-504. The shares
were sold only to persons whom the issuer reasonably believes are
accredited investors as defined in 17CFR 230.501(a) and are purchasing
for investment purposes and not with the view to or for sale in
connection with a distribution of a security.
As at December 31, 1999, the shares had not been issued and are
included in "Subscription received" on the balance sheet.
<TABLE>
<CAPTION>
Date Subscriber Number Share Price Total
---- ---------- ------ ----------- --------
<S> <C> <C> <C> <C>
24th September, 1999 Roi, David 150,000 $1.00 $150,000
24th September, 1999 Charlo Barbosa 100,000 $1.00 $100,000
24th September, 1999 EuroCapital Holdings AVV 250,000 $1.00 $250,000
</TABLE>
These shares were issued to the subscribers in February, 2000.
Item 5 Indemnification of Directors and Officers
-----------------------------------------
The Company's Articles of Incorporation provide that the Company must indemnify
its directors and officers, to the fullest extent permitted under the Florida
Business Corporation Act against all liabilities incurred by reason of the fact
that the person is or was a director or officer, or fiduciary of an employee
benefit plan, of another corporation, partnership, joint venture, trust,
employee benefit or other enterprise.
The effect of these provisions is potentially to indemnify the Company's
directors and officers from all costs and expenses of liability incurred by them
in connection with any action, suit or proceeding in which they are involved by
reason of their affiliation with the Company.
31
<PAGE>
POKER.COM, INC.
(A Development Stage Company)
Consolidated Financial Statements
March 31, 2000 (Unaudited) and
December 31, 1999 and 1998
(U.S. Dollars)
<TABLE>
<CAPTION>
INDEX Page
----- ----
<S> <C>
Report of Independent Chartered Accountants F-1
Consolidated Financial Statements
Consolidated Balance Sheets F-2
Consolidated Statements of Operations F-3
Consolidated Statements of Stockholders'Equity F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6-F-12
</TABLE>
<PAGE>
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS
TO THE DIRECTORS AND SHAREHOLDERS OF POKER.COM, INC.
(A Development Stage Company)
We have audited the accompanying consolidated balance sheet of Poker.com, Inc.
(formerly Thermal Ablation Technologies Corporation), (A Development Stage
Company) as at December 31, 1999 and the related consolidated statements of
operations, stockholders' equity and cash flows for the year 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 generally accepted auditing standards
in the United States. 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 consolidated 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 December 31, 1999
and the results of its operations and cash flows for the year ended December 31,
1999 in conformity with generally accepted accounting principles in the United
States.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in note 2 to the
consolidated financial statements, the Company has minimal capital resources
available and has incurred substantial losses to December 31, 1999. The Company
must obtain additional financing to meet its cash flow requirements. These
matters raise substantial doubt about the Company's ability to continue as a
going concern. These financial statements do not include any adjustments that
may result from the outcome of these uncertainties.
"Pannell Kerr Forster"
Chartered Accountants
Vancouver, Canada
March 14, 2000
F-1
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Consolidated Balance Sheets
March 31, 2000 (Unaudited) and December 31, 1999 and 1998
(U.S. Dollars)
<TABLE>
<CAPTION>
=====================================================================================================================
March 31, December 31,
2000 1999 1998
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(unaudited)
Assets
Current
Cash $ 188,483 $ 41,132 $ 5,898
Accounts receivable 180,160 99,405 0
Advances to related party 0 0 17,223
Prepaid expenses 5,154 2,635 0
---------------------------------------------------------------------------------------------------------------------
Total Current Assets 373,797 143,172 23,121
Long-Term Receivable (note 4) 150,000 150,000 0
Property and Equipment (note 5) 116,949 100,822 0
Intangible Assets (notes 6 and 7) 220,625 222,812 0
Long-Term Investment (note 8) 0 0 90,298
---------------------------------------------------------------------------------------------------------------------
Total Assets $ 861,371 $ 616,806 $ 113,419
=====================================================================================================================
Liabilities
Accounts payable and accrued
liabilities (notes 7 and 9) $ 304,353 $ 195,527 $ 12,350
Advances from related parties (note 11(d)) 11,371 95,927 0
---------------------------------------------------------------------------------------------------------------------
Total Liabilities 315,724 291,454 12,350
---------------------------------------------------------------------------------------------------------------------
Contingencies and Commitments (notes 12 and 14)
Stockholders' Equity (note 10)
Preferred Stock, $0.01 par value, 5,000,000 shares authorized,
no shares issued and outstanding
Common Stock and Paid-In Capital in Excess of $0.01 Par Value
100,000,000 Shares authorized
5,200,000 (1999 - 4,700,000; 1998 - 4,000,000) shares 1,010,000 510,000 160,000
issued and outstanding
Other Comprehensive Loss (14,130) (14,130) 0
Deficit Accumulated During the Development Stage (810,223) (670,518) (158,931)
---------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 545,647 325,352 101,069
---------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 861,371 $ 616,806 $ 113,419
=====================================================================================================================
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Consolidated Statements of Operations
