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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 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
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Part I
Page
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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 32
</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 3/rd/, 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 8/th/, 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.
Up until June 30/th/ 1999 being the date of the financial statements were last
audited prior to 1999 fiscal year end, the Company had not engaged in any
commercial operations, the companies liabilities exceeded their assets by
$86,201 and Grant Thornton, the company's Auditors, expressed "substantial
doubt" that the company had the ability to continue as a going concern.
As the company had no operating entity it started to scout around for a business
opportunity and after reviewing numerous business plans and being approached
with the opportunity of purchasing the domain/url www.Poker.com, the Company
entered into a purchase agreement with UniNet Technology Inc. ("UniNet") on
July 16/th/ 1999 to purchase the exclusive worldwide rights to use and market
the URL/Domain www.poker.com. The purchase consideration for the url consisted
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of a cash payment of $100,000, 500,000 shares of Thermal plus an on-going
royalty payment of 4% of gross monthly profits. These rights were similarly
acquired by UniNet Technology Inc from the registered owner of the URL, Alacorp
for $100,000 plus an on-going royalty payment of 4% of gross profit plus 250,000
shares (in an arms length transaction.
The Company subsequently sold the exclusive world wide rights to Antico Holdings
S.A ("Antico") to use the URL for the sole purpose of operating a Casino and/or
Card room 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.
Antico is an independent Internet Gaming operator with whom the company has
formed a Licensor/Licensee relationship. Antico has purchased a Poker Card room
sub-license and a Casino License from the Company which entitles the company to
receive a License and Royalty fee. Antico pays the Company a marketing fee of
20% of all deposits made in their card room.
Antico will earn administration and technical support fees of 3% of net profits
from each sub-licensees Casino more fully described in 'Business of the Company'
on page 12
UniNet is a company of which Mr Michael Jackson is a Director. Mr Jackson is
also a Director of Poker.com Inc. In May of 1999 Mr Jackson started negotiating
to purchase the domain www.poker.com and contacted a number of groups managing
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public companies in order to find a company that was looking for a business
model to develop into a viable business. Mr Jackson identified Thermal
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Ablation Technology Corporation ("Thermal") as a candidate. The Directors of
Thermal supported vending the domain into Thermal and agreed for Mr Jackson and
his associate Mr Barbosa to take over management of the Company.
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
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portal
The company's strategy is to acquire Master Licenses from software developers in
order to resell 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.
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
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card room and a gaming portal.
The Company is able to offer a prospective Casino operator a turnkey sub-license
whereby the company would assist in registering a url and designing their web
page and would provide a link to a Master Casino who would provide technical and
administrative support, banking and bandwidth to cope with their Casino traffic.
The Casino operators sole function would then be to market their web site and
direct traffic to their site.
The company's principal offices are located at Suite 1502, 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
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.
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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
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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 1703 373,000
</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
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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 can be terminated at any time by either party on
30 days notice.
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Internet Gaming Companies
A number of public and private companies are competing for market share in the
Internet Gaming world.
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
Carribean, 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
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 Kyl (R-Arz.) submitted Bill S.692 to the Senate
for consideration. The Bill was passed in November 1999 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 purchased a Poker Software Program license from ASF Software Inc.
("ASF") for $135,000 on 10th 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.
ASF earns a 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/ day of September, 1999 the company sold to Antico Holdings SA
(`Antico') of Costa Rica (an independent third party), the exclusive rights to
use the URL www.poker.com for the sole purpose of operating an online gaming
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site. On the 30th September the Company also sold to Antico a sub-license to use
the ASF software to operate a multi-player poker card-room and casino under the
www.poker.com domain. Under this agreement the company earns a fee of 20% of
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each deposit made by each player that signs up to play poker on Antico's web-
site. Antico commenced operations 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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card 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 Company through its wholly owned subsidiary,
Casino Marketing S.A. ("CasinoM") purchased a Master Sub-license Agreement
("MLA") from Gamingtech Corporation ("Gamingtech") (a wholly owned subsidiary
of Chartwell Technologies Inc ("Chartwell") who are software developers) for
$100,000 which provides CasinoM the non-exclusive world wide rights to sell
Casino software program licenses. The Master License software program enables
CasinoM 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 case the dependant sub-licensee is linked into an
independent sub-licensees proprietary software and does not have
his own proprietary software
The link connection (similar to an Internet affiliation program) are 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.
The Companies 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 the Master 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.
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 CasinoM's
dependant and independent sub-licensees.
Casino Marketing S.A. was incorporated in Costa Rica on 14th November, 1999.
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, 10th 2000 CasinoM sold to Antico, a GamingTech Software program to
operate an independent sub-license and two servers to run the Software program.
CasinoM set up the servers in Costa Rica in November, 1999
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prior to defining who would operate as the Master Casino. Antico has agreed to
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 net
profit generated 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 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.
CasinoM has sold 7 Casino sub-license links which will integrate into Antico's
software program and servers.
To capitalize on the vast pool of potential players worldwide, Poker.com, Inc.
will offer software to its sub-licensees in different language, as they become
available such as Spanish, German, French, and Japanese. The GamingTech software
program currently offers the following games in English and Chinese.
Games
The GamingTech software program currently in use all of 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 March, 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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<PAGE>
- 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
Services
CasinoM through its service agreement with Antico, will be able to provide
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 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 is rapidly building market share through the development of the
www.poker.com web-site as the 'Ultimate Gaming Portal" on the Internet and
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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 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 companies 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. Two 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 20c per e-mail
subscriber. 10,000 subscribers generate $2,000 per mail out. The opt-in
newsletter is expected to generate revenues of approximately $250,000
million for Poker.com, Inc. within its first year of operation.
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
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books on poker, gambling and the strategy of winning), and
www.travelocity.com (for airfare tickets to gaming destinations and travel
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in general). Amazon and travelocity off 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 Travelopciy and
purchases
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product, the web masters site is credited with a poercentage of revenue
from that sale of up to 20%. 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.
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
the year 2000. Assuming that an average user would be checking his e-mail
4 times a day, this would generate 16 impressions per user which would
result in 160,000 impressions a day - generating revenue of approximately
$300,000 per year.
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. 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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<PAGE>
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 a
`portal' there will be the ability to provide for a revolving roster, and each
casino sub-licensee will be linked directly from the portal. The company's sub-
licensees will be listed on the Top 10 banner which will constantly be rotated.
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 company's 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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<PAGE>
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 advertise 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, including Cardplayer and Poker Digest. The
Company is also promoting its corporate image through Internet public
relations firms.
Strategic Alliances
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
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.
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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. 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
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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 will submit 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
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banner is immediately and prominently displayed.
Retail E-Commerce/Affiliation Programs
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.
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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
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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.
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
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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").
In September, 1999 the Company raised $500,000 through a private placement under
a Rule 504 exemption and have recently obtained a commitment from three entities
to invest $360,000 in a private placement under a rule 506 exemption.
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 April, 2000.
