As filed with the Securities and Exchange Commission on May 18, 2000
Registration No. 333-31068
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE EFFECTIVE AMENDMENT NO. 1 TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CYBEROAD.COM CORPORATION
(Name of Small Business Issuer in Its Charter)
FLORIDA 7372 65-0916440
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Classification Identification No.)
Organization) Code Number)
OFICENTRO SABANA SUR
EDIFICIO 7, 5 PISO
SAN JOSE, COSTA RICA
506-296-6335
(Address and Telephone Number of Principal Executive Offices)
OFICENTRO SABANA SUR
EDIFICIO 7, 5 PISO
SAN JOSE, COSTA RICA
(Address of Principal Place of Business or Intended Principal Place of Business)
INTRASTATE REGISTERED AGENT
701 BRICKELL AVENUE, SUITE 3000
MIAMI, FLORIDA 33133
305-789-7770
(Name, Address and Telephone Number of Agent for Service)
COPIES TO:
Corporate Secretary
cyberoad.com Corporation, Oficentro Sabana Sur
Edificio 7,5 Piso
San Jose, Costa Rica
and to
Julie M. Kaufer, Esq.
Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East
Los Angeles, California 90067
(310) 728-3200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If any of the securities being registered on this form are being offered on a
delayed or continuous basis pursuant to Rule 145 under the Securities Act of
1933, other than securities being offered only in connection with dividend or
interest reinvestment plans, check the following box.
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT (2) OFFERING PRICE FEE(3)
- --------------------------- -------------- ---------------- --------------- -------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.00001 per share . . 13,373,395 $ 3.25 $ 43,463,534 $ 11,474
- --------------------------- -------------- ---------------- --------------- --------------
</TABLE>
(1) In the event of a stock split, stock dividend, or similar transaction
involving the Registrant's common stock, in order to prevent dilution,
the number of shares registered shall automatically be increased to
cover the additional shares in accordance with Rule 416(a) under the
Securities Act.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a).
(3) This figure includes $4,044 that was previously paid in connection with
the filing of this Registration Statement on Form SB-2 on February 24,
2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE TIME UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
SUBJECT TO COMPLETION - May 18, 2000
13,373,395 Shares PROSPECTUS
CYBEROAD.COM CORPORATION
Common Stock
This prospectus may be used only in connection with the resale by the
parties listed below or their assigns of shares of the common stock of
cyberoad.com Corporation as follows:
- Up to 8,659,650 shares of common stock that were issued by us in
connection with the purchase of all of the stock of Cyberoad.com (Isle
of Man) Ltd.
- Up to 2,253,745 shares of common stock that were issued by us to certain
selling stockholders under securities purchase agreements.
- Up to 291,375 shares of common stock that underlie options that were
issued by us to Thomson Kernaghan as a placement agent commission fee
under the placement agency agreement.
- Up to 50,000 shares of common stock that were issued by us to a selling
stockholder as compensation for services rendered.
- Up to 618,625 shares of common stock issued and held in escrow pursuant
to the securities purchase agreements.
- Up to 1,500,000 shares of common stock issued to selling stockholders in
connection with the purchase by Cyberoad.com (Isle of Man) Ltd. of the
issued and outstanding shares of Ecomm Relationship Technologies
(IOM) Limited.
The selling security holders may offer their shares through public or
private transactions at prevailing market prices or at privately negotiated
prices. cyberoad.com will not receive any proceeds from this offering.
AN INVESTMENT IN THESE SECURITIES IS RISKY. YOU SHOULD ONLY PURCHASE THESE
SHARES IF YOU CAN AFFORD TO LOSE YOUR ENTIRE INVESTMENT. SEE "RISK FACTORS"
BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER
BEFORE YOU INVEST IN THE COMMON STOCK BEING SOLD WITH THIS PROSPECTUS.
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the SEC is effective. This prospectus is not an offer to
sell these securities and it is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
___________________
This prospectus is dated May 18, 2000
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PROSPECTUS SUMMARY
ABOUT CYBEROAD.COM CORPORATION
cyberoad.com is an Internet technology and software development company.
cyberoad.com develops, markets and licenses its software systems and provides
related technical and marketing support to its clients and licensees, who are
operators of Internet sportsbook and casino websites.
In November 1999, cyberoad.com released its Netbook Version 2 sports
betting software system. It is a browser-based, no downloads system that allows
sports enthusiasts to bet on a wide variety of sporting events using almost any
computer system, anywhere in the world. cyberoad.com also provides a software
system that supports several browser-based virtual casino games including
blackjack, roulette and slots.
As part of its technology services and software development features,
cyberoad.com provides a proprietary e-commerce financial transaction processing
system that enables secure online commerce and information transmission.
Clients and licensees also receive network hosting on cyberoad.com's web
servers that are located in Costa Rica and Canada, as well as full technical and
customer support and marketing and website management services.
cyberoad.com Corporation was incorporated in Florida in June 1988 with its
primary operating subsidiary located in the Isle of Man. cyberoad.com's
principle office is located in Costa Rica at Oficentro Sabana Sur, Edificio 7, 5
Piso, San Jose, Costa Rica, telephone (506) 296-6335. Information on our
website located at www.cyberoad.com does not constitute part of this prospectus.
----------------
ABOUT THE OFFERING
Shares offered by the Selling Stockholders. . . . Up to 13,373,395 shares.
Offering Price. . . . . . . . . . . . . . . . . . Determined at the time of sale
by the selling stockholder.
Total Shares outstanding as of March 31, 2000. . .14,159,009 shares.
The total shares outstanding as of March 31, 2000 do not include the
following shares that will dilute your investment if and when they are issued:
- 291,375 shares of common stock issuable upon exercise of the options
issued to Thomson Kernaghan & Co. Ltd.; and
- 2,199,500 shares of common stock issuable upon exercise of options
granted or available for future grant under our 1999 Stock Option Plan.
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<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following summary financial data is derived from our financial
statements and related notes appearing elsewhere in this prospectus. You should
read the following summary financial data in conjunction with those financial
statements and notes. cyberoad.com was incorporated in June 1988 and conducted
no material operations prior to May 1, 1999. On May 1, 1999, cyberoad.com
Corporation purchased all of the stock of Cyberoad.com (Isle of Man) Ltd., a
corporation existing under the laws of the Isle of Man. Immediately thereafter,
Cyberoad.com (Isle of Man) Ltd. purchased certain assets from Cyberoad Gaming
Corporation relating to the online gaming technology. Prior thereto,
Cyberoad.com (Isle of Man) Ltd. had no material operations. On May 1, 1999,
Ecomm Relationship Technologies (IOM) Limited, a corporation existing under the
laws of the Isle of Man, purchased certain assets from Cyberoad Gaming
Corporation relating to the financial transaction processing technology. On
November 11, 1999, Cyberoad.com (Isle of Man) Ltd. purchased all of the
outstanding shares of Ecomm Relationship Technologies (IOM) Limited. The
following summary financial data for the three months ended March 31, 2000 and
the year ended December 31, 1999 reflects financial data for cyberoad.com
Corporation.
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
----------------------- -----------------------
2000 1999
----------------------- -----------------------
(in thousands, (in thousands,
except per share data) except per share data)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues. . . . . . . . . . . . $ 950 $ 1,959
Gross profit (loss) . . . . . . . . . (174) 13
Loss from operations. . . . . . . . . (975) (1,622)
Net loss. . . . . . . . . . . . . . . (975) (1,622)
Basic and diluted net loss per share. $ (0.07) $ (0.17)
Weighted average number of shares
used in computing basic and
diluted net loss per share . . . . . 13,309 9,316
AT MARCH 31, 2000 AT DECEMBER 31, 1999
----------------------- -----------------------
(in thousands) (in thousands)
BALANCE SHEET DATA:
Cash and cash equivalents . . . . . . $ 937 $ 1,336
Restricted cash . . . . . . . . . . . 227 227
Total current assets. . . . . . . . . 1,760 2,239
Total assets. . . . . . . . . . . . . 3,526 3,915
Total current liabilities . . . . . . 1,107 1,104
Total stockholders' equity. . . . . . 1,266 2,218
</TABLE>
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<PAGE>
RISK FACTORS
You should carefully consider the following risks before you decide to
buy our common stock. The risks and uncertainties described below are the
material ones facing our company. If any of the following risks actually occur,
our business, revenues, financial condition or results of operations would
likely suffer. If this occurs, you may lose all or part of the money you paid
to buy our common stock.
OUR OPERATIONS MAY FAIL IF WE ARE UNABLE TO OBTAIN ADDITIONAL FINANCING
Our capital requirements are and will continue to be significant. We
cannot assure you that we will be able to operate on a profitable basis or that
cash flow from operations will be sufficient to pay our operating costs. We
anticipate that our current cash resources will be sufficient to fund operations
through the end of December 2000. Thereafter, we will need to raise additional
capital to finance our operations. We anticipate seeking additional financing
through debt or equity financings. We cannot assure you that additional
financing will be available to us, or, if available, any financing will be on
terms acceptable or favorable to us. We cannot assure you that our estimate of
our anticipated capital needs is accurate or that new business developments or
other unforeseen events will not occur that will result in the need to raise
additional funds. If we cannot raise additional funds, further development of
our technology and upgrades to our existing products may be delayed and we
otherwise may not be able to execute our business plan, all of which may have a
material adverse effect on our operations and financial condition.
YOU MAY BE UNABLE TO EFFECTIVELY EVALUATE OUR COMPANY FOR INVESTMENT PURPOSES,
BECAUSE WE HAVE A LIMITED OPERATING HISTORY
We had no material operations prior to May 1, 1999. Accordingly, we
have a very limited operating history upon which you may evaluate us. To date
we have generated limited revenue. In addition, our revenue model is evolving.
Under our model, we expect to generate a substantial portion of our revenues
from our licensing agreements with our licensees. Under our licensing
agreements, we receive a percentage of the net gaming revenue generated from a
licensee's site. However, we may not be able to generate revenues through these
agreements or other sources. We cannot guaranty or accurately predict our
future results of operations.
IF WE CONTINUE TO INCUR SIGNIFICANT OPERATING LOSSES, YOU COULD LOSE ALL OR A
SUBSTANTIAL PORTION OF YOUR INVESTMENT
We commenced operations in May 1999 and to date, we have not been
profitable. We expect to continue to incur significant operating losses and to
generate negative cash flow from operating activities for the foreseeable
future. We incurred net losses of $975,152 for the quarter ended March 31,
2000. As of March 31, 2000, our accumulated deficit was $2,699,726. We may
never be profitable, or, if we become profitable, we may be unable to sustain
profitability. Our limited operating history makes predicting our future
operating results difficult. An investor in our securities must consider the
risks and difficulties frequently encountered by early stage companies in new
and rapidly evolving markets, particularly those involved in the Internet and
electronic commerce. These risks include:
- - the level of use of the Internet and online services, and consumer
acceptance of the Internet and online services;
- - our inability to generate significant licensing revenue, as well as
revenue from advertising and e-commerce;
- - the inability of our licensees to maintain and increase levels of traffic
on their respective web sites;
- - our failure to anticipate and adapt to a developing market;
- - our inability to upgrade and develop our systems and infrastructure and
attract new personnel in a timely and effective manner;
- - the failure of our licensees' servers and networking systems to
efficiently handle web traffic; and
- - our inability to effectively manage rapidly expanding operations.
If revenues grow more slowly than we anticipate, or if operating expenses exceed
our expectations or cannot be adjusted as necessary, our business, revenues,
results of operations and financial condition will be adversely affected.
PERIOD-TO-PERIOD COMPARISONS OF OUR OPERATING RESULTS MAY NOT BE HELPFUL TO YOU
IN EVALUATING A POTENTIAL INVESTMENT IN OUR COMPANY, BECAUSE WE EXPECT OUR
QUARTERLY RESULTS TO FLUCTUATE
We expect that our quarterly operating results will fluctuate
significantly due to many factors, including:
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<PAGE>
- - our ability to attract and retain licensees;
- - pending or to be proposed government regulation of the gaming industry;
- - new Internet sites, services or products introduced by us or our
competitors;
- - uncertain acceptance of our Internet gaming software;
- - management of our growth; and
- - risks associated with potential acquisitions.
Many of these factors are beyond our control. Due to the limited history
of businesses relying on the Internet as a commercial medium, we believe that
period-to-period comparisons of our operating results are not meaningful.
IF WE FAIL TO ESTABLISH, MAINTAIN AND STRENGTHEN OUR BRAND NAME, WE MAY BE
UNABLE TO ATTRACT ADDITIONAL LICENSEES OF OUR PRODUCTS AND SERVICES
In order to expand our licensee base, solidify our business relationships
and successfully implement our business strategy, we must establish, maintain
and strengthen our brand name. For us to be successful in establishing our
brand name, potential licensees must perceive us as a reliable source of
sophisticated gaming and financial transaction processing software. We expect
that we will need to increase substantially our marketing budget to establish
brand name recognition and brand loyalty. If we have licensee and customer
complaints, our reputation may be significantly damaged, which could have an
adverse effect on our business, results of operations and financial condition.
If our licensees do not perceive our existing technologies, products and
services to be of high quality or if we alter or modify our brand image,
introduce new services or enter into new business ventures that are not
favorably received, the value of our brand could be diminished, which could
decrease interest in our technologies, products and services.
OUR OPERATIONS MAY FAIL IF INTERNET GAMING SOFTWARE GENERALLY, OR OUR PRODUCTS
AND SERVICES SPECIFICALLY, ARE NOT COMMERCIALLY ACCEPTED
Our success will depend in large part on widespread licensee and consumer
acceptance of Internet gaming software. The development of a market for Internet
gaming software and specifically our technology and products has only recently
begun, is rapidly evolving and likely will be characterized by an increasing
number of market entrants. Our future growth, if any, will depend on the
following critical factors:
- - the growth of the Internet as a commerce medium generally, and as a market
for Internet gaming software and services specifically;
- - our ability to successfully and cost-effectively market our services to a
sufficiently large number of licensees and customers; and
- - our ability to overcome a perception among many potential licensees and
consumers that using Internet gaming software is risky.
We cannot assure you that the market for our technologies, products and
services will develop or that licensees and consumers will significantly
increase their use of the Internet for gaming software. Accordingly, it is very
difficult to predict the future growth rate of the market in which we operate.
Demand and market acceptance for our products and services generally are subject
to a high level of uncertainty and risk. We cannot assure you that the markets
for our technologies and products will stabilize or become sustainable. If the
markets fail to develop, develop slower than expected or become saturated with
competitors, we may not enter into additional license agreements and we may not
recognize substantial revenue from our existing licenses, all of which would be
materially adverse to our operations.
We have entered into license agreements with three licensees. We cannot
assure you that we will be able to attract additional licensees. In addition,
we need to expend substantial additional efforts and expenditures to enhance the
capabilities of our technologies and products. If we are unable to enhance our
initial products or develop new products, we may not be able to maintain or
increase our licensee base, which will have a material adverse effect on our
business, results of operations and financial condition. If our technologies,
products and services do not achieve widespread market acceptance, our business,
results of operations and financial condition would be adversely affected.
IF WE ARE UNABLE TO MAINTAIN OUR RELATIONSHIPS WITH CERTAIN THIRD PARTIES OUR
OPERATIONS MAY SUFFER
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We are in an early stage of development and are continuing to establish
internal management, personnel and other resources. We depend substantially
upon third parties for several critical elements of our business, including
among others, promotion and marketing, technology and infrastructure development
and distribution activities. The services of all of our management, except Mr.
Coffey, our President, and substantially all of our other personnel are provided
through a Services Agreement with Kazootek.com Technologies Inc., a related
party, which is terminable upon thirty days notice from either party. In
addition, we engage in our promotion and marketing technology, infrastructure
development and distribution services in office space provided by Kazootek. If
we are unable to maintain our relationship with Kazootek, we will need to retain
executives and other employees to perform these job responsibilities and we will
need to identify suitable property to relocate these operations. We may not be
able to retain these employees or locate alternative property on a timely basis,
or at all, or at commercially reasonable rates, all of which will have a
materially adverse effect on our business and results of operations.
THE ENACTMENT OF NEW LAWS, OR THE INTERPRETATION OF CURRENT LAWS, MAY RESTRICT
INTERNET GAMING ACTIVITIES WHICH MAY HAVE AN ADVERSE EFFECT ON OUR OPERATIONS
We are subject to applicable laws in the jurisdictions in which we operate
and our licensees are subject to applicable laws in the jurisdictions in which
they operate. Many jurisdictions have attempted to restrict or prohibit
Internet gaming. As companies and consumers involved in Internet gaming are
located around the world, there is uncertainty regarding exactly which
government has jurisdiction or authority to regulate or legislate with respect
to various aspects of the industry. Furthermore, it may be difficult to
identify or differentiate gaming-related transactions from other Internet
activities and link these transmissions to specific users, in turn making
enforcement of legislation aimed at restricting Internet gaming activities
difficult. If existing regulations are interpreted to prohibit or restrict
Internet gambling and are enforced, or if new regulations are enacted which are
designed to prohibit Internet gambling, our licensees may be found to violate
these regulations and may be required to cease operations of their sites.
Moreover, if existing regulations are interpreted to apply to suppliers of
gaming software, if new laws applicable to suppliers are enacted that restrict
our activities or if our operations are interpreted to extend beyond software
development, we may be required to cease or restrict our development, marketing
and licensing activities. The uncertainty surrounding the regulation of
Internet gaming and any adverse interpretation and subsequent enforcement of
existing or new laws relating to Internet gambling could have a material adverse
effect on our business, revenues, operating results and financial condition.
Governments in the United States and other jurisdictions may in the future
adopt legislation that restricts or prohibits Internet gaming. After previous
similar bills failed to pass in 1998, in 1999, Senator Jon Kyl of the United
States Senate introduced a revised bill intended to prohibit and criminalize
Internet gambling. On November 19, 1999, the Senate passed this bill. The
companion bill in the House of Representatives was referred to the Subcommittee
on Crime on February 3, 2000. We cannot assure you whether the Kyl bill or any
similar bill will become law. Should the Kyl Bill be passed in its present
form, it would eliminate most arguments that Internet gambling is legal in the
United States, and in order to avoid violation, would force owner/operators to
provide a mechanism whereby Internet gaming Web sites were inaccessible to
citizens of the United States.
In addition, existing United States federal statutes and state laws could
be construed to prohibit or restrict gaming through the use of the Internet. To
date, we offer technologies, products and support services to non-U.S. based
licensees. Governmental authorities may view us and/or our licensees as having
violated these statutes or laws. Several state Attorney Generals and court
decisions have upheld the application of state anti-gambling laws to Internet
casino companies.
United States or other jurisdictions may initiate criminal or civil
proceedings against us and/or our licensees, and these proceedings could involve
substantial litigation expense, penalties and fines. In addition, these
proceedings may divert the attention of our key executives, and may result in
injunctions or other prohibitions against us and/or our licensees.
In addition, as electronic commerce further develops, it generally may be
the subject of government regulation. Current laws, which pre-date or are
incompatible with Internet electronic commerce, may be enforced in a manner that
restricts the electronic commerce market. These developments could have a
material adverse effect on our business, revenues, operating results and
financial condition.
IF WE ARE UNABLE TO COMPETE EFFECTIVELY WITH EXISTING OR NEW COMPETITORS, WE MAY
BE REQUIRED TO REDUCE PRICES, ENTER INTO FEWER CONTRACTS, OR REDUCE MARGINS
The market for Internet products and services is highly competitive and
there are no substantial barriers to entry. We expect that competition will
continue to intensify. Many of our Internet competitors have more experience
online and have greater brand recognition. We may not be able to compete
successfully in the Internet services market, which would prevent us from
effectively executing our business strategy. In addition, the market for
Internet products and services is characterized by rapid technological
developments, evolving industry standards, and frequent new products and
enhancements. If faster Internet access becomes more widely available through
cable modems or other technologies, we may be required to make significant
changes to the design and content of our technologies and products to compete
effectively. As the number of web pages and users increase, we will need to
modify our Internet infrastructure and technologies and products to accommodate
increased traffic to our licensees' sites. If we cannot modify our technologies
and products, users may experience:
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<PAGE>
- - system disruptions;
- - slower response times;
- - impaired quality and speed of processing.
Gaming services over the Internet is a relatively new industry, and
licensees of our software will compete with existing and more established
recreational services and products, in addition to certain other forms of
entertainment. Our success will depend upon, among other things, our ability to
enhance our products and to develop and introduce new products and services that
keep pace with technological developments, respond to evolving licensee and
customer requirements and achieve strong brand name recognition. We compete
with several public and private companies that provide electronic commerce
and/or Internet gaming software. Many of these competitors have longer
operating histories, larger customer bases, greater brand recognition and
significantly greater financial, marketing, technical, management and other
resources than we do. Our failure to anticipate or respond adequately to
technological development and licensee and customer requirements or any
significant delays in product developments or introductions could result in
price reductions, reduced revenues and margins and loss of market share.
Pursuant to an existing revolving line of credit agreement, we have agreed
to furnish to our lender, upon its request, an unrestricted open source code
license to all software developed by us for up to two years after the revolving
line of credit is converted or repaid in full. If the lender obtains an open
source code license, it potentially could develop that source code into a
software system and either become an owner/operator of internet gaming websites
itself, or license the software to third parties who would become our
competitors.
WE FACE HARDWARE SYSTEMS RISKS FROM NATURAL DISASTERS AND THIRD PARTIES, AND IF
OUR COMMUNICATIONS SERVICE OR THAT OF OUR LICENSEES IS DISRUPTED, OUR ABILITY TO
GENERATE REVENUE WILL SUFFER
Our business model depends on the ability of cyberoad.com and on the
ability of our licensees to engage in global communications services, and both
are dependent upon third parties to deliver these services. Our results of
operations and financial condition will be materially adversely affected if we
or our licensees suffer disruptions in service. Fires, floods, earthquakes,
power losses, telecommunications failures, break-ins, civil disturbances, acts
of terrorism, strikes, and similar events could damage our communications
systems, or those of our licensees. Computer viruses, electronic break-ins or
other similar disruptive problems may also occur. Our business would be
adversely affected if our systems or the systems of our licensees were affected
by any of these occurrences. We do not have any insurance covering damage to
our property and other assets in Costa Rica. If there is damage to our
properties or assets in Costa Rica, we do not believe we will suffer any
material delay in the provision of services to our licensees or in connection
with our product development. In those circumstances however we would be
required to expend substantial sums to replace or rebuild any damaged equipment.
OUR OPERATING RESULTS COULD BE IMPAIRED IF WE BECOME SUBJECT TO BURDENSOME
GOVERNMENT REGULATIONS AND LEGAL UNCERTAINTIES CONCERNING THE INTERNET
Due to the increasing popularity and use of the Internet, it is possible
that a number of laws and regulations may be adopted with respect to the
Internet, relating to:
- - user privacy;
- - pricing, usage fees and taxes;
- - content;
- - copyrights;
- - distribution;
- - characteristics and quality of products and services; and
- - online advertising and marketing.
The adoption of any additional laws or regulations may decrease the
popularity or impede the expansion of the Internet and could seriously harm our
business. A decline in the popularity or growth of the Internet could decrease
demand for our products and services, reduce our revenues and margins and
increase our cost of doing business. Moreover, the applicability of existing
laws to the Internet is uncertain with regard to many important issues,
including property ownership, intellectual property, export of encryption
technology, libel and personal privacy. The application of laws and regulations
from jurisdictions whose laws do not currently apply to our business, or the
application of existing laws and regulations to the Internet and other online
services, could also harm our business.
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IF THE QUALITY OF A USER'S ONLINE SERVICE IS POOR, THERE MAY BE LESS DEMAND FOR
OUR PRODUCTS
Our licensees and their customers depend on Internet service providers,
online service providers and other website operators for access to our
technologies and products. Many of these users have experienced significant
outages in the past, and could experience outages, delays and other difficulties
due to system failures unrelated to our technologies or products. Additionally,
the Internet infrastructure may not be able to support continued growth in its
use. Any of these problems could result in a decrease demand for our products
and a decreased usage of our licensee's sites which would have a material
adverse affect on our business.
IF CONSUMERS DO NOT ACCEPT THE INTERNET FOR COMMERCIAL TRANSACTIONS, OUR ABILITY
TO GENERATE REVENUES WILL BE ADVERSELY AFFECTED
Our growth and operating results depend in part on widespread consumer
acceptance and use of the Internet as a way to transact business. This consumer
practice is at an early stage of development, and demand and continued market
acceptance is uncertain. We cannot predict the number of consumers that will be
willing to transact business over the Internet, rather than through traditional
outlets. The Internet may not become a viable commercial marketplace due to
inadequate development of network infrastructure and enabling technologies that
address consumer concerns about:
- - network performance;
- - security;
- - speed of access;
- - ease of use; and
- - bandwidth availability.
In addition, the Internet's viability as a commercial marketplace could be
adversely affected by increased government regulation. Changes in or
insufficient availability of telecommunications or other services to support the
Internet could also result in slower response times and adversely affect general
usage of the Internet. Also, negative 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.
ONLINE SECURITY RISKS COULD SERIOUSLY HARM OUR BUSINESS
A significant barrier to electronic commerce is the secure exchange of
value over public networks. We rely on encryption and authentication technology
to provide the security and authentication necessary to effect the secure
exchange of value, including public key cryptography technology licensed from
VeriSign Inc. and private key Data Encryption Standard, or DES, cryptography.
Advances in computer capabilities, new discoveries in the field of cryptography
or other events or developments may result in a compromise or breach of the
VeriSign Inc. technology, DES or other algorithms we use to protect customer
transaction data. If a breach of these technologies occurred, we could be
subject to lawsuits and our reputation would be significantly damaged.
Our business model is predicated on our licensees being able to provide
secure online financial transaction processing for their clients. We cannot
assure you that international financial institutions and banks will continue to
process the transactions of our licensees' clients in the future. As a large
portion of our revenues is based on a percentage of the revenues generated by
our licenses, any disruption in the processing of these transactions would
result in a disruption to the licensee's business, and would have an adverse
effect on our business.
ANY FUTURE ACQUISITIONS WE MAKE OF COMPANIES OR TECHNOLOGIES MAY RESULT IN
DISRUPTIONS TO OUR BUSINESS
We may acquire or make investments in complementary businesses,
technologies, services or products. These acquisitions and investments could
disrupt our ongoing business, distract our management and employees and increase
our expenses. If we acquire a company, we could have difficulty integrating
that company's personnel, operations, technology and software into ours. In
addition, the key personnel of the acquired company may decide not to work for
us. We could also have difficulty in integrating the acquired products, services
or technologies into our operations and we may incur indebtedness or issue
equity securities to pay for a future acquisition. The issuance of securities
could be dilutive to our existing stockholders.
-8-
<PAGE>
OUR SENIOR MANAGEMENT AND EXPERT CONSULTANTS HAVE LIMITED EXPERIENCE IN OUR
INDUSTRY AND MAY NOT BE ABLE TO EXECUTE OUR BUSINESS PLAN.
Our success will depend largely upon the personal efforts of members of
management and expert consultants including Mr. John Coffey, President, Mr.
Brent Corobotuic, Manager, Functionality Design, Mr. Orlando Guerrero, Director,
Mr. Carl Schmidt, Chief Information Officer, Mr. Joseph Chin, Chief Systems
Officer and Mr. Calvin Ayre, Internet Business Model and Product Consultant.
Most of our senior management has no direct experience in founding other
companies or developing other technologies and products similar to ours. We
cannot assure you that our senior management or consultants will be successful
in efficiently executing our business strategy or in recruiting a senior group
of experienced executives, consultants and personnel.
WE MAY NEED TO RETAIN ADDITIONAL EXPERIENCED PERSONNEL TO IMPLEMENT OUR BUSINESS
STRATEGY.
Competition for personnel throughout our industry is intense. We may be
unable to retain our key employees or to attract, integrate or retain other
highly qualified employees in the future. Our success depends on our continuing
ability to attract, retain and motivate highly skilled employees, particularly
with respect to our technology development and support. We expect that hiring
and retaining employees with appropriate qualifications will be difficult. If
we cannot attract new personnel or retain and motivate our current personnel,
our business will be adversely affected.
OUR BUSINESS MODEL DEPENDS ON OUR ABILITY TO DEVELOP A COMPLEX GLOBAL MARKETING
AND SALES PROGRAM AND FUTURE STRATEGIC PARTNERSHIPS. ANY FAILURE TO DEVELOP
THESE PROGRAMS MAY INHIBIT OUR GROWTH.
Our business requires marketing, brand development and sales on a global
basis as well as the formation of strategic partnerships globally, nationally
and regionally to assist in a focused marketing effort, and to provide financial
strength. We cannot assure you that we will succeed in developing and managing
a complex marketing and sales strategy resulting in reasonable penetration of
our technologies into our target markets on a timely basis. We cannot assure
you that we will develop these strategic partnerships on a timely basis, or at
all, or develop an adequate number of strategic partnerships to successfully
market our technologies and products globally. If we do not effectively
implement our marketing strategy, we may not grow our business or increase our
sales.
WE DEPEND ON CERTAIN LICENSEES FOR A SUBSTANTIAL PORTION OF OUR REVENUE, AND THE
LOSS OF ONE OR MORE OF THESE LICENSEES COULD HAVE AN ADVERSE EFFECT ON OUR
OPERATIONS
A substantial portion of our revenue is derived from our current three
licensees. We expect that a substantial portion of our revenue through December
31, 2000 will continue to depend on a small number of licensees. The loss of
one or more of these licensees would have a material adverse effect on our
ability to generate revenue, our operating results and financial condition.
IF WE ARE UNABLE TO PROTECT OUR TRADEMARKS AND INTELLECTUAL PROPERTY RIGHTS, OUR
REPUTATION AND BRAND COULD BE IMPAIRED AND WE COULD LOSE LICENSEES
We regard our trademarks, trade secrets and similar intellectual property
as critical to our success. We rely on intellectual property law and
confidentiality and/or license agreements with employees, licensees, customers,
providers and others to protect our proprietary rights. We cannot be certain
that we have taken adequate steps to protect our proprietary rights, especially
in countries where the laws may not protect our rights as fully as in the United
States. In addition, third parties may infringe or misappropriate our
proprietary rights, and we could be required to incur significant expenses to
preserve them. We have applied for the registration of some of our trademarks
and service marks in the United States and some other countries. Even if we are
able to register these names, registration may not adequately protect us against
infringement by others. Effective trademark, service mark, copyright and trade
secret protection may not be available in every country in which our products
and services are made available online. If we are not able to protect our
trademarks and other intellectual property, we may experience difficulties in
achieving and maintaining brand recognition and customer loyalty.
Other parties may assert infringement or unfair competition claims against
us. We cannot predict whether third parties will assert claims of infringement
against us, or whether any assertions or prosecutions will adversely affect our
business. If we are forced to defend against any of these claims, whether
meritless or not, we may face costly litigation and diversion of technical and
management personnel. As a result of these disputes, we may have to expend
significant resources to develop or acquire non-infringing property.
Alternatively, we may need to pursue royalty or licensing agreements, which may
not be available on acceptable terms, if at all.
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<PAGE>
IN EVALUATING A POTENTIAL INVESTMENT IN OUR COMPANY, YOU SHOULD TAKE INTO
ACCOUNT THE FACT THAT WE DO NOT ANTICIPATE PAYING ANY DIVIDEND PAYMENTS ON OUR
COMMON STOCK IN THE FORESEEABLE FUTURE
We have never paid dividends on our common stock and we do not anticipate
paying any dividends on our common stock in the foreseeable future. The
declaration and payment of dividends are subject to the discretion of our Board
of Directors. Any determination to pay dividends in the future will depend upon
results of operations, capital requirements, restrictions in loan agreements, if
any, and other factors as the Board of Directors may deem relevant. We
currently intend to retain any future earnings to fund the development and
growth of our business. Therefore, cyberoad.com currently does not anticipate
paying dividends.
CAUTIONARY NOTICE ABOUT FORWARD-LOOKING STATEMENTS
This prospectus contains statements that constitute forward-looking
statements within the meaning of Section 21E of the Exchange Act of 1934 and
Section 27A of the Securities Act of 1933. The words "expect," "estimate,"
"anticipate," "predict," "believe" and similar expressions and variations of
these words are intended to identify forward-looking statements. These forward
looking statements appear in a number of places in this prospectus and include
statements regarding:
- - our intent or current expectations regarding our strategies, plans and
objectives;
- - our product release schedules;
- - our ability to design, develop and market products;
- - the ability of our products to achieve or maintain commercial acceptance.
Any forward-looking statements are not guarantees of future performance and
involve risks and uncertainties. Actual results may differ materially from
those projected in this prospectus, for the reasons, among others, described in
the Risk Factors section beginning on page 4. You should read the Risk Factors
section carefully, and should not place undue reliance on any forward-looking
statements, which speak only as of the date of this prospectus. We undertake no
obligation to release publicly any updated information about forward-looking
statements to reflect events or circumstances occurring after the date of this
prospectus or to reflect the occurrence of unanticipated events.
USE OF PROCEEDS
cyberoad.com will not receive any proceeds from the sale of the shares of
common stock offered by the selling stockholders under this prospectus.
DIVIDEND POLICY
cyberoad.com has never paid any dividends on its common stock.
cyberoad.com intends to retain earnings for use in its business and does not
intend to pay any dividends on its common stock in the foreseeable future.
DETERMINATION OF THE OFFERING PRICE
The selling stockholders may from time to time sell all or a portion of the
shares of common stock offered by them under this prospectus in routine
brokerage transactions on the Over the Counter Bulletin Board, if we resume
trading on that system, in negotiated transactions, or otherwise, at fixed
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to the stock market's closing prices or at negotiated prices.
The selling stockholders also may make private sales directly or through
brokers. Because of this, the offering price cannot be determined as of the
date of this prospectus. See "Plan of Distribution."
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<PAGE>
PRICE RANGE OF COMMON STOCK
The common stock of cyberoad.com was approved for quotation on the OTC
Bulletin Board on September 14, 1998. The common stock began trading on the OTC
Bulletin Board in March 1999, under cyberoad.com's previous name, LAL Ventures
Corp. (Ticker Symbol: LAL). On January 19, 2000, the shares of cyberoad.com
were removed from the Over the Counter market for failing timely to comply with
the Eligibility Rule promulgated by the OTC Bulletin Board. The following table
sets forth, for the periods indicated, the high and low bid information for our
common stock as reported by the Over the Counter Bulletin Board. These
quotations reflect inter-dealer prices.
<TABLE>
<CAPTION>
HIGH LOW
--------- --------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1999
First Quarter. . . . . . . . . . . . . . . . . . $ 6.00 $ 0
Second Quarter . . . . . . . . . . . . . . . . . 6.25 0.875
Third Quarter. . . . . . . . . . . . . . . . . . 6.00 4.00
Fourth Quarter . . . . . . . . . . . . . . . . . 5.25 2.00
YEAR ENDED DECEMBER 31, 2000
First Quarter (through January 19, 2000) . . . . $ 4.75 $ 3.125
</TABLE>
On January 19, 2000, the closing bid price of the common stock as reported
on the Over the Counter Bulletin Board was $3.63 per share. As of March 31,
2000, there were 54 shareholders of record of our common stock.
CAPITALIZATION
The following table sets forth cyberoad.com's capitalization as of March
31, 2000. This table should be read in conjunction with cyberoad.com's
financial statements, the notes to cyberoad.com's financial statements, and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this prospectus. The number of issued and
outstanding shares in the following table excludes the following shares that
could further dilute your investment:
- - 291,375 shares of common stock issuable upon exercise of options issued to
Thomson Kernaghan; and
- - 2,199,500 shares of common stock issuable upon exercise of options granted
or available for future grant under our 1999 Stock Option Plan.
<TABLE>
<CAPTION>
MARCH 31,
2000
----------
(in thousands)
Actual
----------
<S> <C>
STOCKHOLDERS' EQUITY:
Common Stock, $0.00001 par value; Shares Authorized 500,000,000
shares Issued and Outstanding at March 31, 2000: 14,159,009. -
Additional paid-in capital. . . . . . . . . . . . . . . . . . 3,966
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . 2,700
Total stockholders' equity. . . . . . . . . . . . . . . . . . . . 1,266
Total capitalization. . . . . . . . . . . . . . . . . . . . . $ 1,266
</TABLE>
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected financial data of our business for
the period indicated. The statement of operations data for the three months
ended March 31, 2000, and the balance sheet data as of March 31, 2000 are
derived from our unaudited consolidated financial statements appearing elsewhere
in this prospectus. The statement of operations data for the year ended
December 31, 1999, and the balance sheet data as of December 31, 1999 are
derived from our audited consolidated financial statements appearing elsewhere
in this prospectus. The following data should be read along with our financial
statements, the notes to our financial statements, and with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
-------------------- -------------------
2000 1999
-------------------- --------------------
(in thousands, (in thousands,
except per share data) except per share data)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Data Processing. . . . . . . . . . . . . . $ 166 $ 430
Transaction Processing . . . . . . . . . . 285 495
Systems Support and Maintenance. . . . . . 304 637
Marketing. . . . . . . . . . . . . . . . . 182 368
Other. . . . . . . . . . . . . . . . . . . 12 29
Total revenues . . . . . . . . . . . . . . . . 950 1,959
Cost of revenues . . . . . . . . . . . . . . . 1,124 1,946
Gross profit (loss). . . . . . . . . . . . . . $ (174) $ 13
Operating Expenses:
Development. . . . . . . . . . . . . . . . $ 243 $ 337
General and administrative . . . . . . . . 557 1,298
Total operating expenses . . . . . . . . . . . 801 1,635
Income (loss) from operations. . . . . . . . . (975) (1,622)
Net income (loss). . . . . . . . . . . . . . . (975) (1,622)
Basic and diluted net income (loss) per share. $ (0.07) $ (0.17)
Weighted average number of shares
used in computing basic and
diluted net income (loss) per share . . . . . 13,309 9,316
AT MARCH 31, 2000 AT DECEMBER 31, 1999
-------------------- --------------------
(in thousands) (in thousands)
BALANCE SHEET DATA:
Cash and cash equivalents. . . . . . . . . . . $ 937 $ 1,366
Restricted cash. . . . . . . . . . . . . . . . 227 227
Total current assets . . . . . . . . . . . . . 1,760 2,239
Total assets . . . . . . . . . . . . . . . . . 3,526 3,915
Total current liabilities. . . . . . . . . . . 1,107 1,104
Total stockholders' equity (deficit) . . . . . 1,266 2,218
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read together with the
consolidated financial statements of cyberoad.com and the notes to those
consolidated financial statements included elsewhere in this prospectus. This
discussion summarizes the significant factors affecting the consolidated
operating results, financial condition and liquidity and cash flows of
cyberoad.com for the three months ended March 31, 2000 and the fiscal year ended
December 31, 1999. Except for historical information, the matters discussed in
this Management's Discussion and Analysis of Financial Condition and Results of
Operations are forward looking statements that involve risks and uncertainties
and are based upon judgments concerning various factors that are beyond our
control. Actual results could differ materially from those projected in the
forward looking statements as a result of, among other things, the factors
described in "Risk Factors" included elsewhere in this prospectus.
OVERVIEW
cyberoad.com was incorporated in June 1988 and conducted no material
operations prior to May 1, 1999. On May 1, 1999, cyberoad.com Corporation
purchased all of the stock of Cyberoad.com (Isle of Man) Ltd., a corporation
existing under the laws of the Isle of Man. Immediately thereafter,
Cyberoad.com (Isle of Man) Ltd. purchased certain assets of Cyberoad Gaming
Corporation relating to the online gaming technology. Prior thereto,
Cyberoad.com (Isle of Man) Ltd. had no material operations. On May 1, 1999,
Ecomm Relationship Technologies (IOM) Limited, a corporation existing under the
laws of the Isle of Man, purchased certain assets of Cyberoad Gaming Corporation
relating to the financial transaction processing system. On November 11, 1999,
Cyberoad.com (Isle of Man) Ltd. purchased all of the outstanding shares of Ecomm
Relationship Technologies (IOM) Limited. Pursuant to an agreement dated as of
October 31, 1999, Ecomm Relationship Technologies (IOM) Limited transferred all
of its assets other than those assets relating to technology to Corporacion
Ebanx.com, S.A., a corporation wholly owned by Cyberoad.com (Isle of Man) Ltd.
and existing under the laws of Panama.
Our revenues are generated from data processing, financial transaction
processing, systems support and maintenance, marketing and other. All revenue
streams are recognized at the time services are provided except for systems
support and maintenance. Systems support and maintenance is derived from actual
wagering activity, and is recognized after verifiable events conclude. Direct
costs consist of actual costs incurred to generate revenues and consist
primarily of maintenance charges associated with the operations infrastructure,
telecommunications conductivity and office space of the call centers, e-commerce
transaction costs, direct marketing costs incurred, and third party software
licensing royalties.