Three Months Ended March 31, 2000 (Unaudited), Years Ended December 31, 1999 and
1998 and Period From May 3, 1989 (Inception) Through December 31, 1999
(U.S. Dollars)
<TABLE>
<CAPTION>
======================================================================================================================
Period From
May 3, 1989
Three (Inception)
Months Ended Through
March 31, Year Ended December 31, December 31,
2000 1999 1998 1999
----------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
Revenues
Marketing $ 257,220 $ 50,280 $ 0 $ 50,280
Miscellaneous 0 108 906 1,014
----------------------------------------------------------------------------------------------------------------------
Total Revenues 257,220 50,388 906 51,294
Cost of Goods Sold 28,689 27,793 0 27,793
----------------------------------------------------------------------------------------------------------------------
Gross Margin 228,531 22,595 906 23,501
----------------------------------------------------------------------------------------------------------------------
Expenses
Website marketing 220,668 136,573 0 136,573
Corporation promotion 67,471 39,802 1,412 41,214
Office supplies and services 40,337 29,059 2,340 31,399
Management and consulting fees 19,095 43,573 61,681 115,254
Rent 6,631 21,101 11,460 32,561
Professional fees 2,962 45,996 71,428 117,424
Compensation expense (note 11(b)) 0 125,000 0 125,000
Investment written off (note 8) 0 140,297 0 140,297
General corporate expenses (2,269) 9,856 1,516 11,372
Depreciation and amortization 13,341 7,925 0 7,925
----------------------------------------------------------------------------------------------------------------------
Total Expenses 368,236 599,182 149,837 759,019
----------------------------------------------------------------------------------------------------------------------
Loss from Operations (139,705) (576,587) (148,931) (735,518)
Gain on Sale of Asset 0 65,000 0 65,000
----------------------------------------------------------------------------------------------------------------------
Net Loss for Period $ (139,705) $ (511,587) $ (148,931) $(670,518)
======================================================================================================================
Net Loss Per Share $(0.03) $(0.12) $(0.06)
======================================================================================================================
Weighted Average Number of
Common Shares Outstanding 5,097,849 4,291,667 2,536,986
======================================================================================================================
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
Three Months Ended March 31, 2000 (Unaudited), Years Ended December 31, 1999 and
1998 and Period From May 3, 1989 (Inception) Through December 31, 1999
(U.S. Dollars)
<TABLE>
<CAPTION>
============================================================================================================================
Period From
May 3, 1989
Three (Inception)
Months Ended Through
March 31, Year Ended December 31, December 31,
2000 1999 1998 1999
----------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
Shares of Common Stock Issued
Balance, beginning of period 4,700,000 4,000,000 1,000,000 (i) 0
Issued for
Services (note 11(b)) 0 250,000 0 1,000,000
Cash 500,000 200,000 (iii) 3,000,000 (ii) 3,200,000
Intangible assets (note 6) 0 250,000 (iii) 0 500,000
----------------------------------------------------------------------------------------------------------------------------
Balance, end of period 5,200,000 4,700,000 4,000,000 4,700,000
============================================================================================================================
Common Stock and Paid-In Capital
In Excess of Par
Balance, beginning of period $ 510,000 $ 160,000 $ 10,000 $ 0
Issued for
Services (note 11(b)) 0 125,000 0 10,000
Cash 500,000 100,000 150,000 250,000
Intangible assets (note 6) 0 125,000 0 250,000
----------------------------------------------------------------------------------------------------------------------------
Balance, end of period $1,010,000 $ 510,000 $ 160,000 $ 510,000
============================================================================================================================
Subscriptions Received
Balance, beginning of period $ 500,000 $ 100,000 $ 0 $ 0
Issued (500,000) (100,000) 0 0
Subscriptions received 360,000 500,000 100,000 500,000
----------------------------------------------------------------------------------------------------------------------------
Balance, end of period $ 360,000 $ 500,000 $ 100,000 $ 500,000
============================================================================================================================
Other Comprehensive Income
Balance, beginning of period $ (14,130) $ 0 $ 0 $ 0
Foreign currency translation loss 0 (14,130) 0 (14,130)
----------------------------------------------------------------------------------------------------------------------------
Balance, end of period $ (14,130) $ (14,130) $ 0 $ (14,130)
============================================================================================================================
Deficit Accumulated During
Development Stage
Balance, beginning of period $ (670,518) $ (158,931) $ (10,000) $ 0
Net loss for period (139,705) (511,587) (148,931) (670,518)
----------------------------------------------------------------------------------------------------------------------------
Balance, end of period $ (810,223) $ (670,518) $ (158,931) $ (670,518)
============================================================================================================================
Total Stockholders' Equity $ 545,647 $ 325,352 $ 101,069 $ 325,352
============================================================================================================================
</TABLE>
(i) Issued @ $0.01/share
(ii) Issued @ $0.05/share
(iii) Issued @ $0.50/share
See notes to consolidated financial statements.