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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
The costs/expenses associated with earning this revenue are as follows
<TABLE>
<S> <C>
Office, telephones & General Administration $ 10,000
Portal Graphic Designer $ 2,000
Investor relations $ 10,000
Advertising, News Letters $ 10,000
Legal & Accounting $ 3,000
Marketing Costs, Excite, Galore & third party traffic $ 55,000
License Fees 4% $ 9,600
Management Fees 5% $ 12,000
Chartwell Technology License Agreement $ 5,800
Travel & Entertainment $ 5,000
Hardware & Software, Development $ 8,000
--------
Total Expenses $130,400
--------
</TABLE>
As of December, 31, 1999 the Company's accumulated loss was $386,587 and total
current cash and accounts receivable were $143,172
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
c) 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.
d) 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
The Company has sold 7 Casino up to the end of February, 2000
The Company has a commitment to pay Chartwell $17,500 per quarter for the
purchase of their Software License, commencing February, 2000 and have entered
into contract with Excite@home
-----------
22
<PAGE>
From whom they have purchased the keywords 'poker, blackjack and bingo' at a
cost of $14,666 per month for the first quarter of 2000 and increasing to
$28,000 per month for the 2/nd/ quarter, $30,175 per month for the 3/rd/ quarter
and $39,800 per month for the 4/th/ quarter.
First payment to Excite was due January, 1/st/ 2000 and was paid by the Company
in arrears
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 March, 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/given-away more Casino licenses than
any other gaming software supplier on the Internet by the end of June, 2000.
The company has purchased a Master License Agreement from TransNet 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
is 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 Janaury, 1988 until Janaury, 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.
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
President and Director
- -----------------------------------------------------------------------------------------------------------------------------
1998
- -----------------------------------------------------------------------------------------------------------------------------
1997
- -----------------------------------------------------------------------------------------------------------------------------
Michael Jackson, Chief 1999 $16,250 100,000
Operating Officer and
Director
- -----------------------------------------------------------------------------------------------------------------------------
1998
- -----------------------------------------------------------------------------------------------------------------------------
1997
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of
stock options pursuant to stock option plans to the named Executive
Officers during the year ended December 31, 1999.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Name Number of % of Total Exercise or Base Expiration Date
Securities Options/SARS Price
Underlying Granted to ($/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
1/ST/ Quarter 75c 37c
2nd Quarter 56c 25c
3rd Quarter $2.06 50c
4th Quarter $2.31 67c
1999 1/ST/ 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
None
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) On September 17, 1999, the Company 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. 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 authorised the issuance of a total
of 500,000 common shares of Poker.com Inc 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.
<TABLE>
<CAPTION>
Date Subscriber Number Share Price Total
---- ---------- ------ ----------- ------
<S> <C> <C> <C> <C>
24/th/ September, 1999 Roi, David 150,000 $1.00 $150,000
24/th/ September, 1999 Charlo Barbosa 100,000 $1.00 $100,000
24/th/ 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>
PART F/S
Index to Consolidated Financial Statements
Report of Independent Auditors............................................ F1
Balance Sheets as of December 31,1999 and December 31, 1998............... F2
Income Statements for the years ended December 31, 1999, 1998 and 1997
and period from May 3, 1989 to December 31, 1999.......................... F3
Statements of Cash Flows for the years ended December 31, 1999, 1998 and
1997 and period from May 3, 1989 to December 31, 1999..................... F4
Statement of Stockholders Equity for the years ended December 31, 1999,
1998 and 1997 and period from May 3, 1989 to December 31, 1999............ F5
Notes to the Financial Statements......................................... F6
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.
</TABLE>
- ----------
* Previously filed and incorporated here by reference.
32
<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: March 27, 2000
By /s/ Michael Jackson
----------------------
Michael Jackson.
Chief Executive Officer and Director
33
<PAGE>
F-1
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 Foster"
Chartered Accountants
Vancouver, Canada
March 14, 2000
<PAGE>
F-2
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Consolidated Balance Sheets
December 31, 1999 and 1998
(U.S. Dollars)
<TABLE>
<CAPTION>
________________________________________________________________________________________________
1999 1998
________________________________________________________________________________________________
<S> <C> <C>
Assets
Current
Cash $ 41,132 $ 5,898
Accounts receivable 99,405 0
Advances to related party 0 17,223
Prepaid expenses 2,635 0
________________________________________________________________________________________________
Total Current Assets 143,172 23,121
Long-Term Receivable (note 4) 150,000 0
Property and Equipment (note 5) 100,822 0
Intangible Assets (notes 6 and 7) 347,812 0
Long-Term Investment (note 8) 0 90,298
_______________________________________________________________________________________________
Total Assets $741,806 $113,419
_______________________________________________________________________________________________
Liabilities
Current
Accounts payable and accrued liabilities
(notes 7 and 9) $195,527 $ 12,350
Advances from related parties (note 11(d)) 95,927 0
_______________________________________________________________________________________________
Total Liabilities 291,454 12,350
_______________________________________________________________________________________________
</TABLE>
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
<TABLE>
<S> <C> <C>
Common Stock and Paid-In Capital in Excess of $0.01 Par Value
100,000,000 Shares authorized
4,700,000 (1998 - 4,000,000) shares issued and outstanding 510,000 160,000
Subscriptions Received 500,000 100,000
Other Comprehensive Loss (14,130) 0
Deficit Accumulated During the Development Stage (545,518) (158,931)
- -----------------------------------------------------------------------------------------------
Total Stockholders' Equity 450,352 101,069
- -----------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 741,806 $ 113,419
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
F-3
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Consolidated Statements of Operations
Years Ended December 31, 1999, 1998 and 1997 and Period From May 3, 1989
(Inception) Through December 31, 1999
(U.S. Dollars)
<TABLE>
<CAPTION>
========================================================================================================================
Period From
May 3, 1989
(Inception)
Through
December 31,
1999 1998 1997 1999
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Sales from licensing of software $ 200,875 $ 0 $ 0 $200,875
Marketing 49,405 0 0 49,405
Miscellaneous 108 906 0 1,014
- ------------------------------------------------------------------------------------------------------------------------
Total Revenues 250,388 906 0 251,294
Cost of Goods Sold 162,793 0 0 162,793
- ------------------------------------------------------------------------------------------------------------------------
Gross Margin 87,595 906 0 88,501
- ------------------------------------------------------------------------------------------------------------------------
Expenses
Investment written off (note 8) 140,297 0 0 140,297
Website marketing 136,573 0 0 136,573
Professional fees 45,996 71,428 0 117,424
Management and consulting fees 43,573 61,681 0 115,254
Corporation promotion 39,802 1,412 0 41,214
Office supplies and services 29,059 2,340 0 31,399
Rent 21,101 11,460 0 32,561
General corporate expenses 9,856 1,516 0 11,372
Depreciation and amortization 7,925 0 0 7,925
- ------------------------------------------------------------------------------------------------------------------------
Total Expenses 193,588 149,837 0 353,425
- ------------------------------------------------------------------------------------------------------------------------
Net Loss for Period $ 281,183 $ 150,743 $ 0 $441,926