Our annual and quarterly revenue will depend in large part upon the
successful development and market acceptance of our internet/intranet sportsbook
management software, Netbook Version 2, and our financial transaction processing
and payment system, which we refer to as our eBanx.com eCash system. If
accepted, we believe that revenues attributable to system support and
maintenance as well as licensing fees resulting from the sale of additional
licenses to third parties to set up and maintain sportsbook websites will
increase. Accordingly our annual and quarterly revenues are, and will continue
to be, extremely difficult to forecast.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000
- --------------------------------------
Revenues
Revenues are generated from four main sources: data processing, financial
transaction processing, systems support and maintenance, and marketing. All
revenues are recognized on an accrual basis as services are rendered, except for
systems support and maintenance, which is recognized as events conclude.
For the three months ended March 31, 2000, revenues were $949,805. Of this
amount, we generated $166,362 from fees from our licensees for providing the
operations infrastructure, telecommunications conductivity and related items for
the call centers. Fees are billed on a monthly basis as services are rendered.
We generated transaction processing revenue of $285,430 as a result of
processing e-commerce transactions. Fees are billed on a monthly basis based on
actual transactions processed. We generated systems support and maintenance
revenue of $303,664, which is recognized as a result of developing, maintaining
and supporting licensees' websites. Fees attributable to systems support and
maintenance revenue consist of a percentage of the net gaming revenue based on
wagering activity on a licensee's site and is recognized and retained as events
conclude. We generated marketing revenue of $182,301 based on direct marketing
efforts performed on behalf of licensees to promote their respective websites.
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<PAGE>
Direct Costs
For the three months ended March 31, 2000 we incurred $1,124,237 in direct
costs. Direct costs consisting of actual costs incurred for the maintenance of
a call center in which "live lines / live odds" are supported and various
sportsbooks totaled $211,021. Direct costs consisting of actual costs incurred
in performing all financial transaction processing totaled $421,480. Marketing
costs consisting of traditional media buy and unique Internet promotional tools
totaled $480,246. Other direct costs of $11,490 were incurred for royalty fees
for the licensing of third party casino software.
Development Expenses
For the three months ended March 31, 2000, we incurred $243,324 in
development costs. Development costs include equipment, salaries and benefits
and other labor costs incurred for the research and development of Netbook and
eBanx proprietary software. All development costs incurred have been expensed
in the period incurred. As the development, upgrade, and improvement of Netbook
and eBanx software is ongoing, we expect to continue to incur development costs.
Operating Expenses
For the three months ended March 31, 2000, we incurred total operating
costs of $557,396. Operating expenses consist of wages and employee benefits of
$144,299, professional fees of $139,512, consulting and management fees of
$45,049, and equipment rental and maintenance of $33,513. Other significant
operating costs incurred were stock options benefits, rent, and office and
miscellaneous.
Amortization and Depreciation
For the three months ended March 31, 2000, we incurred $107,369 in
amortization and depreciation which was attributable to depreciable assets of
computer software and equipment, furniture and fixtures and leasehold
improvements acquired during the prior year ended December 31, 1999 and the
first three months ended March 31, 2000.
Three Months Ended March 31, 1999 and March 31, 1998
- -------------------------------------------------------------
There were no significant activities performed by cyberoad.com in the three
months ended March 31, 1999 and 1998.
Year Ended December 31, 1999
- --------------------------------
Revenues
Revenues are generated from four main sources: data processing, financial
transaction processing, systems support and maintenance, and marketing. All
revenues are recognized on an accrual basis as services are rendered, except for
systems support and maintenance, which is recognized as events conclude.
For the year ended December 31, 1999, revenues were $1,958,702. Of this
amount, we generated $429,805 from fees from our licensees for providing the
operations infrastructure, telecommunications conductivity and related items for
the call centers. Fees are billed on a monthly basis as services are rendered.
We generated transaction processing revenue of $494,502 as a result of
processing e-commerce transactions. Fees are billed on a monthly basis based on
actual transactions processed. We generated systems support and maintenance
revenue of $636,768, which is recognized as a result of developing, maintaining
and supporting licensees' websites. Fees attributable to systems support and
maintenance revenue consist of a percentage of the net gaming revenue based on
wagering activity on a licensee's site and is recognized and retained as events
conclude. We generated marketing revenue of $368,215 based on direct marketing
efforts performed on behalf of licensees to promote their respective websites.
Direct Costs
For the year ended December 31, 1999 we incurred $1,945,562 in direct
costs. Direct costs consisting of actual costs incurred for the maintenance of
a call center in which "live lines / live odds" are supported and various
sportsbooks totaled $335,905. Direct costs consisting of actual costs incurred
in performing all financial transaction processing totaled $509,124. Marketing
costs consisting of traditional media buy and unique Internet promotional tools
totaled $1,078,328. Other direct costs of $22,205 were incurred for royalty
fees for the licensing of third party casino software.
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<PAGE>
Development Expenses
For the year ended December 31, 1999, we incurred $337,626 in development
costs. Development costs include equipment, salaries and benefits and other
labor costs incurred for the research and development of Netbook and eBanx
proprietary software. All development costs incurred have been expensed in the
period incurred. As the development, upgrade, and improvement of Netbook and
eBanx software is ongoing, we expect to continue to incur development costs.
Operating Expenses
For the year ended December 31, 1999, we incurred total operating costs of
$1,297,765. Operating expenses consist of wages and employee benefits of
$346,521, consulting and management fees of $250,979, and professional fees of
$182,743. Other significant operating costs incurred were equipment rental and
maintenance, rent, office and miscellaneous, stock options benefits, and
advertising and promotion.
Amortization and Depreciation
For the year ended December 31, 1999, we incurred $90,993 in amortization
and depreciation which was attributable to depreciable assets of computer
software and equipment, furniture and fixtures and leasehold improvements
acquired during the year ended December 31, 1999.
Fiscal Years Ended December 31, 1998 and December 31, 1997
- -------------------------------------------------------------------
There were no significant activities performed by cyberoad.com in the
fiscal years ended December 31, 1998 and 1997.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, cyberoad.com's principal source of liquidity was
approximately $1,163,704 in cash, which was primarily raised through equity
financings completed in the prior fiscal year ended December 31, 1999 and a
revolving line of credit executed on February 28, 2000.
Net cash used in operating activities during the year ended December 31,
1999 was $1,283,451 and for the three months ended March 31, 2000 was $777,187.
Cash used in operating activities during the fiscal year ended December 31, 1999
was primarily due to the start up of Ecomm Relationship Technologies (IOM)
Limited, the development of Netbook Version 2 software and the increase in
accounts receivable due from licensees, and the purchase of prepaid assets. The
cost of the start up and development of software has been offset by cash
deposits received from Ecomm Relationship Technologies (IOM) Limited customers.
Cash used in operating activities for the three months ended March 31, 2000
resulted primarily from the further development of Netbook Version 2 Software,
increased expenses related to the Offering, increased accounts receivable, and
increased customer and merchant deposits offset by a decrease in prepaid
expenses and an increase in accounts payable.
Net cash used in investing activities during the year ended December 31,
1999 was $1,166,332 and for the three months ended March 31, 2000 was $114,861,
and was primarily due to the purchase of computer hardware and software and
office furniture.
Net cash provided by financing activities for the year ended December 31,
1999was $3,785,317 and for the three months ended March 31, 2000 was $493,117.
Cash provided by financing activities during the fiscal year ended December 31,
1999 was primarily provided from the issuance of capital stock pursuant to
equity offerings. Cash provided by financing activities during the three months
ended March 31, 2000 was provided from a revolving line of credit and net
advances from related parties offset by payment of capital lease obligations.
On July 3, 1999, cyberoad.com closed a private placement of 1,400,000
shares of common stock, which were issued to investors at $1.43 per share. The
offering raised net proceeds of $1,865,019. On November 11, 1999, cyberoad.com
issued an aggregate of 648,859 shares of common stock, which were issued to
investors at $3.50 per share. The offering raised net proceeds of $2,031,516.
These offerings were made pursuant to Regulation S of the Securities Act of
1933, as amended. The shares were issued to non U.S. Persons, as defined in
Regulation S.
At December 10, 1999, cyberoad.com entered into a revolving line of credit
agreement with El Moro Finance Ltd., a company existing under the laws of the
British Virgin Islands. The agreement provides for a revolving line of credit
to be made available to cyberoad.com in the amount of $500,000. Upon the
advancement of funds, cyberoad.com agrees to make interest payments on the first
day of every month. The interest payments will be either a compounded annual
-15-
<PAGE>
rate of 10% of the funds advanced per annum only, or compound annual interest
payments of prime (Switzerland) plus 2% of the funds advanced, per annum only,
for the first year of instatement of the revolving line of credit. Also upon
the advancement of funds, and at El Moro's sole discretion, cyberoad.com agrees
to furnish to El Moro upon its request an unrestricted open source code license
to all software developed by cyberoad.com for up to two years after the
revolving line of credit is converted or repaid in full. Since March 1, 2000,
cyberoad.com has accrued interest at prime (Switzerland) plus 2%, payable on
demand to El Moro. As of May 1, 2000, no request has been made by El Moro for
the unrestricted open source code license.
At February 24, 2000, cyberoad.com entered into an additional revolving
line of credit agreement with El Moro Finance Ltd., for a revolving line of
credit up to $200,000. Upon the advance of funds only, cyberoad.com agrees to
make interest payments on the first day of every month. The interest payments
will be either a compounded annual rate of 10% of the funds advanced per annum
only, or compound annual interest payments of prime (Switzerland) plus 2% of the
funds advanced, per annum only, for the first year of instatement of the
revolving line of credit. In consideration for the revolving line of credit,
cyberoad.com agreed to furnish to El Moro the ownership of the domain name
"ebanx.com" and the European trademark to the name "eBanx," which was owned by
eComm Relationship technologies (Isle of Mann) Limited. As of May 1, 2000, no
request has been made by El Moro for the ownership of the domain name
"ebanx.com" and the European trademark to the name "eBanx."
We have minimal commitments for capital expenditures. Pursuant to our
Services Agreement with Kazootek.com Technologies, Inc., we are financially
obligated, on a month-to-month basis, for payments equal to the cost of the
services provided plus 10%. These costs include software development, web
development, network systems administration, human resources, accounting,
corporate finance and securities administration, consulting, marketing and
communications, technology development and management. Please refer to "Certain
Relationships and Related Transactions" for a discussion of our Services
Agreement with Kazootek.com. In addition, we lease property in Costa Rica on a
month to month basis and our monthly rental payments are $3,362.
We continually evaluate various financing strategies to be utilized in
expanding our business and to fund future growth or acquisitions. Our future
capital requirements will depend on many factors, including the timing and rate
of the expansion of our business. From time to time, in the ordinary course of
business, we expect to evaluate potential acquisitions of businesses, services
or technologies and strategic relationships. At this time, however, we do not
have any present understandings, commitments or agreements with respect to any
material acquisition. To the extent that existing resources and future earnings
are insufficient to fund our activities, we may need to raise additional funds
through debt or equity financings. We cannot assure you that any additional
financing will be available or that, if available, it can be obtained on terms
favorable to us and our stockholders. In addition, any equity financing could
result in dilution to our stockholders. Our inability to obtain adequate funds
would adversely affect our operations and ability to implement our strategy.
Management anticipates that the net proceeds from its July 3, 1999 and
November 11, 1999 offerings, combined with cash flow from operations and its
bank lines of credit will provide adequate liquidity to fund its business growth
plans and its operations until the end of December 2000.
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<PAGE>
BUSINESS
OUR COMPANY
cyberoad.com is an Internet technology and software development company
that develops, markets and licenses complete computer software systems along
with related technical and marketing support to operators of Internet sportsbook
and casino websites. We develop network gaming (sportsbook and casino) and
e-commerce systems. We provide systems development, network management and
hosting on web servers and databases located outside of the United States, as
well as ongoing technical support and marketing services for our licensees. In
November 1999, we released Version 2 of our sportsbook system, which enables us
to more easily add new sports and betting features and allows service to a
greater number of users at any one time.
We also have developed a proprietary e-commerce financial transaction
processing system for use by our licensees. Our licensees are able to provide
secure financial transaction processing for their customers, the end user.
Currently, our primary use for our e-commerce platform is as an online stored
value system and an economic relationship management system. The online stored
value system allows customers to purchase digital cash that they can use at any
time when gaming on our licensees' web sites. The economic relationship
management system primarily serves to manage the financial accounts of customers
that use our licensees' web sites.
cyberoad.com was incorporated in June 1988 under the name Sunshine Equities
Corporation. The name was changed to LAL Ventures in August 1998, and
subsequently to cyberoad.com Corporation in May 1999. cyberoad.com conducted no
material operations prior to May 1, 1999. On May 1, 1999, cyberoad.com
Corporation purchased all of the stock of Cyberoad.com (Isle of Man) Ltd., a
corporation existing under the laws of the Isle of Man. Immediately thereafter,
Cyberoad.com (Isle of Man) Ltd. purchased certain assets from Cyberoad Gaming
Corporation relating to its online betting technology. Prior thereto,
Cyberoad.com (Isle of Man) Ltd. had no material operations. On May 1, 1999,
Ecomm Relationship Technologies (IOM) Limited, a corporation existing under the
laws of the Isle of Man, purchased certain assets of Cyberoad Gaming Corporation
relating to its financial transaction processing technology. On November 11,
1999, Cyberoad.com (Isle of Man) Ltd. purchased all of the outstanding shares of
Ecomm Relationship Technologies (IOM) Limited. Pursuant to an agreement dated
October 31, 1999, Ecomm Relationship Technologies (IOM) Limited transferred all
of its assets other than those assets relating to technology to Corporacion
Ebanx.com, S.A., a corporation wholly owned by Cyberoad.com (Isle of Man) Ltd.
and existing under the laws of Panama.
We have six direct or indirect wholly owned subsidiaries including:
- - Cyberoad.com (Isle of Man) Ltd., which is the operating entity for
cyberoad.com, entering into licensing agreements and holding our
software development assets.
- - Corporacion Ebanx.com, S.A., a corporation existing under the laws of
Panama, which holds the assets relating to the operation of our
Financial transaction processing system.
- - Ecomm Relationship Technologies (IOM) Limited, a corporation existing under
the laws of Isle of Man, which holds the assets relating to the technology
of our financial transaction processing system.
- - Sistemas de Informacion Tecnologica, a corporation existing under the laws
of Costa Rica, which provides administrative and management services
for cyberoad.com's principal offices in Costa Rica.
- - Informacion y Tecnologia Canadiense, a corporation existing under the laws
of Costa Rica, which provides administrative services for cyberoad.com's
offices in Costa Rica.
- - Ebanx Limited, a Nevada corporation, is inactive.
A GAMING INDUSTRY OVERVIEW
The projections discussed in this Industry Overview section are industry
projections, and any growth rates discussed are industry growth rates and may
not reflect our growth rates over the same period.
-17-
<PAGE>
THE INTERNET AND E-COMMERCE
The Internet is an increasingly significant global medium for
communication, entertainment and commerce. Internet use is growing rapidly.
Jupiter Communications, a research, consulting and publishing firm specializing
in emerging consumer online and interactive technologies estimates in an April
1999 study that the number of Web users in the U.S. alone is expected to grow
from approximately 100 million in 1999 to approximately 160 million by 2003.
E-commerce has become the new wave of buying and selling goods over the
Internet. E-commerce describes the purchase of goods using some form of virtual
cash or credit. This new marketplace, which began with only a few powerful
brand names offering consumer goods over the Internet, has now grown to include
many distinct types of goods and services.
The rapid growth of the Internet as a tool for communication, entertainment
and e-commerce has resulted in a proliferation of websites dealing with diverse
topics, products and services. Websites that serve as search engines such as
America Online and Yahoo! developed in response to Internet users' need for a
simple means of navigating the Internet. As the number of Internet users has
increased, discrete user groups have developed that share the same interests,
such as people searching for gaming services. These groups have, in turn,
created a demand for more focused subject-specific websites. These
subject-specific websites are a growing segment of the Internet. Among the most
popular of these types of websites are those involved in Internet gaming, which
involves the placing of wagers via the Internet.
THE INTERNET GAMING INDUSTRY
The global gaming industry began to capitalize on the rising popularity of
e-commerce in 1997. At that time, there were only approximately 40 gaming
websites worldwide. A gaming industry report published in January 2000 by Bear
Stearns, and available for purchase by contacting the Bear Stearns Research
Department at www.bearstearns.com, estimates that there are 250 companies
-------------------
involved in operating or providing services to nearly 650 Internet gaming
websites. On the Internet today, gaming websites generally can be classified
into two groups: gaming sites dedicated to casino-style gaming exclusively and
gaming sites offering wagering on sporting events, lotteries, bingo and horse
racing. The companies involved in these Internet gaming websites can be
classified as either owner/operators or software suppliers.
INTERNET GAMING SOFTWARE SUPPLIERS
Most owner/operators of Internet gaming websites do not develop the
software that end users see and interact with on the website. Instead, software
suppliers that develop gaming software license the software to the
owner/operators of the websites, and often will license complete support
systems. The Bear Stearns report states that approximately twenty companies
consider themselves software suppliers. We are an example of a software
supplier that licenses our software and support systems to owner/operators of
the Internet gaming websites.
OUR BUSINESS STRATEGY
Our objective is to secure a position as a leading provider of Internet
gaming and financial transaction processing technologies. We intend to
accomplish our goal by:
Developing cyberoad.com into a global brand name through the marketing of
our licensees' gaming systems, and the development and marketing of a sports and
entertainment portal
Upgrading existing gaming systems by developing and implementing new
technology, and adding new sports and betting features
Adding new licensees
Expanding into international markets by adding Web servers overseas
Developing new gaming systems in a cost-effective and timely manner
Establishing key business alliances and strategic partnerships.
OUR PRODUCTS AND SERVICES
SPORTSBOOK WAGERING
Initially, we chose to focus on the development of sports wagering systems,
which involve verifiable sporting events rather than casino wagering systems,
which involve random number events. We believe end users are more trusting in
the results of sports wagering events, as the outcome of the sporting events are
common knowledge and easily verifiable. Our sportsbook wagering system consists
of wagering and e-commerce software, and a scalable network coupled with
management infrastructure located in San Jose, Costa Rica and British Columbia,
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Canada. A scalable system is one that continues to run efficiently during
periods of high traffic to the website. Our principal gaming software system is
called Netbook. Our e-commerce system consists of our secure financial
transaction processing software, and a high-speed network which consists of a
satellite, frame relay and Internet networking technology.
We believe three fundamental elements are necessary for our licensees to
successfully operate an international online sportsbook:
- - Scalable network system that provides fast, secure and cost-effective
delivery of multimedia content to a large number of international
Internet customers;
- - Secure financial transaction system that is fully encrypted and which
settles all financial transactions cost-effectively.
- - Dynamic, browser-based content enabling customers to use unique, fast and
user-friendly software systems that provide both high volume gaming
transactions and extensive sports and casino information.
NETBOOK
Netbook is our proprietary Internet/Intranet sophisticated turnkey
sportsbook management system that allows sports enthusiasts with Internet access
to bet on a wide variety of sports on any computer system from anywhere in the
world. Netbook is designed to process wagers online and manage a high-volume
sportsbook. Users can access the Netbook through the Internet or a telephone
call center.
Unlike many other sportsbook software systems that require a download,
Netbook is a web browser-based application. This type of application allows the
customer to access our licensees' websites using platforms ranging from
Microsoft Windows and AOL to Macintosh and WebTV. Customers also are able to
access their accounts and place wagers from any computer, as they do not have to
download a specific software system to any one computer. We believe a
downloadable software system creates a barrier to participate for many potential
customers.
The system is inexpensive to install and administer, as operators and
managers in the call center can access Netbook via a web browser. This
browser-based system runs on most existing personal computers and is designed to
take advantage of the new Network Computers, such as Windows Terminals and Sun's
Java Station. The system can be monitored and managed, both technically and
financially from anywhere in the world.
In November 1999, we launched the Netbook Version 2 sports betting system.
We developed Netbook Version 2 using the Java programming language incorporating
many components of the Java 2 Platform Enterprise Edition, including Enterprise
JavaBeans, JavaServer Pages and Java Servlets. Java is well suited for Internet
and e-commerce applications because it includes specific facilities for network
access, database access and web server programming that are usually add-ons, and
is the only programming language that allows us to run our software on different
computing platforms without significant modification. Moreover, because Java is
very portable, potential licensees of cyberoad.com do not need to purchase large
volumes of expensive computer equipment. These potential licensees may commence
business running on inexpensive computer systems, and thereafter move to more
powerful hardware when their client base and transaction volume increase.
Netbook Version 2 uses the Versant Object Database, a high performance
database which we believe will enhance our ability to add new product features
and significantly increase the speed of our software development. Versant
eliminates the necessity of writing "translation" software, which in turn
removes a significant amount of work from our development cycle.
We believe that Netbook Version 2 provides cyberoad.com with significant
advantages over our competitors primarily in the following areas:
BENEFITS TO THE LICENSEE
- ---------------------------
Scalability. A scalable system is one that continues to work efficiently
-----------
during periods of high traffic to the website. Netbook Version 2 has been
designed to enable sportsbooks to service up to 10,000 customers placing bets
and accessing the odds lines simultaneously, without any detectable change in
delivery speed. Also, Notebook Version 2 allows the addition of more server
hardware, rather than forcing the additional cost of completely replacing old
servers with new, faster systems.
Sportsbook Management Features. This feature can make or break a
--------------------------------
licensee's profit margin because the licensee can see and manage the odds or
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<PAGE>
"lines" in realtime and adjust its exposure accordingly, as opposed to delayed
time. This management feature allows for a clear display of payout and revenue
exposure on each event the sportsbook has listed. Also, the Netbook Version 2
software package has flexible game setup where licensees may customize event and
line/odds features, complete auditing, adjust the minimum/maximum wager
enforcement, adjust payout rules and display all odds formats.
Flexibility. It is critical to have a software system that allows the
-----------
quick addition of new products and features. Maximum flexibility is a critical
component of Netbook Version 2, which allows us to add or change new betting and
gaming features easily and with minimal disruption to our licensee's service.
BENEFITS TO THE PLAYER
- -------------------------
Betting Cart. Our new "Bet Cart" uses a shopping cart-style interface to
-------------
provide greater flexibility in placing bets. Players are able to select games
from various sports they want to bet on and place them in their shopping cart,
or Bet Cart. From the Bet Cart, the player can select what games to play as
single bets, and what games to play as parlays or teasers. Parlays and teasers
involve a player betting on multiple sporting events as part of one bet, for
more favorable odds and winnings if the player accurately predicts the result of
each of the events. Once the games are in the Bet Cart, the player never need
return to the odds page.
Open Bets. With Open Bets, the player can review a list of open bets
----------
placed, eliminating the risk of placing the same bet twice. All open bets will
remain on the list until either the complete wager has won, or one segment of
the wager has been graded as a loss. Open Bets allows an easy and convenient
means for players to view their wagers that have not yet been completed.
New Bets. Several new betting features have been added in Netbook Version
---------
2, including cross-sport parlays, cross-sport teasers, and buy points within a
parlay. Generally, these features allow a player to wager on multiple sporting
events as part of one bet, for more favorable odds and winnings if the player
accurately predicts the result of each of the events.
New Sports. Our list of available sports continues to grow: major league
-----------
baseball; NFL and NCAA football; NBA and NCAA basketball; NHL hockey;
international soccer from leagues in England, Italy, Germany, Spain and more;
PGA and international golf; auto racing (NASCAR and Formula One); professional
tennis; and professional boxing.
LIVE LINES/LIVE ODDS
Live Lines is a proprietary software system that allows "real time" lines
on all major sporting events to be dynamically linked to any web site. This
means that odds and lines on sporting events are continuously streamed to
websites, as the odds are set and subsequently change. Live Lines adds valuable
content to sports and gaming related web sites. Moreover, Live Lines is
intended to increase revenue for these web sites by adding more pages upon which
banner ads can be sold.
CYBEROAD.COM PORTAL
A portal is a website that gathers resources in one location, and is
designed to be the first page that loads into the web user's browser when they
access the Internet. Vertical portals are thematic portals that provide
targeted, customizable content, and one comprehensive financial transaction
processing system. cyberoad.com intends to become a sports-and-entertainment
vertical portal late in the year 2000, further differentiating itself from other
gaming software vendors. This strategy is designed to provide cyberoad.com with
two streams of revenue:
- - increased revenues from its gaming license agreements;
- - advertising and co-branding revenues from portal website traffic volume.
Also, as part of the portal, cyberoad.com expects late in the year 2000 to
offer sports information, free play sportsbook and casino contests, bulletin
boards and a stock information channel. We believe that the free play
sportsbook and casino contests are a key element of our strategy. A free play
website has all the functional components of a "live" revenue generating
website. Therefore, we intend to have a signup function, an accounting
function and an interactive betting display function built into the system.
Offering both a free play sportsbook and a free play casino provides
cyberoad.com with two advantages:
- - true test environment for introducing gaming software and new graphic user
interface, or GUI, developments
- - the ability to develop a database of potential clients for its
revenue-generating websites.
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<PAGE>
CASINOS
Following initial market acceptance of our sports wagering system, we added
casino gaming capability to our software line. cyberoad.com licenses the
software code of its casino system from third parties, and integrates these
systems into the Ecomm Relationship Technologies (IOM) Limited's eCash
framework. Integrating the casino system into the eCash framework allows for
secure online financial transaction processing for our casino licensees. As
with cyberoad.com's other products, players are not required to download any
software in order to play. The only requirement is a browser that supports
Java. cyberoad.com's casino software system allows players to play their
favorite casino games - blackjack, poker, slots, roulette, and craps - for real
money, from virtually any computer on any Internet browser system.
cyberoad.com's browser-based casino software system offers a competitive
advantage over most other virtual casino systems, whose products require the
player to use software that can take up to 50 minutes to download. To date, a
substantial majority of casino systems operate with downloadable products. With
cyberoad.com's browser-based system, casino games load quickly and the graphics
and sound are comparable to many download-based systems. Licensees can adjust
game configurations in a variety of ways using the Java-based casino management
system, allowing the licensee to set its revenue percentages in line with the
industry standards of Las Vegas and Atlantic City.
To date, cyberoad.com has two casino licensees: The Big Casino and Grand
Prix Casino. Each system operates with five games: blackjack, roulette, poker,
slots and craps. cyberoad.com expects to upgrade its casino systems by the end
of the third quarter of fiscal 2000 by adding more reporting capabilities, which
will help licensees market the system more effectively because of greater access
to its customers' data. In the future, cyberoad.com also intends to add new
casino games, including but not limited to video poker, Pai Gow, Caribbean Stud
poker and Progressive Slots.
FINANCIAL TRANSACTION PROCESSING SYSTEM
Ecomm Relationship Technologies (IOM) Limited owns a proprietary secure
online financial transaction processing system that provides Internet-based,
stored value, micro-payment financial services for our licensees, and for
account holders, through its transaction clearinghouse services with acquiring
and issuing banks. Consumers are able to open a secure account, purchase eCash,
then purchase goods and services from any Ecomm Relationship Technologies (IOM)
Limited merchant. To date, the merchants consist of our three licensees.
Consumers can purchase eCash with major credit cards, an online debit card
system, Western Union, bank wire, money orders or personal checks. Ecomm
Relationship Technologies (IOM) Limited maintains the accounts for all its
account holders, and acts as a third party service provider. The Ecomm
Relationship Technologies (IOM) Limited eCash system also provides certain fraud
management services, complete accounting and transaction documentation, and
customer service.
OUR LICENSEES
To date, Cyberoad.com (Isle of Man) Ltd. has three licensees of its turnkey
software: The Big Book & Casino, Grand Prix Sportsbook & Casino, and Mayan
Sportsbook. The Big Book & Casino and Grand Prix Sportsbook are both owned and
operated by Asanol Management Corporation. Mayan Sportsbook is owned and
operated by International Gaming LTD. Cyberoad.com (Isle of Man) Ltd. has
license agreements and revenue sharing agreements with each of its licensees,
whereby Cyberoad.com (Isle of Man) Ltd. receives flat fees for systems use and
software licenses, as well as a percentage of the gross gaming revenue generated
by the licensees' web site. Our license with International Gaming LTD. provides
that we will receive 20% of the gross gaming revenue attributable to the
Internet. Our two licenses with Asanol Management Corporation each provide that
we will receive 50% of the gross gaming revenue attributable to the operations
of the Sportsbook and to the casino gaming.
SALES AND MARKETING
cyberoad.com's sales and marketing services are provided through a contract
with Kazootek.com Technologies, Inc., a company organized under the laws of
British Columbia, Canada. As of March 31, 2000, the sales and marketing team
provided by Kazootek consisted of approximately 38 Internet technology marketing
and software development professionals.
Through its contractual agreements with its licensee's, cyberoad.com
provides marketing research, marketing plans, promotions, budgets and timelines,
project management, licensee specific branding, associative branding as part of
cyberoad.com, concept development, technical writing, graphic design, electronic
art production, illustration, website development, media services, and public
relations and corporate communications.
Internet marketing strategies include:
- cyberoad.com proprietary Live Lines program
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<PAGE>
- referral program whereby users can earn bonus money for referring
friends to cyberoad.com licensee web sites and receive further bonuses
for the amount of wagering activity these referrals generate
- links that direct people to cyberoad.com licensee web sites
- use of banners to direct people to cyberoad.com licensee web sites
- use of direct email to sign people up with cyberoad.com licensees
- providing custom content programs for various websites that help drive
traffic back to cyberoad.com licensee web sites
- search engine optimization programs targeting specific search engines
and using various tactics to increase the placement order.
Traditional methods include placing advertisements in magazines, newspapers, the
radio, and TV.
cyberoad.com's marketing strategy for its gaming products and services
specifically includes expanding this platform into international markets by
building additional servers and service centers in strategic international
locations. cyberoad.com also intends to deliver multi-language products,
marketing these internationally both on the Internet and through traditional
methods.
RESEARCH AND DEVELOPMENT
We currently are developing a pari-mutuel system which we expect to be
launched in spring 2001. A pari-mutuel system varies from traditional
sportsbook or casinos in that the monies are won from a "pool" of money, which
contains fixed percentages designating which persons win what amounts.
Traditional sportsbooks and casinos both have exposure, in that each could lose
money to those who are wagering. Companies running pari-mutuel systems do not
have this exposure in that these companies take a percentage of the monies
wagered on an event, with the remaining sum divided among the winners of that
event. The new pari-mutuel wagering system includes real-time wagering for
horseracing. Horseraces are ongoing every day of the year throughout the United
States, Canada, Europe and the rest of the world. By virtue of the Internet,
the entire global market can be opened to the individual racetracks.
OUR COMPETITION
INTERNET SPORTSBOOK COMPETITION
cyberoad.com conducted an extensive study of the global gaming industry,
focusing on companies that offer Internet-based sportsbook software systems. Of
all the sportsbook software developers, the industry leaders appear to
differentiate themselves with three core attributes:
- proprietary financial transaction processing and gaming software
- browser-based system
- distributed and scalable network architecture
Approximately 12 sportsbook software developers have implemented all three
of these core attributes. These developers can be divided further into two
groups:
- vendors (sell or license proprietary software systems)
- owner/operators (single user of its proprietary software system)
Seven of the 12 companies can be classified as owner/operators: Intertops
Antigua, International Gaming & Entertainment Ltd., William Hill International,
Coral Technologies Inc., Victor Chandler International, Interwetten Wein, TAB
(run by the government of New Zealand), and Total Bet (which is owned by
Sporting Life Publications in Britain), each having developed sportsbook
software systems for their own use. The remaining five sportsbook software
developers are vendors, like cyberoad.com, and are examined in the Direct
Competition Matrix below.
-22-
<PAGE>
<TABLE>
<CAPTION>
DIRECT COMPETITION MATRIX
-------------------------
COMPANY VENDOR OPERATOR FREE PORTAL PUBLIC LISTING EXAMPLE WEBSITE
PLAY
SITE
<S> <C> <C> <C> <C> <C> <C>
cyberoad.com Corporation. . Y Y Y OTC:FUNN* www.thebigbook.com
Starnet Communications
International Inc.. . . . . Y Y OTC BB:SNMM www.playersonly.com
Global Entertainment Group. Y OTC BB:GGNC www.cyberbetz.com
VIP Sports. . . . . . . . . Y Y www.vipsports.com
Total Entertainment Inc.. . Y OTCBB:TTLN www.theonlinecasino.com
___________________________
<FN>
* Our shares were removed from the OTC:BB effective January 19, 2000 for failure timely to comply with the
Eligibility Rule. Currently we trade on the National Quotation Bureau Pink Sheets. Immediately following the
effectiveness of this Registration Statement, we expect to apply for listing on the OTC:BB.
</TABLE>
OUR COMPETITIVE ADVANTAGE
Free Play Websites:
A free play website is a site that has all the functional components of a
"live" revenue generating website. Therefore, there must be a signup function,
an accounting function and an interactive betting display function built into
the system. A few sportsbook websites claim to have a free play website, but
actually only offer a single bet scenario with no membership database building
and no financial transaction processing system.
Marketing Strategies:
Our strategies provide us with two streams of revenue:
- increased revenues from gaming license agreements
- advertising and revenues from website traffic volume
Collecting email addresses and developing demographic profiling of sports
enthusiasts is a key strategy. cyberoad.com intends to use this demographic
information to implement multi-segmented email programs designed to convert
portal users into gaming website clients. Further, cyberoad.com expects to
benefit from its cross-over branding support strategy.
INTERNET CASINO COMPETITION
The Internet casino product development sector has far outstripped the
development of sportsbook systems. The key reason for this is that barriers to
entry into Internet casino system development are lower than sportsbook
development. Much like Internet sportsbooks, Internet casinos require game
system software, and an accounting system. But while Internet casinos require
nominal management and support staff, Internet sportsbook systems are relatively
complex to manage. Additional costs result from ongoing management of day-to-day
activities (line entry, line management, event grading, and customer support)
and infrastructure (call center and customer support center).
Two of the primary casino system developers and vendors are Cryptologic,
Inc. and Boss Media AB, yet to date neither have a commercially available
Internet sportsbook product. cyberoad.com, in maintaining a full complement of
gaming products, has licensed two casino websites (The Big Casino and Grand Prix
Casino), both of which are browser-based systems. The cyberoad.com casino system
components are licensed from third parties and integrated into the Ecomm
Relationship Technologies (IOM) Limited eCash framework for its licensees.
Having a browser-based system is a competitive advantage for cyberoad.com over
systems such as Cryptologic, which offers a download product. With a
browser-based product, cyberoad.com provides a feature that attracts many web
users who are reluctant to download software over the Internet. To date, most
casino systems operate with a downloadable product.
INTELLECTUAL PROPERTY
cyberoad.com regards its copyrights, service marks, trademarks, trade
dress, trade secrets, proprietary technology and similar intellectual property
as critical to its success, and relies on trademark and copyright law, trade
secret protection and confidentiality and/or license agreements with its
employees, customers, independent contractors, partners and others to protect
its proprietary rights. cyberoad.com strategically pursues the registration of
its trademarks and service marks in the United States, and has applied for
registration in the United States for certain of its trademarks and service
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marks, including "CYBEROAD". cyberoad.com also applied for Community Trade Mark
applications in Europe for certain of its trademarks and service marks.
Effective trademark, service mark, copyright and trade secret protection may not
be available in every country in which cyberoad.com's products and services are
made available.
cyberoad.com filed a trademark/service mark application for the mark
"CYBEROAD" on June 4, 1999.
cyberoad.com filed a trademark/service mark application for the mark
"eBanx" and design on June 4, 1999.
cyberoad.com filed a trademark/service mark application to the United
States Patent and Trademark Office, instructed for filing of the mark
"LIVE LINES" on January 19, 2000.
cyberoad.com filed a trademark/service mark application to the United
States Patent and Trademark Office, instructed for filing of the mark
"LIVE ODDS" on January 19, 2000.
cyberoad.com filed a trademark/service mark application to the United
States Patent and Trademark Office, instructed for filing of the logo
"Walking Man" on January 19, 2000.
cyberoad.com filed a Community Trade Mark Application for the mark
EBANX.COM on May 7, 1999.
On January 31, 2000, cyberoad.com was assigned the rights to the Community
Trade Marks CYBEROAD and CYBEROAD.COM. Applications for both of these
marks were filed on May 7, 1999.
REGULATORY FRAMEWORK
As a supplier of software programs that are used on Internet gaming Web
sites, the regulatory framework that will most likely affect our business is the
framework designed to regulate Internet gaming.
Many countries currently are struggling with regulatory issues surrounding
wagering and gambling over the Internet. More specifically, they are
considering the merits, limitations and enforceability of prohibition,
regulation or taxation of wagering and gambling transactions over the Internet.
There is uncertainty regarding exactly which government has jurisdiction or
authority to regulate or legislate with respect to the Internet gaming industry.
Several Caribbean countries, Australia, and certain Native American territories
have taken the position that Internet gaming is legal and have adopted (or are
in the process of reviewing) legislation to regulate Internet gaming within
their jurisdictions.
If existing regulations are interpreted to prohibit or restrict Internet
gambling and are enforced, or if new regulations are enacted which are designed
to prohibit Internet gambling, our licensees may be found to violate these
regulations and may be required to cease operations of their sites. In this
event our ability to generate revenue would suffer substantially as the majority
of our revenue consists of a percentage of the net gaming revenue based on
wagering activity on a licensee's site. Moreover, if existing regulations are
interpreted to apply to suppliers of gaming software, or if our operations are
interpreted to extend beyond software development, we may be required to cease
or restrict our development, marketing and licensing activities. If we are
unable to market or license our software and technology, we will not be able to
generate revenue. The uncertainty surrounding the regulation of Internet gaming
and any adverse interpretation and subsequent enforcement of existing or new
laws relating to Internet gambling could have a material adverse effect on our
business, revenues, operating results and financial condition.
A recently published industry report by Bear Stearns states that if a
government has made the determination that Internet gaming is illegal, then the
government may target six major groups in an effort to enforce its laws: (1)
the operators of the Internet gambling sites, (2) Internet Service Providers,
(3) index providers (for example, a search engine that allows a Web user to find
Internet sites whose descriptions match a word or phrase), (4) sites that accept
gambling advertising, (5) financial transaction providers, and (6) the home
users. The Bear Stearns report did not identify software suppliers as one of
these groups; however, if a software supplier's role be such that it could be
classified as a member of one of these six groups, the software supplier could
face potential enforcement actions.
On August 20, 1999, investigators from the British Columbia Coordinated Law
Enforcement Unit executed search warrants at the offices of Starnet
Communications International, Inc. and the homes of six of Starnet's officers
and directors. According to documents filed by the Coordinated Law Enforcement
Unit, Starnet is being investigated for, among other things, illegal betting and
bookmaking and making agreements for the purchase and sale of betting and gaming
privileges. We believe the investigation was the result of Starnet's casino
management and administration of third party gaming operations and the operation
of their own gaming web site. As of March 16, 2000, we believe the
investigations are still pending based on publicly available information.
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In the United States, the ownership and operation of land-based gaming
facilities has traditionally been regulated on a state by state basis.
According to the Bear Stearns report, the federal government's role in
regulating gambling appears to be changing. Increased federal interest may not
result in new regulations for traditional forms of gambling that are easily
subject to the police power of the individual states, but may result in a
redefined role for the federal government in dealing with Internet gaming. The
U.S. Department of Justice currently maintains that, technically, there are no
specific U.S. federal provisions against the placing of bets over the Internet.
However, the Justice Department also maintains that it is illegal to operate
Internet gaming Web sites and servers from within the United States. In light
of this, many Internet gaming sites are licensed and house servers located
outside the United States. According to the Justice Department, it is illegal
for any Internet gambling operation outside the U.S. to accept bets from U.S.
citizens.
The United States Federal Wire Act contains provisions that make it a crime
for anyone engaged in the business of betting or wagering to knowingly use a
telephone line to transmit bets or wagers or information assisting in the
placing of bets or wagers on any sporting event, unless the wagering is legal in
the jurisdictions from which, and into which, the transmission is made. There
are other federal laws impacting gaming activities, including the Wagering
Paraphernalia Act, the Travel Act and the Organized Crime Control Act. However,
it remains unresolved whether these other laws apply to gaming conducted over
the Internet.
