<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ____________
Commission File No. 000-30029
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ENCOUNTER.COM INC.
------------------
(Exact name of Registrant as specified in its charter)
COLORADO 84-1027606
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6900 Westcliff Drive, Suite 608
Las Vegas, NV 89145
------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 360-0066
--------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act:
50,000,000 shares of common stock
Check whether the issuer (l) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months (or for such shorter period that
the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days. [ X ] Yes [ ] No
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B is not contained in
this form, and no disclosure will be contained, to the best
of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III
of this Form 10-KSB or any amendment to this Form 10-KSB. [ ]
Revenues for 1999 were $0.
The aggregate market value of the voting stock held by non-
affiliates computed by reference to the last reported sale
price of such stock as of May 31, 2000 is $494,524.
The number of shares of the issuer's Common Stock
outstanding as of May 31, 2000 is 33,968,264.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
<PAGE>
PART I
Item 1. Description of Business
The Company is in the business of providing Internet
products and services including, Internet access, colocation
and professional services. In September 2000, the Company,
through its subsidiary CyberCastingCorp.com, executed
agreements to acquire two Internet service providers. The
Company believes both of these acquisitions will be
consummated prior to year-end 2000. The acquisitions bring
the Company Internet related capabilities such as delivery
of high-speed Internet access; broadband wireless;
networking expertise; colocation facility development; and
management experience and technical personnel for providing
Internet services. Working in conjunction with the two
Internet service providers, the Company has begun offering
colocation service in Las Vegas, NV through a strategic
partnership agreement with an existing colocation facility,
and has formed a subsidiary, CybAirCorp, to market wireless
Internet access and collocation services. The
aforementioned projects and acquisitions each require
substantial capital funding, and there can be no assurance
that the Company will be able to obtain such financing.
Principal Services and Products
The Company has formed a subsidiary, CyberCastingCorp.com,
to grow externally by acquiring small Internet service
providers marketing a wide range of Internet products and
services some of which are described below. The Company has
also formed CybAirCorp to develop colocation facilities and
deploy wireless Internet access systems, which are also
described below.
Internet Access
Internet Service Providers (ISP's) market telephone
services, whereby subscribers are connected to the Internet
through local toll-free telephone numbers. Dial-Up Access,
limited to 56,000 bps, is now used by the majority of
Internet subscribers, but is rapidly being replaced by
upscale residential and business users, with various forms
of high-speed access such as DSL, cable and wireless. High-
speed access systems are more profitable to ISP's and tend
to decrease subscriber attrition.
The Company plans to penetrate the Internet Service Provider
market through an acquisition strategy. ISP acquisition
targets are selected based on how well they potentially
support the rollout of the Company's colocation facilities
and high-speed wireless Internet access deployment. Market
demographics, competition, management and technical
personnel are primary considerations when grading a
prospective acquisition.
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Colocation
Colocation centers are single purpose facilities designed to
deliver clients optimum performance from network equipment
and systems owned by them or provided by the Company. These
facilities are custom engineered with features such as
raised floors, temperature controls, state of the art
security, fire suppression, back-up power and 24 hour
management. Worldwide high bandwidth connectivity is also
provided with redundancy from major telecom partners.
The Company, working with its acquisition candidates, has
begun marketing colocation services at Colo-Gate.com in Las
Vegas, NV. Products being marketed include Internet
connection services, engineering support, managed services
and professional services. Internet connection services are
redundant, high quality, connections to the Internet
backbone delivered via Ethernet connections. Engineering
support is on demand service available twenty-four hours a
day seven days a week. Managed services include load
balancing, data backup, multi-homing, caching, clustering,
server rental, maintenance, security firewalls and systems
monitoring. Professional services include site
architecture/validation, site migration plan and web systems
design.
The Company's strategy is to expand into additional
colocation markets, initially in west coast markets that
have potential but have not yet been penetrated by strong
major competitors.
Wireless Internet Access
The Company believes it can leverage its Internet Service
Provider operations by providing high-speed wireless
Internet access to its subscribers as well as to other
ISP's. Accordingly, it is developing a business plan to
deploy the Vector Orthogonal Frequency Division Multiplexing
"VOFDM" wireless strategy recently introduced by Cisco
Systems. This new wireless strategy is based on a
proprietary technology that allows distribution of a signal
"point to multipoint", a feature that the Company believes
is a competitive advantage. It should be noted, however,
that the Company will not have any exclusive rights to the
technology. In cases where the Company has a colocation
facility and wireless operation in the same market, a
significant cost savings can be realized by combining the
operations.