- ------------------------------------------------------------------------------------------------------------------------
Net Loss Per Share $(0.09) $(0.06) $0.00
- ------------------------------------------------------------------------------------------------------------------------
Weighted Average Number of
Common Shares Outstanding 4,291,667 2,536,986 1,000,000
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
F-4
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Consolidated Statements of Cash Flows
Years Ended December 31, 1999, 1998 and 1997 and Period From May 3, 1989
(Inception) Through December 31, 1999
(U.S. Dollars)
<TABLE>
<CAPTION>
======================================================================================================================
Period From
May 3, 1989
(Inception)
Through
December 31,
1999 1998 1997 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Activities
Net loss $(386,587) $(148,931) $ 0 $(545,518)
Adjustments to reconcile net loss to
net cash used by operating activities
Depreciation and amortization 7,925 0 0 7,925
Write-down of investment 140,297 0 0 140,297
Changes in non-cash working capital
Accounts receivable (99,405) 0 0 (99,405)
Advances to related party 17,223 (17,223) 0 0
Prepaid expenses (2,635) 0 0 (2,635)
Long-term receivable (150,000) 0 0 (150,000)
Accounts payable and accrued 173,177 12,350 0 185,527
liabilities
Due to officers and directors 10,000 0 0 10,000
Advances from related parties 95,927 0 0 95,927
- ----------------------------------------------------------------------------------------------------------------------
Net Cash Used By Operating Activities (194,078) (153,804) 0 (357,882)
- ----------------------------------------------------------------------------------------------------------------------
Investing Activities
Acquisition of investment (49,999) (90,298) 0 (140,297)
Purchase of property, equipment
and intangible assets (206,559) 0 0 (206,559)
- ----------------------------------------------------------------------------------------------------------------------
Net Cash Used By Investing Activities (256,558) (90,298) 0 (346,856)
- ----------------------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of common
stock 100,000 150,000 0 260,000
Subscriptions received 400,000 100,000 0 500,000
- ----------------------------------------------------------------------------------------------------------------------
Net Cash Provided By Financing Activities 500,000 250,000 0 760,000
- ----------------------------------------------------------------------------------------------------------------------
Effect of Foreign Currency Translation
on Cash (14,130) 0 0 (14,130)
- ----------------------------------------------------------------------------------------------------------------------
Increase in Cash 35,234 5,898 0 41,132
Cash, Beginning of Period 5,898 0 0 0
- ----------------------------------------------------------------------------------------------------------------------
Cash, End of Period $ 41,132 $ 5,898 $ 0 $ 41,132
======================================================================================================================
Supplemental Disclosure of Non-Cash Transactions
Issue of common stock for
assets $ 250,000 $ 0 $ 0 $ 250,000
======================================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
F-5
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
Years Ended December 31, 1999, 1998 and 1997 and Period From May 3, 1989
(Inception) Through December 31, 1999
(U.S. Dollars)
<TABLE>
<CAPTION>
======================================================================================================================
Period From
May 3, 1989
(Inception)
Through
December 31,
1999 1998 1997 1999
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock Issued
Balance, beginning of period 4,000,000 1,000,000 1,000,000 (i) 0
Issued for
Services 0 0 0 1,000,000
Cash 200,000 (iii) 3,000,000 (ii) 0 3,200,000
Intangible assets (note 6) 500,000 (iii) 0 0 500,000
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of period 4,700,000 4,000,000 1,000,000 4,700,000
=====================================================================================================================
Common Stock and Paid-In Capital
In Excess of Par
Balance, beginning of period $ 160,000 $ 10,000 $ 10,000 $ 0
Issued for
Services 0 0 0 10,000
Cash 100,000 150,000 0 250,000
Intangible assets (note 6) 250,000 0 0 250,000
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of period $ 510,000 $ 160,000 $ 10,000 $ 510,000
=====================================================================================================================
Subscriptions Received
Balance, beginning of period $ 100,000 $ 0 $ 0 $ 0
Issued (100,000) 0 0 0
Subscriptions received $ 500,000 100,000 0 500,000
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of period $ 500,000 $ 100,000 $ 0 $ 500,000
=====================================================================================================================
Other Comprehensive Income
Balance, beginning of period $ 0 $ 0 $ 0 $ 0
Foreign currency translation
loss (14,130) 0 0 (14,130)
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of period $ (14,130) $ 0 $ 0 $ (14,130)
=====================================================================================================================
Deficit Accumulated During
Development Stage
Balance, beginning of period $ (158,931) $ (10,000) $ (10,000) $ 0
Net loss for period (386,587) (148,931) 0 (545,518)
- ---------------------------------------------------------------------------------------------------------------------
Balance, end of period $ (545,518) $ (158,931) $ (10,000) $ (545,518)
=====================================================================================================================
Total Stockholders' Equity $ 450,352 $ 101,069 $ 0 $ 450,352
=====================================================================================================================
</TABLE>
(i) Issued @ $0.01/share
(ii) Issued @ $0.05/share
(iii) Issued @ $0.50/share
See notes to consolidated financial statements.
<PAGE>
F-6
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Years Ended December 31, 1999, 1998 and 1997 and Period From May 3, 1989
(Inception) Through December 31, 1999
(U.S. Dollars)
================================================================================
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 $545,518. 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.
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Years Ended December 31, 1999, 1998 and 1997 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 revenue when the license is granted and other
revenues on an accrual basis as services are provided.
(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.
(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.
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Years Ended December 31, 1999, 1998 and 1997 and Period From May 3, 1989
(Inception) Through December 31, 1999
(U.S. Dollars)
================================================================================
5. PROPERTY AND EQUIPMENT
==========================================================================
December 31, 1999 1998
Accumulated
Cost Depreciation Net Net
- --------------------------------------------------------------------------
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
==========================================================================
6. INTANGIBLE ASSETS
Pursuant to an agreement dated July 16, 1999, the Company acquired for
$350,000 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 $350,000 resulting in a net book value of $347,812 at December 31, 1999.
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 500,000 common shares and $100,000. 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.
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Years Ended December 31, 1999, 1998 and 1997 and Period From May 3, 1989
(Inception) Through December 31, 1999
(U.S. Dollars)
================================================================================
7. LICENSE AGREEMENTS (Continued)
(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.
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>
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Years Ended December 31, 1999, 1998 and 1997 and Period From May 3, 1999
(Inception) Through December 31, 1999
(U.S. Dollars)
================================================================================
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.
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 1997
------------------------------------------------------------------------------
<S> <C> <C> <C>
Management and consulting fees $ 22,573 $ 48,400 $ 0
Rent 21,101 11,460 0
------------------------------------------------------------------------------
Office supplies and services 4,717 1,179 0
------------------------------------------------------------------------------
$ 48,391 $ 61,039 $ 0
==============================================================================
</TABLE>
<PAGE>
POKER.COM, INC.