On November 19, 1999, the United States Senate passed the Kyl Bill, which
would prohibit or limit wagering activities in the United States. The House of
Representatives is also considering its own version of Internet gambling
legislation, which was referred to the Subcommittee on Crime on February 3,
2000. The House bill must be approved and reconciled with the Kyl Bill, and
then signed by the President of the United States in order for the bill to
become law. Under the current proposal, the Kyl Bill would prohibit Internet
gaming in the United States and would likely be enforced by law enforcement
identifying Web sites that provide illegal gambling in the United States.
Should the Kyl Bill be passed in its present form, it would eliminate most
arguments that Internet gambling is legal in the United States, and in order to
avoid violation, would force owner/operators to provide a mechanism whereby
Internet gaming Web sites were inaccessible to citizens of the United States.
In addition, existing United States federal statutes and state laws could
be construed to prohibit or restrict gaming through the use of the Internet. To
date, we offer technologies, products and support services to non-U.S. based
licensees. Governmental authorities may view us and/or our licensees as having
violated these statutes or laws. Several state Attorney Generals and court
decisions have upheld the application of state anti-gambling laws to Internet
casino companies.
United States or other jurisdictions may initiate criminal or civil
proceedings against us and/or our licensees, and these proceedings could involve
substantial litigation expense, penalties and fines. In addition, these
proceedings may divert the attention of our key executives, and may result in
injunctions or other prohibitions against us and/or our licensees. These
proceedings could have a material adverse effect on our business, revenues,
operating results and financial condition.
OUR EMPLOYEES
As of March 31, 2000, cyberoad.com and its subsidiaries have one full-time
employee and receive indirectly pursuant to a Services Agreement with
Kazootek.com the services of approximately 79 full-time employees.
OUR PROPERTIES
Our principal corporate offices, consisting of approximately 2,176 square
feet, are located in San Jose, Costa Rica. The lease for this facility is month
to month. We do not have any insurance covering damage to our property and
other assets in Costa Rica.
LEGAL PROCEEDINGS
We are not currently involved in any material litigation.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
cyberoad.com's directors and executive officers, and their ages as of
December 31, 1999, are as follows:
NAME AGE POSITION(S)
John Coffey 38 Director, President
Brent Corobotiuc 30 Director, Manager - Functionality Design
Orlando Guerrero 39 Director
Stig Lyren 44 Chief Financial Officer
Paul Mari 48 Chief Operating Officer
Krista Wilson 32 Secretary
TERMS OF DIRECTORS
Messrs. Coffey, Corobotiuc and Guerrero have served as directors of
cyberoad.com since April 1, 1999, December 31, 1999 and February 29, 2000,
respectively. The directors of cyberoad.com serve as such until the next annual
meeting of stockholders and until their successors are elected and qualified.
BUSINESS EXPERIENCE OF DIRECTORS AND EXECUTIVE OFFICERS
John Coffey has served as the President and a Director of cyberoad.com
since April 1999. John has a background in International Consulting, holding a
MSc in International Political Economy from the London School of Economics, a
MBA from Universite Laval, and a Bachelor of Mathematics degree from the
University of Waterloo. He is fluent in English, French, Japanese and Spanish.
John served as an Investment Consultant to Calvex International, Inc. in Ho Chi
Minh City, Vietnam from 1994 to 1995. John worked as Project Consultant to PTK
Consortium, Kuala Lumpur, Malaysia from 1995 to 1997. John has served as
General Manager of Sistemas de Informacion Technologica, in Costa Rica from 1997
to present. John has been living in Costa Rica, overseeing the day to day
operations of cyberoad.com since May 1999.
Brent Corobotiuc has served as a Director of cyberoad.com and Manager,
Functionality Design since December 1999. Brent joined cyberoad.com with
several years of experience, working for Seanix Technology Inc. in Business
Development from January 1995 to April 1999, combining his experience in the
high-tech sector with a knowledge of sports and the gaming industry. From June
1999 to December 1999, Brent served as Operations Manager of cyberoad.com,
assisting our President, John Coffey, in the daily operations of cyberoad.com.
Orlando Guerrero has served as a Director of cyberoad.com since February
29, 2000. Orlando is a fully certified Attorney-at-Law and Notary Public, and
has worked as an independent professional at the law firm of Bufete Guerrero Y
Guerrero, S.A. since 1995. He previously served as the President of the Board
of Directors at Banco Internacional de Costa Rica, S.A. and has also served on
the Board of Museo do Arte y Diseno. Orlando lives in Costa Rica and speaks
fluent Spanish, English and French.
Stig Lyren has served as Chief Financial Officer of cyberoad.com since
February 7, 2000. In 1999, Stig served as Controller of RSL Com Canada Inc.
From 1998 to 1999, Stig was Controller of Overwaitea Food Group. From 1997 to
1998, Stig served as Manager, Revenue Accounting and Corporate Reporting for BC
Rail Ltd., and from 1993 to 1997, he served as Manager, Financial Planning and
Analysis for the same company.
Paul Mari has served as the Chief Operating Officer of cyberoad.com since
December 1999. Paul brings to cyberoad.com over 25 years of Operations
Management experience. Paul has put his experience with integrating
administrative policies and procedures to use in creating our business model and
striving to ensure execution and delivery of our business plan. From 1984 to
1998, Paul worked for Future Shop Ltd., serving for the final eight years as
Group Product Manager, Appliance Division. From 1998 to 1999, Paul served as
Vice President of Operations for NTS Computer Systems Ltd.
Krista Wilson has served as the Secretary of cyberoad.com since June 1999,
and has an extensive background in Corporate Law and Securities Administration.
Prior to joining cyberoad.com, from 1991 to 1998, Krista served as
Administration Manager and Corporate Secretary and held Directorships in the
NASDAQ listed Optima Petroleum Corporation, now Petroquest Energy Inc., and the
TSE listed High G. Minerals Corp., a group of publicly traded oil, gas, mining,
and resource based companies. Krista currently provides administrative services
to the Corporate Finance and Securities Administration Departments.
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<PAGE>
SIGNIFICANT EMPLOYEES
Carl Schmidt has served as Chief Information Officer since April 28, 1999.
Carl is responsible for computer programming activities. For the past 11 years,
his programming experience has revolved around a variety of Internet and network
programming assignments. Carl is proficient in several computer languages,
including java, C and C++, as well as various network systems. While finishing
a Bachelor of Science Degree from Simon Fraser University, from May 1995 to
December 1995 and from May 1996 to August 1996, Carl served as Systems Analyst
for ISM-BC. From December 1990 to April 1997 at various points, Carl has
undertaken projects as an independent consultant, including network support and
installation. Carl was employed as the Chief Information Officer of Calvex
International from 1997 to 1999.
Joseph Chin has served as Chief Systems Officer since April 28, 1999.
Joseph is responsible for the implementation and management of cyberoad.com's
computer systems and networks. He joined cyberoad.com with over 10 years
experience in the design, implementation and management of mission-critical
enterprise information systems and networks. In addition to his education in
Computer Science at Simon Fraser University, Joseph is a Sun-certified systems
engineer and a CCNA (Cisco Certified Network Associate). From 1992 to 1996
Joseph served as Network Systems Consultant for Prodigy technologies Corporation
in Vancouver, B.C. In 1997, Joseph served as Network Systems Manager for
International Bingonet Corporation, Burnaby, B.C., and Network Systems
Consultant for Unilogik Computer Systems, Vancouver, B.C. Joseph was employed
as the Network Systems Manager of Calvex International from 1997 to 1999.
SIGNIFICANT CONSULTANTS
Calvin Ayre has served as Internet Business Model and Product Consultant
since November 15, 1999. Calvin is the founder and visionary of both
cyberoad.com and Ecomm Relationship Technologies (IOM) Limited. Calvin's
background is in business start-ups, software development, and network and
Internet technologies. He holds a Bachelor of Science degree from the
University of Waterloo, and a Master of Business Administration with a major in
management finance from City University in Seattle. From 1990 to 1997 Calvin
was the owner and President of HQ Vancouver, a privately held Canadian business
incubation company. During that time he also served as Chief Operating Officer
of Calvex International Inc., a Canadian based technology development company
that commenced development work for cyberoad.com. From 1996 to February 1999
Calvin was Director of Cyberoad Gaming Corporation of St. Kitts, West Indies.
From February 1999 to November 1999, Calvin was employed as Chief Executive
Officer and Chief Operating Officer of Cyberoad.com (Isle of Man) Ltd.
FAMILY RELATIONSHIPS
There are no family relationships among directors and executive officers.
COMPENSATION OF DIRECTORS
Directors of cyberoad.com do not receive any salary for their services as
directors. cyberoad.com issued options to purchase 75,000 shares of common
stock to Mr. Corobotiuc at an exercise price of $1.00 per share for his services
as a director. Mr. Corobotiuc's options became exercisable commencing on
October 1, 1999 and vest in equal monthly installments over the following 24
months, with an expiration date of July 26, 2009. cyberoad.com issued options
to purchase 50,000 shares of common stock to Mr. Guerrero at an exercise price
of $3.50 per share for his services as a director. Mr. Guerrero's options shall
be exercisable commencing on June 1, 2000 and shall vest in equal monthly
installments over the following 24 months, with an expiration date of March 1,
2009. Directors of cyberoad.com may also serve cyberoad.com in other capacities
as an officer, agent or otherwise, and may receive compensation for their
services in such other capacity.
EXECUTIVE COMPENSATION
The following table sets forth, as to our four most highly compensated
executive officers (the "Named Executive Officer") whose compensation exceeded
$100,000 during the last fiscal year, information concerning all compensation
paid for services to cyberoad.com in all capacities during the last three fiscal
years. For a description of employment agreements between cyberoad.com and
certain executive officers, see "Employment Agreements with Executive Officers"
below.
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<PAGE>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------- ----------------------
SECURITIES
FISCAL YEAR STOCK UNDERLYING
NAME AND PRINCIPAL POSITION ENDED SALARY AWARD OPTIONS
- ----------------------------- ----- ------ ----- -------
John Coffey, President 1999 $108,000 1,882,150 300,000
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth specified information regarding options
granted to the Named Executive Officer during the year ended December 31, 1999.
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED
OPTIONS TO EMPLOYEES IN EXERCISE OR EXPIRATION
NAME GRANTED FISCAL YEAR BASE PRICE DATE
- ---- ------- ----------- ----------- ----
John Coffey 300,000 17.21% $1.00 April 1, 2009
The percentage of total options granted to employees in 1999 shown in the
table above is based on options to purchase an aggregate of 1,743,625 shares of
common stock granted during the year ended December 31, 1999.
1999 YEAR-END OPTION VALUES
The following table sets forth certain information concerning the number
and value of unexercised options held by the Named Executive Officer at December
31, 1999. The value of the in-the-money options is based on a closing sales
price of $3.375 per share on December 31, 1999, and an exercise price of $1.00.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT DECEMBER 31, 1999 DECEMBER 31, 1999
-------------------------------- -------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ------------ -------------
John Coffey 99,900 200,100 $ 237,263 $ 475,238
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
Pursuant to the Services Agreement between cyberoad.com and Kazootek.com
Technologies Inc., Kazootek provides cyberoad.com with the services of several
executive officers. Please refer to "Certain Relationships and Related
Transactions" for a discussion of the Services Agreement with Kazootek.com.
Paul Mari executed an employment agreement with Kazootek.com dated December
13, 1999, pursuant to which Mr. Mari is employed by Kazootek.com to serve as
Chief Operating Officer to cyberoad.com, in exchange for a base salary of
$90,000 Cdn. per annum, and options to purchase 100,000 shares of common stock
of cyberoad.com at an exercise price of $1.00 per share.
Krista Wilson executed an employment agreement with Kazootek.com dated
September 23, 1999, pursuant to which Ms. Wilson is employed by Kazootek.com to
provide administrative services to cyberoad.com, in exchange for a base salary
of $55,000 Cdn. per annum and options to purchase 60,000 shares of common stock
of cyberoad.com at an exercise price of $1.00 per share.
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<PAGE>
Stig Lyren executed an employment agreement with Kazootek.com dated
February 7, 2000, pursuant to which Mr. Lyren is employed by Kazootek.com to
serve as Chief Financial Officer of cyberoad.com, in exchange for a base salary
of $80,000 Cdn. per annum. If Mr. Lyren continues to be employed six months
following his commencmeent date with the Company, he is entitled to receive
options to purchase 20,000 shares of common stock of cyberoad.com exercisable at
the current market price at the date of issuance.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
Our Articles of Incorporation, as amended, provide that in our Bylaws, we
shall have the power to indemnify our directors and executive officers and any
of our other officers, employees and agents against any contingency or peril, as
may be determined to be in the best interests of cyberoad.com. Our Articles of
Incorporation, as amended, also empower us to purchase insurance on behalf of
any person whom we are required or permitted to indemnify. To date,
cyberoad.com has not entered into indemnification agreements with any of its
directors, executive officers, or any other officer, employee or agent. In
addition, to date, cyberoad.com has not purchased insurance policies under these
indemnification provisions.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 1999, cyberoad.com entered into a services agreement
with Kazootek.com Technologies Inc., a company incorporated under the laws of
British Columbia, for the purposes of Kazootek.com providing cyberoad.com
certain services including but not limited to, software and technology
development and marketing, web development, network systems administration,
human resources administration, consulting, and corporate finance and securities
administration. The Services Agreement is effective for a period of one year,
unless terminated earlier by either party upon 30 days written notice to the
other party. The Services Agreement shall be automatically renewed for
successive renewal periods of one year each, on each anniversary of the
effective date. In return for the services provided for by Kazootek.com,
cyberoad.com shall pay a fee equal to all costs plus 10% Cdn., paid annually.
These costs include software development, web development, network systems
administration, human resources, accounting, corporate finance and securities
administration, consulting, marketing and communications, technology development
and management. Between January 1, 2000 and March 31, 2000, the costs incurred
by Kazootek total approximately $860,000, and have been accruing. As of May 1,
2000, cyberoad.com has not paid Kazootek a fee for these costs incurred, because
the fee is to be paid annually. Paul Mari is the President of Kazootek.com and
Corporacion Ebanx.com, S.A., and the Chief Operating Officer of cyberoad.com.
Stig Lyren is the Chief Financial Officer of Kazootek.com, Corporacion
Ebanx.com, S.A. and cyberoad.com. Krista Wilson is the Secretary of
Kazootek.com, Ecomm Relationship Technologies (IOM) Limited, Corporacion
Ebanx.com, S.A. and cyberoad.com.
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<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table presents information regarding the beneficial ownership
of our common stock as of March 31, 2000 for:
- - each person who is known to us to be the beneficial owner of more than 5%
percent of the outstanding common stock;
- - each of our directors;
- - the Named Executive Officer;
- - each of the selling stockholders named in this prospectus; and
- - all of our directors and executive officers as a group.
The address of each person listed is in care of cyberoad.com, Corporation,
Oficentro Sabana Sur, Edifico 7, 5 Piso San Jose, Costa Rica, unless otherwise
provided below the person's name.
Shares of common stock that a person has the right to acquire under
options, warrants or other arrangements within 60 days of March 31, 2000 are
deemed outstanding for purposes of computing the percentage ownership of the
person who has the right to acquire the shares but are not deemed outstanding
for computing the percentage ownership of any other person. Except as provided
under applicable community property laws or as indicated below, each stockholder
identified in the table possesses sole voting and investment power with respect
to all shares of common stock shown as beneficially owned by that stockholder.
- - As to Thomson Kernaghan & Co. Ltd, the figures in the table include
291,375 shares of common stock underlying stock options which are currently
exercisable and which were issued as a placement agency commission fee.
- - As to Paul Lemmon, the sole director and officer of Striker Capital Ltd.,
and has investment control over the shares held by Striker Capital Ltd.
- - As to John Coffey, the figures in the table include 126,000 shares of
common stock reserved for issuance upon exercise of stock options which
currently are exercisable or will be exercisable within 60 days of March
31, 2000.
- - As to Brent Corobotiuc, the figures in the table include 30,000 shares of
common stock reserved for issuance upon exercise of stock options which
currently are exercisable or will be exercisable within 60 days of March
31, 2000.
- - As to Krista Wilson, the figures in the table include 25,200 shares of
common stock reserved for issuance upon exercise of stock options which
currently are exercisable or will be exercisable within 60 days of March
31, 2000.
- - As to the Directors and executive officers as a group, the figures in the
table include 181,200 shares of common stock reserved for issuance upon
exercise of stock options which currently are exercisable or will be
exercisable within 60 days of March 31, 2000.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR OWNED AFTER
TO OFFERING THE OFFERING
------------------ -----------------
NUMBER OF
NAME AND ADDRESS NUMBER PERCENT SHARES OFFERED NUMBER PERCENT
- ------------------------------------------- --------- -------- -------------- -------- ---------
<S> <C> <C> <C> <C> <C>
Thomson Kernaghan & Co. Ltd.
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2. . . . . . . . . . 580,143 4.0% 580,143 0 *
Peter Legault
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2. . . . . . . . . . 44,000 * 44,000 0 *
Westover Investments Inc
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2. . . . . . . . . . 34,100 * 34,100 0 *
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<PAGE>
David L.K. Bruce
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2. . . . . . . . . . 34,100 * 34,100 0 *
ASSIF S.A.
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2. . . . . . . . . . 78,571 * 78,571 0 *
Atlantis Capital Fund Ltd.
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2. . . . . . . . . . 78,571 * 78,571 0 *
Brian Matheson
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2. . . . . . . . . . 33,000 * 33,000 0 *
CALP II LP
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2. . . . . . . . . . 157,143 1.1% 157,143 0 *
779271 Ontario Ltd.
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2. . . . . . . . . . 96,250 * 96,250 0 *
Thesis Group Inc.
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2. . . . . . . . . . 154,000 1.1% 154,000 0 *
Striker Capital Ltd
129 Front Street, Penthouse Suite
Hamilton, Bermuda . . . . . . . . . . . . . 789,231 5.3% 789,231 0 *
Benitz and Partners Ltd.
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2. . . . . . . . . . 57,750 * 57,750 0 *
Colony Investments Ltd.
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2. . . . . . . . . . 154,000 1.1% 154,000 0 *
Mary Wynn Fini
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2 . . . . . . . 34,100 * 34,100 0 *
Bob Weir
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2 . . . . . . . 57,200 * 57,200 0 *
Southshore Capital Fund Ltd.
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2 . . . . . . . 78,571 * 78,571 0 *
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<PAGE>
Rottweiler Holdings Ltd.
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2 . . . . . . . 7,334 * 7,334 0 *
Loire Sextant S.A.
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2 . . . . . . . 36,667 * 36,667 0 *
Gregg Badger
c/o Thomson Kernaghan & Co. Ltd
365 Bay Street, 10th Floor
Toronto, Ontario M5H-2V2 . . . . . . . 40,389 * 40,389 0 *
El Moro Trust
Larchwood Clay Head Road
Baldrive, Isle of Man
British Isles . . . . . . . . . . . . . . . 600,000 4.2% 600,000 0 *
Dhoon Glen Trust
International House
Victoria Road
Douglas, Isle of Man
British Isles . . . . . . . . . . . . . . . 500,000 3.5% 500,000 0 *
Beru Establishment Ltd.
Pflugstrasse 10
PO Box 1623
FL-9490
Vaduz, Liechtenstein. . . . . . . . . . . . 400,000 2.8% 400,000 0 *
518659 BC Ltd.
3995 East Hastings Street
Burnaby, BC V5C 2HB . . . . . . . . . . 50,000 * 50,000 0 *
Alan Ackerman.
c/o Kink & Co., C1
1500 Hornby Street
Vancouver, BC, V6Z 2R1. . . . . . . . . 250,000 1.8% 250,000 0 *
Advanced Financial.
c/o Kink & Co., C1
1500 Hornby Street
Vancouver, BC, V6Z 2R1. . . . . . . . . 500,000 3.5% 500,000 0 *
Tanzanite Holdings Inc
c/o Kink & Co., C1
1500 Hornby Street
Vancouver, BC, V6Z 2R1. . . . . . . . . 500,000 3.5% 1,250,000 0 *
Asanol Management Corporation.
Suite 700 - 555 West Hastings Street
Vancouver, BC, V6z 2R1. . . . . . . . . 400,000 2.8% 400,000 0 *
Fiston Investments Ltd
Road Town, Pases Estate, P.O. Box 3149
Tortola, British Virgin Islands . . . . 600,000 4.2% 600,000 0 *
FMWP (BVI), Inc
122-5000 Miller Road
Richmond, BC, V7B 1KB . . . . . . . . . 100,000 * 100,000 0 *
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Joanne Coulson.
Unit 35-1905 Broad Hollow Gate
Mississauga, ON L5L 5X2 . . . . . . . . 50,000 * 50,000 0 *
Bank Sal. Oppenheim Jr. & Co
Uraniastrasse 28, Postfach 4439,
CH-8022 Zurich, Switzerland . . . . . . 640,000 4.5% 640,000 0 *
Finter Bank Zurich.
Claridenstrasse 35, Postfach,
CH-8022 Zurich, Switzerland . . . . . . 620,000 4.4% 620,000 0 *
Centrum Bank AG.
Helligireuz 8, Postfach 1168,
FL-9490, Vaduz, Liechtenstein . . . . . 600,000 4.2% 600,000 0 *
Basler Kantonalbank.
6, cours de Rive, P.O. Box 3460
1211 Geneve 3, Switzerland. . . . . . . 640,000 4.5% 640,000 0 *
LE Management Ltd
700-595 Howe Street
Vancouver, BC, V6C 2T5. . . . . . . . . 25,000 * 25,000 0 *
Manfred Moschner.
A-1010 Wien
Rauhensteingasse 7/42, Vienna, Austria. 7,500 * 7,500 0 *
Margaret Bruce.
31431 Southern Drive
Abbotsford, BC, V2T 5N9 . . . . . . . . 50,000 * 50,000 0 *
Martin Robert Johnson.
850-1095 West Pender Street
Vancouver, BC, V6E 2M6. . . . . . . . . 50,000 * 50,000 0 *
Pat Meredith.
1050 Cortell Street
North Vancouver, BC, V7P 2N3. . . . . . 50,000 * 50,000 0 *
Peter Hanusch.
Roten Turm Str. 29,
A1010 Vienna, Austria . . . . . . . . . 50,000 * 50,000 0 *
Tom Locke.
232 W. 14th Ave.
Vancouver, BC, V5Y 1X1. . . . . . . . . 430,000 3.0% 430,000 0 *
Darrell Lidstone.
#101 - 7155 Granville Street
Vancouver, BC, V6P 4X6. . . . . . . . . 20,000 * 20,000 0 *
Robin & Suzanne Smith.
2780 Chelsea Avenue
West Vancouver, BC, V7S 3V9 . . . . . . 310,000 2.2% 310,000 0 *
380946 B.C. Ltd
2780 Chelsea Avenue
West Vancouver, BC, V7S 3V9 . . . . . . 20,000 * 20,000 0 *
FMWP (BVI), Inc
2780 Chelsea Avenue
West Vancouver, BC, V7S 3V9 . . . . . . 10,000 * 10,000 0 *
Ross Carriere.. . . . . . . . . . . . . . . 100,000 * 100,000 0 *
Viktoria Zazoulina. . . . . . . . . . . . . 20,000 * 20,000 0 *
Eric Chan.. . . . . . . . . . . . . . . . . 20,000 * 20,000 0 *
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Gord Harris.. . . . . . . . . . . . . . . . 20,000 * 20,000 0 *
Lisa Shields. . . . . . . . . . . . . . . . 50,000 * 50,000 0 *
Kenneth Miller. . . . . . . . . . . . . . . 100,000 * 100,000 0 *
Joe Chin. . . . . . . . . . . . . . . . . . 100,000 * 100,000 0 *
Greg Taylor.. . . . . . . . . . . . . . . . 100,000 * 100,000 0 *
Eppie Canning.. . . . . . . . . . . . . . . 100,000 * 100,000 0 *
Don Matlo.. . . . . . . . . . . . . . . . . 25,000 * 25,000 0 *
Carl Schmidt. . . . . . . . . . . . . . . . 150,000 1.1% 150,000 0 *
Dal Brynelsen.. . . . . . . . . . . . . . . 50,000 * 50,000 0 *
John Coffey . . . . . . . . . . . . . . . . 2,008,150 14.1% 0 2,008,150 14.1%
Brent Corobotiuc. . . . . . . . . . . . . . 30,000 * 0 30,000 *
Paul Mari.. . . . . . . . . . . . . . . . . 0 * 0 0 *
Krista Wilson.. . . . . . . . . . . . . . . 45,200 * 0 45,200 *
Stig Lyren .. . . . . . . . . 0 * 0 0 *
Directors and executive officers
as a group (5 persons). . . . . . . . . . . 2,083,350 14.5% 0 2,083,350 14.5%
________________________________
<FN>
* Less than one percent.
</TABLE>
-35-
<PAGE>
PLAN OF DISTRIBUTION
In July 1999 we completed the sale of up to 1,400,000 shares of our common
stock pursuant to an offering under Regulation S of the Securities Act of 1933,
as amended, to investors that are not "U.S. Persons" as defined under Regulation
S. In that offering, we also granted a compensatory option to purchase 200,000
shares of common stock at an exercise price of $1.00 to Thomson Kernaghan for
serving as placement agent in the offering. In November 1999 we completed the
sale of 648,859 shares of common stock pursuant to an offering under Regulation
S of the Securities Act of 1933, as amended, to investors that are not "U.S.
Persons" as defined under Regulation S. In that offering, we also granted a
compensatory option to purchase 64,886 shares of common stock at an exercise
price of $3.50 to Thomson Kernaghan for serving as placement agent in the
offering and issued into escrow 850,000 shares of our common stock that may be
issued to certain of the selling stockholders pursuant to the terms of the
offering. Effective November 11, 1999, we issued 1,500,000 shares of our common
stock to three selling security holders in exchange for all of the issued and
outstanding shares of Ecomm Relationship Technologies (IOM) Limited. In
November 1999, we issued 50,000 shares of our common stock to a selling security
holder as compensation for services rendered for certain introductions made to
various investors and underwriters.
Our gross proceeds from the offer and sale of our common stock in the
offering completed in July 1999 was $2,002,000 and our net proceeds were
approximately $1,865,019. Our gross proceeds from the offer and sale of our
common stock in the offering completed in November 1999 was $2,271,007 and our
net proceeds were approximately $2,030,996.
Pursuant to an agreement dated April 15, 1999, as amended, we issued
8,659,650 shares of our common stock to Cyberoad.com (Ireland) Ltd. In exchange
for all of the outstanding capital stock of Cyberoad (Isle of Man) Ltd. The
issuance of these shares was pursuant to an offering under Regulation S of the
Securities Act of 1933, as amended, to a non "U.S. Person" as defined under
Regulation S. Subsequent thereto, Cyberoad.com (Ireland) Ltd. distributed these
shares to its stockholders, all of whom are non "U.S. Persons."
The Selling Security Holders have advised us that the sale or distribution
of the common stock may be effected directly to purchasers by the Selling
Security Holders as a principal or through one or more underwriters, brokers,
dealers or agents from time to time in one or more transactions (which may
involve crosses or block transactions) (i) in the over-the-counter market, (ii)
in transactions otherwise than in the over-the-counter market, or (iii) through
the writing of options (whether such options are listed on an options exchange
or otherwise) on, or settlement of short sales of, the Common Stock. Any of
such transactions may be effected at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, at varying prices
determined at the time of sale or at negotiated or fixed prices, in each case as
determined by the Selling Security Holders or by agreements between the Selling
Security Holders and underwriters, brokers, dealers or agents or purchasers. If
the Selling Security Holders effect such transactions by selling common stock to
or through underwriters, brokers, dealers or agents, such underwriters, brokers,
dealers or agents may receive compensation in the form of discounts, concessions
or commissions from the Selling Security Holders or commissions from purchasers
of common stock for whom they may act as agent (which discounts, concessions or
commissions as to particular underwriters, brokers, dealers or agents may be in
excess of those customary in the types of transactions involved). The Selling
Security Holders and any brokers, dealers or agents that participate in the
distribution of the common stock may be deemed to be underwriters, and any
profit on the sale of common stock by them and any discounts, concessions or
commissions received by any such underwriters, brokers, dealers or agents may be
deemed to be underwriting discounts and commissions under the Securities Act.
Because each of the Selling Security Holders may be deemed to be an
"underwriter" within the meaning of Section 2(11) of the Securities Act, the
Selling Security Holders will be subject to prospectus delivery requirements
under the Securities Act. Furthermore, in the event of a "distribution" of
their shares, the Selling Security Holders, any selling broker or dealer and any
"affiliated purchasers" may be subject to Regulation M under the Exchange Act
until its participation in the distribution is completed.
To comply with the securities laws of certain jurisdictions, if applicable,
the shares of common stock will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the shares of common stock may not be offered or sold unless they
have been registered or qualified for sale in such jurisdictions or an exemption
from registration or qualification is available and is complied with. Upon
request of certain Selling Security Holders, we will make all applicable filings
under state securities or blue sky laws.
The Selling Security Holders will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the shares of common stock by
the Selling Security Holders. The foregoing may affect the marketability of the
shares of common stock.
-36-
<PAGE>
We will pay all expenses of the registration of the shares, including,
without limitation, SEC filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that the Selling Security
Holders will pay all underwriting discounts and selling commissions, if any.
DESCRIPTION OF CAPITAL STOCK
We are authorized to issue a total of 500,000,000 shares of common stock,
par value $0.00001 per share. As of March 31, 2000, 14,159,009 shares of our
common stock were issued and outstanding.
VOTING RIGHTS; DIVIDENDS; PREEMPTION; REDEMPTION; CONVERSION; LIQUIDATION
The holders of common stock (i) are entitled to one vote per outstanding
share on all matters requiring shareholder action, (ii) have no preemptive or
other rights and there are no redemption, sinking fund or conversion privileges
applicable thereto and (iii) are entitled to receive dividends as and when
declared by the board of directors out of funds legally available therefore.
Upon liquidation, dissolution or winding up of cyberoad.com, the holders of
common stock are entitled to share ratably in all assets remaining after payment
of liabilities.
COMPENSATION OPTIONS
Thomson Kernaghan & Co. Limited is the registered holder of options to
purchase 220,000 shares of common stock of cyberoad.com at an exercise price of
$1.00 per share. These options are exercisable at any time and from time to
time until June 30, 2001. Thomson Kernaghan & Co. Limited is the registered
holder of options to purchase 71,375 shares of common stock of cyberoad.com at
an exercise price of $3.50 per share. These options are exercisable at any time
and from time to time until November 11, 2001.
TRANSFER AGENT
cyberoad.com's transfer agent is Interwest Transfer Co., Inc. The transfer
agent's mailing address is 1981 East 4800 South, Suite 100, Salt Lake City, UT
84117.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our Articles of Incorporation, as amended, provide that in our Bylaws, we
shall have the power to indemnify our directors and executive officers and any
of our other officers, employees and agents against any contingency or peril, as
may be determined to be in the best interests of cyberoad.com. Our Articles of
Incorporation, as amended, also empower us to purchase insurance on behalf of
any person whom we are required or permitted to indemnify.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling us pursuant to
the foregoing provisions, we have been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
-37-
<PAGE>
LEGAL MATTERS
The validity of the common stock subject to this offering will be passed
upon for us by Holland & Knight LLP, Miami, Florida, counsel to cyberoad.com
Corporation.
EXPERTS
The financial statements of cyberoad.com Corporation for the fiscal year
ended December 31, 1999 included in this prospectus have been so included in
reliance on the report of Pannell Kerr Forster, independent accountants, given
on their authority as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission in Washington,
D.C., a registration statement under the Securities Act covering the shares to
be sold using this prospectus. This prospectus does not contain all of the
information included in the registration statement and the exhibits to the
registration statement. Statements contained in this prospectus as to the
contents of any contract or any other document referred to are not necessarily
complete, and with respect to any contract or other document filed as an exhibit
to the registration statement, reference is made to the exhibit for a more
complete description of the matter involved. For further information about us
and the shares offered using this prospectus, please refer to the registration
statement and the exhibits to the registration statement. A copy of the
registration statement, including the exhibits, may be inspected without charge
at the Securities and Exchange Commission's principal office in Washington,
D.C., and copies of all or any part of the Registration Statement may be
obtained from the Public Reference Section of the Securities and Exchange
Commission at 450 Fifth Street, N.W., Room 1024, Washing-ton, D.C. 20549, upon
payment of prescribed rates.
-38-
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements of cyberoad.com Corporation
For the Year Ended December 31, 1999 Page
- ----------------------------------------------------------------------- ------
Report of Independent Chartered Accountants 41
Consolidated Balance Sheets 42
Consolidated Statements of Operations 43
Consolidated Statement Stockholder's Equity 44
Consolidated Statements of Cash Flows 45
Notes to the Consolidated Financial Statements 46-53
Consolidated Unaudited Financial Statements of cyberoad.com Corporation
For Three Months Ended March 31, 2000
- -----------------------------------------------------------------------
Consolidated Unaudited Balance Sheets 55
Consolidated Unaudited Statement of Operations 56
Consolidated Unaudited Statement Stockholder's Equity 57
Consolidated Unaudited Statement of Cash Flows 58
Notes to the Consolidated Unaudited Financial Statements 59-64
-39-
<PAGE>
CYBEROAD.COM CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
INDEX PAGE
----- ----
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS 1
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet 2
Consolidated Statement of Operations 3
Consolidated Statement of Stockholders' Equity 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6-13
-40-
<PAGE>
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
OF CYBEROAD.COM CORPORATION
We have audited the accompanying consolidated balance sheets of Cyberoad.com
Corporation as at December 31, 1999 and the related consolidated statements of
operations, stockholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, these consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as at December 31, 1999 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles
in the United States.
"Pannell Kerr Forster"
Chartered Accountants
Vancouver, Canada
February 23, 2000
-41-
<PAGE>
CYBEROAD.COM CORPORATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
(U.S. DOLLARS)
ASSETS
CURRENT
Cash and term deposits. . . . . . . . . . . . . . . . $ 1,335,534
Restricted cash (note 3). . . . . . . . . . . . . . . 227,101
Accounts receivable . . . . . . . . . . . . . . . . . 411,596
Due from related party (note 7) . . . . . . . . . . . 13,658
Prepaid expenses. . . . . . . . . . . . . . . . . . . 250,815
- ------------------------------------------------------- ------------
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . 2,238,704
DEPOSITS (note 4) . . . . . . . . . . . . . . . . . . . 434,717
PROPERTY AND EQUIPMENT (note 5) . . . . . . . . . . . . 1,241,473
- ------------------------------------------------------- ------------
$ 3,914,894
- ------------------------------------------------------- ------------
LIABILITIES
CURRENT
Accounts payable and accrued liabilities (note 6) . . $ 75,347
Customer deposits . . . . . . . . . . . . . . . . . . 794,711
Due to related parties (note 7) . . . . . . . . . . . 175,871
Current portion of capital lease obligations (note 8) 57,649
- ------------------------------------------------------- ------------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . 1,103,578
DEPOSITS FROM MERCHANTS (note 9). . . . . . . . . . . . 428,822
CAPITAL LEASE OBLIGATIONS (note 8). . . . . . . . . . . 164,391
1,696,791
------------
COMMITMENTS (note 10)
STOCKHOLDERS' EQUITY (DEFICIT) (notes 11, 12, 13
and 14)
COMMON STOCK, $0.00001 par value; 500,000,000 shares
authorized, 14,159,009 shares issued and outstanding . $ 142
ADDITIONAL PAID-IN CAPITAL. . . . . . . . . . . . . . . 3,942,535
ACCUMULATED DEFICIT . . . . . . . . . . . . . . . . . . (1,724,574) 2,218,103
- ------------------------------------------------------- ------------ ---------
$ 3,914,894
- ------------------------------------------------------- ------------
-42-
<PAGE>
CYBEROAD.COM CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(U.S. DOLLARS)
REVENUES
Data processing . . . . . . . . . . . . $ 429,805
Transaction processing. . . . . . . . . 494,502
Systems support and maintenance . . . . 636,768
Marketing . . . . . . . . . . . . . . . 368,215
Other . . . . . . . . . . . . . . . . . 29,412
- ----------------------------------------- ------------
1,958,702
DIRECT COSTS
Data processing . . . . . . . . . . . . $ 335,905
Transaction processing. . . . . . . . . 509,124
Marketing . . . . . . . . . . . . . . . 1,078,328
Royalties . . . . . . . . . . . . . . . 22,205 1,945,562
- ----------------------------------------- ------------ ---------
GROSS MARGIN. . . . . . . . . . . . . . . 13,140
- ----------------------------------------- ------------
DEVELOPMENT EXPENSES
Equipment . . . . . . . . . . . . . . . 15,794
Salaries. . . . . . . . . . . . . . . . 268,420
Other . . . . . . . . . . . . . . . . . 53,412 337,626
- ----------------------------------------- ------------ -------
OPERATING EXPENSES
Wages and employee benefits . . . . . . 346,521
Consulting and management fees (note 7) 250,979
Professional fees . . . . . . . . . . . 182,743
Rent. . . . . . . . . . . . . . . . . . 81,494
Equipment rental and maintenance. . . . 74,611
Office and miscellaneous. . . . . . . . 57,732
Advertising and promotion . . . . . . . 48,140
Travel. . . . . . . . . . . . . . . . . 42,101
Stock options benefits (note 11). . . . 41,055
Telecommunications. . . . . . . . . . . 23,555
Software support. . . . . . . . . . . . 21,756
Professional development. . . . . . . . 20,185
Bank charges and interest . . . . . . . 8,488
Automobile. . . . . . . . . . . . . . . 7,412
Amortization and depreciation . . . . . 90,993 1,297,765
- ----------------------------------------- ------------ ---------
NET LOSS. . . . . . . . . . . . . . . . . $(1,622,251)
- ----------------------------------------- ------------
NET LOSS PER SHARE - BASIC AND DILUTED. . $ (0.17)
- ----------------------------------------- ------------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING. . . . . . . . . . . 9,315,840
- ----------------------------------------- ------------
-43-
<PAGE>
CYBEROAD.COM CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1999
(U.S. DOLLARS)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON STOCK PAID-IN ACCUMULATED STOCKHOLDERS'
----------------
NUMBER AMOUNT CAPITAL DEFICIT EQUITY
---------- --------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 (note 1) . . . . . 8,659,650 $ 87 $ 0 $ 0 $ 87
Acquisition of a subsidiary (note 1). . . . . 1,050,000 10 (10) 0 0
Issuance of common stock
For cash, at $1.43. . . . . . . . . . . . . 1,400,000 14 2,001,986 0 2,002,000
For cash, at $3.50. . . . . . . . . . . . . 648,859 6 2,271,001 0 2,271,007
Escrow shares (note 13) . . . . . . . . . . 850,000 9 (9) 0 0
For cash, exercise of options at $1.00. . . 500 0 500 0 500
For services. . . . . . . . . . . . . . . . 50,000 1 4,999 0 5,000
For acquisition of a subsidiary (note 2(a)) 1,500,000 15 (15) 0 0
Share issue costs (including compensatory
stock options) (note 12). . . . . . . . . 0 0 (1,258,080) 0 (1,258,080)
Stock options benefits and compensatory
stock options issued to underwriter
(notes 11 and 12) . . . . . . . . . . . . . 0 0 922,163 0 922,163
Distribution to shareholders (note 2(a)). . . 0 0 0 (102,323) (102,323)
Net loss for year . . . . . . . . . . . . . . 0 0 0 (1,622,251) (1,622,251)
- --------------------------------------------- ---------- --------- ------------- -------------- ------------
Balance, December 31, 1999. . . . . . . . . . 14,159,009 $ 142 $ 3,942,535 $ (1,724,574) $ 2,218,103
- --------------------------------------------- ---------- --------- ------------- -------------- ------------
</TABLE>
-44-
<PAGE>
CYBEROAD.COM CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31
(U.S. DOLLARS)
OPERATING ACTIVITIES
Net loss $(1,622,251)
Adjustments to reconcile net loss to net cash
used by operating activities
Amortization and depreciation 90,993
Stock options benefits 41,055
Common stock issued for services 5,000
Changes in operating assets and liabilities
Accounts receivable (411,596)
Prepaid expenses (250,815)
Deposits (434,717)
Accounts payable and accrued liabilities 75,347
Customer deposits 794,711
Deposits from merchants 428,822
- ------------------------------------------------ ------------
NET CASH USED BY OPERATING ACTIVITIES (1,283,451)
- ------------------------------------------------ ------------
INVESTING ACTIVITIES
- ------------------------------------------------
Acquisition of property and equipment. . . . . $(1,066,332)
Acquisition of net assets and software
license. . . . . . . . . . . . . . . . . . . (100,000)
- ------------------------------------------------ ------------
NET CASH USED BY INVESTING ACTIVITIES (1,166,332)
- ------------------------------------------------ ------------
FINANCING ACTIVITIES
Issuance of common stock . . . . . . . . . . . 4,273,507
Restricted cash held . . . . . . . . . . . . . (227,101)
Share issue costs. . . . . . . . . . . . . . . (376,972)
Net advances from and expenses paid
by related parties . . . . . . . . . . . . . 159,977
Capital lease obligations. . . . . . . . . . . (44,094) 3,785,317
CASH AND TERM DEPOSITS, END OF YEAR $ 1,335,534
- ------------------------------------------------ ------------
SUPPLEMENTAL INFORMATION
Income taxes paid $ 0
Interest paid $ (8,488)
Non-cash investing activities
Equipment leasing $ 266,134
Distribution to shareholders (note 2(a)) $ (102,323)
Non-cash financing activities options to
underwriters (note 12) $ 922,163
- ------------------------------------------------ ------------
-45-
<PAGE>
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
(U.S. DOLLARS)
1. ORGANIZATION, BASIS OF PRESENTATION AND BUSINESS
Cyberoad.Com Corporation ("the Company") was organized June 23, 1988 under the
laws of the State of Florida as Sunshine Equities Corp. The Company changed its
name to LAL Ventures Corp. and then to Cyberoad.com Corporation on May 3, 1999.