Technology
The Company is focused on technology that will deliver its
subscribers high speed Internet access at competitive
prices. It believes that technology development in the
industry will require high-speed access to optimize the
potential of the Internet. CyberCastingCorp.com, the
Company's ISP subsidiary, is targeting acquisition
candidates with the potential for converting subscribers to
high speed value added Internet access products. Initially,
the Company will primarily utilize technology obtained
through its acquisition program. Strategic partnerships
with companies seeking to exploit their technology through
partnering with an ISP are also under consideration.
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The Internet Market
The Internet market is large and growing. Currently, a
small number of very large Internet Service Providers,
promoted by software and hardware companies, control the
vast majority of the ISP market. These ISP's are
subscription based, charging, on average, $20 per month, and
offering basic web site design and hosting. The developing
trend, however, is for ISP's to offer free access when they
offer little in the way of enhanced service or
differentiation. Such free ISP services depend on
advertising revenue for profits.
The Company believes that the trend to heavily discounted or
free ISP service will drive smaller ISP's with subscription
income based business models to consolidate. This will
create an opportunity to acquire existing customer bases
through mergers and acquisitions. The Company intends to
vigorously seek out such opportunities.
Although consumer ISP's now generate more revenue than those
marketing to businesses, according to a report by Cahners
In-Stat Group, this is currently changing. Cahners also
reported "By 2002, the U.S. business ISP market will be
worth more than $63 billion and will be providing higher
margins than the cut-throat consumer segment."
Competition
The Internet services market in which the Company will
operate is extremely competitive, and the Company expects
competition in this market to intensify in the future. The
Company's current and prospective competitors include many
large companies that have substantially greater market
presence and financial, technical, marketing and other
resources. The Company competes (or in the future is
expected to compete) directly or indirectly with the
following categories of companies: (i) national and regional
ISPs such as MindSpring Enterprises, Inc., Netcom On-line
Communication Services, Inc., PSINet, Inc. and UUNET; (ii)
established online services companies such as America
Online, Inc.; (iii) computer software and technology
companies such as Microsoft Corporation; (iv) national
telecommunication companies such as AT&T Corp., MCI
Communications Corporation , and Sprint Corporation; (v)
regional Bell operating companies; (vi) cable operators such
as Comcast Corporation and Time Warner, Inc.; and (vii)
nonprofit or educational Internet service providers.
Many established online services companies and
telecommunication companies have introduced or plan to
expand their Internet services. The Company expects that a
significant number of major telecommunication, cable, media,
software and hardware companies, as well as all of the major
online services companies, will eventually compete fully in
the Internet services market, and that their entry into this
market will result in substantially greater competition for
the Company. The ability of these competitors or others to
bundle services and products with Internet connectivity
services could place the Company at a significant
competitive disadvantage. In addition, competitors in the
telecommunication industry may be able to provide customers
with reduced communication costs in connection with their
Internet access services, reducing the
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overall cost of Internet access and significantly increasing
pricing pressures on the Company. There can be no assurance
that the Company will be able to offset the effects of any
necessary price reductions resulting from such pricing
pressures with an increase in the number of its customers,
higher revenue from enhanced services, cost reductions or
otherwise.
The Company believes that its ability to compete
successfully in the Internet services market depends on a
number of factors, including market presence; the adequacy
of the Company's customer support services; the capacity,
reliability and security of its network infrastructure; the
ease of access to and navigation of the Internet provided by
the Company's services; the pricing policies of the Company,
its competitors and its suppliers; the timing of
introductions of new services and products by the Company
and its competitors; the Company's ability to support
existing and emerging industry standards; and industry and
general economic trends. There can be no assurance that the
Company will have the financial resources, technical
expertise or marketing and support capabilities to compete
successfully.
Research and Development
The Company is in an industry known for rapid evolution and
proliferation of new products. Therefore it must maintain a
competitive level of technology. Whenever possible, new
product technology will be purchased, licensed or acquired
through strategic relationships. The Company did not have
any research and development expenses in the two fiscal
years ended May 31, 1999. Research and development expense
in the fiscal period ended May 31, 2000 was $38,491. Research and
development expenses are estimated to be $100,000 through
fiscal year end May 2001 as a result of the Company's
introduction of wireless Internet services through its
subsidiary, CybAirCorp.
Employees
The Company has only one employee other than its officers.
The Company has one officer, Dennis J. Hinton who is CEO and
CFO. Officers in CyberCastingCorp.com are Dennis Hinton,
CEO and CFO; Tom Kain, President and COO; and Sonia Sworak,
Vice President of Corporate Development. Officers in
CybAirCorp are Dennis Hinton, CEO and CFO and Tom Kain
President and COO.
Mr. Hinton is the sole director of the Company. The Company
intends to add six additional board members and will fill
the vacancies as soon as practicable. There is no
compensation for board members although the Company intends
to provide non-employee board members stock options.