F-4
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 (Unaudited), Years Ended December 31, 1999 and
1998 and Period From May 3, 1989 (Inception) Through December 31, 1999
(U.S. Dollars)
<TABLE>
<CAPTION>
======================================================================================================================
Period From
May 3, 1989
Three (Inception)
Months Ended Through
March 31, Year Ended December 31, December 31,
2000 1999 1998 1999
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Activities
Net loss $(139,705) $(511,587) $(148,931) $(545,518)
Adjustments to reconcile net loss to
net cash used by operating activities
Depreciation and amortization 13,341 7,925 0 7,925
Write-down of investment 0 140,297 0 140,297
Compensation expenses 0 125,000 0 125,000
Changes in non-cash working capital
Accounts receivable (80,755) (99,405) 0 (99,405)
Advances to related party 0 17,223 (17,223) 0
Prepaid expenses (2,519) (2,635) 0 (2,635)
Long-term receivable 0 (150,000) 0 (150,000)
Accounts payable and accrued 208,826 173,177 12,350 185,527
liabilities
Due to officers and directors 0 10,000 0 10,000
Advances from (repayments to)
related parties (84,556) 95,927 0 95,927
----------------------------------------------------------------------------------------------------------------------
Net Cash Used By Operating Activities (85,368) (194,078) (153,804) (232,882)
----------------------------------------------------------------------------------------------------------------------
Acquisition of investment 0 (49,999) (90,298) (140,297)
Purchase of property, equipment
and intangible assets (27,281) (206,559) 0 (206,559)
----------------------------------------------------------------------------------------------------------------------
Net Cash Used By Investing Activities (27,281) (256,558) (90,298) (346,856)
----------------------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of common
stock 0 100,000 150,000 260,000
Subscriptions received 260,000 400,000 100,000 500,000
----------------------------------------------------------------------------------------------------------------------
Net Cash Provided By Financing Activities 260,000 500,000 250,000 760,000
----------------------------------------------------------------------------------------------------------------------
Effect of Foreign Currency Translation
on Cash 0 (14,130) 0 (14,130)
----------------------------------------------------------------------------------------------------------------------
Increase in Cash 147,351 35,234 5,898 166,132
Cash, Beginning of Period 41,132 5,898 0 0
----------------------------------------------------------------------------------------------------------------------
Cash, End of Period $ 188,483 $ 41,132 $ 5,898 $ 166,132
======================================================================================================================
Supplemental Disclosure of Non-Cash Transactions
Issue of common stock for settlement
of debt $ 100,000 $ 0 $ 0 $ 100,000
Issue of common stock for assets $ 0 $ 125,000 $ 0 $ 125,000
======================================================================================================================
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2000 (Unaudited), Years Ended December 31, 1999 and
1998 and Period From May 3, 1989 (Inception) Through December 31, 1999
(Unaudited)
================================================================================
1. INCORPORATION AND NATURE OF OPERATIONS
Poker.com, Inc. was incorporated in the State of Florida on May 3, 1989 and
remained inactive until June 27, 1998. The name was changed from Thermal
Ablation Technologies Corporation to Poker.com, Inc. on August 10, 1999.
The Company is in the development stage as defined in Statement No. 7 of
the Financial Accounting Standards Board.
The Company earns revenue from a variety of Internet sources such as sub-
licensing of software, marketing and royalty fees.