On May 1, 1999, the Company acquired all the issued and outstanding common stock
of Cyberoad.com (Isle of Man) Ltd. ("IOM Ltd.") in exchange for 8,659, 650
common shares of the Company. At the time of the acquisition the Company had no
assets or liabilities (note 2(a)). IOM Ltd. is accounted for as the acquiring
party and the surviving accounting entity because the former stockholders of IOM
Ltd. received an amount of voting shares which constitutes an effective
controlling interest in the combined corporation. The shares issued by the
Company pursuant to the acquisition have been accounted for as if these shares
had been issued upon the organization of IOM Ltd. The outstanding capital stock
of the Company immediately prior to the acquisition has been accounted for as
shares issued by the Company to effect the reverse acquisition. The Company
commenced operations on May 1, 1999 when the subsidiaries acquired operating
assets from a related Company (note 2(a)).
The Company's principal business is the development of internet gaming software,
the licensing of the software to other companies and online financial
transactions processing facility through its wholly-owned subsidiary, Ecomm
Relationship Technologies (IOM) Limited (formerly Ebanx.com (Isle of Man)
Limited). The Company also operates an internet data processing and call centre
based in Costa Rica.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of consolidation and acquisitions
These consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, IOM Ltd., Ecomm Relationship Technologies (IOM)
Limited, Isle of Man Corporations, eBanx Ltd., a Nevada Corporation and Sistemas
de Informacion Technologia ("SIT"), Informacion y Technologia Canadiense
("ITC"), Costa Rica Corporations. All significant intercompany balances and
transactions have been eliminated. Details of the acquisitions, which have been
accounted for using the purchase method, are set out below.
(i) On May 1, 1999 the Company acquired all of the outstanding shares of IOM
Ltd., for 8,659,650 common shares of the Company at a par value of $0.00001 per
share. IOM Ltd. had no assets, liabilities or operations at acquisition date,
accordingly, the reverse acquisition does not reflect any results of operations
of the acquired subsidiary prior to the merger.
On May 1, 1999, IOM Ltd. acquired all the property and equipment of a related
company for consideration of $10.
-46-
<PAGE>
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
(U.S. DOLLARS)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(ii) The Company acquired all of the outstanding shares of Ecomm
Relationship Technologies (IOM) Limited (which has a Nevada subsidiary, eBanx
Ltd.), for 1,500,000 shares of the Company at a stated value of $15. These
companies had a net book value of $0 at acquisition date.
On May 1, 1999, Ecomm Relationship Technologies (IOM) Limited acquired certain
assets and liabilities including the "eBanx" trademark, domain name and other
intellectual properties from a related company for consideration of $50,000
which exceeded the historical cost basis of the net assets acquired by $53,323.
(iii) On May 1, 1999, IOM Ltd. acquired all of the outstanding shares of SIT
and ITC, the license to the "CR Netbook" software, and certain revenue sharing
agreements with customers from a related company for consideration of $49,000
which exceeded the historical cost basis of the assets acquired by $49,000.
The excess of the consideration paid over the acquired assets historical cost
basis amounted to $102,323 and has been reflected as a distribution to
shareholders in the accompanying consolidated statement of stockholders' equity.
(b) Financial instruments
The Company's financial instruments consist of accounts receivable, due from
related party, deposits, accounts payable and accrued liabilities, customer
deposits, due to related parties, deposits from merchants and capital lease
obligations. Unless otherwise noted, it is management's opinion that the
Company is not exposed to significant interest, currency or credit risks arising
from these financial instruments. The fair values of these financial
instruments approximate their carrying values unless otherwise noted.
(c) Foreign operations and concentrations
The U.S. dollar is considered the functional currency for all subsidiaries.
Accordingly, the monetary assets and liabilities of these entities have been
remeasured using the current rates of exchange and nonmonetary assets have been
remeasured using the appropriate historical rates of exchange. Gains and losses
from this translation practice have not been significant. Comprehensive loss
would be approximately the same as reported in these financial statements which
give effect to the translation of the financial statements of these entities on
the aforementioned basis.
-47-
<PAGE>
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
(U.S. DOLLARS)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d) Property and equipment
Property and equipment are carried at cost less accumulated amortization and
depreciation. Amortization and depreciation of property and equipment are
calculated at the following annual rates (commencing when the assets are put
into use):
Computer software - 50% Declining balance
Computer equipment - 30% Declining balance
Furniture, fixtures and equipment - 20% Declining balance
Leased equipment - 20% and 30% Declining balance
Leasehold improvements - 12.5% Straight-line
(e) Revenue recognition
The Company recognizes revenues from licensees and customers on an accrual basis
based on agreed terms of licenses and contracts as the services are rendered
except for systems support and maintenance which is derived from actual wagering
activity and the revenues are, consequently, recognized after verifiable events
conclude. Allowances for non-collection of revenues are made when
collectibility becomes uncertain.
In May 1997, a Statement of Position "Software Revenue Recognition (SOP 97-2)
was issued. SOP 97-2 as amended by SOP 98-9 provides revised and expanded
guidance on software revenue recognition and applies to all entities that earn
revenue from licensing, selling or otherwise marketing computer software. SOP
97-2 is effective for transactions entered into in fiscal years beginning after
December 15, 1997. The application of SOP 97-2 and SOP 98-9 has not had a
material impact on the Company's results of operations.
(f) Net loss per share
Net loss per share computations are based on the weighted average number of
common shares outstanding during the year. The 850,000 shares in escrow have
been excluded from the computation as the number of shares to be issued is not
determinable. 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.
-48-
<PAGE>
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
(U.S. DOLLARS)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(g) 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 amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(h) Regulation risk
The Company intends to provide its services in jurisdictions that do not
prohibit gaming over the Internet. There can be no assurance that the Company
will be able to comply with future government regulations that will affect
gaming operations in a significant number of international jurisdictions. Costa
Rica has laws prohibiting gaming offered to residents of Costa Rica. As a
result, the Company's Costa Rica based operations only offer to subscribers
outside of Costa Rica.
3. RESTRICTED CASH
Restricted cash of $227,101 is held in escrow by the underwriter pursuant to the
agreement relating to the placement of 648,859 shares in November. These funds
are to be released when the registration statement of the Company filed with the
Securities and Exchange Commission is effective or on October 7, 2000, whichever
occurs first.
4. DEPOSITS
Deposits are comprised of funds that have been withheld by banks and credit card
processors.
5. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
ACCUMULATED
AMORTIZATION
AND
COST DEPRECIATION NET
---------- ------------- ----------
<S> <C> <C> <C>
Computer software . $ 452,204 $ 34,232 $ 417,972
Computer equipment. 508,519 35,045 473,474
Furniture, fixtures
and equipment . . 50,595 6,115 44,480
Leased equipment. . 266,134 13,309 252,825
Leasehold
improvements. . . 55,014 2,292 52,722
$1,332,466 $ 90,993 $1,241,473
---------- ------------- ----------
</TABLE>
-49-
<PAGE>
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
(U.S. DOLLARS)
6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Trade payables $69,817
Accrued liabilities 2,306
Payroll and social security taxes 3,224
-------
$75,347
-------
7. RELATED PARTY TRANSACTIONS
(a) During the year ended December 31, 1999, the Company paid related
parties $137,887 in consulting fees.
The above transactions were completed in the normal course of operations on
normal market terms and were recorded at fair market value as estimated by
management.
(b) Amounts due from related party represent advances to a director of a
related company.
(c) Amounts due to related parties are to companies related by common
management and to directors of the Company and certain subsidiaries.
(d) Effective December 31, 1999 the Company entered into a services
agreement with Kazootek.com Technologies Inc., a related party with common
management, for Kazootek to provide certain services (software development and
marketing, web development, network systems administration, human resources
administration, consulting and corporate finance and securities administration.
The services are to be provided at a fee equal to all costs of Kazootek plus
10%. The agreement is effective for one year unless terminated earlier by
either party upon 30 days written notice and is automatically renewable for
successive one year terms.
-50-
<PAGE>
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
(U.S. DOLLARS)
8. CAPITAL LEASE OBLIGATIONS
2000. . . . . . . . . . . . . . . . . . . . $ 86,300
2001. . . . . . . . . . . . . . . . . . . . 86,300
2002. . . . . . . . . . . . . . . . . . . . 79,237
2003. . . . . . . . . . . . . . . . . . . . 19,333
2004. . . . . . . . . . . . . . . . . . . . 16,652
- ------------------------------------------- --------
Total minimum lease payments. . . . . . . . 287,822
Less: Amount representing interest . . . 65,782
- ------------------------------------------- --------
Present value of net minimum lease payments 222,040
Less: Current portion. . . . . . . . . 57,649
- ------------------------------------------- --------
$164,391
--------
9. DEPOSITS FROM MERCHANTS
Deposits from merchants are permanent deposits and rolling reserves withheld by
the Company to cover potential chargebacks and losses.
10. COMMITMENTS
The Company is committed to the following rental payments for office premises
and equipment operating leases for the following five years:
2000 $190,000
2001 210,000
2002 142,000
2003 27,000
2004 4,000
--------
$573,000
========
-51-
<PAGE>
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
(U.S. DOLLARS)
11. STOCK OPTIONS
During the year ended December 31, 1999, the Company granted stock options to
its directors and employees. As at December 31, 1999, the options are
outstanding as follows:
EXERCISE NUMBER
EXPIRY DATE . . . PRICE OF OPTIONS
April 1, 2009 . . $ 1.00 1,505,125
July 26, 2009 . . $ 3.50 50,000
July 26, 2009 . . $ 5.00 75,000
October 1, 2009 . $ 5.50 20,000
November 15, 2009 $ 4.50 10,000
December 1, 2009. $ 3.50 50,000
December 16, 2009 $ 3.50 25,000
December 23, 2009 $ 3.50 10,000
1,745,125
----------
The Company has elected to follow APB 25, "Accounting for Stock Issued to
Employees" and related interpretations in accounting for its stock options. The
exercise prices of certain stock options were below the market price of the
underlying stock on the date of grant, therefore, compensation expense ($41,055)
was recorded under the intrinsic value method. Had compensation expense been
determined on the basis of the estimated fair values of the options granted in
accordance with SFAS No. 123 "Accounting for Stock-Based Compensation", net loss
would have been increased by $16,527 or $0.03 per common share.
The fair value of common share options granted in 1999 is $1,513,531. The fair
value of common share options granted is estimated as at the grant date
using the Black-Scholes option pricing model, using the following weighted
average assumptions:
Dividend yield . . . . . . . . . . . . . . 0%
Risk-free interest rate. . . . . . . . . . 6%
Expected life. . . . . . . . . . . . . . . 5 years
Expected volatility. . . . . . . . . . . . 16%
Weighted average exercise price of options $1.44
During the year ended December 31, 1999, 500 of the April 1, 2009 options were
exercised for 500 common shares of the Company. The weighted average remaining
contractual life of options outstanding at December 31, 1999 is approximately 9
years.
As at December 31, 1999, 658,724 options have been vested.
-52-
<PAGE>
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
(U.S. DOLLARS)
12. COMPENSATION OPTIONS
During 1999, the Company as additional consideration to the underwriter for the
performance of its obligations to the Company, granted the underwriter
compensatory options for serving as placement agent on sales of 1,400,000 and
648,859 shares of the Company's common stock in July and November, respectively.
Details of these options at December 31, 1999 are as follows:
EXERCISE NUMBER WARRANTS
EXPIRY DATE . . . PRICE OUTSTANDING
June 30, 2001 . . $ 1.00 200,000
November 11, 2001 $ 3.50 64,886
- ----------------- --------- ---------------
264,886
---------------
Each option entitles the holder to purchase one share in the common stock of the
Company.
The Company has measured and recorded compensation of $881,108 to the
underwriter using the fair value of the options at the date of grant.
13. ESCROW SHARES
The Company issued 850,000 common shares into escrow as part of the 1999 offer
and sale of up to 1,150,000 shares of common stock of the corporation as
additional consideration to the purchasers of the 1,150,000 shares. The shares
are to be released if the corporation fails to meet certain filing deadlines
relating to a registration statement being filed with the Securities and
Exchange Commission. The first deadline of December 7, 1999 was not met and
purchasers are entitled to an additional 0.02 shares of common stock. For each
30 day period after December 7, 1999 the deadline is not met an additional 0.02
shares of common stock are to be issued. Shares not released from escrow to the
purchasers will be released to the corporation for cancellation on the earlier
of the effective date of the registration statement or October 7, 2000.
14. SUBSEQUENT EVENT
Subsequent to the year-end, the Company granted stock options to employees as
follows:
EXERCISE NUMBER OF COMMON SHARES
EXPIRY DATE PRICE OPTIONS
January 1, 2009 . $ 3.50 10,000
January 26, 2009. $ 3.50 5,000
February 9, 2009. $ 3.50 50,000
February 15, 2009 $ 3.50 1,000
- ----------------- --------- -----------------------
66,000
-----------------------
-53-
<PAGE>
Prepared by Management (Unaudited)
CYBEROAD.COM CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000
INDEX PAGE
----- ----
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet 2
Consolidated Statement of Operations 3
Consolidated Statement of Stockholders' Equity 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6-11
-54-
<PAGE>
Prepared by Management (Unaudited)
CYBEROAD.COM CORPORATION
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(U.S. DOLLARS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
------------ --------------
<S> <C> <C>
ASSETS
CURRENT
Cash and term deposits. . . . . . . . . . . . . . . . $ 936,603 $ 1,335,534
Restricted cash (note 3). . . . . . . . . . . . . . . 227,101 227,101
Accounts receivable . . . . . . . . . . . . . . . . . 505,482 411,596
Due from related party (note 7) . . . . . . . . . . . 13,658 13,658
Prepaid expenses. . . . . . . . . . . . . . . . . . . 77,529 250,815
- ------------------------------------------------------- ------------ --------------
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . 1,760,373 2,238,704
DEPOSITS (note 4) . . . . . . . . . . . . . . . . . . . 492,845 434,717
PROPERTY AND EQUIPMENT (note 5) . . . . . . . . . . . . 1,273,012 1,241,473
- ------------------------------------------------------- ------------ --------------
$ 3,526,230 $ 3,914,894
------------ --------------
LIABILITIES
CURRENT
Accounts payable and accrued liabilities (note 6) . . $ 190,989 $ 75,347
Customer deposits . . . . . . . . . . . . . . . . . . 679,253 794,711
Due to related parties (note 7) . . . . . . . . . . . 179,324 175,871
Current portion of capital lease obligations (note 8) 68,712 57,649
- ------------------------------------------------------- ------------ --------------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . 1,107,215 1,103,578
DEPOSITS FROM MERCHANTS (note 9). . . . . . . . . . . . 474,465 428,822
REVOLVING LINE OF CREDIT (note 10). . . . . . . . . . . 502,057 -
CAPITAL LEASE OBLIGATIONS (note 8). . . . . . . . . . . 164,982 164,391
- ------------------------------------------------------- ------------ --------------
2,259,782 1,696,791
------------ --------------
COMMITMENTS (note 11)
STOCKHOLDERS' EQUITY (DEFICIT) (notes 12, and 13)
COMMON STOCK, $0.00001 par value; 500,000,000 shares
authorized, 14,159,009 shares issued and outstanding. . 142 142
ADDITIONAL PAID-IN CAPITAL. . . . . . . . . . . . . . . 3,966,032 3,942,535
ACCUMULATED DEFICIT . . . . . . . . . . . . . . . . . . (2,699,276) (1,724,574)
- ------------------------------------------------------- ------------ --------------
1,266,448 2,218,103
------------ --------------
$ 3,526,230 $ 3,914,894
- ------------------------------------------------------- ------------ --------------
</TABLE>
-55-
<PAGE>
Prepared by Management (Unaudited)
CYBEROAD.COM CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000
(U.S. DOLLARS)
<TABLE>
<CAPTION>
<S> <C> <C>
REVENUES
Data processing $ 166,362
Transaction processing 285,430
- ----------------------------------- ------------
Systems support and maintenance 303,664
Marketing 182,301
Other 12,048
- ----------------------------------- ------------
949,805
DIRECT COSTS
- -----------------------------------
Data processing . . . . . . . . . $ 211,021
Transaction processing. . . . . . 421,480
Marketing . . . . . . . . . . . . 480,246
Royalties . . . . . . . . . . . . 11,490 1,124,237
- ----------------------------------- ----------- ------------
GROSS MARGIN (174,432)
- ----------------------------------- ------------
DEVELOPMENT EXPENSES
Equipment . . . . . . . . . . . . 484
Salaries. . . . . . . . . . . . . 186,737
Other . . . . . . . . . . . . . . 56,103 243,324
OPERATING EXPENSES
- -----------------------------------
Wages and employee benefits . . . 144,299
Professional fees . . . . . . . . 139,512
Consulting and management fees (note 7) 45,049
Equipment rental and maintenance. 33,513
Stock options benefits (note 12). 23,497
Rent. . . . . . . . . . . . . . . 22,028
Office and miscellaneous. . . . . 18,665
Telecommunications. . . . . . . . 7,762
Professional development. . . . . 5,938
Travel. . . . . . . . . . . . . . 4,211
Bank charges and interest . . . . 2,776
Automobile. . . . . . . . . . . . 2,277
Advertising and promotion . . . . 500
Amortization and depreciation . . 107,369 557,396
- ----------------------------------- ----------- ------------
NET LOSS $ (975,152)
- ----------------------------------- ------------
NET LOSS PER SHARE - BASIC AND DILUTED $ (0.07)
- ----------------------------------- ------------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 13,309,009
- ----------------------------------- ------------
</TABLE>
-56-
<PAGE>
Prepared by Management (Unaudited)
CYBEROAD.COM CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2000
(U.S. DOLLARS)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON STOCK PAID-IN ACCUMULATED STOCKHOLDERS'
------------
NUMBER AMOUNT CAPITAL DEFICIT EQUITY
---------- ------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1999. . . . 14,159,009 $ 142 $3,942,535 $(1,724,574) $2,218,103
Stock options benefits (note 12) 0 0 23,497 0 23,497
Net loss for the period . . . . . 0 0 0 (975,152) (975,152)
- --------------------------------- ---------- ------- ---------- ------------ -----------
Balance, March 31, 2000 . . . . . 14,159,009 $ 142 $3,966,032 $(2,699,726) $1,266,448
- --------------------------------- ---------- ------- ---------- ------------ -----------
</TABLE>
-57-
<PAGE>
Prepared by Management (Unaudited)
CYBEROAD.COM CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000
(U.S. DOLLARS)
OPERATING ACTIVITIES
Net loss $ (975,152)
Adjustments to reconcile net loss to net cash
Used by operating activities
Amortization and depreciation 107,369
Stock options benefits 23,497
Changes in operating assets and liabilities
Accounts receivable (93,886)
Prepaid expenses 173,286
Deposits (58,128)
Accounts payable and accrued liabilities 115,642
Customer deposits (115,458)
Deposits from merchants 45,643
- -------------------------------------------------------------------------
NET CASH USED BY OPERATING ACTIVITIES (777,187)
- -------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisition of property and equipment $(114,861)
NET CASH USED BY INVESTING ACTIVITIES (114,861)
- -------------------------------------------------------------------------
FINANCING ACTIVITIES
Revolving line of credit. . . . . . . . . . . 502,057
Net advances from and expenses paid
by related parties. . . . . . . . . . . . . 3,453
Capital lease obligations . . . . . . . . . . (12,393)
- -------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 493,117
- -------------------------------------------------------------------------
DECREASE IN CASH (398,931)
CASH AND TERM DEPOSITS, BEGINNING OF PERIOD 1,335,534
- -------------------------------------------------------------------------
CASH AND TERM DEPOSITS, END OF PERIOD $ 936,603
- -------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION
Income taxes paid $ 0
Interest paid $ (10,773)
Non-cash investing activities
Equipment leasing $ 24,047
- -------------------------------------------------------------------------
-58-
<PAGE>
Prepared by Management (Unaudited)
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000
(U.S. DOLLARS)
1. ORGANIZATION, BASIS OF PRESENTATION AND BUSINESS
Cyberoad.Com Corporation ("the Company") was organized June 23, 1988 under the
laws of the State of Florida as Sunshine Equities Corp. The Company changed its
name to LAL Ventures Corp. and then to Cyberoad.com Corporation on May 3, 1999.
On May 1, 1999, the Company acquired all the issued and outstanding common stock
of Cyberoad.com (Isle of Man) Ltd. ("IOM Ltd.") in exchange for 8,659, 650
common shares of the Company. At the time of the acquisition the Company had no
assets or liabilities. IOM Ltd. is accounted for as the acquiring party and the
surviving accounting entity because the former stockholders of IOM Ltd. received
an amount of voting shares which constitutes an effective controlling interest
in the combined corporation. The shares issued by the Company pursuant to the
acquisition have been accounted for as if these shares had been issued upon the
organization of IOM Ltd. The outstanding capital stock of the Company
immediately prior to the acquisition has been accounted for as shares issued by
the Company to effect the reverse acquisition. The Company commenced operations
on May 1, 1999 when the subsidiaries acquired operating assets from a related
Company.
The Company's principal business is the development of internet gaming software,
the licensing of the software to other companies and online financial
transactions processing facility through its wholly-owned subsidiary,
Corporacion Ebanx.com, S.A.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of consolidation and acquisitions
These consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, IOM Ltd., Ecomm Relationship Technologies (IOM)
Limited, Isle of Man Corporations, Corporacion Ebanx.com, S.A., a Panamanian
Corporation, eBanx Ltd., a Nevada Corporation and Sistemas de Informacion
Technologia ("SIT"), Informacion y Technologia Canadiense ("ITC"), Costa Rica
Corporations. All significant intercompany balances and transactions have been
eliminated.
(b) Financial instruments
The Company's financial instruments consist of accounts receivable, due from
related party, deposits, accounts payable and accrued liabilities, customer
deposits, due to related parties, deposits from merchants and capital lease
obligations. Unless otherwise noted, it is management's opinion that the
Company is not exposed to significant interest, currency or credit risks arising
from these financial instruments. The fair values of these financial
instruments approximate their carrying values unless otherwise noted.
(c) Foreign operations and concentrations
The U.S. dollar is considered the functional currency for all subsidiaries.
Accordingly, the monetary assets and liabilities of these entities have been
remeasured using the current rates of exchange and nonmonetary assets have been
remeasured using the appropriate historical rates of exchange. Gains and losses
from this translation practice have not been significant. Comprehensive loss
would be approximately the same as reported in these financial statements which
give effect to the translation of the financial statements of these entities on
the aforementioned basis.
-59-
<PAGE>
Prepared by Management (Unaudited)
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000
(U.S. DOLLARS)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d) Property and equipment
Property and equipment are carried at cost less accumulated amortization and
depreciation. Amortization and depreciation of property and equipment are
calculated at the following annual rates (commencing when the assets are put
into use):
Computer software - 50% Declining balance
Computer equipment - 30% Declining balance
Furniture, fixtures and equipment - 20% Declining balance
Leasehold improvements - 12.5% Straight-line
(e) Revenue recognition
The Company recognizes revenues from licensees and customers on an accrual basis
based on agreed terms of licenses and contracts as the services are rendered
except for systems support and maintenance which is derived from actual wagering
activity and the revenues are, consequently, recognized after verifiable events
conclude. Allowances for non-collection of revenues are made when
collectibility becomes uncertain.
In May 1997, a Statement of Position "Software Revenue Recognition (SOP 97-2)
was issued. SOP 97-2 as amended by SOP 98-9 provides revised and expanded
guidance on software revenue recognition and applies to all entities that earn
revenue from licensing, selling or otherwise marketing computer software. SOP
97-2 is effective for transactions entered into in fiscal years beginning after
December 15, 1997. The application of SOP 97-2 and SOP 98-9 has not had a
material impact on the Company's results of operations.
(f) Net loss per share
Net loss per share computations are based on the weighted average number of
common shares outstanding during the year. The 850,000 shares in escrow have
been excluded from the computation as the number of shares to be issued is not
determinable. 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.
(e) 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 amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(f) Regulation risk
The Company intends to provide its services in jurisdictions that do not
prohibit gaming over the Internet. There can be no assurance that the Company
will be able to comply with future government regulations that will affect
gaming operations in a significant number of international jurisdictions. Costa
Rica has laws prohibiting gaming offered to residents of Costa Rica. As a
result, the Company's Costa Rica based operations only offer to subscribers
outside of Costa Rica.
-60-
<PAGE>
Prepared by Management (Unaudited)
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000
(U.S. DOLLARS)
3. RESTRICTED CASH
Restricted cash of $227,101 is held in escrow by the underwriter pursuant to the
agreement relating to the placement of 648,859 shares in November. These funds
are to be released when the registration statement of the Company filed with the
Securities and Exchange Commission is effective or on October 7, 2000, whichever
occurs first.
4. DEPOSITS
Deposits are comprised of funds that have been withheld by banks and credit card
processors.
5. PROPERTY AND EQUIPMENT
ACCUMULATED
AMORTIZATION
AND
COST DEPRECIATION NET
---------- ------------- ----------
Computer software . $ 500,251 $ 87,888 $ 412,363
Computer equipment. 661,826 84,891 576,935
Furniture, fixtures
and equipment . . 211,056 21,574 189,482
Satellite equipment 43,229 - 43,229
Leasehold
Improvements. . . 55,014 4,011 51,003
- ------------------- ---------- ------------- ----------
$1,471,376 $ 198,364 $1,273,012
---------- ------------- ----------
6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Trade payables $183,242
Accrued liabilities 7,747
Payroll and social security taxes -
--------
$190,989
--------
-61-
<PAGE>
Prepared by Management (Unaudited)
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000
(U.S. DOLLARS)
7. RELATED PARTY TRANSACTIONS
(a) During the three months ended March 31, 2000, the Company paid related
parties $30,000 in consulting fees.
The above transactions were completed in the normal course of operations on
normal market terms and were recorded at fair market value as estimated by
management.
(b) Amounts due from related party represent advances to a former director
of a related company.
(c) Amounts due to related parties are to companies related by common
management and to directors of the Company and certain subsidiaries.
(d) Effective December 31, 1999 the Company entered into a services
agreement with Kazootek.com Technologies Inc., a related party with common
management, for Kazootek to provide certain services (software development and
marketing, web development, network systems administration, human resources
administration, consulting and corporate finance and securities administration.
The services are to be provided at a fee equal to all costs of Kazootek plus
10%. The agreement is effective for one year unless terminated earlier by
either party upon 30 days written notice and is automatically renewable for
successive one year terms.
8. CAPITAL LEASE OBLIGATIONS
2000. . . . . . . . . . . . . . . . . . . . $104,507
2001. . . . . . . . . . . . . . . . . . . . 103,407
2002. . . . . . . . . . . . . . . . . . . . 70,309
2003. . . . . . . . . . . . . . . . . . . . 19,958
2004. . . . . . . . . . . . . . . . . . . . 12,245
- ------------------------------------------- --------
Total minimum lease payments. . . . . . . . 310,426
Less: Amount representing interest . . 76,732
- ------------------------------------------- --------
Present value of net minimum lease payments 233,694
Less: Current portion. . .. . . . . . . 68,712
- ------------------------------------------- --------
$164,982
--------
9. DEPOSITS FROM MERCHANTS
Deposits from merchants are permanent deposits and rolling reserves withheld by
the Company to cover potential chargebacks and losses.
-62-
<PAGE>
Prepared by Management (Unaudited)
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000
(U.S. DOLLARS)
10. REVOLVING LINE OF CREDIT
On February 28, 2000, the Company exercised a revolving line of credit agreement
in the amount of $500,000 with El Moro Finance Ltd, a company existing under the
laws of the British Virgin Islands. Interest payments will be either a
compounded annual rate of 10% or compound annual interest payments of prime
(Switzerland) plus 2% per annum paid on the first date of every month.
As at March 31, 2000, interest of $2,057 calculated at prime plus 2% has been
accrued for.
11. COMMITMENTS
The Company is committed to the following rental payments for office premises
and equipment operating leases for the following five years:
2000 $190,000
2001 210,000
2002 142,000
2003 27,000
2004 4,000
- ------------------------
$573,000
12. STOCK OPTIONS
The Company has granted stock options to its directors and employees. As at
March 31, 2000, the options are outstanding as follows:
EXERCISE NUMBER
EXPIRY DATE PRICE OF OPTIONS
April 1, 2009 . . $ 1.00 1,505,125
July 26, 2009 . . $ 3.50 50,000
July 26, 2009 . . $ 5.00 75,000
October 1, 2009 . $ 5.50 20,000
November 15, 2009 $ 4.50 10,000
December 1, 2009. $ 3.50 50,000
December 16, 2009 $ 3.50 25,000
December 23, 2009 $ 3.50 10,000
January 1, 2009 . $ 3.50 10,000
January 26, 2009. $ 3.50 5,000
February 9, 2009. $ 3.50 50,000
February 15, 2009 $ 3.50 1,000
February 21, 2009 $ 3.50 3,000
March 1, 2009 . . $ 3.50 38,000
March 31, 2009. . $ 3.50 8,000
1,860,125
----------
-63-
<PAGE>
Prepared by Management (Unaudited)
CYBEROAD.COM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000
(U.S. DOLLARS)
12. STOCK OPTIONS (Continued)
The Company has elected to follow APB 25, "Accounting for Stock Issued to
Employees" and related interpretations in accounting for its stock options. The
exercise prices of certain stock options were below the market price of the
underlying stock on the date of grant, therefore, compensation expense of
$23,497 (year ended December 31, 1999 - $41,055) was recorded under the
intrinsic value method for the three months ended March 31, 2000.
The weighted average remaining contractual life of options outstanding at March
31, 2000 is approximately 9 years.
As at March 31, 2000, 775,109 options have been vested.
13. ESCROW SHARES
The Company issued 850,000 common shares into escrow as part of the 1999 offer
and sale of up to 1,150,000 shares of common stock of the corporation as
additional consideration to the purchasers of the 1,150,000 shares. The shares
are to be released if the corporation fails to meet certain filing deadlines
relating to a registration statement being filed with the Securities and
Exchange Commission. The first deadline of December 7, 1999 was not met and
purchasers are entitled to an additional 0.02 shares of common stock. For each
30 day period after December 7, 1999 the deadline is not met an additional 0.02
shares of common stock are to be issued. Shares not released from escrow to the
purchasers will be released to the corporation for cancellation on the earlier
of the effective date of the registration statement or October 7, 2000.
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TABLE OF CONTENTS
Prospectus Summary 2
Risk Factors 4
Use of Proceeds 10
Dividend Policy 10
Determination of the Offering Price 10
Price Range of Common Stock 11
Capitalization 11
Selected Consolidated Financial Data 12
Management's Discussion and Analysis
Of Financial Condition and Results of
Operations 13
Business 17
Management 26
Certain Relationships and Related
Transactions 30
Principal and Selling Stockholders 31
Plan of Distribution 36
Description of Capital Stock 37
Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities 37
Legal Matters 38
Experts 38
Where You Can Find More Information 38
Index to Consolidated Financial Statements 39
UNTIL ___________, 2000, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
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PART II INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
cyberoad.com's Articles of Incorporation, as amended, provide that in our
Bylaws, we shall have the power to indemnify our directors and executive
officers and any of our other officers, employees and agents against any
contingency or peril, as may be determined to be in the best interests of
cyberoad.com. Our Articles of Incorporation, as amended, also empower us to
purchase insurance on behalf of any person whom we are required or permitted to
indemnify. To date, cyberoad.com has not entered into indemnification
agreements with any of its directors, executive officers, or any other officer,
employee or agent. In addition, to date, cyberoad.com has not purchased
insurance policies under these indemnification provisions.
Florida General Corporation Act section 607.014 states that:
A corporation shall have power to indemnify any person who was or is a party to
any proceeding (other than an action by, or in the right of, the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against liability incurred in connection with
any such proceeding, including any appeal thereof, if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any proceeding by judgment, order, settlement, or conviction or
upon a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
A corporation shall have power to indemnify any person, who was or is a party to
any proceeding by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee,
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses and
amounts paid in settlement not exceeding, in the judgment of the board of
directors, the estimated expense of litigating the proceeding to conclusion,
actually and reasonably incurred in connection with the defense or settlement of
such proceeding including any appeal thereof. Such indemnification shall be
authorized if such person acted in good faith and in a manner he reasonably
believed to be in, or not opposed to the best interests of the corporation,
except that no indemnification shall be made under this subsection in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable unless, and only to the extent that, the court in which such
proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
To the extent that a director, officer, employee, or agent of a corporation has
been successful on the merits or otherwise in defense of any proceeding referred
to above, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses actually and reasonably incurred by him in
connection therewith.
Any indemnification, unless pursuant to a determination by a court, shall be
made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee, or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth above. Such determination shall be made by any of: majority
vote of a quorum of the board of directors (consisting of directors who were not
parties to such proceeding); by majority vote of a committee duly designated by
the board of directors consisting solely of two or more directors not at the
time parties to the proceeding; independent legal counsel; or the shareholders
by a majority vote of a quorum consisting of shareholders who were not parties
to such proceeding.
Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible.
Expenses incurred by an officer or director in defending a civil or criminal
proceeding may be paid by the corporation in advance of the final disposition of
such proceeding upon receipt of an undertaking by or on behalf of such director
or officer to repay such amount if he is ultimately found not to be entitled to
indemnification by the corporation.
The indemnification and advancement of expenses are not exclusive, and a
corporation may make any other further indemnification or advancement of
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expenses of any of its directors, officers, employees, or agents, under any
bylaw, agreement, vote of shareholders or disinterested directors, or otherwise.
However, indemnification shall not be made to or on behalf of any director,
officer, employee, or agent if a judgment establishes that his actions, or
omissions to act, were material to the cause of action so adjudicated and
constitute any of: a violation of the criminal law; a transaction from which
the director, officer, employee, or agent derived an improper personal benefit;
a circumstance where the liability provisions of section 607.144 apply; or
willful misconduct or a conscious disregard for the best interests of the
corporation.
Indemnification and advancement of expenses shall continue as to a person who
has ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a person, unless
otherwise provided when authorized or ratified.
Unless the corporation's articles of incorporation provide otherwise,
notwithstanding the failure of a corporation to provide indemnification, and
despite any contrary determination of the board or of the shareholders in a
specific case, a director, officer, employee, or agent of the corporation who is
or was a party to a proceeding may apply for indemnification or advancement of
expenses, or both, to the court conducting the proceeding, to the circuit court,
or to another court of competent jurisdiction.
A corporation shall have power to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
If any expenses or other amounts are paid by way of indemnification otherwise
than by court order or action by the shareholders or by an insurance carrier
pursuant to insurance maintained by the corporation, the corporation shall, not
later than the time of delivery to shareholders of written notice of the next
annual meeting of shareholders, unless such meeting is held within three months
from the date of such payment, and, in any event, within 15 months from the date
of such payment, deliver either personally or by mail to each shareholder of
record at the time entitled to vote for the election of directors a statement
specifying the persons paid, the amounts paid, and the nature and status at the
time of such payment of the litigation or threatened litigation.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the offering are as follows:
Amount
----------
Registration Fee Under Securities Act of 1933 $ 11,474
NASD Filing Fee $ *
Blue Sky Fees and Expenses $ 10,000
Printing and Engraving Certificates $ *
Legal Fees and Expenses $ 30,000
Accounting Fees and Expenses $ 18,000
Registrar and Transfer Agent Fees $ *
Miscellaneous Expenses $ *
Total $ 69,474
__________
* Not applicable or none.
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ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The Registrant has sold and issued the following securities since June 23,
1988 (inception):
Since April 1, 1999, we have granted options to purchase 1,743,625 shares
of common stock to a total of 40 employees, consultants and non-employee
directors at weighted average exercise price of $1.545 per share pursuant to the
1999 Stock Option Plan. The sale of these securities was deemed to be exempt
from registration under the Securities Act in reliance on Rule 701 promulgated
under Section 3(b) of the Securities Act as transactions pursuant to
compensatory benefit plans and contracts relating to compensation as provided
under such Rule 701.
On February 28, 1989, we issued an aggregate of 5,000,000 shares of common
stock to the sole stockholder and director of Registrant. The issuance of these
securities was exempt from the registration requirements of the Securities Act
of 1933, as amended, under Section 4(2) thereof.
On November 11, 1999 we issued 8,659,650 shares of Common Stock to Cyberoad
Ireland Ltd., a non "U.S. Person" as defined under Regulation S of the
Securities Act, in exchange for 100% of the issued and outstanding shares of
capital stock of Cyberoad.com (Isle of Man) Limited in compliance with
Regulation S.
On July 3, 1999, we issued 1,400,000 shares of Common Stock to eight non
"U.S. Persons" as defined in Regulation S promulgated under the Securities Act
of 1933, as amended, for a purchase price of $2,002,000. In connection with
this transaction, we issued to Thomson Kernaghan an option to purchase up to
200,000 shares of common stock at a per share exercise price equal to $1.00.
The issuance of these securities was made in compliance with Regulation S.
On November 11, 1999, we issued 648,859 shares of Common Stock to five non
"U.S. Persons" as defined in Regulation S promulgated under the Securities Act
of 1933, as amended, for a purchase price of $2,271,007. In connection with
this transaction, we issued to Thomson Kernaghan an option to purchase up to
64,886 shares of common stock at a per share exercise price equal to $3.50. The
issuance of these securities was made in compliance with Regulation S.
On November 11, 1999, we issued an aggregate of 1,500,000 shares of common
Stock to three non "U.S. Persons" as defined in Regulation S promulgated under
the Securities Act of 1933, as amended, in exchange for 100% of the outstanding
capital stock of Ecomm Relationship Technologies (IOM) Limited, formerly known
as eBanx.com (Isle of Man) Limited. The issuance of these securities was made
in compliance with Regulation S of the Securities Act.
The recipients of securities in transactions exempt under Section 4(2) of
the Securities Act represented their intentions to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the instruments
representing such securities issued in such transactions. All recipients either
received adequate information about the Company or had adequate access, through
their relationships with the Company, to such information.
The securities issued in compliance with Regulation S were offered and sold
in an offshore transaction and there were no directed selling efforts made
within the United States by the Company, any distributor, any of their
affiliates or any other persons acting on their behalf, as those terms are
defined under Regulation S. The Registrant implemented offering restrictions in
connection with the issuance of the securities and to the knowledge of the
Registrant, the offer and sale of the securities was not made to a U.S. Person,
as defined under Regulation S.
ITEM 27. EXHIBITS
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ --------------------
3.1 Articles of Incorporation(1)
3.2 By-laws(1)
5.1 Opinion of Counsel
10.1 Amended and Restated Nonexclusive License Agreement effective as of
March 5, 1998 by and between International Gaming LTD. and Cyberoad
(Isle Of Man) Ltd.
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10.2 Amended and Restated Operating and Revenue Sharing Management Services
Agreement effective as of March 13, 1998 by and between International
Gaming LTD. and Cyberoad (Isle of Man) Ltd.
10.3 Assignment Agreement dated April 19, 1999 between Cyberoad Gaming
Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.4 Amendment to the Assignment Agreement dated October 18, 1999 between
Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.5 Amended and Restated Operating, License, Revenue Sharing and Management
Services Agreement effective as of May 5, 1998 by and between Asanol
Management Corporation and Cyberoad (Isle of Man) Ltd.