Operations
The Company is in a development stage and does not have any
business operations.
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Intellectual Property And Other Proprietary Rights
The Company does not have any patents or trademarks, but
does intend to file for appropriate protection of its
proprietary assets as they are developed.
Item 2. Description of Property
The Company is headquartered in leased premises at 6900
Westcliff Drive, Suite 608, Las Vegas, NV 89145. The leased
premises are approximately 1,310 square feet, representing
Suite 608 and a portion of Suite 601. The lease commitment
is for three (3) years and three (3) months and expires on
June 30, 2003. The Company has a three-year lease renewal
option.
Rent is based on 1,158 square feet until the additional 152
square feet is completed by the landlord and turned over to
the Company. The rent formula is as follows:
Monthly Minimum Base Rate: Months 01-03 Free Rent
-------------------------
Months 04-15 $2.35/Sq.Ft./Month*
Months 16-27 $2.42/Sq.Ft./Month*
Months 28-39 $2.49/Sq.Ft./Month*
*Adjusted by Cost of Living
The Company also pays $70 ($35 each) for two covered parking
spaces. Total rent including parking is currently
$3,148.50.
The Company owns no real property.
Item 3. Legal Proceedings
The Company entered into a Letter of Intent dated February
5, 1999, to acquire 100% of the shares of SA Interactive
Information Technology, Inc. ("Interactive") (Note 3 (I).
The acquisition was not consummated.
Interactive and its shareholders filed a Statement of Claim
in the Supreme Court of British Columbia (Canada) on April
23, 1999, against the Company, related companies and
individuals.
The Claim pertains to the termination of the proposed
acquisition of Interactive and the continued development of
businesses by the Company in the same or similar fields as
Interactive. The Plaintiff seeks various injunctions
restricting the Company from competing against Interactive,
damages for breach of contract and breach of fiduciary duty,
punitive damages and interest. According to the Plaintiff's
Amended Statement of Claim filed July 23, 1999, the total
amount of damages claimed by the Plaintiff in the
Interactive lawsuit is US$300,000 for the alleged
repudiation of the Settlement
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Agreement entered into on or about July 2, 1999, plus unspecified
amounts for other alleged damages.
The Company has filed Statements of Defense responding that
the actions of the Plaintiff in attempting to renegotiate
the terms of the Letter of Intent abrogated all agreements
between them, that the Company has no fiduciary duties to
the Plaintiff and that the Plaintiff has no exclusive rights
to the businesses being developed by the Company.
The Company intends to defend itself vigorously against this
action. The probable outcome of this action is not
determinable at this time.
The Company is also continuing with its Action against the
plaintiffs identified above for the return of funds advanced
to them ($40,333) towards the proposed acquisition.
Item 4. Submission of matters to a Vote of Security Holders
The Company held a special meeting of shareholders on
December 27, 1999 where the shareholders approved the Stock
Purchase Agreement between the Company and Dennis Hinton for
Mr. Hinton's acquisition of 24,726,198 shares of the
Company.
A special meeting of shareholders was also held on May 26,
1999 in which shareholders approved the amendment of Article
I to the Company's Articles of Incorporation to change the
Company's name from eDatenow.com, Inc. to Encounter.com Inc.
No other matters were submitted to our security holders for
a vote during the fiscal year ending May 31, 2000.
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PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholders Matters.
Market Information
The Company's common stock was trading on the OTC Bulletin
Board under the symbol "ENCRE" before being de-listed on
February 11, 2000 for not timely registering its common
stock with the US Securities and Exchange Commission. The
Company was moved from the bulletin board to the pink sheets
on March 9, 2000.
None of the holders of the Company's common stock have any
right to require the Company to register any shares of the
Company's common stock pursuant to the Securities Act of
1933 (the "1933 Act").
The Company has not declared any dividends on its common
stock over the last two years. There are no dividend
restrictions that limit the Company's ability to pay
dividends on its common stock and the Company does not plan
to issue any dividends.
HIGH LOW
---- ----
1999*
First Quarter $12.50 $2.25
Second Quarter $2.625 $0.312
Third Quarter $0.59 $0.125
Fourth Quarter $0.35 $0.07
----------------------------------------------------------------
* The prices are all "bid" prices.
As of May 31, 2000, there were 418 registered shareholders
in the Company.
Recent Sales of Unregistered Securities
The following is a list of equity securities sold by the
Company within the past three years that were not registered
under the Securities Act.
In February of 1999, the Company completed the sale of
8,000,000 shares of common stock to 20 investors for $0.01
per share pursuant to Rule 504 of Regulation D of the
Securities Act. The offering was completed solely to non-
U.S. investors. Total offering price was $80,000. No
sales commissions were paid.