(Formerly Thermal Ablation Technologies Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
Years Ended December 31, 1999, 1998 and 1997 and Period From May 3, 1989
(Inception) Through December 31, 1999
(US Dollars)
================================================================================
11. RELATED PARTY TRANSACTIONS (Continued)
(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 note 6. These were distributed as 250,000 shares to
officers of the Company and 250,000 shares 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
forward of approximately $405,000 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.
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 1997 1999
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net loss $(386,587) $(148,931) $ 0 $(545,518)
Other comprehensive loss (14,130) 0 0 (14,130)
- --------------------------------------------------------------------------------------------------------------------
Comprehensive loss $(400,717) $(148,931) $ 0 $(559,648)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 6.6
GENERAL TERMS AND CONDITIONS - 2000 ADVANCE BANNER ADVERTISING PURCHASE
Advertiser acknowledges that the sole obligation of Excite Inc. ("Excite") is to
display an advertising banner (the "Banner") from Advertiser which conforms to
the specifications set forth elsewhere in the insertion order (the insertion
order and these General Terms and Conditions are referred to collectively herein
as the "Agreement"). In this regard, Advertiser agrees that (i) Excite has the
right to market, display, perform, transmit and promote the Banner, and (ii)
users of Excite's services have the right to access and use the Banner and any
content and/or services directly linked to the Banner (the "Advertiser Web
Content").
Advertising will be invoiced monthly on the first of each month, and payment in
full will be due upon receipt of the invoice. Payment for all Gaming, Tobacco,
or Alcohol Advertisers will be due and paid in advance in monthly installments.
The first monthly payment must be paid prior to the display of the first of the
Banners. Subsequent monthly installments will be due and must be paid on the
first of each month thereafter. Advertiser understands that once this Agreement
is executed there shall be no refunds or proration of rates or monthly
installment payments if Advertiser elects to discontinue display of the Banner
prior to the expiration of the advertising term. Orders are accepted subject
to the terms and provisions of the current rate card. Advertising rates set
forth in the rate card are subject to change; any rate changes will apply to any
additional advertising services requested by Advertiser after such rate change.
Under no circumstances shall Excite be liable to the advertiser for indirect,
incidental, consequential, special or exemplary damages (even if such damages
are foreseeable, and whether or not Excite has been advised of the possibility
of such damages) arising from any aspect of the advertising relationship
provided for herein. Excite shall in no event be liable to Advertiser for more
than the total amount paid to Excite by Advertiser hereunder. Excite makes no
representations, and hereby expressly disclaims all warranties, express or
implied, regarding Excite's services or any portion thereof, including any
implied warranty of merchantability or fitness for a particular purpose and
implied warranties arising from course of dealing or course of performance.
Without limiting the generality of the foregoing, Excite specifically disclaims
any warranty regarding (i) the number of persons who will access the Banner and
(ii) any benefit Advertiser might obtain from including the banner within
Excite's Web site.
Advertiser is solely responsible for any legal liability arising out of or
relating to the Banner and/or the Advertiser Web Content. Advertiser represents
and warrants that (1) the Banner complies with Excite's advertising standards;
(2) Advertiser holds the necessary rights to permit the use of the Banner by
Excite for the purposes of this Agreement (3) the use, reproduction,
distribution or transmission of the Banner will not violate any criminal laws,
rules or regulations or any rights of any third parties, including, but not
limited to, such violations as infringement or misappropriation of any
copyright, patent, trademark, trade secret, music, image, or other proprietary
or property right, false advertising, unfair competition, defamation, invasion
of privacy or rights of celebrity, violation of any anti-discrimination law or
regulation, or any other right of any person or entity; (4) neither the Banner
nor the Advertiser's Web Content shall advertise or enable the sale of alcohol
to persons under 21; (5) neither the Banner nor the Advertiser's Web Content
shall advertise or enable the sale of tobacco or tobacco products to persons
under 21; and (6) Advertiser's Web Content complies with all laws, rules and
regulations of the state, country or territory in which it is located.
Advertiser agrees to indemnify Excite and to hold Excite harmless from any and
all liability, loss, damages, claims, or causes of action, including reasonable
legal fees and expenses that may be incurred by Excite, arising out of or
related to Advertiser's breach of any of the foregoing representations and
warranties.
x /s/ Michael Jackson
-----------------------------------------
<PAGE>
Excite reserves the right to reject any advertising which is not consistent with
Excite's standards. In addition, Excite shall have the right, at any time, to
remove any of Advertiser's advertising and/or terminate this agreement if Excite
determines, in its sole discretion, that the Banner, Advertiser Web Content or
any portion thereof (1) violates Excite's then applicable advertising policy;
(2) violates any law, rule or regulation or if Excite is directed to do so by
any law enforcement agency; or (iii) is otherwise objectionable to Excite, in
which event Excite shall refund to Advertiser a pro rata portion of the fee
which Advertiser has paid to Excite for display of the Banner (if Advertiser has
paid Excite a flat fee).
Excite and Advertiser are independent contractors, and neither Excite nor
Advertiser is an agent, representative or partner of the other. Excite may
terminate this Agreement at any time in the event of material breach of this
Agreement by Advertiser. This Agreement sets forth the entire agreement between
Advertiser and Excite, and supersedes any and all prior agreements (whether
written or oral) of Excite and Advertiser with respect to the subject matter set
forth herein; provided, however, that all pricing will be governed by Excite's
then-current rate card, whether in print or electronic form. This Agreement may
only be modified, or any rights under it waived, by a written document executed
by both parties. This Agreement shall be interpreted, construed and enforced in
all respects in accordance with laws of the State of California, without regard
to the actual state or country of incorporation or residence of Advertiser.
Advertiser hereby irrevocably consents to the exclusive jurisdiction of the
courts of the State of California and the federal courts situated in the State
of California in connection with any action arising under this Agreement.
Advertiser may not assign this Agreement, in whole or in part.