10.6 Assignment Agreement dated April 19, 1999 between Cyberoad Gaming
Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.7 Amendment to the Assignment Agreement dated October 18, 1999 between
Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.8 Termination to Amended Assignment Agreement dated September 1, 1999
between Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man)
Ltd.(1)
10.9 Amendment to Schedule "A" of the Grand Prix Operating, License, Revenue
Sharing and Management Services Agreement dated as of September 1, 1999,
Between Cyberoad Isle of Man Limited and Asanol Management
Corporation
10.10 Amendment to the Grand Prix Operating, License, Revenue Sharing and
Management Services Agreement dated as of September 1, 1999, between
Cyberoad Isle of Man Limited and Asanol Management Corporation
10.11 Software License Agreement effective as of October 15, 1998 by
and between Nordic Investment Group and Cyberoad Isle of Man Limited
10.12 Assignment Agreement dated as of July 15, 1999 by and between Cyberoad
Gaming Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.13 Amendment to the Assignment Agreement dated October 18, 1999 by and
between Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man)
Ltd.(1)
10.14 Assignment Agreement and License dated April 19, 1999 between Cyberoad
Gaming Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.15 Amendment to Assignment Agreement and License dated June 11, 1999
between Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man)
Ltd.(1)
10.16 Revised Amendment to the Assignment Agreement and License dated
October 18, 1999 between Cyberoad Gaming Corporation and Cyberoad.com
(Isle of Man) Ltd.(1)
10.17 Non-Exclusive License Agreement dated April 19, 1999 by and between
Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.18 Amendment to the Non-Exclusive License Agreement dated October 18,
1999 between Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man)
Ltd.(1)
10.19 Amended and Restated Operating and Revenue Sharing Management Services
Agreement effective as of April 19, 1999 by and between Asanol
Management Corporation and Cyberoad.com (Isle of Man) Ltd.
10.20 Intentionally omitted.
10.21 Transfer Agreement dated September 1, 1999 between Asanol Management
Corporation and Cyberoad Gaming Corporation
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10.22 Website Marketing Agreement dated April 19, 1999 between Cyberoad
Gaming Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.23 Amendment to the Website Marketing Agreement dated October 18, 1999
between Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man)
Ltd.(1)
10.24 Software Support Agreement dated April 19, 1999 between Cyberoad.com
(Isle of Man) Ltd. and Calvex International(1)
10.25 Amendment to the Software Support Agreement dated October 18, 1999
Cyberoad.com (Isle of Man) Ltd. and Calvex International(1)
10.26 Sale of Rights Agreement dated May 1, 1999 between Cyberoad Gaming
Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.27 Sale of Rights Agreement dated July 8, 1999 between Cyberoad Gaming
Corporation and eBanx.com (Isle of Man) Limited(1)
10.28 Transfer Agreement dated May 20, 1999 between eBanx.com (Isle of Man)
Limited and Cyberoad Gaming Corporation(1)
10.29 Services Agreement dated April 19, 1999 between Cyberoad.com (Isle of
Man) Ltd. and eBanx.com (Isle of Man) Limted(1)
10.30 Amendment to the Services Agreement dated October 18, 1999 between
Cyberoad.com (Isle of Man) Ltd. and eBanx.com (Isle of Man)
Limited(1)
10.31 Services Agreement dated as of December 31, 1999 between the
cyberoad.com Corporation and Kazootek Technologies Inc.
10.32 Employment Agreement, dated as of December 6, 1999 between Paul Mari
and Kazootek.com Technologies Inc.(1)
10.33 Employment Agreement, dated as of October 12, 1999 between Eric Chan
and Kazootek.com Technologies Inc.(1)
10.34 Employment Agreement, dated as of September 23, 1999 between Krista
Wilson and Kazootek.com Technologies Inc.(1)
10.35 Consulting Agreement, dated as of November 15, 1999 between
Cyberoad.com (Isle of Man) Ltd. and Calvin Ayre(1)
10.36 Engagement Letter dated October 25, 1999 between cyberoad.com
Corporation and Intrastate Registered Agent Corporation(1)
10.37 Revolving Line of Credit Agreement dated as of December 10, 1999
between El Moro Finance Ltd, Cyberoad.com (Isle of Man) Ltd., Ecomm
Relationship Technologies Ltd, cyberoad.com Corporation, and
Kazootek.com Technologies Inc.(1)
10.38 cyberoad.com Corporation Stock Award Plan(1)
10.39 Form of Non-Statutory Stock Option Agreement(1)
10.40 Shares for Debt Settlement Agreement dated as of May 1, 1999 between
Cyberoad Gaming Corporation, eBanx.com (Isle of Man) Limited and
Asanol Management Corporation(1)
10.41 Assignment dated as of February 11, 2000, between Cyberoad.com
(Ireland) and CIOM, whereby Cyberoad.com (Ireland) assigns to
Cyberoad.com (Isle of Man) Ltd. all rights and interests in the
Community Trademark Applications for CYBEROAD and CYBEROAD.COM(1)
10.42 Letter of Employment dated February 7, 2000, between Kazootek.com and
Stig Lyren(1)
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10.43 Agency Agreement dated November 11, 1999 between cyberoad.com
Corporation and Thomson Kernaghan & Co. Limited(1)
10.44 Option to purchase common shares of cyberoad.com Corporation dated
November 11, 1999 issued to Thomson Kernaghan & Co. Limited(1)
10.45 Agency Agreement dated June 18, 1999 between cyberoad.com Corporation
and Thomson Kernaghan & Co. Limited
10.46 Option to purchase common shares of cyberoad.com Corporation dated
June 30, 1999 issued to Thomson Kernaghan & Co. Limited(1)
10.47 Share Purchase Agreement effective as of November 11, 1999 between
Cyberoad.com (Isle of Man) Ltd., cyberoad.com Corporation, Aundyr Enmyn
Limited, IFG International (Nominees) Limited, Aundyr Trust Company
Ltd. and eBanx.com (Isle of Man) Ltd.
10.48 Agreement for the Exchange of Common Stock dated April 15, 1999 by and
among LAL Ventures Corp., Eric P. Littman, and Cyberoad.com
Limited, a corporation organized under the laws of Ireland(1)
10.49 Amendment to Agreement for the Exchange of Common Stock executed as of
October 28, 1999 between cyberoad.com Corporation (formerly known
as LAL Ventures Corp.) and Cyberoad.com Limited, a corporation organized
under the laws of Ireland(1)
10.50 Revolving Line of Credit Agreement dated as of February 24, 2000
between El Moro Finance Ltd, Ecomm Relationship Technologies Ltd
and cyberoad.com Corporation.
10.51 Transfer of Assets Agreement effective as of October 31, 1999 between
Corporacion Ebanx.com, S.A. and Ecomm Relationship Technologies Ltd.
21.1 Subsidiaries of the Registrant
23.1 Consent of Accountants
23.2 Consent of Attorneys (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
27.1 Financial Data Schedule
(1) Incorporated by reference to exhibits to Registrant's Registration
Statement on Form SB-2 filed on February 24, 2000 (File No. 333-31068).
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in
the registration statement.
(iii) Include any additional or changed material information on the plan
of distribution;
(2) That, for the purposes of determining liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering; and
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Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of the appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this pre effective
amendment no. 1 to the registration statement to be signed on its behalf by the
undersigned, in San Jose, Costa Rica, on May 18, 2000.
cyberoad.com Corporation
By: /s/ John Coffey
------------------------------
John Coffey
President and Director
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints John
Coffey and Krista Wilson, and each of them as his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and his name, place and stead, in any and all capacities, to sign any or
all amendments (including post effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the foregoing, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Pre
Effective Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates stated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Stig Lyren
- --------------------- Chief Financial Officer May 18, 2000
Stig Lyren
/s/ John Coffey
- --------------------- President and Director May 18, 2000
John Coffey
/s/ Brent Corobotiuc
- --------------------- Director May 18, 2000
Brent Corobotiuc
Orlando Guerrero
- --------------------- Director May __, 2000
Orlando Guerrero
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EXHIBIT INDEX
3.1 Articles of Incorporation(1)
3.2 By-laws(1)
5.1 Opinion of Counsel
10.1 Amended and Restated Nonexclusive License Agreement effective as of
March 5, 1998 by and between International Gaming LTD. and Cyberoad
(Isle Of Man) Ltd.
10.2 Amended and Restated Operating and Revenue Sharing Management Services
Agreement effective as of March 13, 1998 by and between International
Gaming LTD. and Cyberoad (Isle of Man) Ltd.
10.3 Assignment Agreement dated April 19, 1999 between Cyberoad Gaming
Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.4 Amendment to the Assignment Agreement dated October 18, 1999 between
Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.5 Amended and Restated Operating, License, Revenue Sharing and Management
Services Agreement effective as of May 5, 1998 by and between Asanol
Management Corporation and Cyberoad (Isle of Man) Ltd.
10.6 Assignment Agreement dated April 19, 1999 between Cyberoad Gaming
Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.7 Amendment to the Assignment Agreement dated October 18, 1999 between
Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.8 Termination to Amended Assignment Agreement dated September 1, 1999
between Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man)
Ltd.(1)
10.9 Amendment to Schedule "A" of the Grand Prix Operating, License, Revenue
Sharing and Management Services Agreement dated as of September 1, 1999,
Between Cyberoad Isle of Man Limited and Asanol Management
Corporation
10.10 Amendment to the Grand Prix Operating, License, Revenue Sharing and
Management Services Agreement dated as of September 1, 1999, between
Cyberoad Isle of Man Limited and Asanol Management Corporation
10.11 Software License Agreement effective as of October 15, 1998 by
and between Nordic Investment Group and Cyberoad Isle of Man Limited
10.12 Assignment Agreement dated as of July 15, 1999 by and between Cyberoad
Gaming Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.13 Amendment to the Assignment Agreement dated October 18, 1999 by and
between Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man)
Ltd.(1)
10.14 Assignment Agreement and License dated April 19, 1999 between Cyberoad
Gaming Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.15 Amendment to Assignment Agreement and License dated June 11, 1999
between Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man)
Ltd.(1)
10.16 Revised Amendment to the Assignment Agreement and License dated
October 18, 1999 between Cyberoad Gaming Corporation and Cyberoad.com
(Isle of Man) Ltd.(1)
10.17 Non-Exclusive License Agreement dated April 19, 1999 by and between
Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
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10.18 Amendment to the Non-Exclusive License Agreement dated October 18,
1999 between Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man)
Ltd.(1)
10.19 Amended and Restated Operating and Revenue Sharing Management Services
Agreement effective as of April 19, 1999 by and between Asanol
Management Corporation and Cyberoad.com (Isle of Man) Ltd.
10.20 Intentionally omitted.
10.21 Transfer Agreement dated September 1, 1999 between Asanol Management
Corporation and Cyberoad Gaming Corporation
10.22 Website Marketing Agreement dated April 19, 1999 between Cyberoad
Gaming Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.23 Amendment to the Website Marketing Agreement dated October 18, 1999
between Cyberoad Gaming Corporation and Cyberoad.com (Isle of Man)
Ltd.(1)
10.24 Software Support Agreement dated April 19, 1999 between Cyberoad.com
(Isle of Man) Ltd. and Calvex International(1)
10.25 Amendment to the Software Support Agreement dated October 18, 1999
Cyberoad.com (Isle of Man) Ltd. and Calvex International(1)
10.26 Sale of Rights Agreement dated May 1, 1999 between Cyberoad Gaming
Corporation and Cyberoad.com (Isle of Man) Ltd.(1)
10.27 Sale of Rights Agreement dated July 8, 1999 between Cyberoad Gaming
Corporation and eBanx.com (Isle of Man) Limited(1)
10.28 Transfer Agreement dated May 20, 1999 between eBanx.com (Isle of Man)
Limited and Cyberoad Gaming Corporation(1)
10.29 Services Agreement dated April 19, 1999 between Cyberoad.com (Isle of
Man) Ltd. and eBanx.com (Isle of Man) Limted(1)
10.30 Amendment to the Services Agreement dated October 18, 1999 between
Cyberoad.com (Isle of Man) Ltd. and eBanx.com (Isle of Man)
Limited(1)
10.31 Services Agreement dated as of December 31, 1999 between the
cyberoad.com Corporation and Kazootek Technologies Inc.
10.32 Employment Agreement, dated as of December 6, 1999 between Paul Mari
and Kazootek.com Technologies Inc.(1)
10.33 Employment Agreement, dated as of October 12, 1999 between Eric Chan
and Kazootek.com Technologies Inc.(1)
10.34 Employment Agreement, dated as of September 23, 1999 between Krista
Wilson and Kazootek.com Technologies Inc.(1)
10.35 Consulting Agreement, dated as of November 15, 1999 between
Cyberoad.com (Isle of Man) Ltd. and Calvin Ayre(1)
10.36 Engagement Letter dated October 25, 1999 between cyberoad.com
Corporation and Intrastate Registered Agent Corporation(1)
10.37 Revolving Line of Credit Agreement dated as of December 10, 1999
between El Moro Finance Ltd, Cyberoad.com (Isle of Man) Ltd., Ecomm
Relationship Technologies Ltd, cyberoad.com Corporation, and
Kazootek.com Technologies Inc.(1)
10.38 cyberoad.com Corporation Stock Award Plan(1)
10.39 Form of Non-Statutory Stock Option Agreement(1)
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10.40 Shares for Debt Settlement Agreement dated as of May 1, 1999 between
Cyberoad Gaming Corporation, eBanx.com (Isle of Man) Limited and
Asanol Management Corporation(1)
10.41 Assignment dated as of February 11, 2000, between Cyberoad.com
(Ireland) and CIOM, whereby Cyberoad.com (Ireland) assigns to
Cyberoad.com (Isle of Man) Ltd. all rights and interests in the
Community Trademark Applications for CYBEROAD and CYBEROAD.COM(1)
10.42 Letter of Employment dated February 7, 2000, between Kazootek.com and
Stig Lyren(1)
10.43 Agency Agreement dated November 11, 1999 between cyberoad.com
Corporation and Thomson Kernaghan & Co. Limited(1)
10.44 Option to purchase common shares of cyberoad.com Corporation dated
November 11, 1999 issued to Thomson Kernaghan & Co. Limited(1)
10.45 Agency Agreement dated June 18, 1999 between cyberoad.com Corporation
and Thomson Kernaghan & Co. Limited
10.46 Option to purchase common shares of cyberoad.com Corporation dated
June 30, 1999 issued to Thomson Kernaghan & Co. Limited(1)
10.47 Share Purchase Agreement effective as of November 11, 1999 between
Cyberoad.com (Isle of Man) Ltd., cyberoad.com Corporation, Aundyr Enmyn
Limited, IFG International (Nominees) Limited, Aundyr Trust Company
Ltd. and eBanx.com (Isle of Man) Ltd.
10.48 Agreement for the Exchange of Common Stock dated April 15, 1999 by and
among LAL Ventures Corp., Eric P. Littman, and Cyberoad.com
Limited, a corporation organized under the laws of Ireland(1)
10.49 Amendment to Agreement for the Exchange of Common Stock executed as of
October 28, 1999 between cyberoad.com Corporation (formerly known
as LAL Ventures Corp.) and Cyberoad.com Limited, a corporation organized
under the laws of Ireland(1)
10.50 Revolving Line of Credit Agreement dated as of February 24, 2000
between El Moro Finance Ltd, Ecomm Relationship Technologies Ltd
and cyberoad.com Corporation.
10.51 Transfer of Assets Agreement effective as of October 31, 1999 between
Corporacion Ebanx.com, S.A. and Ecomm Relationship Technologies Ltd.
21.1 Subsidiaries of the Registrant
23.1 Consent of Accountants
23.2 Consent of Attorneys (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
27.1 Financial Data Schedule
(1) Incorporated by reference to exhibits to Registrant's Registration
Statement on Form SB-2 filed on February 24, 2000 (File No. 333-31068).
-76-
<PAGE>
Law Offices
HOLLAND & KNIGHT LLP
Atlanta Orlando
Boston Providence
Fort Lauderdale San Francisco
701 Brickell Avenue Jacksonville St. Petersburg
Suite 3000 Lakeland Tallahassee
P0. Box 015441 (ZIP 33101-5441) Melbourne Tampa
Miami, Florida 33131 Mexico City Washington, DC.
Miami West Palm Beach
New York
305-374-8500 Virginia
FAX 305789.7799
http://www.hklaw.com
May 11, 2000
cyberoad.com Corporation
Oficentro Sabana Sur
Edificio 7, 5 Piso
San Jose, Costa Rica
Ladies and Gentlemen:
On February 24, 2000, cyberoad.com Corporation, a Florida corporation (the
"Company"), filed with the Securities and Exchange Commission a Registration
Statement on Form SB-2 (the "Registration Statement"), under the Securities Act
of 1933, as amended (the "Act"), relating to the sale of up to 4,713,745 shares
of the Company's Common Stock. The Registration Statement, as amended, relates
to the sale by certain selling shareholders (the "Selling Shareholders") of up
to 13,37 3,395 Shares of the Company's Common Stock, par value $000001 per share
(the "Shares") We have not represented the Company in connection with the
preparation and filing of the Registration Statement.
In connection therewith, we have examined and relied upon the original or a
copy, certified to our satisfaction, of (i) the Articles of Incorporation and
the Bylaws of the Company; (ii) actions of the Board of Directors of the Company
authorizing the issuance of the Shares and related matters; (iii) the
Registration Statement and exhibits thereto; and (iv) such other documents and
instruments as we have deemed necessary for the expression of opinions herein
contained. In making the foregoing examinations~ we have assumed the genuineness
of all signatures and the authenticity of all documents submitted to us as
originals, and .the conformity to original documents of all documents submitted
to us as certified or photostatic copies. As to various questions of fact
material to this opinion, we have relied, to the extent we deem reasonably
appropriate, upon representations or certificates of officers or directors of
the Company and upon documents, records and instruments furnished to us by the
Company, without independently checking or verifying the accuracy of such
documents, records and instruments.
Based upon the foregoing examination, we are of the opinion that the
Shares, excluding shares of the Company's Common Stock which underlie stock
<PAGE>
May 11, 2000 Page 2
options issued to Thomson Kernaghan & Co. Limited ("Option Shares"), have been
duly and validly authorized and issued and are fully paid and nonassessable. The
Option Shares have been duly and validly authorized and will be fully paid and
nonassessable when issued and when the Company receives the par value for such
shares.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we come
within the category of persons whose consent is required by Section 7 of the Act
or the Rules and Regulations of the Commission thereunder.
Sincerely,
/s/ Holland & Knight LLP
HOLLAND & KNIGHT LLP
AMENDED AND RESTATED NONEXCLUS1VE LICENSE AGREEMENT
This Amended and Restated Non-Exclusive License Agreement (hereinafter
called the "Agreement" or "License") is effective the 5th day of March, 1998, by
and between Cyberoad.com (IOM) Limited ("CIOM or "Licensor"), an Isle of Man
corporation, and International Gaming LTD. ("IG" or "Licensee"), a Nevis
corporation.
RECITALS
WHEREAS, CIOM and/or its affiliates through contractual agreements
with third parties develops gaming software, transaction systems for verifiable
events wagering, and has developed valuable technology, software, technical and
support know how and related expertise known as CR Netbook .
WHEREAS, IG desires to license software, and wishes to enter into an
agreement with CIOM for CIOM and/or its affiliates through contractual
agreements with third parties to market the services of a sports gaming facility
pursuant to which IG intends to operate and market the services of a sports
gaming facility that provides wagering opportunities on verifiable events in
sports.
WHEREAS, CIOM and/or its affiliates through contractual agreements with
third parties provides services in order for the licensee to operate and
maintain its own call center.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements recited in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by each Party, the Parties hereby agree as follows:
ARTICLEI
--------
DEFINITIONS
-----------
1.1 Software, shall mean computer-readable programs for computer
operating systems or specific applications.
1.2 Hardware, shall mean the equipment and fixtures with which
software is used.
1.3 Website, shall mean Licensee's CR Netbook domain, accessible
as a website via the Internet at a URL to be named by IG, or such other URL as
may be necessary to operate the IG Sportsbook on a Server to be located in Costa
Rica or such other location(s) as CIOM and Licensee may reasonably select.
Nothing in this definition shall be construed as giving CIOM any rights, tide or
legal ownership of, control or say of any nature over the Website of IG, whether
or not the IG website is hosted on equipment owned and managed by CIOM. IG has
absolute ownership and control over any of its Uniform Resource Locators
("URL's") and the entire website and customer database.
1.4 Internet, shall mean a network of computer networks accessible
through telephonic or other means by computer for specific uses, including, but
not limited to recreational activities, such as games, wagering, betting, and
related support activities.
1.5 Platforms, shall mean the equipment, programs, and
telecommunications network access necessary for the provision of specific
telecommunication network activities, including but not limited to games,
activities, and other specific uses.
1.6 Network(s), shall mean a system(s) by which individual
computer operators may communicate with one another via telephonic or wireless
means.
1.7 On-Line Operating System(s), shall mean that software which
supports communication and specific applications over one or more networks.
1.8 Proprietary Technology, shall mean that CIOM's Know-How,
whether patented or unpatented, registered or unregistered, copyrighted or
uncopyrighted, confidential or in the public domain, or acquired by assignment,
license, or other means. The term Proprietary Technology shall include, but
shall not be limited to CIOM's CR Netbook~ On-line Sportsbook management and
delivery system.
1.9 IG Sportsbook, shall mean Licensee's unique software
application(s) derived from Licensor's CR Netbook(TM) template, operating on the
Site.
1.10 Gaming, shall MEAN THE USE OF gaming SOFTWARE AND TRANSACTION
systems for verifiable events wagering.
1.11 On-Line Wagering, shall mean Gaming activities of any kind
performed over Network(s)
1.12 Content Provider, shall mean the Licensee of a website derived
from the CR Netbook (TM) template.
1.13 Process, means the process. method, procedure, sequence,
steps, or use of apparatus including, in whole or in part, Licensor's Trade
Secrets and Know-How.
1.14 Trade Secrets, means the process, drawings, engineering
designs, computations, specifications, materials, customer lists, vendor
sources, formulas and any and all other secrets owned by Licensor to the method,
Process and equipment necessary to enable Licensee to use the CR Netbook~ as a
Content Provider.
1.15 Know-how, means the knowledge, skills, and experience of
Licensor to the method, Process, and equipment to make available the CR Netbook
(TM) application.
1.16 URL, shall mean Uniform Resource Location.
1.17 Server, shall mean a computer Hardware system with
communications capabilities to support the On-Line Operating System(s).
1.18 CR NetbookTM, shall mean On-line Sportsbook management and
delivery Software applications as demonstrated as of the date of this Agreement
or reasonable variations thereof, and use by On-Line Operating System access of
any other. Such Software shall be the template by which a unique identity IG
Sportsbook shall be developed by CIOM for Licensee.
ARTICLE II
----------
THE LICENSE
-----------
2.1 Grant of Nonexclusive license. In consideration of IG's
payment of license fees described in Section 2.2 below, and for other good and
valuable consideration, CIOM grants to IG (a) a nonexclusive right and license
to use the Proprietary Technology as a Content Provider at a single Internet
Website.
2.2 license Fee. IG shall pay to CIOM a license fee of US$ 125,000
in U.S. funds and shall be payable in kind as follows:
2.2.1 US$ 22,500 by March 20, 1998,
2.2.2 US$45,000 by April 20,1998,
2.2.3 US$57,500 by May 20,1998.
2.3 Covenant Not to Compete. At all times during and after
termination of this License, IG shall not disclose to any other party any of the
CIOM's Proprietary Technology.
ARTICLE Ill
------- ---
REPRESENTATIONS AND WARRANTIES
--------------- --- ----------
3.1 Licensor's duties under this Agreement shall not be enforceable
until the Licensee shall have satisfied its due diligence obligations,
represents and warrants and other undertakings as follows:
3.1.1 IG's completion of all steps necessary to consummate the
payments specified in Paragraph 2.2.
3.1.2 Licensee's execution of the Operating and Revenue Sharing,
Management Services Agreement.
3.1.3 Licensee's commitment to develop a professional marketing
plan to be developed and implemented by Licensee at its sole cost and expense
3.1.4 Execution by IG, of CIOM's Non-Disclosure Agreement.
3.1.5 IG's written confirmation that all publicity, press releases
and public announcements that mention CIOM or its proprietary products, shall be
subject to the prior written approval of CIOM.
3.1.6 Certifications by IG and CIOM that they are corporations in
good standing and validly existing under the laws of their respective
jurisdictions of incorporation.
3.1.7 Certifications by IG and CIOM that their actions entering
this License have been duly authorized by their respective boards of directors
and any governmental agencies of any kind having jurisdiction over them and
their activities.
3.1.8 Certifications by IG and CIOM that their entering this
Agreement will not violate any other agreements of any kind to which they are a
party, and that this Agreement will be enforceable by its terms.
3.2 Licensee's duties under this Agreement shall not be
enforceable until CIOM shall have satisfied its due diligence obligations,
represents and warrants and other undertakings as follows:
3.2.1 CIOM represents that: (i) it is protected from unauthorized
disclosure the Proprietary Technology; (Ii) it has not revealed the Trade
Secrets and Know-How to anyone who has not agreed to observe the confidential
nature of such Proprietary Technology; (iii) its service marks and copyrights
are free of any known infringement or any known dilution by others, and; (iv) it
is the sole owner of such Proprietary Technology and has the right to grant the
nonexclusive license described in this Agreement, the execution of which will
not violate any other agreement to which CIOM is a party.
ARTICLE IV
------- --
TERM ADDITIONAL REPRESENTATIONS AND WARRANTIES
---- ---------- --------------- --- ----------
4.1 Term. This Agreement shall remain in force for a 99 year term
or until the agreement is terminated. Nothing in this Agreement shall be
construed as creating an exclusive right by either Party with respect to the
other Party's ongoing activities. Upgrades and support are covered under
separate agreement. CIOM is not obligated under this agreement to provide
services to IG other than those specifically defined herein.
4.2 Representations by CIOM. CIOM represents that it has kept the
proprietary technology proprietary, has not revealed the Trade Secrets and
Know-How to anyone who has not agreed to observe the confidential nature of such
Proprietary Technology, its service marks and copyrights are free of any known
infringement or any known dilution by others, it is the sole owner of such
Proprietary Technology and has the right to grant the nonexclusive license
described in this Agreement, the execution of which will not violate any other
agreement to which CIOM is a party.
4.3 Confidential Information. Each Party shall treat all
Confidential Information which may be disclosed by the other Party (the
"Disclosing Party") to the Party receiving such information (the "Receiving
Party") as confidential commercial property and shall not, during or after the
term of this Agreement, use or disclose to others, except as provided in this
Agreement, any Confidential Information which may heretofore or hereafter come
within the knowledge of the Receiving Party in performing its duties hereunder.
This limitation on disclosure shall extend to the substance of any discussions
concerning the Confidential Information. The foregoing shall not prevent the
Receiving Party (a) from making use of or disclosing other information which the
Receiving Party can show has become part of the public domain other than by acts
or omissions of the Receiving Party; (b) which the Receiving Party can show has
been furnished to him/her by third parties as a matter of right, without
restriction on disclosure; (c) which the Receiving Party can show was in his/her
possession prior to disclosure of the information from the Disclosing Party to
the Receiving Party; or (d) which has to be disclosed to a court of law or
governmental agency as a mater of law. (In the event of the occurrence of a
disclosure pursuant to subparagraph (d), the Receiving Party agrees to notify
the Disclosing Party promptly of the disclosure and of the circumstances
concerning the disclosure and agrees to take whatever legal steps are necessary
to assist the Disclosing Party in protecting the Confidential Information.).
4.4 Warranties. CIOM Disclaims ALL WARRANTIES OR REPRESENTATIONS,
EXPRESSED OR IMPLIED, ON THE MERCHANDISE OR OPERATION OF THE IG SPORTSBOOK.
4.5 NO OTHER WARRANTIES. TO THE MAXIMUM EXTENT PERMIT~ ED BY ISLE
OF MAN OR ANY OTHER LAW FOUND TO GOVERN ITS PERFORMANCE UNDER THIS AGREEMENT,
CIOM DISCLAIMS ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO IMPLIED WARRANTEES OF MERCHANTABILITY AND FITNESS FOR A Particular
PURPOSE OR USE, OTHER THAN FOR THE OPERATION OF SPORTSBOOK WAGERING, FOR THE
SERVICE, SOFTWARE, AND. HARDWARE INVOLVED IN OR RELATED TO THE OPERATION OF ITS
LICENSEE'S IG SPORTSBOOK SITE.
4.6 No Liability for Consequential Damages. TO THE MAXIMUM EXTENT
PERMITTED BY ISLE OF MAN OR ANY OTHER LAW FOUND TO GOVERN ITS PERFORMANCE UNDER
THIS AGREEMENT, CIOM SHALL NOT BE LIABLE FOR ANY DAMAGES WHATSOEVER (INCLUDING,
BUT NOT LIMITED TO SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR INDIRECT DAMAGES FOR
PERSONAL INJURY, LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF
BUSINESS INFORMATION, OR EXEMPLARY) ARISING FROM OR RELATED TO OPERATION OF
LICENSEE'S IG SPORTSBOOK SITE.
4.7 No Developments by Licensee. Except as expressly and
unambiguously provided in this Agreement and as conditions of Licensee's license
pursuant to this Agreement, Licensee represents, warrants and agrees: (1) not to
modify, alter, add to, create any derivative work of, or include in any other
software the Proprietary Technology or any portion thereof; (ii) not to reverse
assemble, decompile, or otherwise attempt to derive source code (or the
underlying ideas, algorithms, structure or organization) from the Proprietary
Technology; (iii) to keep CIOM informed as to any problems encountered with the
Proprietary Technology. Licensee agrees to conduct its business in a manner
which favorably reflects upon the Proprietary Technology. Licensee shall not
use, in the performance of its obligations under this Agreement, any
improvements or additions to or in support of the Website applications
considered a part of the CR Netbook (TM){ gaming system developed by or on its
behalf, without the prior written consent of Licensor.
ARTICLE V
---------
Infringement AND RELATED ISSUES
------------ --- ------- ------
5.1 Protection of Licensee Against Infringement by Others. Within
thirty (30) days of discovery, IG shall notify CIOM in writing of any
infringement, theft., or dilution of CIOM's Proprietary Technology. Provided
such notification is received within thirty (30) days of its discovery by IG,
all costs, attorneys' fees, and other expenses of any action, suit, or
proceeding CIOM may initiate, unless collected from the person or entity against
whom such action, suit, or proceeding is brought, shall be borne by CIOM and all
damages recovered in such action shall be paid to CIOM. IG shall cooperate in
any way necessary, but without expense to it, in the prosecution of any such
action, suit, or proceeding. If IG fails to provide such notice in writing
within thirty (30) days, ft shall reimburse CIOM for CIOM's reasonable costs,
attorney's fees, and other expenses of such action, suit, or proceeding, unless
CIOM is otherwise reimbursed in full by the person or entity against whom it is
brought.
5.2 Protection of Licensee Against Actions for Infringement.
Provided Licensee notifies CIOM in writing within thirty (30) days of any
claims, demands, or suits against Licensee, based upon invalidity of or
infringement by any Proprietary Technology licensed under this Agreement, CIOM
shall indemnify, hold harmless, and defend Licensee from any such claims,
demands, or suits against Licensee.
ARTICLE VI
------- --
CONFIDENTIALITY
---------------
6.1 Obligations. Each party shall receive and hold all
Confidential Information of the other party in confidence and shall exercise the
same degree of care to prevent the disclosure of such Confidential Information
as ft does to protect its own Confidential Information. As a minimum protection,
the receiving party shall limit disclosure of Confidential Information to its
employees having a need to know such information and shall not disclose the
Confidential Information of the other party to any third party, individual,
corporation or other entity, without the prior written consent of the disclosing
party, which consent can be conditioned on such restrictions as the disclosing
party may specify. Each party's obligations under this Section shall survive the
termination of this Agreement and shall continue so long as the received
Confidential Information remains Confidential Information within the meaning of
this Agreement.
6.2 Return of Confidential Information. Within thirty (30) days
following termination or expiration of this Agreement for whatever reason, at
the disclosing party's request the receiving party shall return the original and
all copies of Confidential Information to the disclosing party, or certify in
writing that all copies have been destroyed.
6.3 Inspection. Every party may, at its own expense, examine the
other party's applicable records to verify that such party has satisfied such
party's obligations under this Section 6 relating to the protection of
Confidential Information. Each party agrees to make its records available to the
other party as requested from time to time. No such examination shall be made
more than once during any three-month period. The audited party shall be
entitled to require execution of nondisclosure agreements by arty person
designated to perform such an examination.
ARTICLE VII
------------
SYSTEMS REQUIREMENTS AND PERFORMANCE STANDARDS
------- ------------ --- ----------- ---------
7.1 System Requirements. CIOM shall design and deliver on
Licensee's behalf turn-key Software and Hardware system to operate and support a
unique On-line IG Sportsbook at the Site accessible from the Internet or the
telephone. The system shall have the following operating features:
7.2 Performance. The functional specification will be designed so
as to ultimately provide for the support the following general capability,
subject to a ramping plan for implementation that shall be at the sole
discretion of CIOM minimum of 10,000 users.
7.3 Language. Version 1.0 of the IG Sportsbook Site shall
communicate by the English language. For future versions of the IG Sportsbook,
CIOM shall reasonably adapt IG's Sportsbook Site to other languages including
Japanese, Chinese, Spanish, German, and Russian, as may be financially and
technically feasible, at the sole expense of 1G.
7.4 Customizing. At any time after final acceptance by IG, at
Licensee's request and sole expense, CIOM shall promptly and reasonably
customize the original Site and Licensee's IG Sportsbook located them, by
additional programming. to create modifications and other requested changes. All
costs for adapting Licensee's IG Sportsbook Site shall be incurred pursuant to a
budget agreed to by the Parties.
7.5 Proprietary Data Bases. CIOM shall provide a reasonable system
design to create proprietary database(s) of Clients who visit, register, or
wager at the Site. The database(s) will include the ability to create a basic
set of reports, including the delivery to IG of the report writer associated
therewith, necessary to rim the business and as specifically agreed by the
Parties. CIOM will maintain the database(s) and agrees that ft will not solicit
Licensee's clients or sell, disclose, or knowingly transmit, any proprietary
client data to any third party without Licensee's written consent. CIOM further
agrees not to contact, attempt to sell to or in any way conduct business or
initiate a direct business relationship of any nature with the clients of IG
without the express written consent of 1G. IG acknowledges that ft will be
responsible for any software licenses from any third party suppliers that are
needed for the system to function. The proprietary database shall remain and be
the sole and exclusive property of 1G.
7.6 Contents. Licensee shall be solely responsible for reasonably
approving the IG Sportsbook "contents" to be installed by CIOM for the benefit
of Licensee. The system will be played from a IG Sportsbook sitting on a
server(s) in Costa Rica and Vancouver, B.C.
7.7 Specific Event Types. CIOM shall provide at least the
following event types:
7.7.1 NFL Football
7.7.2 NCAA College Football
7.7.3 NBA Basketball
7.7.4 NCAA College Basketball
7.7.5 NHL Ice Hockey
7.7.6 Major League Baseball
7.7.7 Boxing
7.7.8 Soccer
7.8 The System shall include the following wagering types:
Moneyline
Game Total
Teasers & Parlays
Propositions/Exotics
Point spreads
Futures
7.9 New Event Types. CIOM shall promptly incorporate new event types
into the IG Sportsbook as may be reasonably requested by Licensee in writing and
as included from time to time in the standard CIOM product family in the normal
course of business. Such event types shall be added at Licensee's expense unless
they are incorporated into the standard CIOM product family in which case they
will be provided at the sole expense of CIOM.
7.10 Player Registration. CIOM shall provide online user access to
allow users to register electronically as prospective account holders of the
Site and to review all rules, terms, and conditions applicable to Gaming and
other uses on the Site. Basic reports will be available to IG in the database(s)
which will track registration activity.
7.11 Maintenance. CIOM will provide general system maintenance for
the term of this agreement at its sole expense.
7.12 Installation Acceptance. Prior to final acceptance by IG,
CIOM will perform a live session for Licensee demonstrating the features and
functions of the system which shall materially comply with the functional
specifications and related documentation as agreed to by the Parties.
7.13 Software System. CIOM shall provide software applications as
are currently provided in the IG Sportsbook system and any updates available to
CIOM, and the demonstration IG Sportsbook system, which applications shall allow
various systems solutions, including On-Line real time Gaming, generation and
reconciliation of wagering, player accounting, and reporting such data to
Licensee in a form and manner reasonably agreed between CIOM and Licensee. This
paragraph does not in anyway limit the intent of the IG Sportsbook gaming system
or in anyway intend that the IG Sportsbook gaming system shall be limited by
current applications, whether developed or licensed by CIOM. CIOM agrees to
always have IG supplied with its most current online gaming technology,
encompassed by both the applicable definition and intent of' the IG Sportsbook
gaming system, which may or may not include current software applications either
currently developed or licensed by CIOM.
7.14 Hardware. Hardware is as covered under the Operating and
Revenue Sharing, Management Services. The Parties agree and acknowledge that the
ramping plan, and the costs associated therewith, will require interim
implementation prior to installation of a full-scale system contemplated by the
functional specification. Said ramping plan shall be implemented at the sole and
complete discretion of CIOM.
7.15 Interactive Voice Response (IVR). CIOM may provide, at its
sole discretionary cost and expense, a software system and related equipment
necessary to operate a potential IVR system to be eventually integrated into the
Sportsbook Site, which may in the future provide for users to access the IG
Sportsbook using a telephone.
7.16 Operation and Repair. The following performance standards
shall, apply to Licensor's obligations under this Agreement up until delivery to
IG of CIOM's Notice of Completion: CIOM shall provide an Internet Sportsbook
webpage site within thirty (30) days of payment in full.
7.17 Server(s). CIOM shall, subject to a ramping plan to be
developed by CIOM under CIOM's sole discretionary implementation, provide
sufficient server capacity, such that a minimum of 10,000 users simultaneously
of the IG Sportsbook may reasonably operate the applications contained in the IG
Sportsbook gaming system. All repairs made by CIOM shall be at its expense. CIOM
shall have no liability to Licensee for damages arising from or related to
operation of the Server except for gross negligence of CIOM's employees, agents,
or invitees.
7.18 Website. Website will initially be developed at the sole cost
of 1G. CIOM shall, subject to content provided by Licensee, keep the Site in
good working condition and repair, except for any damage caused to the Site by
any negligent act of Licensee or its agents, employees, or invitees, and except
for events beyond CIOM's control. All repairs made by CIOM shall be at its
expense. CIOM shall have no liability to Licensee for damages arising from or
related to operation of the Site except for gross negligence of CIOM's
employees, agents, or invitees.
7.19 Alterations. Licensee shall not make any alterations,
revisions or updates to any programs or graphic displays used on the Website and
shall submit all requests for any such alteration to CIOM in writing. Upon
receipt of any such request by Licensee, CIOM shall reasonably determine whether
any such alterations may be incorporated into the Website and CIOM shall
reasonably report such determinations to Licensee. Thereafter, if CIOM
determines such alterations may reasonably be made, it shall do so at Licensee's
expense
7.20 Flaws or Glitches. CIOM shall promptly correct any flaws or
glitches in any program or graphic displays.
7.21 Website Control CIOM shall install system software, as
approved by Licensee, on all Servers to ensure the continued operation of the
Website. Licensee shall be solely responsible for all Content made available at
the Website and nothing herein shall be construed as ownership by CIOM of IG's
proprietary content, customer database, or URL's. Nothing in this paragraph
shall be construed to constitute control of such contents by CIOM and the
Licensee agrees to allow display at the Website of any such disclaimer
reasonably requested by CIOM.
ARTICLE VIII
-----------
DISCLOSURES
-----------
8.1 Disclosures. Neither party shall disclose the terms of this
Agreement to any third party, except as required by law or any public regulatory
agency, without the prior written consent of the other party, which consent
shall not be unreasonably withheld; provided that either party may disclose the
terms of this Agreement to its employees who will perform services related to
this Agreement, to its legal counsel, accountants and other professional
representatives and to such other persons as may be required by court order or
legal process. Each party acknowledges and agree that it shall be responsible
for, and such party shall not object to, the other party disclosing the terms of
this Agreement to any proposed investor or contracting party, and their legal,
accounting and other professional representatives, in connection with any
securities offering, proposed corporate acquisition or reorganization, loan
transaction with a financial institution or similar transaction.