In April of 1999, 80,000 shares of common stock were sold
at $2.50 per share to "574125 B.C.LTD." pursuant to Rule
504 of Regulation D of the Securities Act. Total offering
price was $200,000. The offering was completed to persons
known to the Company's officers and directors. 574125
B.C.LTD provided management services to the Company at that
time. No sales commissions were paid.
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In February of 2000, 24,726,198 shares of common stock were
sold to Encounter.com Acquisition Corp. in exchange for the
technology rights and business plan described herein. These
shares were sold pursuant to Section 4(2) of the Securities
Act and have been marked "restricted."
As of March 31, 2000, the Company had sold 1,000,000 shares
of common stock to 5 investors for $0.25 per share pursuant
to Rule 504 of Regulation D of the Securities Act. One
Hundred Thousand (100,000) additional shares were sold in
this offering after fiscal year end May 31, 2000. The total
gross receipts of this offering were $275,000. No sales
commissions were paid. All investors were accredited
investors.
As of September 1, 2000, the Company's subsidiary,
CyberCastingCorp.com sold 380,000 shares of its common
stock for $0.50 per share pursuant to Rule 506 of
Regulation D of the Securities Act. The total offering
price was $190,000. No sales commissions were paid. All
investors were accredited investors.
All Company stock has been purchased for investment purposes
in each of the offerings. No shares were purchased with a
view toward resale.
Item 6. Management's Discussion and Analysis or Plan of
Operation
The Company currently intends to pursue the following plan
of operations during the next twelve months:
Roll-up Strategy
A subsidiary, CyberCastingCorp.com was incorporated on
January 27, 2000 for the purpose of acquiring small to
medium sized Internet Service Providers ("ISP's") with a
goal toward aggregating 50,000 subscribers by May 31, 2001.
Based on discussions over several months with various ISP
acquisition prospects, the Company believes that a
sufficient number of acquisitions can be made on acceptable
terms and conditions to meet its goal. The primary risk in
the Company's roll-up strategy is inability to raise
adequate financing.
Smaller ISP's have difficulty competing with larger ISP's
due to several basic economic factors. Access to the
Internet backbone system, a primary expense, is very volume
sensitive giving larger ISP's a significant advantage.
Also, larger ISP's can centralize major cost centers such as
billing, customer service and administration to dramatically
improve profits. In addition to the foregoing, small ISP's
are threatened by the trend toward "free" Internet access
and, most importantly, by the necessity to provide high
speed Internet access that can be very capital intensive.
The Company is also engaged in the following related
activities to enhance the value of its subscriber base.
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High speed Wireless Products
A subsidiary, CybAirCorp, was incorporated on July 12, 2000
to market colocation services and deploy fixed high speed
broadband wireless Internet access. CybAirCorp management
and technical consultants have been working from June
through August 2000 on a business model to market a state of
the art fixed wireless microwave high frequency radio
technology called Vector Orthoganal Frequency Division
Multiplexing (VOFDM) that will be available from Cisco
Systems early in 2001. The Company plans to offer the
product, initially, in Nevada and northern California.
Approximately $50,000 has been spent in research and
development expense on this project as of September 1, 2000
and an additional $100,000 expense is anticipated prior to
implementation. Financial planning is not complete, but
initial projections indicate that this project will be very
capital intensive and that its viability is subject to
adequate financing, the source of which has not yet been
identified.
Colocation Facilities
CyberCastingCorp.com, the Company's subsidiary, has
developed a business plan to provide facilities in which
clients can locate and operate equipment for the delivery of
Internet Bandwidth over Ethernet. Colocation facility
operations commenced in September 2000 through a partnership
agreement with Colo-Gate.com, a Colocation facility operator
in Las Vegas, Nevada. Although the Colo-Gate partnership is
not capital intensive, future plans to develop Colocation
facilities independently require significant capital.
Cash Flow and Financing Requirements
The Company projects that it will need $12 million to
finance acquisitions and Colocation facilities over the next
twelve-month period. Cash requirement forecasts for the
Wireless Internet Access business are not completed as of
September 1, 2000 but are expected to be significant.
Additional research and development expenses expected to be
incurred on this project prior to seeking financing are
estimated at $100,000. The project will not be continued
beyond that point without a financing commitment.
Competition for financing for projects such as contemplated
by the Company is intense and accordingly may not be
available on acceptable terms, or at all.
The Company sold 1.1 million shares of common stock for
$275,000 in a private placement offering during the first
half of this year. Its subsidiary, CyberCastingCorp.com,
sold 380,000 shares for $190,000 as of September 1, 2000.