2. GOING CONCERN
These financial statements have been prepared in accordance with generally
accepted accounting principles on a going concern basis. This presumes
funds will be available to finance on-going development, operations and
capital expenditures and the realization of assets and the payment of
liabilities in the normal course of operations for the foreseeable future.
Management intends to raise additional capital through share issuances to
finance operations.
The Company has minimal capital resources presently available to meet
obligations which normally can be expected to be incurred by similar
companies and has an accumulated deficit of $670,518. These factors raise
substantial doubt about the Company's ability to continue as a going
concern which is dependent on its ability to obtain and maintain an
appropriate level of financing on a timely basis and to achieve sufficient
cash flows to cover obligations and expenses. The outcome of these matters
cannot be predicted. These financial statements do not give effect to any
adjustments to the amounts and classification of assets and liabilities
which might be necessary should the Company be unable to continue as a
going concern.
3. SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of consolidation
These financial statements include the accounts of Poker.com, Inc. ( a
development stage company) and its wholly-owned subsidiary, Casino
Marketing S.A. ("Casino"), a Costa Rican company. All significant
intercompany balances and transactions have been eliminated.
(b) Depreciation and amortization
Depreciation and amortization are provided using the straight-line
method based on the following estimated useful lives
Computer hardware and software - 3 years
Intangible assets - 40 years
The Company reviews long-term assets to determine if the carrying
amount is recoverable based on the estimate of future cash flow
expected to result from the use of the asset and its eventual
disposition. If in this determination there is an apparent shortfall,
the loss will be recognized as a current charge to operations.
F-6
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2000 (Unaudited), Years Ended December 31, 1999 and
1998 and Period From May 3, 1989 (Inception) Through December 31, 1999
(U.S. Dollars)
================================================================================
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(c) Loss per share
Loss per share computations are based on the weighted average number
of common shares outstanding during the period. Diluted loss per
share has not been presented separately as the outstanding stock
options and warrants are anti-dilutive for each of the periods
presented.
(d) Revenue recognition
The Company recognizes revenues from licensees and customers on an
accrual basis based on agreed terms of licenses and contracts as the
services are rendered and the products are delivered. Income from
advertising, royalties and service fees will be recorded over the
period as the services are being provided to customers. Allowances
for non-collection of revenues are made when collectibility becomes
uncertain.
In May 1997 a Statement of Position "Software Revenue Recognition (SOP
97-2)" was issued. SOP 97-2 as amended by SOP 98-9 provides revised
and expanded guidance on software revenue recognition and applies to
all entities that earn revenue from licensing, selling or otherwise
marketing computer software. SOP 97-2 is effective for transactions
entered into in fiscal years beginning after December 16, 1997. The
application of SOP 97-2 and SOP 98-9 has not had a material impact on
the Company's results of operations.
(e) Foreign currency translation
Amounts recorded in foreign currency are translated into United States
dollars as follows:
(i) Monetary assets and liabilities are translated at the rate of
exchange in effect at the balance sheet date;
(ii) Revenues and expenses, at the rates in effect at the time of the
transaction.
Gains and losses arising from this translation of foreign currency are
excluded from net loss for the period and accumulated as a separate
component of stockholder's equity.
(f) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates and would impact future results of
operations and cash flows.
F-7
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2000 (Unaudited), Years Ended December 31, 1999 and
1998 and Period From May 3, 1989 (Inception) Through December 31, 1999
(U.S. Dollars)
================================================================================
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(g) Financial instruments
The Company's financial instruments include cash, accounts receivable,
long-term receivable, accounts payable and accrued liabilities, due to
officers and directors advances from related parties. It is
management's opinion that the Company is not exposed to significant
interest or credit risks arising from these financial instruments and
that currency risks are nominal. The carrying value of these
financial instruments approximate their fair values.
4. LONG-TERM RECEIVABLE
The amount is receivable over 3 years in equal instalments of $50,000 each
starting in the year 2001. Interest is earned at 6% per annum.
5. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
======================================================================================
December 31, 1999 1998
Accumulated
Cost Depreciation Net Net
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Computer hardware $ 6,559 $ 181 $ 6,378 $ 0
Computer software (note 7(c)) 100,000 5,556 94,444 0
--------------------------------------------------------------------------------------
$106,559 $5,737 $100,822 $ 0
======================================================================================
</TABLE>
6. INTANGIBLE ASSETS
Pursuant to an agreement dated July 16, 1999, the Company acquired for
$225,000 the exclusive marketing and licensing rights to the Poker.com
domain (notes 7(a) and 11(b)). The license will revert to ALA Corp.