ARTICLE IX
------- --
DEFAULTS AND REMEDIES
-------- --- --------
9. Events of Default and Remedies.
9.1 Defaults. It shall be an Event of Default if any of the
following breaches exists and remains in effect for a period of fifteen (15)
days after receipt of written notice to the other party.
9.1.1 There exists a final judgment declaring the Proprietary
Technology as infringing upon the rights of any third party to preclude or
substantially impair the lawful operation of the Proprietary Technology,
Licensee's Site or Licensee's IG Sportsbook.
9.1.2 CIOM fails to perform or comply with any of the provisions
set forth in this Agreement relating to system functions which failure shall
have continued for fifteen (15) days;
9.1.3 CIOM fails to perform or comply with any of the warranties
or representations set forth in this Agreement, which failure shall have
continued for thirty (30) days following notice by Licensee to
CIOM.
9.2 CIOM's Rights and Remedies. Upon the occurrence of any Event
of Default under Section 9.1 and at any time thereafter, in addition to all
other rights and remedies available under the Uniform Commercial Code of Isle of
Man or other applicable law, this Agreement or otherwise, CIOM shall have the
right to terminate this Agreement which right may be exercised, in CIOM's
discretion, at any time or times, individually or cumulatively, with or without
judicial process, with or without the assistance of others and without notice to
or consent by Licensee except for any obligations, including payment
obligations, that have occurred on or before the date of such termination or if
such notice, consent or judicial process is expressly required by law:
9.3 licensee's Rights and Remedies. Upon occurrence of any Event
of Default described in Section 9 and at any time thereafter, in addition to all
other rights and remedies available under the Uniform Commercial Code of Isle of
Man or other applicable law, this Agreement or otherwise, Licensee shall, at its
option, be entitled to terminate this Agreement without any further obligation
to CIOM except for any obligations, including payment obligations, that have
occurred on or before the date of such termination, with or without notice to or
consent by CIOM, except if such notice, consent, or judicial process is
expressly required bylaw.
ARTICLE X
-----------
ARBITRATION
-----------
10. Arbitration.
10.1 Arbitration of Disputes. All disputes arising out of or
in connection with this contract, or in respect of any defined legal
relationship associated therewith or derived therefrom, shall be referred to and
finally resolved by arbitration administered by the British Columbia
International Commercial Arbitration Centre pursuant to its Rules. The Place of
Arbitration shall be Vancouver, British Columbia, Canada.
10.2 Notice. By signing in the space below you are agreeing
to have any dispute arising out of the matters included in the "Arbitration of
Disputes" provision decided by neutral arbitration and you are giving up your
judicial rights to appeal, unless those rights are specifically included in the
"Arbitration of Disputes" provision. Your agreement to this arbitration
provision is, voluntary.
We have read and understand the foregoing and agree to submit disputes arising
out of the matters included in the "Arbitration of Disputes" provision to
neutral arbitration.
INTERNATIONAL GAMING LTD. CYBEROAD.COM (IOM) LIMITED
/s/ Eugene Herbert
- --------------------
By /s/ John Coffey
------------------
Eugene Herbert
John Coffey, President
ARTICLE XI
------- --
MISCELLANEOUS
-------------
11.1 New Technology. If, during the term of this Agreement,
CIOM makes any incremental improvements in the Proprietary Technology or becomes
the owner or licensee of such incremental improvements through software and
hardware applications, know-how, trade secrets, copyrights, and trademarks, it
shall communicate such improvements to IG and give IG full information regarding
their use. Any improvements or suggestions implemented into the CR Netbook
system by IG shall immediately be the property of CIOM, and attach to IG's
license with all rights which are granted to IG for the Proprietary Technology,
without payment of any additional royalties for such improvements.
11.2 Marking. IG agrees it will mark all literature and
Website communications of any kind under this Agreement with the appropriate
trademark, copyright, or patent marking and further agrees to allow CIOM to
place the CR Netbook~ logo on the IG Sportsbook website. CIOM agrees it will
mark all literature and site communications that are the intellectual property
of IG of any kind under this Agreement with the appropriate trademark, copyright
or patent marking reasonably required by 1G.
11.3 Choice of Law. All disputes concerning the validity,
interpretation, or performance of this Agreement and any of its terms or
conditions, or of any rights or obligations of the Patties, shall be governed by
the laws of Isle of Man.
11.4 Complete Understanding and Modifications. This Agreement
constitutes the complete expression of the terms of the grant of this
nonexclusive license. All previous and contemporaneous agreements,
representations, and negotiations, whether oral, written, or implied, are
superseded by this Agreement, except those included in the recitals to this
Agreement and except those included in the Operating and Revenue Sharing
Management Services Agreement. Any modifications to this Agreement must be
reduced to writing, signed by both Parties, and attached to this Agreement, to
be effective.
11.5 Assignability. IG shall have the right, subject to
CIOM's consent, which consent shall not unreasonably be withheld, to assign this
License to an affiliate or a purchaser of all or substantially all the stock or
assets of IG, after which any such assignee or purchaser shall become a party to
this License. Notwithstanding any such assignment or sale, IG shall remain
liable as an unconditional guarantor of such assignee's or purchaser's
obligations under this Agreement. CIOM may assign the Agreement without IG's
prior written consent. The provisions hereof will be binding and inure to the
benefit of the respective party, their successors and assigns.
11.6 No Waiver. The failure by either Party to this Agreement to insist
upon performance by the other Party shall not constitute a waiver of any rights
under this Agreement and shall not bar, by waiver or estoppel, insistence upon
performance by the other Party.
11.7 Relationship of Parties. Nothing in this Agreement shall be
construed in a manner which would create the relationship between the patties of
employee-employer, principal-agent, joint venture, partnership, or anything
other than a CIOM-IG relationship.
11.8 Retention of Ownership. This Agreement is not to be construed
as an assignment of or transfer of ownership in the Proprietary Technology or
related information. CIOM retains ownership of the Licensed Proprietary
Technology and all its improvements, additions, and database(s) related thereto,
subject to this License. IG retains the ownership of its URL, Website and
customer database.
11.9 Severability. The provisions of this Agreement are severable.
If any provision of this Agreement or the application thereof to any person or
circumstances is held invalid, illegal or unenforceable, it shall be deemed
stricken and all the remaining provisions shall remain in full force and effect.
11.10 Survival of Obligations. Each Party does for it and its
successors, heirs, executors, administrators, representatives, insurers, agents,
and assigns, covenants and agrees that it and they will continue to adhere to
the restrictions and obligations of this Agreement and this Agreement shall
inure to their continued benefit.
11.11 Recitals. The recitals shall be considered part of this
Agreement.
11.12 Headings. The Headings are for informational purposes only
and shall not constitute part of this Agreement.
11.13 Multiple Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be considered an original executed
version of this document.
11.14 Notices. Any notice given by either Party to the other Party
shall be deemed to have been sufficiently given if sent by registered air mail
or by cable, telex, or telecopier, to the address of the Party as follows,
unless such other Party designates another address in writing
If to CIOM
Cyberoad.com (IOM) Limited
Castle Hill, Victoria Road
International House
Douglas, Isle of Man
British Isles, 1M2 4RB
If to Licensee:
Eugene Herbert
International Gaming LTD.
C/o Nevis International Trust Company
Stoney Grove, Charlestown
Nevis, West Indies
And fax copy to: 212-504-7979
869-469-5898
11.15 Good Faith. The parties specifically agree to carry out the
provisions of this Agreement in good faith.
11.16 Integration. This Agreement shall constitute the entire
Agreement between the parties with respect to the subject matter hereof except
sections covered in more depth in the Operating, Revenue Sharing and Management
Services
Agreement and any other agreement referred to in this agreement. All prior and
contemporaneous communications, representations, and agreements between the
parties concerning the subject of this Agreement, whether oral or written, are
superseded by this Agreement
11.17 Force Majeure. Neither party shall bear any responsibility
or liability for any losses arising out of any delay or interruption of their
performance of obligations under this Agreement due to an act of God, act of
governmental authority, act of public enemy or due to war, dot, flood, civil
commotion, earthquake, insurrection, labor difficulty storm interruption of
electrical power, of any other cause beyond the reasonable control of the party
delayed.
11.18 Limitation on Legal Actions. No action (regardless of form or
theory of liability) arising out or relating to this Agreement may be brought by
either party more than two years after the date the cause of action occurred. A
cause of action shall be considered to have occurred when the injured party
discovers, or in the exercise of due diligence should have discovered, a default
or breach of this Agreement.
ARTICLE XII
------- ---
COMPLIANCE WITH LAW
---------- ---- ---
12.1 IG represents and warrants to CIOM that (r) no consent, approval,
order or authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state, local or provincial governmental
authority on the part of the Licensee is required in connection with the
consummation of the transactions contemplated by this Agreement; (ii) there is
no action, suit, proceeding or investigation pending or currently threatened
against the Licensee which questions the validity of this Agreement or the right
of the Licensee to enter into it, or to consummate the transactions contemplated
hereby; (iii) IG has, and is in compliance with, all franchises, permits,
licenses, and any similar authority necessary for the conduct of its business as
now being conducted by it and believes it can obtain, any similar authority for
the conduct of its business as planned to be conducted, and (iv) to the
Licensees' knowledge the Licensee is in compliance in all material respects with
all federal or state statutes, rules or regulations applicable to the
transactions contemplated by this Agreement and the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any such violation or cause the
suspension, revocation, impairment, forfeiture, or non-renewal of any material
permit, license, authorization, or approval applicable to the IG Sportsbook
gaming system.
12.2 Licensee acknowledges and agrees that it is not relying on CIOM to
advise it with respect to legal or regulatory compliance in connection with the
IG Sportsbook gaming system or any other uses of the Proprietary Technology
licensed hereunder and that Licensee is making its own determinations with
respect thereto and is relying on its own legal counsel to advise it connection
therewith. Notwithstanding the foregoing, each Party mutually acknowledges the
existence of regulatory jurisdiction of national and sub-national units and
covenant and agrees to cooperate at its own expense with all such units to
obtain any regulatory review, license, concession, or other permission such
units may require.
12.3 Nothing in this Agreement shall be construed as requiring CIOM~
its affiliates, agents, and joint-venturer, to operate or act as a Sportsbook
operator or any equivalent entity relating to the risk of any of the wagers
transacted on its behalf under this agreement.
12.4 Licensee assumes all risk (1) associated with gaming related
licensing and permitting hereunder in the United States and each state thereof
and (ii) and relating to or associated with Licensee the conduct and operation
of the On Line System.
12.5 Further Action. The parties hereto shall execute and
deliver all documents, provide all information and take or forbear from all such
action as may be necessary or appropriate to achieve the purposes of the
Agreement.
12.6 Indemnity. Both parties shall defend, indemnify and hold
harmless the other party against all claims, demands, actions, proceedings,
costs and damages of any kind, including attorney fees, arising from or related
to any acts or omission by the other which are relied on in entering into this
Agreement. CIOM shall defend, indemnify and hold IG harmless against all claims,
demands, actions, proceedings, costs and damages of any kind, including attorney
fees, arising from any third parties who may have an interest in technology
provided by CIOM to IG, mused by IG using any technology provided by CIOM in the
manner contemplated in this agreement.
IN WITNESS WHEREOF, each party of the parties has caused this
Agreement to be executed on the date first above stated.
CYBEROAD.COM (IOM) Limited
/s/ John Coffey
_____________________________ By_______________________________
Witness By:.John Coffey, President
INTERNATIONAL GAMING LTD.
/s/ Michael Flint /s/ Robert Herbert
_____________________________ By________________________________
Witness Title: President
SCHEDULE "A"
For purposes of expediency and clarity, this MOU outlines the
principal terms of the agreement that is to follow.
Systems Use Fee
In exchange for the System Use Fee paid to CIOM, through service
agreements it shall provide the following in order to operate and maintain the
IG Sportsbook:
A 6 line call center with computer stations
Services in order for the licensee to operate and maintain its own
call center.
Transaction server in Costa Pica
Web server in Vancouver
Satellite ground station and hookup facilities
Network access to the Internet
System Use Fee is: US$62,000 for the Network system (includes network
hook-up, network ground station facility, and routers.
Includes installation of all equipment.
US$30,000 for a six-line phone/operator system in
CR
Total: US$92,000
To be paid as follows: US$25,000 by March 20,1998, and US$45,000
by April 20,1998, and an additional US$27,000 by May 20,1998. IG may pay the
payments due at 30 and/or 60 days up to 30 days late without penalty.
Operating Costs
IG shall pay for the maintenance of its call center staff, client support,
variable and fixed tele-communications charges, and marketing expenses and a pro
rata share of the rent. Any expansion of the facilities requested or determined
to be necessary by IG, shall be paid by IG at cost, as agreed to CIOM and IG, on
an ongoing basis. CIOM will pay for all system support and maintenance. The
fixed bandwidth cost per month is US$5,000, payable from the time the site is
operational.
Website
IG will pay CIOM an integration fee of US$ 10,000 for the services of
integrating the proposed Web site into the CR - Netbook TM, due upon completion
of integration.
Software License
The license cost is US$125,000, payable in three stages, US$22,500 by
March 20,1998, and $45,000 by April 20,1998, and US$57,500 by May 20,1998. IG
may pay the payments due at 30 and/or 60 days up to 30 days late without
penalty.
Revenue Sharing
IG shall receive 80% of the Internet generated GGR. The GGR is defined
as the Gross Revenue minus payout to the winners and before operating costs.
On-line Wagering, shall mean Gaming activities of any kind performed over
Network(s).
Payment Schedule
<TABLE>
<CAPTION>
20-Mar 20-Apr 20-May 20-Jun 20-Jul
------- -------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
CR - Netbook . . 22500 45000 57500
Systems User Fee 25000 45000 27000
Website. . . . . 15000 15000
Graphic Design . 5000 5000
Casino Software* 35000 * 40000 * 40000* 35000 *
Casino Servers . 15000
Casino Graphics. 10000
------- -------- --------- --------- ------------
Total. . . . . . 102500 110000 124500 65000 35000
------- -------- --------- --------- ------------
<FN>
*Contingent upon receipt~ of funding. No work to be started until payment made.
OK to above schedule subject to the * contingency.
</TABLE>
FOR: INTERNATIONAL GAMING LTD.
/s/ Eugene Herbert
- --------------------
Eugene Herbert
AMENDED AND RESTATED OPERATING AND REVENUE SHARING
MANAGEMENT SERVICES AGREEMENT
This Amended and Restated Operating and Revenue Sharing Management
Services Agreement ("Agreement") is effective the 13th day of March, 1998, by
and between International Gaming, LTD., or assigns, hereinafter "IG" or
"Licensee", a Nevis corporation, and Cyberoad.com (IOM) hereinafter "CIOM",
an Isle of Man corporation.
RECITALS
--------
These recitals form a material part of this agreement.
WHEREAS, CIOM and/or its affiliates through contractual agreements
with third parties develops gaming software, transaction systems for verifiable
events wagering, and has developed valuable technology, software, arid support
know-how and related expertise known as CR Net book (TM).
WHEREAS, IG is in the process of securing financing for the purpose of
licensing software, and wishes to enter into an agreement with CIOM for CIOM
and/or its affiliates through contractual agreements with third parties to
market the services of a sports gaming facility pursuant to which IG intends to
operate and market the services of a sports gaming facility that provides
wagering opportunities on verifiable events in sports.
WHEREAS, CIOM and/or its affiliates through contractual agreements
with third parties provides services in order for the licensee to operate and
maintain its own call center.
WHEREAS, the Parties have contemporaneously entered into a
non-exclusive license agreement by which CIOM grants IG a non-exclusive license
to Proprietary Technology owned by CIOM and/or its affiliates in connection with
the sportsbook, with its operational center in Costa Rica, and other associated
sites as needed (details of such license is outlined in a separate License
Agreement attached hereto).
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements recited in this Agreement and for other good and
valuable consideration. the receipt and sufficiency of which is hereby
acknowledged by each Party, the Parties hereby agree as follows:
1. DEFINITIONS As applicable in the normal course of the Interactive Gaming
-----------
Industry, and as defined in the Nonexclusive license agreement.
2. TERM AND Conditions PRECEDENT
---- --- ---------- ---------
2.1 Term. This Agreement shall remain in force for 99 years or until
terminated by either party for cause, or under paragraph 2.1.1.
2.1.1 Termination. Either party to this contract can terminate
upon giving 12 months notice after 9 year of operations without cause. Unless a
superseding agreement is entered into by the parties, CIOM will not have any
duty of any nature upon the termination of this agreement, except to do whatever
is necessary to effect a smooth transition for 1G.
2.2 Representations and Warranties. IG represents and warrants the
following:
2.2.1 IG certifies that it is a corporation in good standing and
validly existing under the laws of the jurisdiction of Nevis, W.I.
2.2.2 IG certifies that its actions entering the License Agreement
have been duly authorized by its board of directors and no consents or
approvals, to the best of the parties knowledge are required to be obtained (not
otherwise already obtained) from any governmental agencies of any kind having
jurisdiction over it and its activities.
2.2.3 IG certifies that entering into this Agreement will not
violate any other agreements of any kind to which it is a party parties and that
this Agreement will be enforceable by its terms.
3. SYSTEMS REQUIREMENTS AND PERFORMANCE STANDARDS AND EQUIPMENT Sharing
- -- ------- ------------ --- ----------- --------- --- --------- -------
3.1 Equipment Sharing. IG shall pay for its own call center
equipment and equipment updates.
3.2 Operating Costs and Other. Shall be as outlined in Schedule A,
contained herein. System requirements will be as follows,
3.2.1 Language. Version 1.0 of the IG Sportsbook Site shall
communicate by the English language. For future versions of the IG Sportsbook,
CIOM shall promptly and reasonably adapt the IG Sportsbook Site to other
languages, including Japanese, Chinese, Spanish, German, and Russian, as may be
technically feasible, at IG's sole expense under a budget approved by IG in
advance of such adaptation.
3.2.2 Customizing. At IG's request and sole expense, CIOM shall
promptly and to IG satisfaction, customize the original Site and IG's Sportsbook
located there, by additional programming, to create multi-ethnic identities and
other required languages. All costs for adapting Licensee's IG Sportsbook Site
as described in this Section shall be incurred pursuant to a budget agreed to in
writing by the parties. The adaptation of IG's IG Sportsbook, to include the
customization to create multi-ethnic and multi-language identities, shall, for
the purpose of this Paragraph, be deemed to occur at but one website and under a
single license fee. Additional web pages that refer clients to the same IG
Sportsbook site shall not subject IG to an additional license fee. However, any
additional website shall be subject to an additional license fee.
3.2.3 Proprietary Data Bases. CIOM shall provide a reasonable
system design to create proprietary databases of Clients who visit, register,
or wager at the Site. CIOM will not solicit IG's clients or sell, disclose, or
transmit, any proprietary client data to any third party without IG's written
consent CIOM will provide reports on a monthly basis that record the sites and
sources from which the clients entered the system client Tracking"). The
proprietary database shall remain and be the sole and exclusive property
of 1G.
3.2.4 Specific Sports and Bets. CIOM shall provide at least the
following event types to satisfy the requirements in Paragraphs 3.1.1 through
3.1.5 above:
3.2.4.1 NFL American Football
3.2.4.2 NCAA College Football
3.2.4.3 NBA Basketball
3.2.4.4 NCAA College Basketball
3.2.4.5 NHL Ice Hockey
3.2.4.6 Major League Baseball
3.2.4.7 Boxing
3.2.4.8 Soccer
3.2.4.9 Included wagering types:
Moneyline
Game Total
Point spreads Futures
Teaser & Parlays Propositions/Exotics
Point spreads Futures
CIOM shall promptly incorporate new event and wager types into the IG Sportsbook
as may be reasonably requested by Licensee. Such new wager and event types shall
be added at Licensee's expense and pursuant to a budget agreed to in writing by
the Parties, unless they are normal additions included in system upgrades under
the normal course of business. CIOM is not obligated to update, support or host
the software, or maintain any networks if this Agreement is terminated, except
as otherwise provided herein.
3.2.5 Player Registration. CIOM shall provide user access to allow
users to register electronically over the Internet as prospective account
holders on the Site and to review on line all rules, terms, and conditions
applicable to Gaming and other uses on the Site.
3.2.6 Player Assistance. CIOM shall provide player support on a
cost basis as outlined in Schedule A.
3.2.7 Financial Transactions. CIOM shall provide to Licensee such
applications as are necessary to provide electronic or other access to banks to
transfer Periodic Gross Win/Loss administered under the revenue sharing
provisions of Article 6 and Schedule A of this Agreement, as well as archival
storage capabilities for later audit and verification purposes.
3.3 Hardware. Is as defined in Schedule A. CIOM shall at its sole
cost and expense, provide or cause to be provided by a third party of its
designation, all utilities and services furnished to or to be used at the Site
or by the Server. IG shall pay for its own call center equipment.
3.4 Operation and Repair. The following performance standards
shall apply to Licensor's obligations under this Agreement:
3.4.1 Server. CIOM shall, during the term of this Agreement, keep
the Servers in good working condition and repair, except for any damage caused
to the Server by any negligent act of IG or its agents, employees, or invitees.
CIOM shall, during the term of this Agreement, provide sufficient Server
capacity such that users of the IG Sportsbook may reasonably operate the
applications contained in the IG Sportsbook. All repairs made by CIOM shall be
at its expense. CIOM shall have no liability to IG for damages arising from or
related to operation of the Server except for gross negligence of CIOM's
employees, agents, or invitees.
3.4.2 Web Site. IG will pay for the development of the original
web site as outlined in Schedule A. CIOM shall, during the term of this
Agreement, keep the Site in good working condition and repair, except for any
damage caused to the Site by any negligent act of IG or its agents, employees,
or invitees, and events beyond CIOM's control. All repairs made by CIOM shall be
at CIOM's expense. If IG desires to upgrade the system, IG must agree in writing
to pay the agreed upon fee towards any future upgrades, revisions or expansions.
IG expressly waives and relinquishes the provisions of any law or any other
right permitting IG to make repairs at CIOM's expense, except in cases where
CIOM is grossly negligent. CIOM shall have no liability to IG for damages
arising from or related to operation of the Site except for gross negligence of
CIOM's employees, agents, or invitees. Title to the site and all copyrights and
trademarks thereon other than the CIOM software shall be vested solely and
exclusively in 1G.
3.5 Alterations. IG shall not make any alterations to any programs
or graphic displays used on the Site and shall submit all requests for any such
alteration to CIOM in writing. Upon receipt of any such request by IG, CIOM
shall reasonably determine whether any such alterations may be incorporated into
the Site and CIOM shall report such determinations to IG in writing within 30
days. Thereafter, if CIOM determines such alterations may reasonably be made, it
shall do so at IG's expense, and shall begin such alterations within 30 days.
CIOM will not unreasonably withhold consent in areas of web site design,
graphics, or content.
3.6 Flaws or Glitches. CIOM shall promptly correct any flaws or
glitches in any program or graphic displays.
3.7 Site Control CIOM shall have exclusive control of and management
responsibilities for all Servers and shall have the right to establish, modify,
amend normal revision controls and Network/Server Management roles and
regulations for the use of the Servers and Software at the Site. CIOM shall
install software on all Servers to ensure the continued operation of the Site.
Nothing in this paragraph shall be construed to constitute control of such
contents by CIOM and the Licensee agrees to allow display at the Site of any
such disclaimer reasonably requested by CIOM.
3.8 Audit of Books and Records. Periodic and regular audits shall
be made on a yearly basis. The Parties shall engage and each pay half the fees
of the accounting firm selected under this agreement to audit the accounts,
records, and transactions established and performed under Articles 5 and 6 of
this Agreement. Additional audits requested separately shall be paid by the
initiating party. If the audit reveals underpayment by CIOM to IG of greater
than 5%, then CIOM shall pay all costs of the audit, and any amounts due,
including carrying cost at 3% above LIBOR.
4. MARKETING
- -- ---------
IG shall prepare and pay for a marketing plan, and subsequent
marketing, in developing the IG Sportsbook site.
5. BANKROLL
- -- --------
5.1 Licensee shall make such funds available that it has the
ability to pay for any and all winnings that may be generated by the clients.
6. REVENUE Sharing
- -- ------- -------
6.1 The Gross Win/Loss shall be disbursed through the c-cash
system on a daily basis. Any revenues derived by Licensee under this Agreement,
shall be paid to the Parties as follows:
6.1.1 Revenue Sharing to CIOM, See Schedule A.
6.1.2 Revenue Sharing to IG, See Schedule A.
6.1.3 The Gross Win/Loss, Cash Transactions and any cash recorded
in or by the IG Sportsbook, that both patties have an interest in, shall be
recorded and monitored according to mutually agreed guidelines.
7. PAYMENT OF LICENSE FEES HARDWARE
- -- ------- -- ------- --------------
7.1 Licensing Fees, See Schedule A
7.2 System Use Fees, See Schedule A
8. OTHER AGREEMENTS
- -- ----- ----------
8.1 Incorporation and Cross-Covenants. The provisions of the
Nonexclusive License Agreement, to the extent they are not inconsistent with any
provision of this Agreement, are incorporated by reference and shall become a
part of this Agreement. A material breach by either Party of the License
Agreement shall be a breach of this Agreement.
9. WARRANTIES AND REPRESENTATIONS
- -- ---------- --- ---------------
9.1 Warranty. CIOM warrants that Licensee's IG Sportsbook Site
will perform substantially in accordance with the performance specifications of
this Agreement.
9.2 NO OTHER WARRANTIES. TO THE MAXIMUM EXTENT PERMITTED BY ISLE
OF MAN LAW OR ANY OTHER LAW FOUND TO GOVERN ITS PERFORMANCE UNDER THIS
AGREEMENT, CIOM DISCLAIMS ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING,
BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE OR USE OTHER THAN FOR THE OPERATION OF SPORTSBOOK WAGERING,
FOR THE SERVICE, SOFTWARE, AND HARDWARE INVOLVED IN OR RELATED TO THE OPERATION
OF IG'S IG SPORTSBOOK SITE.
9.3 NO LIABILITY FOR CONSEQUENTIAL DAMAGES. TO THE MAXIMUM EXTENT
PERMITTED BY ISLE OF MAN LAW OR ANY OTHER LAW FOUND TO GOVERN ITS PERFORMANCE
UNDER THIS AGREEMENT, CIOM SHALL NOT BE LIABLE FOR ANY DAMAGES WHATSOEVER
(INCLUDING, BUT NOT LIMITED TO SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR INDIRECT
DAMAGES FOR PERSONAL INJURY, LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION,
LOSS OF BUSINESS INFORMATION, EXEMPLARY, OR PUNITIVE DAMAGES) ARISING FROM OR
RELATED TO OPERATION OF IG'S IG SPORTSBOOK SITE.
10. DEFAULTS AND REMEDIES
- ------------- --- --------
10.l Event of Defaults and Remedies.
10.1.1 By Licensee. It shall be an Event of Default if any of the
following breaches exists and remains in effect for a period of fifteen (15)
days after IG's receipt of CIOM's written notice to 1G.
10.1.1.1 IG becomes insolvent, calls a meeting of creditors or has
creditors' committee appointed, makes general assignment for the benefits of
creditors, or shall admit in writing its inability to pay its debts as they
become due, or shall file a voluntary petition in bankruptcy or shall seek to be
adjudicated bankrupt or insolvent, or shall file any petition or answer or
otherwise commence an action or proceeding seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under the laws applicable to Nevis jurisdiction or any other
present or future statute, law, or regulation, or shall file any answer
admitting or not contesting the allegations of the petition filed against any
such action or proceeding, or shall seek or consent or acquiesce to the
appointment of any trustee, receiver, or liquidator of IG or of any part of the
property of 1G.
10.1.1.2 Any action or proceeding is commenced against IG seeking
any reorganization, arrangement, liquidation, dissolution or similar relief
under the Nevis Bankruptcy Code or any other or future statute, law or
regulation, or the appointment of any trustee, receiver or liquidator of IG or
any or all of its property is not dismissed within 60 days of the commencement
or appointment, or IG by any act or omission indicates its consent to,
acquiescence in or approval of, any such action, proceeding or appointment or if
the relief requested is granted sooner.
10.1.1.3 Any monies owing to CIOM by IG remain unpaid by IG for 15
days after written notice of payments in arrears.
10.1.2 By CIOM. It shall be an Event of Default if any of the
following breaches exists and remains in effect for a period of fifteen (15)
days after CIOM's receipt of IG's written notice to CIOM.
10.1.2.1 There exists a final and unappealable judgment declaring
the Proprietary Technology invalid in its entirety or as infringing upon the
rights of any third party to preclude or substantially impair the lawful
operation of the Proprietary Technology IG's Site or IG's IG Sportsbook.
10.1.2.2 CIOM fails to perform or comply with any of the
provisions set forth in this Agreement relating to banking functions which
failure shall have continued for fifteen (15) days;
10.1.2.3 CIOM fails to perform or comply with any of the
warranties or representations set forth in this Agreement, which failure shall
have continued for 30 days following notice by IG to CIOM.
10.1.2.4 CIOM becomes insolvent, calls a meeting of creditors or a
creditors' committee appointed, makes a general assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts as they
become due, or shall file a voluntary petition in bankruptcy or shall seek to be
adjudicated bankrupt or insolvent, or shall file any petition or answer or
otherwise commence an action or proceeding seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under the Isle of Man Bankruptcy Code or any other present or
future statute, law, or regulation, or shall file any answer admitting or not
contesting the allegations of the petition filed against any such action or
proceeding, or shall seek or consent or acquiesce to the appointment of any
trustee, receiver, or liquidator of CIOM or of all or any part of the property
of CIOM.
10.1.2.5 Any action or proceeding is commenced against CIOM seeking
any reorganization, arrangement, liquidation, dissolution, or similar relief
under the Isle of Man Bankruptcy Code or any other or future statute,
law, or regulation, or the appointment of any trustee, receiver, or liquidator
of CIOM or any or all of its property is not dismissed within 60 days
of the commencement or appointment, or CIOM by an act or omission indicates its
consent to, acquiescence or approval of any such action, proceeding, or
appointment or if the relief requested is granted sooner.
10.2 CIOM's Rights and Remedies. Upon the occurrence of any Event of
Default under Section 10.1 and at any time thereafter, in addition to all other
rights and remedies available under the Uniform Commercial Code of Isle of Man
or other applicable law, this Agreement or otherwise, CIOM shall have the
following rights and remedies which may be exercised, in CIOM's discretion, at
any time or times, individually or cumulatively, with or without judicial
process, with or without the assistance of others and without notice to or
consent by IG except if such notice, consent or judicial process is expressly
required by law.
10.2.1 Terminate this Agreement or:
10.2.2 Operate this Site
10.3 Rights and Remedies. Upon occurrence of any Event of Default
described in Section 10.1 and at any time thereafter, in addition to all other
rights and remedies available under the Uniform Commercial Code of Isle of Man
or other applicable law, this Agreement or otherwise, IG shall be entitled to
terminate this Agreement without any further obligation to CIOM, with or without
notice to or consent by CIOM, except if such notice, consent, or judicial
process is expressly required by law.
11. JUDGMENT OF INFRINGEMENT
- --- -------- -- ------------
If a court of competent jurisdiction issues a final judgment or issues a
final injunction declaring the Proprietary Technology invalid in its entirety
or as infringing upon the rights of any third party to preclude or
substantially impair the lawful operation of the Proprietary Technology, IG's
Site or IG's IG Sportsbook, this Agreement shall terminate.
12. MISCELLANEOUS
- ------------------
12.l Arbitration. All claims, demands, or disputes of any kind between
the Parties arising under or related to this Agreement shall first be submitted
to mediation before a single mediator selected by the Parties. If, after Thirty
(30) days after such mediation has been initiated, the dispute has not been
resolved to the satisfaction of both Parties, the Parties shall then submit the
dispute to binding arbitration conducted in the English language in Vancouver,
B.C., Canada under the roles of the International Arbitration Center. Each Party
shall select an arbitrator, after which the arbitrators selected by each Party
shall select a third arbitrator. Any award from the panel of arbitrators shall
be confirmable in any court of competent jurisdiction and shall be entered as a
judgment enforceable by the prevailing Party. Any award from the panel of
arbitrators shall include an award of reasonable attorneys' fees and costs to
the prevailing Party.
12.2 Marking. IG agrees it will mark all literature and Site
communications that are the intellectual property of CIOM of any kind under this
Agreement with the appropriate trademark, copyright, or patent marking
reasonably required by CIOM. CIOM agrees it will mark all literature and site
communications that are the intellectual property of IG of any kind under this
Agreement with the appropriate trademark, copyright or patent marking reasonably
required by 1G. IG further agrees to allow CIOM to put CR NetbookTM logo on IG'
Sportsbook web-site.
12.3 Choice of Law. All disputes concerning the validity,
interpretation, or performance of this Agreement and any of its terms or
conditions, or of any rights or obligations of the Parties, shall be governed
by the laws of the State of Isle of Man, except its conflicts of laws.
l2.4 Regulatory Compliance. Nothing in this Agreement shall be
construed as requiring CIOM, its affiliates, agents, and joint-venturer, to
operate or act as a Sportsbook operator or any equivalent entity requiring CIOM,
its affiliates, agents, or joint venturer to obtain any license, concession or
any other permission to operate. Notwithstanding the foregoing, each Party
mutually acknowledges the existence of regulatory jurisdiction of national and
subnational units and covenant and agrees to cooperate at its own expense with
all such units to obtain any regulatory review, license, concession, or other
permission such units may reasonably require.
12.5 Complete Understanding and Modifications. This Agreement
constitutes the complete expression of the terms of the grant of this Agreement.
All previous and contemporaneous agreements, representations, and negotiations,
whether oral, written, or implied, related to this Agreement except the
Non-Exclusive License Agreement, are superseded by this Agreement, except those
included in the recitals to this Agreement. Any modifications to this Agreement
must be reduced to writing, signed by both Parties, and attached to this
Agreement, to be effective.
12.6 Assignability. IG shall have the right, subject to CIOM's
consent, which consent shall not unreasonably be withheld, to assign this
Agreement to a subsidiary, affiliate, or a purchaser of all or substantially all
the stock or assets of IG, after which any such assignee or purchaser shall
become a party to this Agreement. CIOM shall have the right to assign this
Agreement without the prior consent of 1G.
12.7 No Waiver. The failure by either Party to this Agreement to
insist upon performance by the other Party shall not constitute a waiver of any
rights under this Agreement and shall not bar, by waiver or estoppels,
insistence upon performance by the other Party.
12.8 Relationship of Parties. Nothing in this Agreement shall be
construed in a manner which would create an employee-employer, principal-agent,
joint venture, partnership relationship between the Parties.
12.9 Retention of Ownership. This Agreement is not to be construed as
an assignment of or transfer of ownership in the Proprietary Technology.
Licensor retains ownership of and exclusive right to apply, license, or assign
the licensed Proprietary Technology and all its improvements, alterations, or
additions to such Proprietary Technology. The license to the use of the CR
Netbook system extends beyond the termination of this agreement, but CIOM has no
obligation to provide support or upgrades unless a separate agreement is entered
into. IG shall have exclusive ownership of the Site, the URL, Website Graphics
and database contents, including customer list.
12.10 Application of IG's Improvements. IG shall not use, in the
performance of its obligations under this Agreement. any improvements or
additions to or in support of the Site developed by or on its behalf, without
the prior written consent of CIOM, which will not be unreasonablywithheld.
12.11 Severability. If any provision of this Agreement is illegal or
unenforceable, it shall be deemed stricken and all the remaining provisions
shall remain in full force and effect.
12.12 Survival of Obligations. Each Party does for it and its
successors, heirs, executors, administrators, representatives, insurers, agents,
and assigns, covenants and agrees that it and they will continue to adhere to
the restrictions and obligations of this Agreement and this Agreement shall
inure to their continued benefit.
12.13 Representation by Counsel; Interpretation. CIOM and IG each
acknowledge that each Party to this Agreement has been represented by counsel in
connection with this Agreement and the transactions contemplated by this
Agreement. Accordingly, any rule of law, or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against the
Party that drafted them has no application and is expressly waived. The
provisions of this Agreement shall be interpreted in a reasonable manner to
effect the intent of CIOM and 1G.
12.14 Recitals. The recitals shall be considered part of this
Agreement.
12.15 Headings. The Headings are for informational purposes only and
shall rot constitute part of this Agreement.
12.16 Multiple Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be considered an original executed
version of this document.
12.17 Force Majeure. The Parties shall be excused from performance
of their respective obligations under this Agreement for such period of time
within which they are prevented from performing their obligations by acts of
God, failures of Internet network or other communications facilities to permit
operation of the Site, governmental intervention, riot, revolutions,
insurrection, civil disturbances, strikes, or any other causes beyond their
reasonable control.
12.18 Partial Invalidity. If any term or provision of this Agreement,
or any application of this Agreement to any Party or circumstance, shall be
declared invalid or unenforceable, the remainder of this Agreement, or its
application, shall not be affected by such determination and each other term and
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted bylaw.
12.19 Further Assurances. The Parties covenant and agree to execute
such documents and perform such things as may reasonably be necessary to effect
the execution and implementation of this Agreement.
12.20 Notices. Any notice given by either Party to the other Party
shall be deemed to have been sufficiently given if sent by registered air mail
or by cable, telex, or telecopier, to the address of the Party as follows,
unless such other Party designates another address in writing:
If to CIOM.
Cyberoad.com (IOM) Limited
Castle Hill, Victoria Road
International House
Douglas, Isle of Man
British Isles, 1M2 ORB
If to IG:
Eugene Herbert
International Gaming LTD.
c/o Nevis International Trust Company
Stoney Grove, Charlestown
Nevis, West Indies
And fax copy to: 212-504-7979
869-469-5898
IN Witness WHEREOF, each party of the parties has caused this Agreement to
he executed on the dare first above stated.
CYBEROAD.COM (IOM) LIMITED
_________________ By: /s/ John Coffey
----------------------
Witness John Coffey, President
INTERNATIONAL GAMING LTD
__________________ -------------------------
Witness Title: President
INTERNATIONAL GAMING LTD
By: /s/ Robert Herbert
___________________ -------------------------
Witness Title: President
CYBEROAD.COM (IOM) LIMITED
_________________ By:
----------------------
Witness Title:
AMENDED AND RESTATED OPERATING,
LICENSE, REVENUE SHARING AND
MANAGEMENT SERVICES AGREEMENT
This Amended and Restated Operating, License, Revenue Sharing and
Management Services Agreement ("Agreement") is effective as of the 5th day of
May, 1998, by and between ASANOL MANAGEMENT CORP. with its directors, officers,
agents representatives and assigns, hereinafter "Licensee", and Cyberoad.com
(IOM) Limited, hereinafter "CIOM", an Isle of Man corporation.
RECITALS
--------
These recitals form a material part of this agreement.
WHEREAS, CIOM and/or its affiliates through contractual agreements with
third parties develops gaming software, transaction systems for verifiable
events wagering, and has developed valuable technology; software, technical and
support know-how and related expertise know as CR Netbook (TM)" (hereinafter
"Proprietary Technology").
WHEREAS, Licensee wishes to license Proprietary Technology from CIOM and
wishes to enter into an agreement with CIOM for CIOM and/or its affiliates
through contractual agreements with third parties to market the services of a
sports gaming facility pursuant to which Licensee intends to operate and market
the services of a sports gaming facility that provides wagering opportunities on
verifiable events in sports, and on-line casino games.
WHEREAS, CIOM and/or its affiliates through contractual agreements with
third parties provides services in order for the licensee to operate and
maintain its own call center.
WHEREAS, the Parties are entering into a non-exclusive license agreement by
which CIOM grants Licensee a non-exclusive license to Proprietary Technology
owned by CIOM and/or its affiliates in connection with the sportsbook, with its
operational center in Costa Rica, and other associated sites as needed.
WHEREAS, Licensee shall be responsible for all marketing and shall provide
the bankroll and assume all business risk of the on-line Casino Sportsbook
operation, including but not limited to paying out all winners, and will provide
all the business rules governing the on-line Sportsbook & Casino.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements recited in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by each Party, the Parties hereby agree as follows:
1. TERM AND CONDITIONS PRECEDENT
- -- ---- --- ---------- ---------
1.1 Term. This Agreement shall remain in force indefinitely until
terminated by either party for cause, or under paragraph (1.2, 1.3, 1.4)
1.2 Termination. Either party to this contract can terminate upon giving 6
months written notice of termination, without cause, but no less than 2 years
from the Website being operational, presently estimated to be May Pt 1998.