Version: Upfront 2000 10/5/99
X /s/ Michael Jackson
--------------------------------------
<PAGE>
EXCITE NETWORK ADVERTISING AGREEMENT
Excite - Redwood City
555 Broadway, Redwood City, CA 94063
voice: 650.568.6000 fax: 650.568.6030
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Contract # 49835-0
Client PO # Campaign: 49835_upfront2000_poker.com_04/01/00-03/31/00 Printed On October 18, 1999
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Agency Advertiser Production Contact:
Company Name: Client: POKER.COM/BARACUDA ENTERPRISES INC. Name:
Contact: Contact: Charlo Barbosa Title:
Title: Title: Phone:
Contact Email: Contact Email: [email protected] Fax:
Company Phone: Street Address: 555 West Hasting St. Suite 811 E-Mail:
Street Address: City, State, Zip: Vancouver, BC v6b4n5 Address:
City, State, Zip: Phone: 604-893-7022 City, State, ZIP:
Fax: Fax: 604-883-6013
- ------------------------------------------------------------------------------------------------------------------------------------
Campaign Information Start Date: 04/01/00 Number of Days: 91
Bill to: POKER.COM/BARACUDA ENTERPRISES INC. End Date: 06/30/00 Total Imps: 811,541
Tech(T)/NonTech(N): N
- ------------------------------------------------------------------------------------------------------------------------------------
Sales Contact: Mathieu DesJardins Total Imps: 811,541 Contract Cost: $85,547
Title: Inside Sales Contract Dollars: $85,547
Weighted CPM: $105.41
- ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------- Summary Information ----------------------------------------------
Summary for Excite Total Imp Avg List CPM Avg Net CPM Total Cost
Keyword 811,541 $667.53 $667.53 $85,547
SubTotal for Excite 811,541 $667.53 $667.53 $85,547
- ---------------------------
------------------------------------------------------- Schedule Information ---------------------------------------------
Service Product Type Product Name Start End #Days Est. Daily Imps Total Imps List CPM Net CPM Total Cost
Excite Keyword xsr-poker 04/01/00 06/30/00 91 4,055 389,086 $120.00 $120.00 $44,290
Excite Keyword xsr-bingo 04/01/00 06/30/00 91 3,071 279,479 $75.00 $75.00 $20,961
Excite Keyword xsr-blackjack 04/01/00 06/30/00 91 1,715 156,151 $105.00 $105.00 $16,396
Excite Keyword xsr-royal+flush 04/01/00 06/30/00 91 9 819 $600
Excite Keyword xsr-paigow 04/01/00 06/30/00 91 3 273 $300
Excite Keyword xsr-paigow+poker 04/01/00 06/30/00 91 3 273 $600
Excite Keyword xsr-sic+bo 04/01/00 06/30/00 91 9 819 $600
Excite Keyword xsr-stud+poker 04/01/00 06/30/00 91 30 2,730 $600
Excite Keyword xsr-texas+holdem 04/01/00 06/30/00 91 19 1,728 $600
Excite Keyword xsr-caribbean+poker 04/01/00 06/30/00 91 2 182 $600
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Comments/Special Instructions:
- ------------------------------------------------------------------------------------------------------------------------------------
I have read and understood the attached terms and conditions.
Client: /s/ Michael Jackson Manager/Account Executive: /s/ Mathieu Jardins
------------------------------------------------- --------------------------------------------
Title: CEO Director:
------------------------------------------------- --------------------------------------------
Date: Oct-18-99 Date:
------------------------------------------------- --------------------------------------------
Note: Due to the continually evolving nature of the web, we reserve the right to change our ad products with 30 days advance notice.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXCITE NETWORK ADVERTISING AGREEMENT
Excite - Redwood City
555 Broadway, Redwood City, CA 94063
voice: 650.568.6000 fax: 650.568.6030
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Contract # 49833-0
Client PO # Campaign: 49833_upfront2000_poker.com_01/01/00-03/31/00 Printed On October 18, 1999
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Agency Advertiser Production Contact:
Company Name: Client: POKER.COM/BARACUDA ENTERPRISES INC. Name:
Contact: Contact: Charlo Barbosa Title:
Title: Title: Phone:
Contact Email: Contact Email: [email protected] Fax:
Company Phone: Street Address: 555 West Hasting St. Suite 811 E-Mail:
Street Address: City, State, Zip: Vancouver, BC v6b4n5 Address:
City, State, Zip: Phone: 604-893-7022 City, State, ZIP:
Fax: Fax: 604-883-6013
- ------------------------------------------------------------------------------------------------------------------------------------
Campaign Information Start Date: 01/01/00 Number of Days: 91
Bill to: POKER.COM/BARACUDA ENTERPRISES INC. End Date: 03/31/00 Total Imps: 458,112
Tech(T)/NonTech(N): N
- ------------------------------------------------------------------------------------------------------------------------------------
Sales Contact: Mathieu DesJardins Total Imps: 458,112 Contract Cost: $49,089
Title: Inside Sales Contract Dollars: $49,689
Weighted CPM: $108.47
- ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------- Summary Information ----------------------------------------------
Summary for Excite Total Imp Avg List CPM Avg Net CPM Total Cost
Keyword 458,112 $709.65 $709.65 $49,689
SubTotal for Excite 458,112 $709.65 $709.65 $49,689
- ---------------------------
------------------------------------------------------- Schedule Information ---------------------------------------------
Service Product Type Product Name Start End #Days Est. Daily Imps Total Imps List CPM Net CPM Total Cost
Excite Keyword xsr-poker 01/01/00 03/31/00 91 2,273 206,925 $120.00 $120.00 $24,831
Excite Keyword xsr-bingo 01/01/00 03/31/00 91 1,721 156,567 $75.00 $75.00 $11,750
Excite Keyword xsr-blackjack 01/01/00 03/31/00 91 963 87,895 $105.00 $105.00 $59,208
Excite Keyword xsr-royal+flush 01/01/00 03/31/00 91 9 819 $899
Excite Keyword xsr-paigow 01/01/00 03/31/00 91 3 273 $300
Excite Keyword xsr-paigow+poker 01/01/00 03/31/00 91 3 273 $600
Excite Keyword xsr-slc+bo 01/01/00 03/31/00 91 9 819 $600
Excite Keyword xsr-stud+poker 01/01/00 03/31/00 91 30 2,730 $600
Excite Keyword xsr-texas+holdem 01/01/00 03/31/00 91 19 1,728 $600
Excite Keyword xsr-caribbean+poker 01/01/00 03/31/00 91 2 182 $600
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Comments/Special Instructions:
- ------------------------------------------------------------------------------------------------------------------------------------
I have read and understood the attached terms and conditions.