The Company had cash of $91,000 and accounts payable of
$8,760 as of August 31, 2000. At May 31, 2000, the current
debt on a note payable to 574125 B.C. Ltd. was $94,573.20,
plus accrued interest, $40,000 of which is now past due. As
discussed below, the Company anticipates that additional
financing will be needed in the near future. Failure to do
so will have a significant negative impact on the Company's
operations.
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The Company does not have any revenue producing operations.
Operations expected to commence within the next six months
include the acquisitions of ISPs and the Colocation
facility. Although both of these operations are budgeted
for short-term profitability, there is no assurance that
capital needed to make the acquisitions or begin operating
the colocation facility will be available.
The Company has financed its operations since February 4,
2000 through private offerings of its common stock and that
of its subsidiary. Additional private offerings are
anticipated but there is no assurance they will be
successful or adequate to finance the Company's future
operations.
The actual expenditures and business plan of the Company may
differ from that stated in the above Plan of Operations.
The board of directors of the Company may decide not to
pursue the stated business Plan of Operations. In addition,
the Company may modify the stated Plan of Operations based
on the available amounts of financing in the event that the
Company cannot obtain the required financings. The Company
does not have any financing arrangement in place to enable
the Company to meet the Stated Plan of Operations.
In the event the Company is not successful in obtaining any
further debt or equity financing, the Company anticipates
that it could not sustain its business operations based on
it's current cash position and revenues.
The Company believes the above statements may be forward-
looking statements. Actual results of the Company and the
Company's actual plan of operations may differ materially
from what is stated above. Factors which may cause the
actual results of the Company or its actual plan of
operations to vary include, among other things, decisions of
the board of directors not to pursue a specific course of
action based on its re-assessment of the facts or new facts,
changes in the Internet business or general economic
conditions and those other factors identified herein.
Impact of the Year 2000 Issue
The "Year 2000 problem" arose because many existing computer
programs use only the last two digits to refer to a year.
Therefore, these computer programs do not properly recognize
a year that begins with "20" instead of the familiar "19".
The Company has not experienced any difficulties as a result
of this potential problem.
Item 7. Financial Statements
The information required by this item is set forth in Item
13 of this Report.
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Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
We have had no disagreements with our accountants on
accounting or financial disclosures.
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PART III
Item 9. Directors and Executive Officers of the Registrant
The following are the names of the officers and directors of
the Company and its subsidiaries, their present positions,
and some brief information about their background.
Encounter.com, Inc.
-------------------
Name Age Office(s) Held
---- --- --------------
Dennis Hinton 64 Director
President, CEO & CFO
CyberCastingCorp.com
--------------------
Name Age Office(s) Held
---- --- --------------
Dennis Hinton 64 Director, CEO, Secretary,
Treasurer and CFO
Tom Kain 49 Director, President and COO
Sonia Sworak 44 Vice President Corporate
Development
CybAirCorp
----------
Name Age Office(s) Held
---- --- --------------
Dennis Hinton 64 Director, CEO, Secretary and
Treasurer
Tom Kain 49 Director, President and COO
Dennis J. Hinton
Dennis Hinton has been President, CEO, Chief Financial
Officer and the sole director of the Company since February
4, 2000. Mr. Hinton for the past twenty years has conducted
an investment banking business through his own firm,
specializing in high growth companies with IPO potential.
He is experienced in mergers and acquisitions, roll-ups and
public company operations. Mr. Hinton's background also
includes general and financial management in major
corporations, such as R. J. Reynolds, Yardley of London,
Inc. and Gulf Oil Corporation. Over the past five years,
Mr. Hinton has worked for several of his own companies
including Extra Equity, Inc. and Delta Leasing. Mr.
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Hinton now devotes his full time to the management of the
Company and it's subsidiaries. Mr. Hinton received his BS
from Gustavus Adolphus College with a major in Business
Administration in 1957.
Tom Kain
Mr Kain has been a self-employed consultant to the high tech
industry for over five years. He is a highly experienced
sales and marketing executive with twenty-five years of
managing diverse organizations, across industries. He has
led sales and marketing initiatives in high technology,
industrial and consumer products. Mr. Kain will be
responsible for strategic partner relationships, mergers and
acquisitions and new products/services strategies. Mr.
Kain received an MBA from Pepperdine and a BA from
University of Notre Dame.
Sonia Sworak
Since January 1996, Ms. Sworak consulted with and was a
director for Peoples Advocates, a political advocacy
corporation. Between 1983 and 1996 she was a self-employed
consultant primarily engaged by troubled public companies.