Unless a superseding agreement is entered into by the parties, CIOM will not
have any duty of any nature upon the termination of this agreement (except the
terms, which this Agreement include), but will agree to do what ever is
necessary to effect a smooth transition for Licensee.
1.3 Dissolution. Licensee may unilaterally turn down the delivery of the
system as suggested, and as such CIOM has no right of claim on Licensee for
costs damages or other charges that are associated with the development,
building and construction of the site, other than such requests specifically
ordered by Licensee and executed by CIOM.
1.4 Cancellation at infringement Upon occurrence of any Event of Default
described herein, and as can be reasonably expected as standard business
practices in addition to all other rights and remedies available under the
Uniform Commercial Code of Isle of Man or other applicable law, this Agreement
or otherwise, Licensee shall be entitled to terminate this Agreement without any
further obligation to CIOM, with or without notice to or consent by CIOM, except
if such notice, consent, or judicial process is expressly required by law.
2. SYSTEMS REQUIREMENTS. PERFORMANCE STANDARDS AND EQUIPMENT SHARING
- -- ------- ------------- ----------- --------- --- --------- -------
2.1 The System. The system is defined and limited to server centers in
Vancouver and Costa Rica with the required tele-communications connectivity to
operate Web servers and transaction servers in the two locations to offer
betting services to the North American and Russian sports market, Software and
Hardware which is necessary to system operate.
2.2 Proprietary Data Bases. CIOM shall provide a reasonable system
design to create proprietary databases of Clients who visit, register, or wager
at the Site. CIOM will not solicit Licensee's clients or sell, disclose, or
knowingly transmit, any proprietary client data to any third party without
Licensee's written consent. Databases and the all information from these
databases and a program interface are Licensee's property.
2.3 Player Registration. CIOM shall provide user access to allow users
to register electronically as prospective account holders of the Site and to
review all rules, terms, and conditions applicable to Gaming and other uses on
the Site.
2.4 Player Assistance. Licensee shall pay player support as needed to
maintain the system even if supplied by CIOM (consultation, explanation and
etc.).
2.5 Financial Transactions. CIOM shall prepare and provide to Licensee
such applications as are necessary to provide electronic or other access to
banks to transfer Win/Loss administered by Licensee as well as archival storage
capabilities for later audit and verification purposes. Such a system shall be
integrated into operating software and operate under the commercial name
"EBANX". All accounts shall be available for review by Licensee upon request,
and will be audited by Pannel Ken Forester's Vancouver Office. Final release of
profits from operations shall be made on a weekly basis after account reviews
both by Licensee and CIOM License will enter into a separate agreement with
eBanx outlining the relationship between Licensee and eBanx.
2.6 Operation and Repair. Licensee shall pay and CIOM shall provide the
installation of the servers necessary to run the system as described. These
servers are Licensee's property. CIOM shall, during the term of this Agreement,
keep the Servers in good working condition and repair, except for any damage
caused to the Server by any negligent act of Licensee or its agents, employees,
or invitees, and except for reasonable wear and tear and events beyond CIOM 's
control. CIOM shall, during the term of this Agreement, provide sufficient
Server capacity such that users of the Licensee Sportsbook may reasonably
operate the applications contained in the Licensee Sportsbook. If and when
required, additional bandwidth will be added and paid for as an item from
operating expenses. All repairs made by CIOM shall be at its expense. Licensee
expressly waives and relinquishes the provisions of any law or any other right
permitting Licensee to make repairs at CIOM's expense. CIOM shall have no
liability to Licensee for damages arising from or related to operation of the
Server except for willful misconduct of CIOM's employees, agents, or invitees.
2.7 Web Site. CIOM shall develop the original web-site for Licensee.
This web-site will be the property of CIOM until all systems and components are
accepted and paid for by Licensee. After this payment the Web-site will be the
Licensee's property and CIOM must transfer to the Licensee all original
program's material about Web-site. CIOM can't sell or use this Web-site without
Licensee's permission.
2.8 Flaws or Glitches. CIOM shall promptly provide and immediately
correct any flaws or glitches in any program or graphic displays
2.9 Audit of Books and Records. Regular audits shall be paid from
operating expenses. Any extraordinary audits requested by either party shall be
paid for by the initiating party, unless a discrepancy of more than s~ is
discovered by the audit, in which case the costs shall be paid by CIOM.
2.10 Extent of Service. The Service provides for software and hardware
maintenance of the System at
2.11 Marketing. CIOM, through service agreements, shall develop and
provide a marketing plan for Licensee.
3. EXPENSES, REWARDS, AND REVENUE SHARING, PROPERTY
- -- --------- -------- --- ------- -------- --------
3.1 The party's expenses must be coordinated in the Budget. The Budget
shall be considered part of this Agreement (Appendix "A"):
3.1.1 Telecom Cost Sharing. Licensee shall pay for its own Call
Center equipment.
3.1.2 Licensee shall pay for Call Center Telecom Charges.
3.1.3 Operating Cost The Licensee shall pay all operating costs
for the system and the site while CIOM shall pay all software and hardware
maintenance cost.
3.1.4 Marketing. Once the marketing plan, which was developed by
CIOM for Licensee, is approved by Licensee, Licensee shall pay all marketing
costs connected with Licensee's Web-site as described in Budget, which is
considered part of this Agreement.
3.1.5 Web-site. The Licensee shall pay for the development of the
original web site to CIOM, with all modifications and changes to the site paid
by Licensee (exclude the paragraph 2.8 of this Agreement) at the current rates
applicable at the time of the changes. The Licensee shall pay for the
development of the Web-site after acceptance of the whole system.
3.1.6 Player Assistance. Licensee shall pay player support as
needed to maintain the system, cost to be determined, but presently estimated to
be 2 telephone operators and equipment.
3.1.7 All other expenses that connect with operating of the system
but not indicate in this Agreement shall be paid from the sum incoming from
wagering, unless specifically defined and agreed by Licensee.
3.2 All revenue sums, which come from the online and Call Center must
deposit to the Licensee's account, after deducting CIOM Revenue share, operating
costs and other incidentals.
3.3 Licensee shall share in the Gross Revenue (Appendix "A") as
follows:
3.3.1 All generated revenue:
- CIOM- 50% (Fifty percent);
- Licensee - 50% (Fifty percent)
3.4 All equipment, including servers, hardware, software, which was
paid by Licensee, is Licensee's property.
4. JUDGMENT OF INFRINGEMENT
- -- -------- -- ------------
If a court of competent jurisdiction issues a final judgment or issues a
final injunction declaring the Proprietary Technology invalid in its entirety or
as infringing upon the rights of any third party to preclude or substantially
impair the lawful operation of the Proprietary Technology~ Licensee's Site or
Licensee's Sportsbook, this Agreement shall terminate.
5. WARRANTIES AND AMENABILITY
- -- --------------------------
5.1 Licensee Protection from the Encroachment by the Third Persons.
CIOM shall guarantee that it is lawful owner of all the Proprietary Technology
rights as well as of all software that is developed for the Licensee and shall
defray all legal and other costs for all and any manner of actions, causes of
action or suits relating to any encroachment, larceny or claims for the CIOM
Proprietary Technology or software even if they are asserted against the
Licensee, and all the loss covered in that manner shall be paid by CIOM The
Licensee will agree to do whatever is necessary in the proceedings relating to
any of such action, cause of action or legal process without defraying costs.
6. MISCELLANEOUS
- -- -------------
6.1 Arbitration. All claims, demands, or disputes of any kind between
the Parties arising under or related to this Agreement shall first be submitted
to mediation before a single mediator selected by the Parties. If, after Thirty
(30) days after such mediation has been initiated, the dispute has not been
resolved to the satisfaction of both Patties, the Parties shall then submit the
dispute to binding arbitration conducted in the English language in Vancouver,
BC, Canada under the rules of the International Arbitration Center. Each Party
shall select an arbitrator, after which the arbitrators selected by each Party
shall select a third arbitrator. Any award from the panel of arbitrators shall
be conformable in any court of competent jurisdiction and shall be entered as a
judgment enforceable by the prevailing Party. Any award from the panel of
arbitrators shall include an award of reasonable attorneys' fees and costs to
the prevailing Party.
6.2 Assignment. AMC shall have the right, subject to CIOM's reasonable
consent to assign this Agreement to a subsidiary, affiliate, or a purchaser or
all or substantially all the stock or assets of AMC after which any such
assignee or purchaser shall become a party to this Agreement. CIOM shall have
the right to assign this Agreement at anytime without the prior consent of AMC
6.3 Choice of Law. All disputes concerning the validity,
interpretation, or performance of this Agreement and any of its terms or
conditions, or of any rights or obligations of the Parties, shall be governed by
the laws of the State of Isle of Man, except its conflicts of laws.
6.4 Survival of Obligations. Each Party does for it and its successors,
heirs, executors, administrators, representatives, insurers, agents, and
assigns, covenants and agrees that it and they will continue to adhere to the
restrictions and obligations of this Agreement and this Agreement shall inure to
their continued benefit.
6.5 Recitals. The recitals shall be considered part of this Agreement.
6.6 Notices. Any notice given by either Party to the other Party shall
be deemed to have been sufficiently given if sent by registered air mail or by
cable, telex, or telecopier, to the address of the Party as follows, unless such
other Party designates another address in writing:
If to CIOM~
Cyberoad.com (IOM) Limited
Castle 1-1111, Victoria Road
International House
Douglas, Isle of Man
British Isles, 1W 4RB
Blank (fill in)
If to Licensee:
ASANOL MANAGEMENT CORP.
Road Town,
Pasea Estate,
SCHEDULE "A"
Systems User Fee
In exchange for the Network Fees paid to CIOM, it shall provide the
following:
Transaction server in Costa Rica
Web server in-Vancouver
Satellite ground station and hookup facilities
Network access to the Internet
System Use Fee for Website:
US$5,000/month for Bandwidth cost and network fee, from the time of
commencement of operation of the Website.
Server cost: $6,000/server X 2 = US$12,000
System User Fee for Call Center
Fixed and Variable Charges plus Operating Costs
Operating Costs
CIOM shall pay for the maintenance of the system while the system is
hosted on servers on its network When the system is installed on
Licensee's network it will pay for all operating and maintenance costs,
including any all costs to build separate facilities to host the system,
according to Schedule GP Operating Projections attached.
Website
The web site development is quoted as costing $40,000
Software License
The license cost is US$150,000, payable in two stages, US$75,000 at
the time of the signing of the Agreement, and $75,000 within 60 days
of the completion of installation and delivery of the system.
Revenue Sharing
Sportsbook Revenue
Licensee - 50% of the Gross Gaming Revenue ("GGR").
CIOM- 50% of the GGR.
Casino Gaming
Licensee - 50% of the GGR
CIOM- 50% of the GGR.
Set Up Fees
Software License $150,000
Website $40,000
Server $12,000
Total: US$202,000 Due at Signing
ASANOL MANAGEMENT CORP.
By:/s/ Dr. A. Karapatakis
-------------------
Title: Director
-------------------
CYBEROAD.COM (IOM) LIMITED
By: /s/ John Coffey
----------------------
Title: President
----------------------
AMENDMENT to SCHEDULE "A" of the GRAND PRIX OPERATING, LICENSE, REVENUE SHARING
AND MANAGEMENT SERVICES AGREEMENT dated MAY 5, 1998
This Amendment, as of September 1, 1999 evidences the following:
REVENUE SHARING
Each of the Licensee and CGC shall receive 50% of the Gross Gaming Revenue after
payment of any and all fixed expenses and transaction fees as set out in the
Agreement, which fixed expenses and transaction fees the parties hereto shall
divide between themselves on a 50 / 50 basis. Any expenses that are not set out
in the Operating, License, Revenue Sharing and Management Services Agreement
dated May 5, 1998, should be agreed upon in writing by the parties hereto prior
to any deduction or payment of such expenses.
EXECUTION
This Agreement may be executed in as many counterparts as may be necessary, and
each counterpart shall be deemed to be an original and shall bear the date first
written above.
ACKNOWLEDGED AND AGREED TO BY:
CYBEROAD.COM (ISLE OF MAN) LIMITED ASANOL MANAGEMENT CORPORATION
/s/ David Harris /s/ Sergei Nitsenko
David Harris, Sergei Nitsenko
Director Director
[Asanol Management Corp Seal]
AMENDMENT TO THE GRAND PRIX OPERATING, LICENSE, REVENUE SHARING AND
MANAGEMENT SERVICES AGREEMENT DATED MAY 5, 1998
This Amendment, as of September 1, 1999, evidences the following:
WHEREAS ASANOL MANAGEMENT CORPORATION ("Asanol"), holds 100% ownership of The
Big Book Website, Domain Name, Software, Licenses and Operations; and
WHEREAS CYBEROAD.COM (ISLE OF MAN) LIMITED ("IOM"), entered into an Operating,
License, Revenue Sharing and Management Services Agreement for The Grand Prix
Website, Domain Name, Software License and Operations (the "Grand Prix
Agreement"); and an Amendment to that Agreement, (the "Grand Prix Amendment")
and a Termination Agreement in respect to ownership with Cyberoad Gaming
Corporation dated June 11, 1999; all of which is attached hereto, the parties
agree as follows:
The parties hereby agree that all terms and conditions contained
within the Grand Prix Agreement are the same and will apply to the terms and
conditions of the Big Book Operating, License, Revenue Sharing and Management
Service Agreement between the parties; and
These terms and conditions will be binding and in full effect, as in
the Grand Prix Agreement, on all parties contained therein.
EXECUTION
This Agreement, may be executed in counterpart, in as many counterparts as may
be necessary, and each counterpart shall be deemed to be an original, and shall
bear the date first written above.
ACKNOWLEDGED AND AGREED TO BY:
CYBEROAD.COM (ISLE OF MAN) LIMITED ASANOL MANAGEMENT CORPORATION
/s/ David Harris /s/ Sergei Nitsenko
David Harris, Sergei Nitsenko
Director Director
[Asanol Management Corp Seal]
SOFTWARE LICENSE AGREEMENT
THIS SOFTWARE LICENSE AGREEMENT (this "Agreement") is effective as of the
October 15, 1998, by and between Nordic Investment Corporation (hereinafter
"Licensor") a Marshall Islands Corporation or Assignee, and Cyberoad.com a St.
Kitts, West Indies Corporation with a principal place of business at Oficentro
Sabana Sur, Building 7, 5th Floor, San Jose, Costa Rica.
WITNESSETH
WHEREAS, Licensee has approached Licensor to provide Internet Casino software
for the purposes of online wagering entertainment.
WHEREAS, Licensee desires to integrate an electronic payment method to the
Licensor's software.
WHEREAS, each party hereto represents that it is ready, willing, and able to
undertake the responsibilities and obligations set forth in this Agreement, and
that it possesses the rights, resources, and capabilities to perform its
responsibilities under this Agreement;
NOW, THEREFORE, in consideration of the premises, and of the obligations herein
made and undertaken, the parties hereto do hereby covenant and agree as follows:
Section 1
DEFINITIONS
For the purposes of this Agreement, the definitions set forth in this
Section shall apply to the respective capitalized terms:
1.1 "Agreement Territory" Costa Rica and the rest of the world.
1.2 "Software." Computer programming Software, including
CasinoComplete(TM) and associated procedural Software.
1.3 "Derivative Work" A work that is based upon one or more preexisting
works, such as a revision, modification, translation, abridgement, condensation,
expansion, or any other form in which a preexisting work may be recast,
transformed, or adapted, and that, if prepared without the authorization of the
Licensor of the preexisting work, would constitute a copyright infringement.
1.4 "Documentation." The printed material relating to the Software,
including the description of the principles of operation of the Software.
1.5 "Enhancement." A change or addition to the Software or
Documentation, other than an Error Correction, that improves its function, adds
new function, or substantially enhances its performance.
1.6 "Error." A defect in the Software or a mistake in the Documentation
that prevents the Software from functioning in material conformity with the
Specifications.
1.7 "Error Correction." A change to the Software or the Documentation
that is in a form that allows its application to the Software or inclusion in
the Documentation to reestablish material conformity with the specifications.
All Error Correction shall be considered part of Software and Documentation for
all purposes under this Agreement.
1.8 "Net Wm." All casino earnings less all winnings paid.
1.9 "Product." Computer programs that contain, or are Derivative Works
of, the Software or any Subset thereof.
1.10 "Front End" All custom art, graphics and animations as it relates
to the games, websites and related web pages.
<PAGE>
Section 2
LICENSOR'S OBLIGATIONS
2.1 Initial Deliveries. Licensor shall deliver to Licensee, two (2)
copies of the Software. The first copy will be due upon ratification of this
agreement. The second copy will be available at the Licensees' request.
2.2 Support Services. Licensor shall provide support services in
accordance with Section 9 hereof relating to the Software for training, ongoing
support and demonstration purposes relating to the software.
2.3 Enhancements. Licensor may offer Enhancements as proposed additions
to the Software and Documentation in accordance with Section 6 hereof.
2.4 Electronic Payment System Integration Licensor will assist Licensee
in the integration of an electronic payment system.
Section 3
LICENSEE OBLIGATIONS
3.1 Evaluation and Testing. Licensee shall evaluate and test the
Software to determine its suitability for use for live wagering online casino
entertainment.
3.2 Marketing. If such assessment is positive, Licensee shall use all
reasonable efforts to market the Products in accordance with this Agreement.
3.3 Equipment and Network Facilities: Licensee shall be responsible for
providing all equipment including servers, and network facilities.
3.4 Electronic Payment Integration: Licensee shall be responsible for
the total integration of the electronic payment system.
3.5 Customer Service. Licensee shall be responsible for all customer
service and support related to the software.
3.6 Website Development and Game Graphics. Licensee shall be
responsible for all website and graphic development related to the front end.
3.7 Royalties. Licensee shall pay royalties to Licensor in accordance
with Section 5.
Section 4
GRANT OF LICENSE
Licensor hereby grants to Licensee, a perpetual non-exclusive right and
license to use the software online. Upgrades and support to be available to
Licensee subject to this agreement being in good standing.
Section 5
ROYALTIES AND PAYMENT
5.1 Royalties. Licensee shall pay to Licensor, the amounts as earned
royalties beginning on the first day of live wagering:
25% of the Net Win less standard eBanx financial charges, bonuses given to
induce persons to open accounts and any chargebacks or bad cheques per software
copy until total amount earned by Licensor per software copy equals $300,000.00
(US) as software license fee, 5% of the Net 'Win as described above for upgrades
and technical support thereafter.
Per Software Copy PER-COPY ROYALTY AMOUNT
CasinoComp1ete(TM) 25% of Net Win to $300,000.00(US)
5% of Net Win thereafter
All royalty payments shall be made on a 30 day, pro-rated monthly basis.
Section 6
AVAILABILITY OF ENHANCEMENTS
Licensor will from time to time offer Enhancements, to the extent developed
or acquired by Licensor, to Licensee for inclusion in the Software. If the
parties agree on inclusion of any Enhancements, appropriate changes in the
Specifications and royalty provisions shall be set forth in a written amendment
to this Agreement, and thereupon the Enhancements shall become part of the
Software for purposes of this Agreement.
Section 7
LIMITED WARRANTY AND LIMITATION OF LIABILITY
7.1 Licensorship and Authority Licensor wan-ants that it is authorized
and retains all rights necessary related to the software, granted by this
Agreement.
7.2 Conforrnity to Specifications Licensor warrants that the Software
will, at the time of delivery, conform in all material respects to the
Specifications.
Section 8
OBLIGATION FOR EXPENSES
Licensor shall have no obligation or requirement whatsoever to reimburse
Licensee for any expenses or costs incurred by Licensee in the performance of,
or otherwise by reason of, this Agreement. Licensee's incursion of costs or
expenses under this Agreement is at its sole risk and upon its independent
business judgment that such costs and expenses are appropriate.
Section 9
SUPPORT SERVICES
9.1 Technical Support and Training; Error Correction. Licensor shall
provide, during the term of this Agreement, the following support services to
Licensee:
1. 1. Initial technical support and training in the use of the
Software, including system set-up including any Enhancements, at the Licensor's
convenience; and
2. Efforts to prepare Error Correction of the Software upon
reasonable notice of the nature of any identified Errors.
9.2 Personal Services. It is understood and agreed that the personal
services of Licensor and of Licensor's technical experts are required for
support services by reason of authorship and unique familiarity with the
Software and Documentation and by reason of their unique understanding of the
underlying programming theories and specialized methods and practices used.
<PAGE>
Section 10
TERM OF AGREEMENT
The term of this Agreement shall commence on the date hereof and continue,
unless sooner terminated under Section 12.
Section 11
ASSIGNMENT
Licensor shall have the right, subject to Licensee's reasonable consent, to
assign this Agreement to a subsidiary; affiliate, or a purchaser of all or
substantially all the stock or assets of Licensor, after which any such assignee
or purchaser shall become a party to this Agreement. Licensee shall have the
right to assign this Agreement at anytime without the prior consent of Licensor
Section 12
TERMINATION; EFFECT OF TERMINATION
12.2 Breach. Should either party commit a material breach in its
obligations hereunder, or should any of the representations of either party
prove to be untrue in any material respect, the other party may, at its option,
terminate this Agreement by thirty (30) days written notice to the other party~
Such notice shall identify and describe the default upon which termination is
based. The defaulting party shall have thirty (30) days to cure such default,
which, if effected, shall prevent termination by virtue of such default.
12.3 Consequences. Upon the termination of this Agreement, Licensee
shall continue the use of the software, as needed, under the royalty and payment
guidelines stated in Section 5.
12.6 Continuation of Payment. Licensor shall continue to be entitled to
fees and charges set forth in Section 5 that have accrued or shall accrue.
Section 13
INDEMNIFICATION
13.1 Licensor Indemnification. Licensor agrees to, and does hereby,
indemnify and hold harmless Licensee from any and all claims, demands, or
actions alleging that the Software, including any Enhancements, in the form
delivered by Licensor, infringes or abridges any third-party rights in
copyright, trade secret, or other intellectual property rights.
13.2 Licensee Indemnification. Licensee agrees to indemnify and hold
harmless Licensor from any and all claims, demands, or actions, whether
initiated by individual or governmental entities, from or relating to the
gambling aspects of Products.
13.3 Force Majeure. Neither party shall be in default if failure to
perform any obligation hereunder is caused solely by supervening conditions
beyond that party's control, including acts of God, civil commotion, strikes,
labor disputes, and governmental demands or requirements.
13.4 Scope of Agreement; Amendment. The parties hereto acknowledge that
each has read this Agreement, understands it, and agrees to be bound by its
terms. The parties further agree that this Agreement is the complete and
exclusive statement of agreement and supersedes all proposals (oral or written),
understandings, representations, conditions, warranties, covenants, and other
communications between the parties relating hereto. This Agreement may be
amended only by a subsequent writing that specifically refers to this Agreement
and is signed by both parties, and no other act, document, usage, or custom
shall be deemed to amend this Agreement.
Section 14
NON-Disclosure AND NONCIRCUMVENTION
<PAGE>
14.1 Both parties agree not to disclose any confidential intonation not
in the public domain, gained from the other to any third parties.
14.2 Both parties agree not to do any direct independent business with
any third parties introduced to the other without the express written agreement
of the other party. Penalties for breach of this clause will be the higher of US
$100,000 or 5% of the total net dollar value of any business done between these
parties. The following are protected third parties under Licensee and Licensor
Licensor's third parties:
Eloy Alfaro (Attomej) - Costa Rica
Dub Media, Inc. - Santa Clan, CA
Garr Inc. - Seattle, WA
Object Methods - Los Angeles, CA
MNM Soft - Los Angeles, CA
Martin Info Systems, Los Angeles, CA
Starbelly Productions Inc. - Cleveland, OH
Corwin Kipp (worldwideholdings)- Seattle, WA
Monte Carlo Management, Antigua
Wayae Bryan - VA
Brad Astleford - IL
Web One Communications - FL
Licensee's third parties:
Harbour Centre Complex - Vancouver
MetroNet Communications Group - Canada
Starcom International Optics Corporation - US and Canada
Carlos Chamberlain - Costa Rica
HQ Vancouver
Any additions to this list must be submitted to the other party and agreed upon
prior to any introductions to be considered protected contacts under this
provision.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized representatives as set forth below.
Nordic Investment Corp Cyberoad.com Gaming Corporation
By./s/ Ehren Richardson By:/s/ Calvin Ayre
---------------------- -----------------
Ehren Richardson Calvin Ayre
President Chief Executive Officer
Date: 10-14, 1998 Date: October 15,1998
-------------- ----------------
<PAGE>
Amendment 1.0 to Software License Agreement
DEFINITIONS
1.11 "Titanic Casino". All art, graphics and animation as it relates to the
games, website and related web pages of the Titanic Casino, a custom Front End
developed for Gambling Software purposes.
Per Section 14 of the Software License Agreement, Licensee accepts the Titanic
Casino as confidential information to be used for testing and evaluation
purposes only. Licensee will under no circumstances make available to the
public, the games, website or any related graphics of the Titanic Casino.
/s/ Calvin Ayre
- -----------------
Calvin Ayre
CEO
Cyberoad Gaming Corporation
November 4, 1998
- --------------------
Date
AMENDED AND RESTATED OPERATING AND REVENUE SHARING
MANAGEMENT SERVICES AGREEMENT
This Amended and Restated Operating and Revenue Sharing Management Services
Agreement ("Agreement") is effective the 19th day of April, 1999, by and between
Asanol Management Corporation, or assigns, hereinafter "AMC' or "Licensee", and
Cybemad.com (IOM) Limited, hereinafter "CIOM", an Isle of Man corporation.
RECITALS
--------
These recitals form a material part of this agreement.
WHEREAS, CIOM and/or its affiliates through contractual agreements with
third parties develops gaming software, transaction systems for verifiable
events wagering, and has developed valuable technology; software, technical and
support know how and related expertise known as CR Netbook .
WHEREAS, AMC is in the process of securing financing for the purpose of
licensing software, and wishes to enter into an agreement with CIOM for CIOM
and/or its affiliates through contractual agreements with third parties to
market the services of a sports gaming facility pursuant to which AMC intends to
operate and market the services of a sports gaming facility that provides
wagering opportunities on verifiable events in sports, and on-line casino games,
WHEREAS, CIOM and/or its affiliates through contractual agreements with
third parties provides services in order for the licensee to operate and
maintain its own call center,
WHEREAS, the Parties have contemporaneously entered into a non- exclusive
license agreement by which CIOM grants AMC a non-exclusive license to
Proprietary Technology owned by CIOM and/or its affiliates in connection with
the "Bigbook", with its operational center in Costa Rica, and other associated
sites as needed, (details of such license are outlined in a separate License
Agreement attached hereto),
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements recited in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by each Party, the Parties hereby agree as follows:
1. DEFINITIONS: As applicable in the normal course of the Interactive Gaming
-----------
Industry and as defined in the Non-exclusive license agreement.
2. TERM AND CONDITIONS PRECEDENT:
---- --- ---------- ---------
2.1 Term. This Agreement shall remain in force for 99 years or until
terminated by either party for cause.
3. SYSTEMS REQUIREMENTS. PERFORMANCE STANDARDS AND EQUIPMENT SHARING
------- ------------- ----------- --------- --- --------- -------
3.1 Equipment Sharing. All equipment purchases and leases will be paid for
by CIOM.
3.1.1 Equipment Updates. All equipment updates will be paid for by
CIOM.
3.2 Operating Costs and Other. Shall be the responsibility of CIOM System
requirements will be as follows:
3.2.1 Language. Version 1.0 of the AMC Sportsbook Site shall
communicate by the English language. For future versions of the AMC Sportsbook,
CIOM shall promptly and reasonably adapt the AMC Sportsbook Site to other
languages, including Japanese, Chinese, Spanish, German, and Russian, as may be
technically feasible, at CIOM's sole expense under a budget approved by AMC in
advance of such adaptation.
3.2.2 Customizing. At AMC's request and sole expense, CIOM shall
promptly and to AMC's satisfaction, customize the original Site and AMC's AMC
Sportsbook located there, by additional programming, to create multi-ethnic
identities and other required languages. All costs for adapting Licensee's AMC
Sportsbook Site as described in this Section shall be incurred pursuant to a
budget agreed to in writing by the parties.
3.2.3 Proprietary Data Bases. CIOM shall provide a reasonable
system design to create proprietary databases of Clients who visit, register, or
wager at the Site. CIOM will not solicit AMC's clients or sell, disclose, or
transmit, any proprietary client data to any third party without AMC's written
consent. CIOM will provide reports on a monthly basis that record the sites and
sources from which the clients entered the system ("Client Tracking"). The
proprietary database shall remain and be the sole and exclusive property of AMC
3.2.4 Specific Sports and Bets. CIOM shall provide at least the
following event types to satisfy the requirements in Paragraphs 3.1.1 through
3.1.5 above:
3.2.4.1 NFL American Football
3.2.4.2 NCAA College Football
3.2.4.3 NBA Basketball
3.2.4.4 NCAA College Basketball
3.2.4.5 NHL Ice Hockey
3.2.4.6 Major League Baseball
3.2.4.7 Boxing
3.2.4.8 Soccer
3.2.4.9 Casino Games
3.2.4.10 Included wagering types:
Moneyline
Game Total
Teaser & Parlays
Propositions/Exotics
Pointspreads
Futures
CIOM shall promptly incorporate new event and wager types into the AMC
Sportsbook as may be reasonably requested by Licensee. Such new wager and event
types shall be added at CIOM's expense.
3.2.5 Player Registration. CIOM shall provide user access to allow
users to register electronically over the Internet as prospective account
holders on the Site and to review on line all roles, terms, and conditions
applicable to Gaming and other uses on the Site.
3.2.6 Player Assistance. CIOM shall provide player support at its
sole cost.
3.2.7 Financial Transactions. CIOM shall provide to Licensee such
applications as are necessary to provide electronic or other access to banks to
transfer Periodic Gross Win/Loss administered under the revenue sharing
provisions of Article 6 and Schedule A of this Agreement, as well as archival
storage capabilities for later audit and verification purposes.
3.3 Hardware. CIOM bean the sole cost of all hardware.
3.4 Operation and Repair. The following performance standards shall apply
to Licensor's obligations under this Agreement.
3.4.1 Server. CIOM shall, during the term of this Agreement, keep
the Servers in good working condition and repair, except for any damage caused
to the Sewer by any negligent act of AMC or its agents, employees, or invitees.
CIOM shall, during the term of this Agreement, provide sufficient Sewer capacity
such that users of the AMC Sportsbook may reasonably operate the applications
contained in the AMC Sportsbook. All repairs made by CIOM shall be at its
expense. CIOM shall have no liability to AMC for damages arising from or related
to operation of the Sewer except for gross negligence of CIOM's employees,
agents, or invitees.
3.4.2 Web Site. CIOM shall, during the term of this Agreement,
keep the Site in good working condition and repair, except for any damage caused
to the Site by any negligent act of AMC or its agents, employees, or invitees,
and events beyond CIOM's control. All repairs made by CIOM shall be at its
expense.
3.5 Alterations. AMC shall not make any alterations to any programs or
graphic displays used on the Site and shall submit all requests for any such
alteration to CIOM in writing. Upon receipt of any such request by AMC CIOM
shall reasonably determine whether any such alterations maybe incorporated into
the Site and CIOM shall report such determinations to AMC in writing within 30
days. Thereafter, if CIOM determines such alterations may reasonably be made, at
its sole expense, it shall begin such alterations within 30 days. CIOM will not
unreasonably withhold consent in areas of web site design, graphics, or content.
3.6 Flaws or Glitches. CIOM shall promptly correct any flaws or
glitches in any program or graphic displays.
3.7 Site Control. CIOM shall have exclusive control of and management
responsibilities for all Sewers and shall have the right to establish, modify,
amend normal revision controls and Network/Sewer Management rules and
regulations for the use of the Sewers and Software at the Site. CIOM shall
install software on all Sewers to ensure the continued operation of the Site.
Nothing in this paragraph shall be construed to constitute control of such
contents by CIOM and the Licensee agrees to allow display at the Site of any
such disclaimer reasonably requested by CIOM.
3.8 Audit of Books and Records. Periodic and regular audits shall be
made on a yearly basis. The Parties shall engage and each pay half the fees of
the accounting firm selected under this agreement to audit the accounts,
records, and transactions established and performed under Articles 5 and 6 of
this Agreement. Additional audits requested separately shall be paid by the
initiating party If the audit reveals underpayment by CIOM to AMC of greater
than 5%, then CIOM shall pay all costs of the audit, and any amounts due,
including carrying cost at 3% above
LIBOR.
4. MARKETING
- -- ---------
For the first three years subsequent to this agreement CIOM shall prepare
the marketing plan for the AMC Sportsbook site. The cost sharing of said
marketing plan is detailed in a separate Agreement: The Marketing Plan.f.
5. BANKROLL
- -- --------
5.1 Licensee shall make such funds available that it has the ability to pay
for any and all winnings that may be generated by the clients
6. REVENUE SHARING
- -- ----------------
6.1 The Gross Win/Loss shall be disbursed through the e-cash system on a
periodic basis. My revenues derived by Licensee under this Agreement, shall be
paid to the Parties as follows:
6.1.1 Revenue Sharing to CIOM, See Schedule A.
6.1.2 Revenue Sharing to AMC, See Schedule A.
6.2 The Gross Win/Loss, Cash Transactions and any cash recorded in or by
the MAC Sportsbook that both parties have an interest in, shall be recorded and
monitored according to mutually agreed guidelines.
7. OTHER AGREEMENTS
- -- -----------------
7.1 Incorporation and Cross Covenants. The provisions of the
Non-exclusive License Agreement, to the extent they are not inconsistent with
any provision of this Agreement, are incorporated by reference and shall become
a part of this Agreement. A material breach by either Party of the License
Agreement shall be a breach of this Agreement.
8. WARRANTIES AND REPRESENTATIONS
- -- ---------- --- ---------------
8.1 Warranty. CIOM warrants that licensee's AMC Sportsbook Site will
perform substantially in accordance with the performance specifications of this
Agreement.
8.2 NO OTHER WARRANTIES. TO THE MAXIMUM EXTENT PERMITTED BY ISLE OF MAN
LAW OR ANY OTHER LAW FOUND TO GOVERN IT'S PERFORMANCE UNDER THIS AGREEMENT, CIOM
DISCLAIMS ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED
TO IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR
USE OTHER THAN FOR THE OPERATION OF SPORTSBOOK WAGERING, FOR THE SERVICE,
SOFTWARE, AND HARDWARE INVOLVED IN OR RELATED TO THE OPERATION OF AMC'S AMC
SPORTSBOOK SITE.
8.3 NO LIABILITY FOR CONSEQUENTIAL DAMAGES. TO THE MAXIMUM EXTENT PERMITTED
BY ISLE OF MAN LAW OR ANY OTHER LAW FOUND TO GOVERN ITS PERFORMANCE UNDER THIS
AGREEMENT, CIOM SHALL NOT BE LIABLE FOR ANY DAMAGES WHATSOEVER (INCLUDING, BUT
NOT LIMITED TO SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR INDIRECT DAMAGES FOR
PERSONAL INJURY, LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION LOSS OF
BUSINESS INFORMATION EXEMPLARY, OR PUNITIVE DAMAGES) ARISING FROM OR RELATED TO
OPERATION OF AMC'S AMC SPORTSBOOK SITE.
9. MISCELLANEOUS
- -- -------------
9.1 Arbitration. All claims, demands, or disputes of any kind between
the Parties arising under or related to this Agreement shall first be submitted
to mediation before a single mediator selected by the Parties. If, after Thirty
(30) days after such mediation has been initiated, the dispute has riot been
resolved to the satisfaction of both Parties, the Parties shall then submit the
dispute to binding arbitration conducted in the English language in Vancouver,
B.C, Canada under the rules of the International Arbitration Center. Each Party
shall select an arbitrator, after which the arbitrators selected by each Party
shall select a third arbitrator. Any award from the panel of arbitrators shall
be confirmable in any court of competent jurisdiction and shall be entered as a
judgment enforceable by the prevailing Party. Any award from the panel of
arbitrators shall include an award of reasonable attorneys' fees and costs to
the prevailing Party.
9.2 Marking. AMC agrees it will mark all literature and Site
communications that are the intellectual property of CIOM of any kind under this
Agreement with the appropriate trademark, copyright, or patent marking
reasonably required by CIOM. CIOM agrees it will mark all literature and site
communications that are the intellectual property of AMC of any kind under this
Agreement with the appropriate trademark, copyright or parent marking reasonably
required by AMC . AMC further agrees to allow CIOM to put CR Netbook (TM) logo
on the Bigbook web-site.
9.3 Choice of Law. All disputes concerning the validity;
interpretation, or performance of this Agreement and any of its terms or
conditions, or of any rights or obligations of the Parties, shall be governed by
the laws of the Isle of Man, except its conflicts of laws.
9.4 Regulatory Compliance. Nothing in this Agreement shall be construed
as requiring CIOM, its affiliates, agents, and joint-venturer, to operate or act
as a Sportsbook operator or any equivalent entity requiring CIOM, its
affiliates, agents, or joint venturer to obtain any license, concession or any
other permission to operate, other than those needed to operate within the
jurisdiction of Costa Rica. Notwithstanding the foregoing, each Party mutually
acknowledges the existence of regulatory jurisdiction of national and
subnational units and covenant and agrees to cooperate at its own expense with
all such units to obtain any regulatory review, license, concession, or other
permission such units may reasonably require.
9.5 Complete Understanding and Modifications. This Agreement
constitutes the complete expression of the terms of the grant of this Agreement.
All previous and contemporaneous agreements, representations, and negotiations,
whether oral, written, or implied, related to this Agreement except the
Non-Exclusive License Agreement, axe superseded by this Agreement, except those
included in the recitals to this Agreement. Any modifications to this Agreement
must be reduced to writing, signed by both Parties, and attached to this
Agreement to be effective.
9.6 Assignability. AMC shall have the right, subject to CIOM's
reasonable consent, to assign this Agreement to a subsidiary, affiliate, or a
purchaser of all or substantially all the stock or assets of AMC~ after which
any such assignee or purchaser shall become a party to this Agreement. CIOM
shall have the right to assign this Agreement at anytime without the prior
consent of AMC.
9.7 No Waiver. The failure by either Party to this Agreement to insist
upon performance by the other Party shall not constitute a waiver of any rights
under this Agreement and shall not bar, by waiver or estoppel, insistence upon
performance by the other Party
9.8 Relationship of Patties. Nothing in this Agreement shall be
construed in a manner which would create an employee-employer, principal-agent,
joint venture, partnership relationship between the Parties.
9.9 Retention of Ownership. This Agreement is not to be construed as an
assignment of or transfer of ownership in the Proprietary Technology; Licensor
retains ownership of and exclusive right to apply, license, or assign the
licensed Proprietary Technology and all its improvements, alterations, or
additions to such Proprietary Technology;
9.10 Application of AMC's Improvements. AMC shall not use, in the
performance of its obligations under this Agreement, any improvements or
additions to or in support of the Site developed by or on its behalf, without
the prior written consent of CIOM, which will not be reasonably withheld.
9.11 Severability. If any provision of this Agreement is illegal or
unenforceable, it shall be deemed stricken and all the remaining provisions
shall remain in full force and effect.
9.12 Survival of Obligations. Each Party does for it and its
successors, heirs, executors, administrators, representatives, insurers, agents,
and assigns, covenants and agrees that it and they will continue to adhere to
the restrictions and obligations of this Agreement and this Agreement shall
inure to their continued benefit.
9.13 Representation by Counsel; Interpretation. CIOM and AMC each
acknowledge that each Party to this Agreement has been represented by counsel in
connection with this Agreement and the transactions contemplated by this
Agreement. Accordingly, any rule of law, or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against the
Party that drafted them has no application and is expressly waived. The
provisions of this Agreement shall be interpreted in a reasonable manner to
effect the intent of CIOM and AMC.
9.14 Recitals. The recitals shall be considered part of this Agreement.
9.15 Headings. The Headings are for informational purposes only and
shall not constitute part of this Agreement.
9.16 Multiple Counterparts. This Agreement maybe executed in multiple
counterparts, each of which shall be considered an original executed version of
this document.
9.17 Force Majeure. The Parties shall be excused from performance of
their respective obligations under this Agreement for such period of time within
which they are prevented from performing their obligations by acts of God,
failures of Internet network or other communications facilities to permit
operation of the Site, governmental intervention, riot, revolutions,
insurrection, civil disturbances, strikes, or any other causes beyond their
reasonable control.