Client: /s/ Michael Jackson Manager/Account Executive: /s/ Mathieu Jardins
------------------------------------------------- --------------------------------------------
Title: CEO Director:
------------------------------------------------- --------------------------------------------
Date: Oct-18-99 Date:
------------------------------------------------- --------------------------------------------
Note: Due to the continually evolving nature of the web, we reserve the right to change our ad products with 30 days advance notice.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXCITE NETWORK ADVERTISING AGREEMENT
Excite - Redwood City
555 Broadway, Redwood City, CA 94063
voice: 650.568.6000 fax: 650.568.6030
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Contract # 49840-0
Client PO # Campaign: 49840_upfront2000_poker.com_07/01/00-09/30/00 Printed On October 18, 1999
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Agency Advertiser Production Contact:
Company Name: Client: POKER.COM/BARACUDA ENTERPRISES INC. Name:
Contact: Contact: Charlo Barbosa Title:
Title: Title: Phone:
Contact Email: Contact Email: [email protected] Fax:
Company Phone: Street Address: 555 West Hasting St. Suite 811 E-Mail:
Street Address: City, State, Zip: Vancouver, BC v6b4n5 Address:
City, State, Zip: Phone: 604-893-7022 City, State, ZIP:
Fax: Fax: 604-883-6013
- ------------------------------------------------------------------------------------------------------------------------------------
Campaign Information Start Date: 07/01/00 Number of Days: 92
Bill to: POKER.COM/BARACUDA ENTERPRISES INC. End Date: 09/30/00 Total Imps: 860,674
Tech(T)/NonTech(N): N
- ------------------------------------------------------------------------------------------------------------------------------------
Sales Contact: Mathieu DesJardins Total Imps: 860,674 Contract Cost: $90,525
Title: Inside Sales Contract Dollars: $90,525
Weighted CPM: $105.18
- ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------- Summary Information ----------------------------------------------
Summary for Excite Total Imp Avg List CPM Avg Net CPM Total Cost
Keyword 860,674 $702.42 $702.42 $90,525
SubTotal for Excite 860,674 $702.42 $702.42 $90,525
- ---------------------------
------------------------------------------------------- Schedule Information ---------------------------------------------
Service Product Type Product Name Start End #Days Est. Daily Imps Total Imps List CPM Net CPM Total Cost
Excite Keyword xsr-poker 07/01/00 09/30/00 92 4,256 381,605 $120.00 $120.00 $46,993
Excite Keyword xsr-bingo 07/01/00 09/30/00 92 3,222 298,515 $75.00 $75.00 $22,239
Excite Keyword xsr-blackjack 07/01/00 09/30/00 92 1,800 166,654 $105.00 $105.00 $17,394
Excite Keyword xsr-royal+flush 07/01/00 09/30/00 92 9 828 $600
Excite Keyword xsr-paigow 07/01/00 09/30/00 92 3 276 $300
Excite Keyword xsr-paigow+poker 07/01/00 09/30/00 92 3 276 $600
Excite Keyword xsr-sic+bo 07/01/00 09/30/00 92 9 828 $600
Excite Keyword xsr-stud+poker 07/01/00 09/30/00 92 30 2,760 $600
Excite Keyword xsr-texas+holdem 07/01/00 09/30/00 92 19 1,748 $600
Excite Keyword xsr-caribbean+poker 07/01/00 09/30/00 92 2 184 $600
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Comments/Special Instructions:
- ------------------------------------------------------------------------------------------------------------------------------------
I have read and understood the attached terms and conditions.
Client: /s/ Michael Jackson Manager/Account Executive: /s/ Mathieu Jardins
------------------------------------------------- --------------------------------------------
Title: CEO Director:
------------------------------------------------- --------------------------------------------
Date: Oct-18-99 Date:
------------------------------------------------- --------------------------------------------
Note: Due to the continually evolving nature of the web, we reserve the right to change our ad products with 30 days advance notice.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXCITE NETWORK ADVERTISING AGREEMENT
Excite - Redwood City
555 Broadway, Redwood City, CA 94063
voice: 650.568.6000 fax: 650.568.6030
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Contract # 49841-0
Client PO # Campaign: 49841_upfront2000_poker.com_10/01/00-12/31/00 Printed On October 18, 1999
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Agency Advertiser Production Contact:
Company Name: Client: POKER.COM/BARACUDA ENTERPRISES INC. Name:
Contact: Contact: Charlo Barbosa Title:
Title: Title: Phone:
Contact Email: Contact Email: [email protected] Fax:
Company Phone: Street Address: 555 West Hasting St. Suite 811 E-Mail:
Street Address: City, State, Zip: Vancouver, BC v6b4n5 Address:
City, State, Zip: Phone: 604-893-7022 City, State, ZIP:
Fax: Fax: 604-883-6013
- ------------------------------------------------------------------------------------------------------------------------------------
Campaign Information Start Date: 10/01/00 Number of Days: 92
Bill to: POKER.COM/BARACUDA ENTERPRISES INC. End Date: 12/31/00 Total Imps: 1,147,241
Tech(T)/NonTech(N): N
- ------------------------------------------------------------------------------------------------------------------------------------
Sales Contact: Mathieu DesJardins Total Imps: 1,147,241 Contract Cost: $119,599
Title: Inside Sales Contract Dollars: $119,599
Weighted CPM: $104.25
- ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------- Summary Information ----------------------------------------------
Summary for Excite Total Imp Avg List CPM Avg Net CPM Total Cost
Keyword 1,147,241 $659.75 $659.75 $119,599
SubTotal for Excite 1,147,241 $659.75 $659.75 $119,599
- ---------------------------
------------------------------------------------------- Schedule Information ---------------------------------------------
Service Product Type Product Name Start End #Days Est. Daily Imps Total Imps List CPM Net CPM Total Cost
Excite Keyword xsr-poker 10/01/00 12/31/00 92 5,685 523,036 $120.00 $120.00 $62,764
Excite Keyword xsr-bingo 10/01/00 12/31/00 92 4,305 396,062 $75.00 $75.00 $29,705
Excite Keyword xsr-blackjack 10/01/00 12/31/00 92 2,404 221,243 $105.00 $105.00 $23,231
Excite Keyword xsr-royal+flush 10/01/00 12/31/00 92 9 828 $600
Excite Keyword xsr-paigow 10/01/00 12/31/00 92 3 276 $300
Excite Keyword xsr-paigow+poker 10/01/00 12/31/00 92 3 276 $800
Excite Keyword xsr-sic+bo 10/01/00 12/31/00 92 9 828 $600
Excite Keyword xsr-stud+poker 10/01/00 12/31/00 92 30 2,760 $600
Excite Keyword xsr-texas+holdem 10/01/00 12/31/00 92 19 1,748 $600
Excite Keyword xsr-caribbean+poker 10/01/00 12/31/00 92 2 184 $600
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Comments/Special Instructions:
- ------------------------------------------------------------------------------------------------------------------------------------
I have read and understood the attached terms and conditions.
Client: /s/ Michael Jackson Manager/Account Executive: /s/ Mathieu Jardins
------------------------------------------------- --------------------------------------------
Title: CEO Director:
------------------------------------------------- --------------------------------------------
Date: Oct-18-99 Date:
------------------------------------------------- --------------------------------------------
Note: Due to the continually evolving nature of the web, we reserve the right to change our ad products with 30 days advance notice.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 6.7
MASTER SOFTWARE SUB LICENSE AGREEMENT
-------------------------------------
This Agreement made this 15/th/ day of February, 2000.
By and Between
TransNet International S.A. ("TransNet") a body corporate with offices in Costa
Rica
And
Casino Marketing SA ("Master Licensee") a body corporate with offices San
Jose, Costa Rica
WHEREAS
. TransNet has purchased the world wide licensing rights to a Poker software
program ("Software") from RiverStyx for playing Texas Hold-em Poker and
other Poker Games in development stage ("client games")
. Master Licensee is in the business of selling gaming software licenses to
3/rd/ party operators and wishes to acquire a Master Sub-License from
TransNet.