("ALA"), the owner of the domain, if the Company:
(a) fails to perform or defaults on the agreement;
(b) causes the owner of the domain to be in violation of any law; or
(c) becomes insolvent.
Amortization of $2,188 has been charged in 1999 against the original cost
of $225,000 resulting in a net book value of $222,812 at December 31, 1999.
F-8
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2000 (Unaudited), Years Ended December 31, 1999 and
1998 and Period From May 3, 1989 (Inception) Through December 31, 1999
(U.S. Dollars)
================================================================================
7. LICENSE AGREEMENTS
(a) Uninet Technologies
Pursuant to an agreement dated July 16, 1999, the Company obtained the
exclusive marketing and licensing rights to the Poker.com domain, from
Uninet Technologies ("Uninet"), which obtained the rights from ALA in
exchange for 250,000 common shares and $100,000. As part of the
transaction, an additional 250,000 shares valued at $125,000 were
issued to officers of the Company as compensation expense. The CEO of
the Company is also a director of Uninet. The Company is obligated to
pay a 4% royalty of any gross revenue including marketing revenue from
the Casino site to ALA. Title will transfer to the Company once total
cumulative royalties exceed $1,000,000. Accounts payable at December
31, 1999 includes $8,000 payable to ALA.
(b) ASF software
Pursuant to an agreement dated August 10, 1999, the Company obtained
the non-exclusive license to use, to distribute or to sub-license ASF
Software Inc.'s ("ASF") Back End Management System software for
$135,000. The Company sold the license and the sub-licensing rights
and the cost amount has been expensed. The Company is obligated to
pay 20% of all revenues derived from the use of the software less
payments to customers as license fees to ASF.
The agreement is automatically renewed for one-year periods. Either
party may terminate this agreement within 90 days notice.
(c) Gamingtech
Pursuant to an agreement dated November 29, 1999, Casino purchased the
following for $100,000
(a) the non-exclusive and non-transferable right to sub-license
Gamingtech's gaming software; and
(b) the right of Casino's sub-licensees to grant the use of the
software to end users.
This amount has been capitalized as computer software. Casino is
obligated to pay Gamingtech a set-up fee of $40,000 for each new sub-
licensee and 15% of gross revenue of every sub-licensee. At December
31, 1999, $70,000 is included in accounts payable.
8. LONG-TERM INVESTMENT
The Company holds a 6% equity interest in Thermal Ablation Technologies
Canada Ltd., a private British Columbia company, that was engaged in the
development of a device for use in the medical treatment of menorrhagia.
The net realizable value of this investment is uncertain. The amount has
accordingly been written off in 1999.
F-9
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2000 (Unaudited), Years Ended December 31, 1999 and
1998 and Period From May 3, 1989 (Inception) Through December 31, 1999
(U.S. Dollars)
================================================================================
9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<TABLE>
<CAPTION>
December 31,
1999 1998
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Trade payables $105,671 $12,350
Payable to Gamingtech (note 7) 70,000 0
Management fees payable to officers and directors 10,000 0
Royalties payable (note 7) 9,856 0
------------------------------------------------------------------------------------------------------------
$195,527 $12,350
============================================================================================================
</TABLE>
10. STOCKHOLDERS' EQUITY
(a) Stock options
The following table summarizes activity in the Company's stock option
plan to December 31, 1999:
<TABLE>
<CAPTION>
Weighted
Exercise Average
Number Price Exercise
of Options Per Option Price
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Granted during 1999
Expiring June 30, 2004 170,000 $1 $1
Expiring December 31, 2001 300,000 1 1
---------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 470,000 $1 $1
===============================================================================================================
</TABLE>
The Company may issue up to 2,000,000 shares under the terms of the
1998 Combined Incentive and Nonqualified Stock Option Plan to
employees, officers, directors and agents of the Company. Incentive
stock options granted to employees holding more than 10% of the total
voting power of all classes of stock must have an exercise price of at
least 110% of fair market value at date of grant. Options granted to
other employees shall have an exercise price of not less than the fair
market value at date of grant. Non-qualified stock options may be
granted at exercise prices more or less than or equal to the fair
market value at date of grant.