9.18 Partial Invalidity. If any term or provision of this Agreement, or
any application of this Agreement to any Party or circumstance, shall be
declared invalid or unenforceable, the remainder of this Agreement, or its
application, shall not be affected by such determination and each other term and
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
9.19 Further Assurances. The Parties covenant and agree to execute such
documents and perform such things as may reasonably be necessary to effect the
execution and implementation of this Agreement.
9.20 Notices. Any notice given by either Party to the other Party shall
be deemed to have been sufficiently given if sent by registered air mail or by
cable, telex, or telecopier, to the address of the Party as follows, unless such
other Party designates another address in writing:
If to CIOM
Cyberoad.com (IOM) Ltd.
Castle Hill, Victoria Road
International House
Douglas, Isle of Man,
British Isles, 1M2 4RB
If to Asanol Management Corporation
Road Town.
Pasea Estate,
P.O. Box 3149, Tortola,
British Virgin Islands
ASANOL MANAGEMENT CORPORATION,
By. /s/ Dr. A. Karapatakis
------------------------
Title: Director
------------------------
Cyberoad.com (IOM) Ltd.
By. /s/ John Coffey
------------------------
Title: President
------------------------
SCHEDULE "A"
Revenue Sharing
CIOM shall receive 50% of the Internet generated Gross Gaming Revenue GGR
The GGR is defined as the Gross Revenue minus payout so the winners and before
operating costs from the Effective Date of this agreement.
AMC will retain 50% of the GGR.
Acknowledged:
ASANOL MANAGEMENT CORPORATION,
By. /s/ Dr. A. Karapatakis
------------------------
Title: Director
------------------------
Cyberoad.com (IOM) Ltd.
By. /s/ John Coffey
------------------------
Title: President
------------------------
TRANSFER AGREEMENT
This Agreement effective as of September 1, 1999.
BETWEEN:
CYBEROAD GAMING CORPORATION ("CGC"), a St. Kitts corporation having it's place
of business at Box 174 Basseterre, St. Kitts, West Indies; and
ASANOL MANAGEMENT CORPORATION ("ASANOL"), having it's place of business at Road
Town, Pasea Estate, P0 Box 3149, Tortola, British Virgin Islands.
RECITALS:
This Transfer Agreement (the "Agreement") acknowledges that:
The parties hereto agree to enter into this agreement with respect to the
ownership interest of The Big Book Website; and
That CGC hereby agrees to transfer 100% ownership of The Big Book Website,
Domain Name, Software License and Operations to Asanol, for a total compensation
of US $10.00 and other consideration hereby acknowledged as being received and
paid in full.
EXECUTION
This Agreement may be executed in as many counterparts as may be deemed
necessary, and each counterpart shall be deemed to be an original, and to bear
the date first written above.
ACKNOWLEDGED AND AGREED TO this 1st day of September, 1999
CYBEROAD GAMING CORPORATION ASANOL MANAGEMENT CORPORATION
/S/ Lawrence Cofield, /S/ Sergei Nitsenko
Lawrence Cofield, Sergei Nitsenko
Director Director
[ASANOL MANAGEMENT CORP SEAL]
SERVICES AGREEMENT
THIS AGREEMENT effective as of December 31, 1999, by and between:
KAZOOTEK.COM TECHNOLOGIES INC., a company incorporated under the laws of British
Columbia, carrying on business at Suite 620, 1380 Burrard Street, Vancouver, BC,
V6Z 2H3, ("Kazootek"); and
CYBEROAD.COM CORPORATION, a company incorporated under the laws of the State of
Florida, with its head office at Oficentro Sabana Sur, Edificio 7, 5 Piso, San
Jose, Costa
Rica, ("Cyberoad")
NATURE OF AGREEMENT
WHEREAS
A. Cyberoad, a technology, software development and internet gaming
company, has expressed a desire to retain Kazootek for the purposes of providing
certain services described herein, and including but not limited to software
development and marketing, web development, network systems administration,
human resources administration, consulting, corporate finance and securities
administration.
B. Kazootek, a high-tech services provision company, has expressed a
desire to provide to Cyberoad certain services, including but not limited to,
and as contemplated above.
NOW THEREFORE this Agreement witnesses that in consideration of the mutual
terms, covenants and provisions herein contained, the parties hereto agree as
follows:
1. SERVICES
Subject to the terms, covenants and provisions contained herein, Kazootek hereby
agrees to provide to Cyberoad, and to its subsidiaries, in whole or in part,
joint venture partners, merchants and clients, as Cyberoad so shall request in
writing, from time to time, those services specified above and described more
fully in Schedule "A" attached hereto, (the "Services").
2. FEES & PAYMENT TERMS
The service fees and payment terms shall be those outlined, but not limited to,
those in Schedule "B" attached hereto. These fees are subject to being adjusted
throughout the normal course of business, and Kazootek agrees herein that
Cyberoad and its clients will always receive the lowest preferred rate offered.
3. TERMS OF AGREEMENT
A) This Agreement is effective as of the date first written above,
for a period of 1 year, unless earlier terminated in accordance with the terms
of this Agreement.
B) This Agreement shall be automatically renewed for successive
renewal periods of one year each, on each anniversary of the effective date of
this Agreement. The terms of this Agreement shall remain in full force and
effect as long as it is renewed annually. All provisions of this Agreement shall
apply both for the initial one-year term of this Agreement and for all
subsequent extensions.
C) Both parties hereto may terminate this Agreement after
providing 30 days written notice or for breach of any of the terms contained
herein.
4. GENERAL
A) Independent Contractor. It is expressly agreed that Kazootek is
----------------------
acting as an independent contractor in performing its services hereunder. No act
of the parties hereto shall be construed as creating or establishing a
partnership, joint venture or association of any type between them. Neither
party hereto, not their respective directors, officers, employees, consultants
or agents shall hold themselves out as such of the other party.
B) Entire Agreement. Except as specifically provided for herein,
-----------------
this Agreement contains the entire and only Agreement and understanding between
the parties, relating to this specific subject matter, and supercedes all
proposals, written or oral, and all other communications between the parties
hereto. This Agreement may not be modified except in writing, signed by both
parties hereto.
C) Notice Any notice required herein shall be deemed to have been
------
properly given 48 hours after being sent to the address of record for the other
party, by fax, email. mail or commercial courier service. The addresses for such
notice shall be:
Kazootek.com Technologies Inc.
Suite 620, 1380 Burrard Street
Vancouver, BC, V6Z 2H3
Cyberoad.com Corporation
Officiator Sabana Sur
Edificio 7. 5 Piso
San Jose, Costa Rica
D) Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of British Columbia.
E) Enurement. This Agreement shall be binding upon and enure to the
---------
benefit of the parties hereto and their respective successors and assigns.
F) The Agreement is not assignable by either party, without the
written consent of the other party, which consent shall not be unreasonably
withheld.
G) Survivability. In the event that any provision of this Agreement
-------------
proves to be invalid, void or illegal, That provision shall be deemed to be
severed from this Agreement, and shall in no way affect, impair or Invalidate
any other provision or the Agreement as a whole. All other provisions contained
herein will remain in full force and effect.
EXECUTION IN COUNTERPART
This instrument may be signed in counterpart, in as many counterparts as may be
necessary, and each instrument shall bear the date first written above, and
shall be deemed to be an original, forming one and the some instrument.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be executed
personally or by their duly authorized officers as of the day and year first
written above.
KAZOOTEK.COM TECHNOLOGIES INC. CYBEROAD.COM CORPORATION
/s/ Paul Mari /s/ John Coffey
Paul Mari, John Coffey
President President
SCHEDULE "A"
The services as described in the Agreement contained herein, shall include, but
not be limited to the following:
Software Development
Web Development
Network Systems Administration
Human Resources
Accounting
Corporate Finance & Securities Administration
Consulting
Office Space
Web Marketing
Web Communications
Technology Development & Management
Payment for the services provided for by Kazootek shall constitute, but not be
limited to, the above, and may include a nominal fee of all costs plus 10% Cdn.
These costs will be paid annually and may be revised and agreed to by the
parties under separate arrangement, if consented to by the parties in writing.
LAW OFFICES
MONAHAN & BIAGI
A PROFESSIONAL LIMITED LIABILITY COMPANY
June 15, 1999
BY FACSIMILE
- -------------
(416) 350-3510
Jay Goldman, Esq.
Beach, Hepburn
36 Toronto Street - Suite 1000
Toronto, Ontario
Canada M5C 2C5
Re: Cyberoad.com Corporation Your Reference No. 20692
Dear Jay:
As discussed, this letter is intended to set forth the matters that remain to be
satisfied in connection with the sale of 1,400.000 shares of common stock of the
above referenced company (the company") at US$1.43 per share ($1.43 "Placement")
by your client Thomson Kernaghan & Co. Limited ("TK") sometimes referred to
herein as the "Agent". (TK warrants and represents that Dominick & Dominick
Securities Inc. is no longer an agent, but is a subagent, in the $1.43
Placement) This letter incorporates by reference the attached engagement letter
("Engagement Letter") for a proposed placement of 11000,000 shares of the
Company's common stock at US$3.50 per share (3.50 Placement").
if any term set forth in this letter is inconsistent with any term set forth in
any other document relating to acquisition of LAL Ventures ("LALV"), the $1.43
Placement or the $3.50 Placement, the terms set forth in this letter will apply
and control. The foregoing includes, but is not limited to, the Agreement of
Exchange relating to the acquisition of LALV and all documents relating to the
$1.43 Placement.
The objective of the Company and the Agent is to satisfy all outstanding matters
relating to the $1.43 Placement no later than Friday, June 24, 1999. By signing
this Agreement in the places provided below, the Company and the Agent agree
that the outstanding matters relating to the $1.43 Placement consist of only the
following and they agree to use all reasonable efforts to satisfy these matters
on or before June 24, 1999:
1. Completion of the Agents due diligence with respect to the following
matters:
701 Fifth Avenue, Suite 570l SEATTLE, WASHINGTON 98104
TELEPHONE (206) 587-5700 E-MAIL: [email protected] FACSIMILE: (206) 587-5710
<PAGE>
Jay Goldman, Esq. June 18, 1999
a. Outstanding and Reserved Equity Securities. Satisfying the Agent that,
subject to completion of various ministerial acts, the outstanding and reserved
equity securities of the Company consist of the following:
No. of Shares
---------------
Common Stock of LALV outstanding prior to
$1.43 Placement 1,050,000
Common Stock issued to Cyberoad.com (Ireland) Ltd.
("CYB Ireland") in connection with the Company's
acquisition of all outstanding equity of CYB Ireland 8,659,650
Common Stock issued to the shareholders of eBanx (Isle
of Man) Ltd. ("eBanx IOM") in connection with CYB
Ireland's acquisition of all outstanding equity of eBanx IOM 1,500,000
Common Stock to be issued in the fully subscribed
$1.43 Placement 1,490,000
---------
Total Outstanding 12,609.650
Common Stock reserved for issuance upon exercise of stock
options of the Company granted to key personnel (1.700,000
shares subject to outstanding options) 2,200,000
Common Stock to be issued in a fully subscribed
$3.50 Placement (excludes 15% option) 1,000,000
---------
Total Outstanding and Reserved for Issuance 15,659,650
----------
b. Of the 8,659,650 shares delivered in the CYB Ireland transaction, Alan
Ackerman has agreed to accept 1,250,000 shares in full satisfaction of all debts
of the Company to him.
c. The Company is the owner, directly or indirectly, of all of the
outstanding equity securities of the following companies:
(1) Cyberoad.com [Ireland) Ltd.
(2) Cyberoad.com (Isle of Man) Ltd.
(3) Information y Technologies Canadian (ITC)
(4) Sistemes de Informacion Tecnologies (Sir)
(5) eBanx.com (Isle of Man) Ltd;
(6) eBanx [Nevada) Ltd.
d. Directly, or indirectly through one or more of the subsidiaries listed
above, the Company's assets include the following:
<PAGE>
Jay Goldman, Esq June 18. 1999
(1) ownership of 100% of eBanx.com [Isle of Man] Ltd;
(2) the right to receive a royalty of 20% off the revenues of
thebigbook.com for a five-year term and, subject to thebigbook.com being
responsible for all operating costs relating to thebigbook.com and Cyberoad
Gaming, the party entitled to the 80% of revenues retained by thebigbook.com
(but after such costs) being required to apply same to marketing of
thebigbook.com for a five-year period;
(3) a five-year option to purchase thebigbook.com website
business for US$200,000;
(4) the right to receive royalties of the following percentages of
the revenues of the following website businesses:
(i) grandprixsports.com (approximately 16%)
(ii) Mayansports.com (approximately 20%)
(5) a vertical sports and entertainment internet portal,
currently in development
(6) the domain name and right to use in connection with a
website "cyberoad.com?
2. Ayre Employment Agreement. Calvin Ayre shall have entered into a two-year
employment agreement with the Company providing that during such period he shall
devote his full time and attention to the business of the Company. Such
agreement shall include non-competition and confidentiality provisions having a
two-year term and shall be consistent with any order to which Ayre is subject.
3. Satisfaction of Matters. Unless the Agent objects within 72 hours after
receipt to the documentation the Company provides as proof of satisfaction of
the above matters, the Company shall be deemed to have satisfied the above
matter(s) to which it relates. If the Agent does so object, its objection shall
state with reasonable particularity why the documentation furnished is not
satisfactory and the reasonable form of proof that the Agent will accept in
satisfaction of the related matter.
4. Release of Remaining Funds. Upon satisfaction of the above matters, the
Agent shall instruct Monahan & Biagi, P.L.L.C. (M&B'), and Horwitz and Beam if
they still hold in escrow proceeds from the $1.43 Offering, to release to the
Company all remaining proceeds from the $1.43 Offering, less the commission
payable to the Agent of US$80,000 and a US$20,000 advance to the Agent against
expenses of the Agent relating to the $1.43 Placement and the $3.50 Placement,
i.e., an aggregate of US$1,200,000. Such instructions shall be accompanied or
preceded by delivery to the Company of original copies of appropriate
subscription agreements from all subscribers to the $1.43 offering, including
without limitation any addenda thereto reasonably requested by M&B.
It is agreed by the Company that as an inducement for Agent to enter into this
Agreement, the Company shall, in addition to paying the Agent an $80,000
commission in connection with the $1.43 Placement and agreeing to pay the
<PAGE>
Jay Goldman, Esq. June 18, 1999
reasonable expenses of the Agent relating to the $1.43 Placement (including
without limitation, reasonable fees and disbursements of its legal counsel),
grant to the Agent, upon release to the Company of the US$1,200,000 remaining
proceeds from the $1.43 Placement, 200,000 compensation options on the Company's
common stock exercisable for two years at a price of US$1.00 per share.
If the foregoing correctly sets forth the Agent's understanding of its agreement
with the Company, please have the Agent so indicate by signing this Agreement in
the place provided below and return the Agreement to us. If the Agent does not
so sign and return this Agreement within 24 hours after your receipt hereof, the
Company's offer of the above terms is withdrawn.
We look forward to a satisfactory completion of both the $1.43 Placement and the
$3.50 Placement,
Very truly yours,
MONAHAN & BIAGI, P.L.L.C.
James F. Biagi, Jr.
AGREED AND ACCEPTED:
THE COMPANY: THE AGENT:
CYBEROAD.COM CORPORATION THOMSON KERNAGHAN & CO. LIMITED
By: /s/ . By: /s/
----------------------- ----------------------------
Its: CEO Its: Sr. VP Corp Finance
Date: June 18, 1999 Date: June 18, 1999
<PAGE>
Thomson Kernaghan & Co. Limited
June 18, 1999
BY HAND
- -- ----
Mr. Calvin Ayre
Chief Executive Officer
Cyberoad.com Corporation
c/o Calvex Corporation
1380 Burrard Street - Suite 620
Vancouver, British Columbia
Canada V6Z 2113
Re: Engagement of Thomson Kernaghan & Co. Limited
--- ---------- ----------- --------- - --- -------
Dear Mr. Ayre:
We attach a term sheet ("Term Sheet") setting forth the terms and
conditions of the engagement of Thomson Kernaghan & Co. Limited ("TK") to act as
agent of Cyberoad.com Corporation (the "Corporation') in connection with a
financing to raise US$3,500,000 (the "offering'). In addition to those
provisions set forth In the Term Sheet, it is agreed and understood that:
(a) this letter is not an agency, underwriting or other agreement, but
is evidence of the understanding between TX and the Corporation relating to
the Offering;
(b) TX's ability to successfully market the Offering will be contingent
upon several factors which will be included in an agency agreement mutually
agreeable to the parties (agreement to which shall not be unreasonably withheld
by either party), such factors include but are not limited to market conditions
at the time of the Offering and the completion of due diligence by it;
(c) Cyberoad agrees to indemnify all of the officers, directors,
employees and agents of TIC against any material misrepresentation, or material
misleading statements, in any documentation provided to it in the preparation
and marketing of the Offering, where reliance on such misrepresentation or
misleading statements in such documents causes TX, its directors, officers,
employees or agents financial harm from clients and other third parties;
(d) this engagement letter shall (1) not become effective until all
proceeds from the fully subscribed previous $1.43 offering of common shares by
the Corporation are released to the Corporation, and (2) terminate and be of no
further force or effect if the Offering does not close on or before July 31,
1999; and
(e) The Corporation agrees not to make any corporate changes or take
any actions, without the prior written consent of TIC (which shall not be
unreasonably withheld), that result in currently free trading shares of the
Corporation becoming restricted from trading.
If you are in agreement with proceeding with the Offering on the foregoing
terms please so indicate by signing and returning closed copy of this letter.
Yours very truly,
Thomas Kernaghan & Co. Limited
By: /s/
------------------------
Its: Sr. VP Corp Finance
The undersigned confirms its agreement with the foregoing.
Dated this 18 day of June, 1999.
Cyberoad.com Corporation
By: /s/ .
------------------------
Its: _________________________
<PAGE>
CYBEROAD.COM CORPORATION
PRIVATE PLACEMENT OF COMMON SHARES
Issuer: Cyberoad.com Corporation (the "Corporation")
Agent: Thomson Kernaghan & Co. Limited ~l1~")
Offering: 1,000,000 shares of common stock of the Corporation
("Shares'), distributed by way of private placement on a
best efforts agency basis and an option exercisable by the
Agent to increase the size of the offering by up to 15%.
Amount: U.S. $3,500,000
Price: U.S. $3.50 per Share
Issue Type: Private placement to be sold on an all or none agency basis in
British Columbia, Ontario and other jurisdictions outside
of Canada and the United States.
Minimum
Subscription: Each subscriber's aggregate acquisition cost of
purchasing Shares must not be less than:
i) U.S. $105,000, if the subscriber is a resident of
Ontario;
ii) U.S. $70,000, if the subscriber is a resident of
British Columbia; or
iii) U.S. $100,000, if the subscriber is a resident of
another jurisdiction outside of Canada and the
United States;
to qualify to acquire the Shares under applicable Canadian
laws without the filing of a prospectus.
Suitability Standards
and Resale Restrictions:
The Shares are being issued to non-U.S. Persons (as defined in
Regulation S) pursuant to an exemption from registration
according to Regulation S of the Securities Act of 1933, as
amended ("Regulation S"). The Shares are restricted from
offer and resale unless the hold period applicable in the
Subscriber's jurisdiction of residence has expired (and any
related requirements satisfied), a registration statement or
prospectus has been filed in the applicable Subscriber's
jurisdiction of residence or an exemption from applicable
registration and prospectus requirements is available. Each
potential investor must complete a subscription agreement and
remit the full amount of the subscription in US. dollars to it
as described in the subscription agreement. The Corporation
reserves the right to refuse any subscription in its discretion.
Financial Information:
Attached are the Corporation's audited financial statements
as at February 28, 1999 and for the year then ended and
an unaudited balance sheet of the Corporation as at May 31,
1999.
Capitalization: The Corporation's current capitalization prior to this
Offering consisted of 12,609,659 shares, of which up to
1,050,000 shares currently may be traded without
restriction. The Corporation agrees not to make any corporate
changes or take any actions, without the consent of TK,
that result in such 1,050,000 shares becoming restricted from
trading.
The Corporation has a stock option plan in effect pursuant to
which options to purchase up to 2,200,000 shares may be
awarded from time to time (which amount cannot be increased for
one year), at exercise prices per share that are not less than
the fair market value of the shares at the date of grant. Not
more than 1,700,000 options have been awarded to date each of
which is exercisable at U.S. $1.00 per share. No other shares
are reserved for issue.
Registration Filings,
Escrow and Remedies:
The Corporation shall file with the U. S. Securities and
Exchange Commission (the "SEC") a Form 10-SB or Form 20-F
under the Securities Act of 1934, as amended ("l934 Act Form"),
seeking status as a reporting company in the United States
within 60 days of closing. In addition, the Corporation shall
file with the SEC a Registration Statement under the
Securities Act of 1933, as amended (the "1933 Act Registration
Statement") within 60 days of closing to permit resale of the
Shares and certain other securities issued by the Company
pursuant to a previous financing (the "First Financing"). The
Corporation agrees to keep the 1933 Act Registration Statement
effective for a period of not less than 24 months from the
closing date.
In the event that either filing is not completed within 60 days
of closing the Corporation will deliver to each purchaser of
Shares (in both the Offering and the First Financing), for no
additional consideration, an additional 0.02 Shares, in
respect of each Share purchased for each further 30 days,
or part thereof, beyond the foregoing 60 day filing deadlines
in which either filing is not complete.
In addition, in the event that both the 1934 Act Form
and the 1933 Act Registration Statement have not become
effective within 120 days after closing (the "120 Day Deadline")
unless waived by TK in writing, the Corporation will deliver
to each purchaser of Shares (in both the Offering and
the First Financing) for no additional consideration, an
additional 0.02 Shares, in respect of each Share purchased,
for each 30 days, or part thereof, beyond the 120 Day Deadline
in which either the 1934 Act Form or the 1933 Act Registration
Statement is not effective.
In order to provide a sufficient number of shares to
satisfy the foregoing penalty provisions, an additional
850,000 shares shall be issued and held in escrow by a third
party mutually acceptable to the Agent and the Corporation
(the "Custodian") until the earlier to occur of: (a)
the completion of both filings and (b) the date that is
12 months following closing.
An amount equal to 10% of the gross proceeds of the Offering
will be placed in escrow with the Custodian and released
to the Corporation on the earlier to occur of: (a) the effective
date of the 1933 Act Registration Statement; and (b) the date
that is 12 months after closing.
Conditions: Completion of the Offering is conditional on; (i) execution
of a mutually satisfactory agency agreement, (ii) approval
by the Agent of the form of subscription agreement (iii)
receipt by the Agent of favorable legal opinions, (iv) the
opportunity for the Agent to conduct due diligence (the results
of such due diligence to be satisfactory to the Agent, acting
reasonably, and to Include the Corporation's providing for the
Agent's interviews with staff and inspection of operating
facilities in Costa Rica and British Columbia); and (v) the
right to appoint one of five nominees to the board of
directors of the Corporation.
Closing: Payment and delivery for the Shares will occur on or about
July 15, 1999, or on such other date as may be mutually agreed
to by the Agents and the Corporation.
Business of the
Corporation: The Corporation is the successor company to LAL Ventures Corp.
(as a result of a name change). The shares trade on the NASD
OTCC: BB wider the symbol "FUNN". Through its indirect
Wholly-owned subsidiary,Cyberoad.com [Isle of Man] Ltd.
("Cyberoad Opco"), the Corporation manages an Internet operation
that develops and manages distributed wide area network (WAN)
gaming (sports book and casino) systems. The Corporation
owns and operates websites at cyberoad.com and sportsmachin.com
(ownership of 100% revenue), and manages websites at
grandprixsports.com, (licensing fee of approximately 16%
revenue) and Mayansports.com (licensing fee of approximately
20% revenue), in addition, the Corporation owns 100% of
e-Banx.com [Isle of Man] Ltd. ("e-Banx"), a company that
supplies transaction services for the Corporation's websites.
A chart detailing the Corporation's structure is attached.
The business of Cyberoad Opco was started in 1995.
Cyberoad Opco was incorporated in Isle of Man in 1999.
The board of directors of the Corporation consists of five
members, Calvin Ayre, Ken Miller, John Coffey, Eppie
Canning and a nominee of the Agent The Corporation's
corporate office is located at Oficentro Sabana Stir Building 7,
5th Floor, San Jose, Costa Rica. The Corporation's North
American office is located at 1380 Burrard St, Suite 620,
Vancouver, British Columbia V6B 2Z6, Canada.
Use of Proceeds:
The net proceeds, together with cash on hand, will be used by
the Corporation to finance operations of Cyberoad Opec and
e-Banx, including but not limited to, deposits with credit
card processors, development costs and marketing; capital
expenditures, including, but not limited to, collateralizing
leases, equipment purchases, furniture and fixtures, office
equipment, call center equipment and improvements and third
party licensing; working capital, corporate development and
investor relations; and development of a sports and
entertainment vertical portal.
Compensation Payable to Agents:
A cash commission of eight percent of the gross proceeds of
the Offering shall be payable to the Agent at closing, together
with all reasonable out-of-pocket costs incurred by the Agent
in completing the Offering including legal fees (provided that
any travel expenses incurred by the Agent for flights
will be for business class seats). In addition, the Agent
shall receive at closing compensation options entitling the
holders thereof to acquire that number of shares that equals
10% of the number of Shares issued and sold in the Offering,
exercisable for a period of two years at a price of U.S. $3.50
per share. The shares underlying the compensation options shall
be registered in the 1933 Act Registration Statement
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (the "Agreement") is effective as of November
11, 1999 and is entered into by and among Cyberoad.com (Isle of Man) Ltd., a
corporation having a place of business at International House, Castle Hill,
Victoria Road, Douglas, Isle of Man, IM2 4RB ("Purchaser"), Cyberoad.com
Corporation, a Florida corporation (the "Corporation"), Aundyr Enmyn Limited,
residing at International House, Castle Hill, Victoria Road, Douglas, Isle of
Man, IM2 4RB ("Aundyr"), IFG International (Nominees) Limited, residing at
International House, Castle Hill, Victoria Road, Douglas, Isle of Man, IM2 4RB
("IFG"), Aundyr Trust Company Ltd in its capacity as trustee of El Moro Trust
("Aundyr Trust" and together with IFG and Aundyr, the "Sellers") and eBanx.com
(Isle of Man) Ltd., a company having an office at International House, Castle
Hill, Victoria Road, Douglas, Isle of Man, IM2 4RB ("eBanx).
RECITALS
WHEREAS, Purchaser and certain of its affiliates are engaged in the
business of developing distributed wide area network gaming and e-commerce
systems and provide system development, network management and ongoing technical
support services for its gaming industry clients;
WHEREAS, eBanx is the sole owner of the eBanx online financial relationship
management system;
WHEREAS, there are two shares of eBanx issued and outstanding, one of which
is owned by Aundyr and the other of which is owned by IFG, both of which shares
are owned beneficially by Aundyr Trust, in its capacity as trustee of the El
Moro Trust.
WHEREAS, the Corporation, the parent company of Purchaser, is engaged in a
private offering to raise up to $3,500,000 of additional capital by means of an
offering (the "Offering") of up to 1,000,000 shares (the "Offering Shares") of
common stock, par value $.00001 per share, of the Corporation (the "Common
Stock") and an option (the "Option") to purchase that number of shares of Common
Stock (the "Option Shares" and together with the Offering Shares, the "Shares")
that equals (a) 150,000 plus (b) 1,000,000 less the Offering Shares, at $3.50
per share exercisable for a 30 day period.
WHEREAS, the Corporation has retained the firm of Thomson Kernaghan & Co.
Limited (the "Placement Agent") to assist it in connection with the Offering;
WHEREAS, in connection with the terms of the Offering, it is necessary that
Purchaser purchase eBanx from Sellers so that eBanx shall become indirectly
wholly owned by the Corporation;
WHEREAS, each of Purchaser and Sellers has agreed with the Placement Agent
to effect the purchase and sale of all of the outstanding shares of eBanx
pursuant to certain conditions.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the recitals set forth hereinabove which by this
reference are incorporated herein, and of the good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereby agree as
follows:
1. Purchase of eBanx. Subject only to the satisfaction of the conditions of
closing set forth herein, Sellers hereby sell, assign and transfer and Purchaser
hereby purchases, the issued and outstanding shares of eBanx in accordance with
the terms and conditions of this Agreement.
2. Consideration. The Corporation shall deliver to Sellers 1,500,000
shares of its Common Stock in exchange for the transfer of all of the issued and
outstanding shares of eBanx to Purchaser.
3. Representations of Aundyr and IFG. Each of Aundyr and IFG jointly and
severally represents and warrants to the Purchaser as follows:
a. Aundyr and IFG each owns of record one share of common stock of
eBanx and there are issued and outstanding an aggregate of two
shares (the "Shares") of eBanx.
b. Aundyr and IFG hold the Shares, respectively, as nominee holders
and have no other interest or involvement in the business
of eBanx.
c. All necessary actions have been taken by each of Aundyr and IFG to
authorize the execution, delivery and performance of this
Agreement.
d. The entering into of this Agreement and the transactions
contemplated hereby will not result in the violation of any of
the terms and provisions of the constating documents or by-laws
of IFG or Aundyr or of any indenture or other agreement, written or
oral, to which IFG or Aundyr may be a party.
4. Representations of Aundyr Trust. Aundyr Trust represents and warrants to
the Purchaser as follows:
a. eBanx owns all proprietary rights, title and interest in and to the
eBanx technology assets (the "eBanx Assets") and owns all of
the issued and outstanding shares of eBanx Ltd., a Nevada
corporation.
b. There are no liens, encumbrances, security interests, pending
litigation or other claims known to the Corporation that would
adversely affect the eBanx Assets.
c. All of the shares of eBanx are owned by Aundyr and IFG as the owner
of record, and by Aundyr Trust as the beneficial owner, with
a good and marketable title thereto, free and clear of all
mortgages, lens, charges, security interests, adverse claims,
pledges, encumbrances and demands whatsoever.
d. No person, firm or corporation has any agreement or option or any
right or privilege capable of becoming an agreement for the
purchase, subscription, allotment or issuance of any of the
unissued share so in the capital of eBanx or of any securities
of eBanx.
e. The entering into of this Agreement and the transactions
contemplated hereby will not result in the violation of any of
the terms and provisions of the constating documents or by-laws of
eBanx or of any indenture or other agreement, written or oral,
to which eBanx or Aundyr Trust may be a party.
f. All necessary actions have been taken by Aundyr Trust to authorize
the execution, delivery and performance of this Agreement.
5. Conditions to Closing. The obligations of the Sellers to effect the
sale of the shares of eBanx common stock shall be subject to the fulfillment of
the following condition:
a. The Placement Agent shall arrange for the closing of a minimum of
$2,000,000 in the Offering, and the closing of the Offering
wherein at least $2,000,000 is raised shall occur prior to
November 15, 1999.
6. Closing. The Closing of the transactions contemplated by this Agreement
shall occur forthwith following the satisfaction of the conditions to Closing
set forth in paragraph 4 hereof.
7. Miscellaneous.
a. Successors and Assigns. All rights, covenants and agreements of
the parties contain in this Agreement shall, except as
otherwise provided herein, be binding upon and inure to the benefit
of their respective successors and assigns.
b. Governing Law. This Agreement shall be governed by and construed
both as to validity and performance and enforced in accordance with
the laws of the Isle of Man.
c. Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the
parties hereto.
d. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
e. No Adverse Construction. Any rule that provides that a contract
is to be construed against he party drafting the contract is hereby
waived, and shall have no applicability in construing this
Agreement or any provisions hereof.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
CYBEROAD.COM CORPORATION
/s/ John Coffey
- --------------------------
Name: John Coffey
Title: Director
CYBEROAD.COM (ISLE OF MAN) LTD.
/s/ John Coffey
- --------------------------
Name: John Coffey
Title: Director
AUNDYR ENMYN LIMITED
/s/ D.A. Harris
- --------------------------
By: D. A. Harris
Title: Director
IFG INTERNATIONAL
/s/ D. A. Harris
- --------------------------
Name: D.A. Harris
Title: Director
EBANX.COM (ISLE OF MAN) LTD.
/s/ D. A. Harris
- --------------------------
Name: D.A. Harris
Title: Director
AUNDYR TRUST COMPANY LIMITED
In its capacity as trustee of El Moro Trust
/s/ D. A. Harris
- --------------------------
Name: D.A. Harris
Title: Director
REVOLVING LINE OF CREDIT AGREEMENT
WHEREAS EL MORO FINANCE LTD., a Tortola, British Virgin Islands registered
company ("El Moro"), of Pasea Estate, Road Town, Tortola, B.V.I.; and
WHEREAS ECOMM RELATIONSHIP TECHNOLOGIES (ISLE OF MAN) LIMITED, and
Isle of Man registered company, ("EIOM") of International House, Castle Hill,
Victoria
Road, Douglas, Isle of Man; and
WHEREAS CYBEROAD.COM CORPORATION, a Florida based corporation ("Cyberoad") with
its head office at Oficentro Sabana Sur, Edificio 7, 5 Pesa, San Jose, Costa
Rica.
HEREBY AGREE TO THE FOLLOWING RECITALS, TERMS AND CONDITIONS, AND ENTER INTO
THIS AGREEMENT AS OF THE 24th DAY OF FEBRUARY, 2000;
RECITALS
For consideration and interest paid, El Moro, hereby agrees to provide to
Cyberoad, a revolving line of credit in the amount of U.S.$200,000.00, available
as of the date first written above.
TERMS & CONDITIONS
1. El Moro will make available to the Cyberoad, a revolving line of credit
in the amount of U.s.$ 200,000.00, as of February 24, 2000, for a full-term of 5
years from the date of entitlement. Such amount can be increased at any time
under the same terms and conditions herein at the sole discretion of El Moro.
2. Notice of foreclosure can be issued by El Moro only upon 2 consecutive
months or
60 days of non-payment by Cyberoad, as outlined herein, and such notice must be
provided by 30 days written notice to Cyberoad.
3. Such line of credit will be administered from Swiss representative
office, Todistr.51, P0 Box 1059, CH-8039 Zurich.
4. Such line of credit will not be subject to penalties or any additional
provisions other than as provided for in this Agreement, including but not
limited to, penalties for early payment or for non-use of funds.
5. This Agreement is binding and in full-effect as of February 24, 2000 and
is governed by the laws of Zurich Switzerland.
CONSIDERATION
6. Cyberoad, upon advance of funds only, agree to provide to El Moro
interest payments of a compounded annual rate of 10% of the funds advanced per
annum only, or compound annual interest payments of prime (Switzerland) + 2 of
the funds advanced, per annum only, for the first year of instatement of the
revolving line of credit, due and payable on the first day of every month.
7. Cyberoad, upon completion of the first year of instatement of the
revolving line of credit, agree to provide to El Moro interest as described in
item 6 above plus principal payments, due and payable on the first day of every
month.
8. In the case of missed interest or principle payments or any portion
thereof, Cyberoad agrees to provide to El Moro, standard interest payments on
any outstanding amounts due and payable.
9. Cyberoad agrees to furnish to El Moro, as additional consideration for
the open revolving line of credit, the ownership of the domain name ebanx.com
and the European wide trademark to the name eBanx., which is currently owned by
eComm Relationship Technologies (Isle of Man) Limited ("eComm") The rights to
the name eBanx.com is transferred upon the signing of this agreement whether any
money is accepted or not and is not affected by El Moro's decision to let eComm
continue to use the domain name for its current use. Should eComm continue to
use the domain ebanx.com, it will change to another domain not less than 30 days
after getting written notice of the fact that El Moro want to take over
possession of the domain and
10. Cyberoad also gives El Moro first claim against any and all assets of
Cyberoad.com as compensation should Cyberoad.com not be able to pay it
obligations to El Moro as outlined herein, and agrees not to encumber any assets
of Cyberoad.com in any way as long as any monies under this agreement are
outstanding.
EXECUTION IN COUNTERPART
11. This instrument may be executed in counterpart by the parties hereto, in
as many counterparts as may be necessary, and each instrument shall be deemed to
be an original. Such counterparts together shall constitute one and the same
instrument, and shall bear the date first written above.
NOTICES
12. Addresses, for all parties, for delivery of all notices, shall be as set
out and described in full, above.
CONVERSION
13. Cyberoad agrees that at the sole discretion of El Moro, any outstanding
monies owing for a period of 2 consecutive months or 60 days, con be converted
into freely-traded shores in the parent company, Oyberoad.com Corporation, at
current market prices as at the date first written above, February 24, 2000,
plus the maximum discount allowed under existing Securities arid Exchange Act
rules and regulations.
HEREBY ACKNOWLEDGED AND AGREED TO THIS 24th DAY OF FEBRUARY, 2000 BY AND
BETWEEN:
EL MORO FINANCE LTD.
/s/ Kay-Linda Richardson /s/ Annetta Penn
Kay-Linda Richardson, Annetta Penn
Director Director
ECOMM RELATIONSHIP TECHNOLOGIES
(ISLE OF MAN) LIMITED
/s/ David Harris
David Harris,
Director
CYBEROAD.COM CORPORATION
/s/ John Coffey
John Coffey.
Director
TRANSFER OF ASSETS
EFFECTIVE AS OF October 31, 1999
BETWEEN: CORPORACION EBANX.COM, S.A., a company incorporated under the laws of
the Republic of Panama, ("EPAN"); and
BETWEEN: ECOMM RELATIONSHIP TECHNOLOGIES MANAGEMENT LIMITED, a company
incorporated under the laws of Isle of Man, ("EIOM").
WHEREAS the parties hereby agree and acknowledge that 1000/0 of all operational
assets of EIOM, as defined herein and as further defined in Appendix "A"
attached hereto;
a) EIOM's operations, including assets and liabilities, and all
rights and obligations therein.
are hereby transferred in full to EPAN in consideration for a total amount of
$1.00 U.S. and other consideration hereby acknowledged as being received in
full.
EXECUTION IN COUNTERPART
This instrument may be signed in counterpart, in as many counterparts as may be
necessary, each of which shall be deemed to be an original and each of which
shall constitute one and the same instrument, and shall bear the date first
written above.
ACKNOWLEDGED AND AGREED TO ON THE 31st DAY OF October 1999, BY:
CORPORATION EBANX.COM, S.A. ECOMM RELATIONSHIP TECHNOLOGIES
MANAGEMENT LIMITED
/s/ Paul Mari /s/ David Harris
Paul Mari David Harris,
President Director
<PAGE>
Transfer of Assets
Schedule "A"
Operational Assets and Liabilities
Assets and liabilities of Ecomm Relationship Technologies (TOM) Ltd. contained
under the eBanx business model and transferred under this Transfer of Assets
consist of the following as at March 1, 2000:
Cash accounts on hand 354,617.48
Accounts Receivable 385,947.80
Prepaid Expenses 40,998.97
Security Deposits 477,874.03
Due from Related Parties 312,171.88
Computer Equipment (NBV) 330,878.10
Furniture and Fixtures (NBV) 70,705.49
Office Equipment (NBV) 49,063.85
Software (NBV) 278,782.68
Leasehold Improvements (NBV) 51,575.63
Customer Deposits 706,137.28
Obligations under Capital Leases 178,443.85
Merchant Deposits 478,209.83
Exhibit 21.1
SUBSIDIARIES OF CYBEROAD.COM CORPORATION
----------------------------------------
Cyberoad.com (Isle of Man) Ltd., a corporation existing under the laws of Isle
of Man
Sistemas de Informacion Tecnolgica, a corporation existing under the laws of
Costa Rica
Informacion y Tecnologia Canadiense, a corporation existing under the laws of
Costa Rica
Ebanx Limited, a Nevada corporation
Ecomm Relationship Technologies (IOM) Limited, a corporation existing under the
laws of Isle of Man
Corporacion Ebanx.com, S.A., a corporation existing under the laws of Panama
[LETTERHEAD PANNELL KERR FORSTER]
7th Floor Marine Building
355 Burrard St
Vancouver, B.C.
Canada, V6C 2G8
Telephone: (604) 667-1231
Facsimile: (604) 688-4675
A.S. Henshaw
File #:195400
May 16, 2000
Board of Directors
Cyberoad.com Corporation
Oficentro Sabana Sur
Edificio 7, 5 Piso
San Jose, Costa Rica
Dear Sirs:
We consent to the incorporation in the Pre Effective Amendment No. 1 to Form
SB-2 Registration Statement of our report dated February 23, 2000 relating to
the consolidated balance sheets of cyberoad.com Corporation as at December 31,
1999 and the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for the year then ended.
/s/ Pannell Kerr Forster
CHARTERED ACCOUNTANTS
Vancouver, Canada
ASH/dm
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
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YEAR ENDED DECEMBER 31, 1999
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
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</LEGEND>
<MULTIPLIER> 1000
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