. TransNet is willing to grant the Master Licensee a non-exclusive world wide
license to use and/or to grant sub-licenses and the right to use the
software in object code, only while connected to a server on which the
server component of the Software is installed.
NOW THEREFORE, in consideration of the mutual covenants and promises set forth
herein the parties hereto agree as follows;
Interpretation
Dollar or $ Shall mean United States Dollars
Gross Revenue Shall mean the 'rake' earned by the sub-licensees before any
expenses
Master License Shall mean the right to sub-license the software provided to
the Master Sub-Licensee By TransNet
Software
Program Shall mean the gaming software program developed by
RiverStyx and licensed to TransNet under a Master Sub-
License Agreement
1
<PAGE>
1 Grant of Master License
TransNet hereby grants to the Master Licensee the unlimited right to use
and/or sub-license the client games on terms and conditions as set out
herein
a) For these rights Master Licensee shall pay to TransNet
i) $20,000 upon signing hereof
ii) $10,000 upon receipt of the software in working form
iii) 80,000 shares of Poker.com Inc
b) Master Licensee shall pay to TransNet the sum of $50,000 for each sub-
license that Master Licensee sells excluding the sale of the first
sub-license to Antico Holdings SA. which shall be the sum of $1.00
based on the fact that Antico will transfer all their past present and
future players to the new software, and excluding the second license
which shall be $35,000.
c) Master Licensee shall pay to TransNet continuing licensing fees of 20%
of sub-licensees monthly rate from the tables.
d) Royalty fees shall be made to TransNet for each payment period at such
time as the sub-licensee receives winnings from their Credit Card
processor.
e) The Master Licensee with enter into sub-licensing agreements
incorporating similar terms and conditions as set out herein
2 Term
The term of this agreement shall begin on signing hereof and shall remain
in full force and effect until June, 30/th/ 2050 unless terminated for just
cause or if one party has defaulted under its obligations as provided for
herein and such default has not been cured as provided for herein
3 Entire Agreement
This Agreement, including all appendixes and reference attachments,
constitutes the entire agreement between Master Licensee and TransNet and
supersedes all proposals, agreements, oral and written, between the parties
on the subject matter.
4 Software License and Other Services
TransNet herewith agrees to provide the following services (including the
software licenses as set forth below, the "Service") on a non-exclusive
basis and subject to these terms and conditions.
a. License
On each occasion that the Master Licensee sells a sub-license, TransNet
shall provide the Master Licensee with a copy of the software program,
subject to the provisions of sub paragraph 2(c). below, (hereinafter
referred to as the "License") for use of TransNet's current version of its
Back End Management System which includes a Communications Server Program,
a Player Database System using MS SQL and the capability to interface the
Player Database System to MPACT, Master merchant Credit Card processing
system or other Credit Card Processors, hereinafter
2
<PAGE>
referred to as the ("Software"). Furthermore TransNet shall provide from
time to time as TransNet deems necessary, updates or enhancements to the
current features provided in the Software at cost..
b. Hardware Compatibility
TransNet agrees the Software as delivered shall load and operate on a
minimum computer equipment configuration as listed herein below:
The Master Licensee shall provide its own hardware meeting or exceeding the
following requirements:
1 x Linux Server
Raid Box
Tape Backup
1 x Standby Linux Server
Network and Database:
c. Usage and Distribution
TransNet shall grant usage to the Master Licensee on a non-exclusive basis
as follows:
1) The rights to use a copy of the Software utilizing a URL in
a legal jurisdiction for the Master Licensee.
2) The unlimited right to use, distribute, or sub-license the
Client Games.
Except as specifically set forth above, the Master Licensee shall not copy
or distribute or cause to be copied or distributed the Software for any
other purpose except as provided herein without the written consent of the
TransNet.
5 Performance of Services
The Services provided herein and the manner in which the Services are to be
performed and the specific hours to be worked by TransNet shall be
determined by the TransNet. The Sub-Licensee shall rely on TransNet to work
as many hours as may be reasonably necessary to fulfill the scheduling
obligations under this Agreement.
6 Delivery and Installation
Both parties understand time is of the essence and shall make their best
efforts to expedite the delivery of the Software as follows:
a. Delivery Schedule
TransNet shall deliver or cause to be delivered the working
version of TransNet's current software program of or before April
15/th/, 2000
b. Master Licensee Preparation and Installation
TransNet shall load and certify the installation of the Software
on hardware provided by the Sub-licensee. The Master Licensee
shall reimburse TransNet for any out-of-pocket expenses
associated with travel and subsistence for this effort.
3
<PAGE>
7 Acceptance
Acceptance of the Software shall occur upon delivery of the Software as set
forth in paragraph 4(a).
8 Limited Warranty and Legality
Upon delivery, the TransNet acknowledges to the best of its ability that
the Software is free of defects or imperfection for a period of ninety days
from delivery. Any errors that create on screen error messages and which
can be reproduce by the Master Licensee on the TransNet's or mutually
agreeable test computer system that are found in the delivered Software
during the warranty period hall be corrected in a reasonable time frame, as
determined by industry standards, at the TransNet's expense. Furthermore,
the TransNet warrants and represents that the games are based on standard
random number generation and that ht software has not been modified to the
favor of nay specific player or the Master Licensee. At the Master
Licensee's option and sole expense the Master Licensee may select an
Internationally recognized Accounting and Consulting firm to view the
Software Source Code and Verify the randomness of random number generators
at the offices of the TransNet.
The TransNet shall only be responsible for errors that are reproducible in
the Software as delivered by the TransNet, and not for any errors created
because of other programs, hardware, or changes not made by the TransNet.
TransNet hereby disclaims all other warranties of any kind as to the
Software whether stated or implied, including any warranty of
merchantability or fitness for a particular purpose, even if the TransNet
has been advised of the purpose
The Master Licensee has conducted an independent investigation into
legality of the intended used of the Software and hereby releases TransNet
from any responsibility with respect to any present or intervening
illegality of such use.
The Master Licensee shall indemnify and hold TransNet harmless from any
and all claims, liability or damage arising from or related to any alleged
or actual illegal use of the Software. In the event of any such illegality,
Master Licensee shall not be excused from its obligations to the TransNet
hereunder.
9 Payments After Termination
Upon termination of this Agreement for any reason other than the default of
the TransNet, the TransNet shall be entitle to payments and partial
payments that occurred prior to the date of termination and for which the
TransNet has not yet been paid.
Furthermore, all Services and Schedules provided herein by the TransNet
shall be suspended if any payments, fees or invoices are in arrears and
shall remain suspended until such time the arrears have been paid or until
the TransNet elects to continue working with the Master Licensee.
10 Expenses of TransNet
TransNet shall be entitled to reimbursement from the Master Licensee for
reasonable and mutually agreeable travel expenses, if any, that relate to
this Agreement.