Her experience includes new company formation, and
privatizations in the areas of telecommunications and
technology. Ms.Sworak is also skilled in website development
and marketing. Ms. Sworak studied primarily in Canada. She
holds a Bachelor of Arts and Bachelor of Education degree
and has completed post-graduate work in Administration.
Jack MacDonald
Mr. Jack MacDonald served as the Company's President, CEO
and sole director from approximately March 18, 1999 to
February 4, 2000. The Company's current management does not
have information concerning Mr. MacDonald's business
experience and notes that the Company was not a reporting
company during Mr. MacDonald's tenure. Mr. MacDonald served
pursuant to a management agreement dated on or about March
18, 1999 between the Company and 574125 B.C. Ltd.
Terms of Office
Directors of the Company are appointed for one year terms to
hold office until the next annual general meeting of the
holders of the Company's Common Stock or until removed from
office in accordance with the Company's by-laws. Officers
of the Company are appointed by the Company's board of
directors and hold office until removed by the board.
Significant Employees
The Company does not have any employees who are not
executive officers that are expected to make a significant
contribution to the business.
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Section 16(a) Beneficial Ownership Reporting Compliance
The following persons have failed to file, on a timely
basis, the identified reports required by section 16(a) of
the Exchange Act during the most recent fiscal year.
----------------------------------------------------------------------------
Number Transactions Known Failures
of Late Not Timely To File a
Name and principal position Reports Reported Required Form
----------------------------------------------------------------------------
Dennis Hinton, Director,
President, CEO 2 (Forms 3 & 5) 0 0
Dave Cleveland,
10% beneficial owner 2 (Forms 3 & 5) 0 0
----------------------------------------------------------------------------
Item 10. Executive Compensation
Annual Compensation Table
Annual Compensation Long Term Compensation
------------------- ----------------------
Other All
Annual Other
Com- Com-
pen- Restricted pen-
sa- Stock Options/* LTIP sa-
Name Title Year Salary Bonus tion Awarded SARs (#)payouts($)tion
---- ----- ---- -------- ----- ------ ------- ------- --------- ----
Dennis CEO 1999 $ 0 $ 0 $ 0 0 0 0 0
Hinton President
CFO
Director
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Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 31, 2000, the
beneficial ownership of the Company's common stock by each
officer and director of the Company, by each person known by
the Company to beneficially own more than 5% of the
Company's common stock outstanding and by the officers and
directors of the Company as a group. Except as otherwise
indicated, all shares are owned directly.
Name and address Amount of Percent
Title of class of beneficial owner beneficial ownership of class*
-------------- ------------------- -------------------- ---------
Common Stock Dennis J. Hinton(2) 12,363,099 36.4%
5001 Cabrillo Point
Discovery Bay, CA 94514
Common Stock Dave Cleveland(2) 12,363,099 36.4%
8981 NE Highway Number 104
Kingston, WA 98346
Common Stock All Officers and Directors
as a Group (1 person) 12,363,099 36.4%
------------------------------------------------------------------------
(1) Based on 33,968,264 common shares outstanding as of May 31, 2000.
(2) 24,726,198 shares of common stock are held by Encounter Acquisition
Corp. which is equally beneficially owned by Dennis Hinton and Dave
Cleveland. These shares were acquired in consideration of the
Company's acquisition of certain software and a business plan relating
to the development of the Company as an Internet Service Provider in
February 2000. Dennis Hinton is the Company's current President,
CEO and CFO; Dave Cleveland does not hold a position in the Company.
The Company knows of no other person who is the beneficial
owner of more than five percent of the Company's common
stock.
Item 12. Certain Relationships and Related Transactions.
Except as disclosed below, none of the following parties
within the last two fiscal years has had any material
interest, direct or indirect, in any transaction
with the Company or in any presently proposed transaction
that, in either case, has or will materially affect the
Company.
* Director or officer of the Company
* Proposed nominee for election as a director of the Company
* Person who beneficially owns, directly or indirectly,
shares carrying more than 10% of the voting rights
attached to all outstanding shares of the Company
* Promoter of the Company
* Relative or spouse of any of the foregoing persons
16
<PAGE>
Related party transactions with 574125 B.C. Ltd. included:
* General and administrative expenses for
administrative and shareholder relations fees,
promotion, entertainment, travel and accommodation
expenses under a Management Agreement terminated
February 4, 2000. The amount for the year ended
May 31, 1999 was $247,725 and totaled $174,846 for
the period June 1, 1999 to February 4, 2000;
* A gain on settlement of amounts owing of
$(184,957);
* A note payable to an affiliate of 574125 B.C. Ltd.
The amount due at May 31, 2000 was $94,573;
* $82,434 due to 574125 B.C. Ltd. at the year ended
May 31, 1999; and
* 80,000 shares issued by the Company to 574125 B.C.