(b) Subscriptions received
Pursuant to a private placement on September 24, 1999, the Company
received subscriptions for 500,000 units and proceeds of $500,000 were
received in October 1999. Each unit consists of one share of common
stock and one share purchase warrant. Each warrant is exercisable
into one share of common stock at an exercise price of $1 per warrant
expiring December 31, 2000. The 500,000 shares subscribed were issued
January 19, 2000 and the warrants are outstanding at December 31,
1999.
F-10
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2000 (Unaudited), Years Ended December 31, 1999 and
1998 and Period From May 3, 1989 (Inception) Through December 31, 1999
(Unaudited)
================================================================================
11. RELATED PARTY TRANSACTIONS
(a) The Company paid the following expenses to companies that employ the
executive officers of the Company:
<TABLE>
<CAPTION>
=============================================================================================================
Year Ended December 31,
1999 1998
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Management and consulting fees $22,573 $48,400
Rent 21,101 11,460
Office supplies and services 4,717 1,179
-------------------------------------------------------------------------------------------------------------
$48,391 $61,039
=============================================================================================================
</TABLE>
(b) The Company acquired the exclusive marketing and licensing rights to
the Poker.com domain in return for the issuance of 500,000 shares as
described in notes 6 and 7(a). 250,000 shares were issued to officers
of the Company as compensation expense and 250,000 shares were issued
to Uninet, to be held in trust for the owner of the domain.
(c) During 1999, the Company paid management fees of $21,000 to two
officers.
(d) Advances from related parties are from companies controlled by a
shareholder and director. The amounts are non-interest bearing.
12. CONTINGENCIES
(a) At present, the sale of Internet gaming software/licenses is
unregulated. As the Internet grows in popularity and use, it is
possible that certain laws and regulations will be adopted which may
materially affect the Company's ongoing operations.
(b) During the year ended December 31, 1999, the Company had not purchased
any insurance. Management is in the process of obtaining insurance.
13. INCOME TAXES
A deferred tax asset stemming from the Company's net operating loss carry
forward, has been reduced by a valuation account to zero due to
uncertainties regarding the utilization of the deferred assets. At
December 31, 1999, the Company has available a net operating loss carry
foward of approximately $530,000 which it may use to offset future United
States federal taxable income. The net operating loss carry forward if not
utilized, will begin to expire in 2018.
F-11
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2000 (Unaudited), Years Ended December 31, 1999 and
1998 and Period From May 3, 1989 (Inception) Through December 31, 1999
(U.S. Dollars)
================================================================================
14. COMMITMENTS
(a) The Company is obligated to compensate the officers of the Company for
management fees calculated as the greater of 5% of gross revenues or
$5,000 per month.
(b) The Company is committed to a $340,000 advertising contract expiring
December 31, 2000 with a major web search engine.
15. COMPREHENSIVE LOSS
<TABLE>
<CAPTION>
=================================================================================================================
Period From
May 3, 1989
(Inception)
Through
Year Ended December 31, December 31,
1999 1998 1999
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net loss $(511,587) $(148,931) $(670,518)
Other comprehensive loss (14,130) 0 (14,130)
-----------------------------------------------------------------------------------------------------------------
Comprehensive loss $(525,717) $(148,931) $(684,648)
=================================================================================================================
</TABLE>
F-12
<PAGE>
Part III
Item 1 Index to Exhibits
-----------------
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -------------------------------------------------------
<S> <C>
2.1* Articles of Incorporation
2.2* Bylaws
3.1* Specimen Share Certificate of Common Stock
6.1* Agreement between UniNet Technology Inc. and Poker.com
6.2* Agreement between Poker.com and Antico Holdings
6.3* Agreement between Poker.com and the Directors Remuneration
6.4* Agreement between Casino Marketing and Gamingtech
6.5* Agreement between Poker.com and ASF Games
6.6* Agreement between Poker.com Inc and Excite
6.7* Agreement between TransNet and Casino Marketing S.A.
6.8 Letter of Resignation from Grant Thornton
6.9 Resolution accepting resignation of Grant Thornton and appointment
of Pannell Kerr Forster
6.10 Auditors' Report on the Financial Statements from Grant Thornton
16 Letter from Grant Thornton re: Item 304(a)(3)
</TABLE>
----------
* Previously filed and incorporated here by reference.
33
<PAGE>
SIGNATURES
Pursuant to the requirements Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this report or amendment to be signed on
its behalf by the undersigned, thereunto duly authorized.
POKER.COM, Inc.
Date:
By
----------------------
Michael Jackson.
Chief Executive Officer and Director
34