4
<PAGE>
11 Termination
a. Default
Either party has the right to terminate this Agreement if the other party
breaches or is in default of its obligations hereunder and such default is
incapable of cure or which, being capable of cure, has not been cured
within the time provided for herein.
b. Acts of Insolvency
TransNet may terminate this Agreement by written notice to the Master
Licensee if the Master Licensee becomes insolvent, suffers or permits the
appointment of a receiver for its business or assets, becomes subject to
any proceeding under any bankruptcy or insolvency law whether domestic or
foreign, or has wound up or liquidated, voluntarily or otherwise. If
TransNet becomes insolvent, is placed in receivership, or in Bankruptcy,
this Agreement will terminate.
c. Force Majeure Event
In the event that either party is unable to perform any of its obligations
under this Agreement, or to enjoy any of its benefits because of natural
disasters, or communications line failure not the fault of the affected
party (hereinafter referred to as a "Force Majeure Event"), the party who
has been so affected shall immediately give notice to the other party and
shall do everything possible to resume performance. Upon receipt of such
notice, all obligations under this Agreement shall be immediately
suspended. If the period of nonperformance exceeds fifteen (15) days from
the receipt of notice of the Force Majeure Event, the party whose ability
to perform has not been affected may, by giving written notice, terminate
this Agreement.
However, delays in delivery due to Force Majeure Events shall automatically
extend the delivery date for a period equal to the duration of such Events;
any warranty period affected by a Force Majeure event shall likewise be
extended for a period equal to the duration of such Event.
d. Return of Software
Should this Agreement be terminated by TransNet on account of Master
Licensee's default pursuant to this Agreement, TransNet may repossess any
and all the Services by directing Master Licensee in writing to deliver all
records, notes, data, memoranda, of any nature that are in their possession
or under their control within thirty (30) days to TransNet and at Master
Licensees expense to the nearest convenient location of TransNet.
12 Relationship of Parties
It is understood by the parties that TransNet is an independent contractor
with respect to the Master Licensee, and not an employee of the Master
Licensee. The Master Licensee shall not provide fringe benefits, including
health insurance benefits, paid vacation, or any other employee benefit,
for the benefit of TransNet. Licensee without prior written approval of
TransNet.
13 Consequential Damages
In no event shall either party be liable for consequential damages caused
by the other party unless by the negligence of that party
5
<PAGE>
14 Intellectual Property
Except as otherwise provided for herein, the following provisions shall
apply with respect to copyrightable works, ideas, discoveries, inventions,
applications for patents, and patents (collectively, "Intellectual
Property"):
a. Master Licensee Intellectual Property
The Master Licensee shall not hold any interest in any Intellectual
Property except for Copyrights of the WebMaster Licensee for Graphic or
Graphics Design created by or for the Master Licensee.
b. Development of Intellectual Property
Any item of Intellectual Property discovered or developed TransNet (or
TransNet's employees) for the benefit of the Master Licensee during the
term of this Agreement shall automatically become the property of
TransNet.
Furthermore, software features specifically developed by TransNet for and
paid by the Master Licensee shall be deemed the intellectual property of
TransNet, however, if there are to be any exclusivity and royalty
conditions regarding such features, those conditions shall be mutually
agreed in writing before such development begins.
15 Confidential and Proprietary Information
Both parties recognize that they have and/or shall have copyrights,
products, costs, business affairs trade secrets, technical information,
product design information, and other proprietary information
(collectively, "Information") which are valuable approval of the Master
Licensee.
a. Master Licensee Business Information
TransNet agrees that TransNet shall not knowingly distribute, either orally
or written, any Information of the Master Licensee, including specific
operational statistics or results, to a third party without the prior
written approval of the Master Licensee.
b. TransNet's Intellectual Property
The Master Licensee agrees that the Software provided by TransNet to the
Master Licensee is the sole property of TransNet regardless of any
payments, fees or other considerations made to TransNet by the Master
Licensee.
c. Unauthorized Disclosure of Information
If it appears that either party has disclosed (or has threatened to
disclose) Information in violation of this Agreement, the other party shall
be entitled to an injunction to restrain the other party from disclosing,
in whole or in part, such Information, or from providing any Services to
any party to whom such Information has been disclosed or may be disclosed
pending resolution for any arbitration filed to resolve a dispute as it
relates to this Agreement. Neither party shall be prohibited by this
provision from pursuing other remedies, including a claim for losses and
damages.
d. Confidentiality After Termination of Agreement
6
<PAGE>
The confidentiality provisions of this Agreement shall remain in full force
and effect after the termination of this Agreement. A violation of sub-
paragraphs 13(a). or 13(b). above shall be a material violation of this
Agreement.
16 Return of Records
Upon termination of this Agreement, both Party's shall deliver all records,
notes, data, memoranda, of any nature that are in their possession or under
their control and that are the other Party's property or relate to the
other Party's business operations.
17 Notices
All notices required or permitted under this Agreement shall be in writing
and shall be deemed delivered when delivered in person or deposited in
the United States mail, postage prepaid, addressed as follows:
Attn:
TransNet
TransNet International S.A.
______________________ San Jose, Costa Rica
Master Licensee: Casino Marketing SA
_____________________ San Jose, Costa Rica
Such addresses may be changed from time to time by either party providing
written notice in the manner set forth above.
18 Amendment
This Agreement may be modified or amended, if the amendment is made in
writing and is signed by both parties.
19 Severability
If any provision of this Agreement shall be held to be invalid or
unenforceable for any reason, the remaining provisions shall continue to be
valid and enforceable. If arbitration finds that any provision of this
Agreement is invalid or unenforceable, but that by limiting such provision
it would become valid and enforceable, then such provision shall be deemed
to be written, construed and enforced as so limited.
7
<PAGE>
20 Waiver
The Failure of either party to enforce any provision of this Agreement
shall not be construed as a waiver or limitation of that party's right to
subsequently enforce and compel strict compliance with every provision of
this Agreement.
No term or provision hereof shall be deemed waived and no breach excused
unless such waiver or consent shall be in writing and signed by the party
claimed to have waived or consented.
21 No Contingencies or Changes
It is agreed by TransNet that the Software has been created and is not
contingent upon uncertain events or engineering which shall not have
occurred until after the contract is awarded. This does not include changes
requested by the Master Licensee or other factors that are not under
TransNet's direct control.
22 Taxes
Master Licensee shall pay all taxes arising from the sale of the Software,
other than any tax based on TransNet's income.
23 Assignment
Neither party shall assign or subcontract its obligations under this
Agreement, in whole or in part, or any interest therein, without the other
party's written consent. Such consent shall not be unreasonably withheld.
24 Miscellaneous
a. Applicable Law
This Agreement shall be governed by the laws of the Country of Costa Rica
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and do
hereby warrant and represent that heir respective signatory whose signature
appears below has been and is on the date of the Agreement duly authorized by
all necessary and appropriate corporate action to execute this Agreement and
have caused this Agreement to become effective as of the date first above
written.
/s/ Giovanni Bruno Guzman /s/ Michael Jackson
- ---------------------------- -----------------------------
TransNet International S.A. Master Casino S.A.
8