Ltd. in the 1999 fiscal year at a price of $2.50
per share for consideration of $200,000.
The Company also was involved in a related transaction of
$21,311 in management and consulting fees to stockholders of
Encounter.com Acquisition Corp.
17
<PAGE>
PART IV
Item 13. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
Exhibits
--------
None
Financial Statements
--------------------
The Company's audited Financial Statements, as described
below, are attached hereto.
1. Audited Consolidated Financial Statements
(a) Independent Auditors' Report;
(b) Consolidated Balance Sheets;
(c) Consolidated Statements of Operations;
(d) Consolidated Statements of Stockholders' (Deficiency);
(e) Consolidated Statements of Cash Flows; and
(f) Notes to Consolidated Financial Statements.
18
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2000 AND 1999
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Encounter.com, Inc.
We have audited the accompanying consolidated balance sheets of
Encounter.com, Inc. (a development stage enterprise) as at May
31, 2000 and 1999 and the related consolidated statements of
operations, stockholders' deficiency and cash flows for the
periods ended May 31, 2000, February 4, 2000, the year ended May
31, 1999 and cumulative from inception of the development stage
on February 5, 2000 to May 31, 2000. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall consolidated financial statement presentation. We
believe that our audits provide 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 Encounter.com, Inc. (a development stage enterprise)
at May 31, 2000 and 1999, and the results of its operations and
its cash flows for the periods ended May 31, 2000, February 4,
2000, the year ended May 31, 1999 and cumulative from inception
of the development stage on February 5, 2000 to May 31, 2000 in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern.
As discussed in Note 1 to the consolidated financial statements,
the Company is a development stage enterprise, has to date not
established any revenues, and needs to obtain new equity
financing for the development of its business. These factors
together raise substantial doubt about its ability to continue as
a going concern. Management's plan in regards to these matters
are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
CERTIFIED PUBLIC ACCOUNTANTS
Bellingham, Washington
August 31, 2000
<PAGE>
=============================================================================
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
=============================================================================
As of May 31, 2000 1999
-----------------------------------------------------------------------------
Note
ASSETS
CURRENT
Cash $ 52,010 $ -
Prepaid expenses 1,539 -
-----------------------------------------------------------------------------
53,549 -
EQUIPMENT AND FURNITURE 4 19,228 -
SECURITY DEPOSIT 3,078 -
-----------------------------------------------------------------------------
$ 75,855 $ -
=============================================================================
LIABILITIES
CURRENT
Bank indebtedness $ - $ 12
Accounts payable and accrued liabilities 43,025 11,600
Due to related party - 82,434
Current portion of note payable 5 74,573 -
-----------------------------------------------------------------------------
117,598 94,046
NOTE PAYABLE 5 20,000 -
-----------------------------------------------------------------------------
137,598 94,046
-----------------------------------------------------------------------------
CONTINGENCY 10
STOCKHOLDERS' EQUITY (DEFICIENCY)
PREFERRED STOCK
Authorized: 5,000,000 shares, $1.00 par value
Issued and outstanding: nil
COMMON STOCK
Authorized: 50,000,000 shares,
$0.001 par value
Issued and outstanding:
May 31, 1999 - 8,242,066 shares
May 31, 2000 - 33,968,264 shares 33,968 8,242
ADDITIONAL PAID-IN CAPITAL 106,032 889,169
DEFICIT (Reorganized February 4, 2000) 3 - (616,124)
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (201,743) (375,333)
-----------------------------------------------------------------------------
(61,743) (94,046)
-----------------------------------------------------------------------------
$ 75,855 $ -
=============================================================================
See accompanying Notes to the Consolidated Financial Statements
<PAGE>
=============================================================================
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
=============================================================================
Cumulative
From Febru- June 1,
Inception of ary 5, 1999
Development 2000 to Year
Stage on to Febru- Ended
February 5, 2000 May 31, ary 4, May 31,
to May 31, 2000 2000 2000 1999
GENERAL AND ADMINISTRATIVE
EXPENSES
Amortization $ 1,054 $ 1,054 $ - $ -
Audit and accounting 7,500 7,500 2,025 9,459
Communications 6,183 6,183 4,845 9,997
Interest 3,783 3,783 - -
Legal fees 34,180 34,180 6,029 28,876
Management, administrative
and shareholder relations 40,816 40,816 162,667 163,692
Office and sundry 4,312 4,312 2,972 8,997
Premises rent 6,105 6,105 - -
Software development 38,491 38,491 - -
Travel and promotion 59,319 59,319 12,373 83,979
-----------------------------------------------------------------------------
201,743 201,743 190,911 305,000
COSTS INCURRED TOWARDS
BUSINESS ACQUISITION
NOT PROCEEDED WITH
(NOTE 9) - - - 70,333
GAIN ON SETTLEMENT OF
LIABILITIES (NOTE 3) - - (184,957) -
-----------------------------------------------------------------------------
NET LOSS FOR THE PERIOD $201,743 $201,743 $ 5,954 $375,333
=============================================================================
BASIC LOSS PER SHARE $0.006 $0.001 $0.146
WEIGHTED AVERAGE
NUMBER OF SHARES 33,573,436 8,242,066 2,563,162
See accompanying Notes to the Consolidated Financial Statements
<PAGE>
=============================================================================
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIENCY)
=============================================================================
Deficit
Accumu-
lated Total
Addit- During Stock-
Common Stock ional Develop- holders'
---------------- Paid-in Ment Equity
Number Amount Capital Deficit Stage (Deficiency)
Balance, May 31, 1998
(Note 6) 162,066 $ 162 $622,249 $(616,124)$ - $ 6,287
Issued for cash:
$0.01 per share 8,000,000 8,000 72,000 - - 80,000
Issued for cash:
$2.50 per share 80,000 80 199,920 - - 200,000
Share issue costs
- legal fees (5,000) (5,000)
Net loss-year ended
May 31, 1999 - - - - (375,333) (375,333)
------------------------------------------------------------------------------
Balance,
May 31, 1999 8,242,066 8,242 889,169 (616,124)(375,333) (94,046)
Net loss-June 1,
1999 to
February 4, 2000 (5,954) (5,954)
Reorganization
Adjustments (997,411) 616,124 381,287 -
------------------------------------------------------------------------------
Balance,
February 4, 2000 8,242,066 8,242 (108,242) - - (100,000)
Issued for
technology
license and
business plan 24,726,198 24,726 (24,726) - - -
Issued for cash:
$0.25 per share 1,000,000 1,000 249,000 - - 250,000
Share issue
costs-finder's
fee (10,000) - - (10,000)
Net loss-
February 5,
2000 to May 31,
000 (201,743) (201,743)
------------------------------------------------------------------------------
Balance,
May 31, 2000 33,968,264 $ 33,968 $106,032 $ - $(201,743) $ (61,743)
==============================================================================
See accompanying Notes to the Consolidated Financial Statements
<PAGE>
=============================================================================
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
=============================================================================
Cumulative
From Febru- June 1,
Inception of ary 5, 1999
Development 2000 to Year
Stage on to Febru- Ended
February 5, 2000 May 31, ary 4, May 31,
to May 31, 2000 2000 2000 1999
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net loss for the period $(201,743) $(201,743) $ (5,954) $(375,333)
Item not requiring
outlay of cash
Amortization 1,054 1,054 - -
Changes in operating
assets and liabilities
Prepaid expenses (1,539) (1,539) - -
Accounts payable and
accrued liabilities 43,025 43,025 (11,600) 11,600
Due to related party - - 17,566 82,434
-----------------------------------------------------------------------------
Net cash - operating
Activities (159,203) (159,203) 12 (281,299)
-----------------------------------------------------------------------------
INVESTING ACTIVITIES
Equipment and furniture (20,282) (20,282) - -
Security deposit (3,078) (3,078) - -
-----------------------------------------------------------------------------
(23,360) (23,360) - -
-----------------------------------------------------------------------------
FINANCING ACTIVITIES
Common stock subscribed 250,000 250,000 - 280,000
Stock offering costs (10,000) (10,000) - (5,000)
Reduction in note payable (5,427) (5,427) - -
-----------------------------------------------------------------------------
234,573 234,573 - 275,000
-----------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH 52,010 52,010 12 (6,299)
CASH (BANK INDEBTEDNESS)
AT BEGINNING OF PERIOD - - (12) 6,287
-----------------------------------------------------------------------------
CASH (BANK INDEBTEDNESS) AT
END OF PERIOD $ 52,010 $52,010 $ - $ (12)
=============================================================================
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash paid for interest $ 3,783 $ 3,783 $ - $ -
Cash paid for income taxes $ - $ - $ - $ -
SUPPLEMENTAL NON-CASH
INVESTING AND FINANCING
ACTIVITIES
Note payable issued in
settlement of related
party accounts payable $ 100,000 $ - $ - $ -
See accompanying Notes to the Consolidated Financial Statements
<PAGE>
=============================================================================
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
=============================================================================
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company was organized June 4, 1986 under the laws of
Colorado as "Sure Hair, Inc.". Its original business was in the
cosmetic and beauty care products field, and was abandoned. The
Company remained dormant until September 1997, when its issued
stock was reduced by a 500:1 reverse split, and an equity
financing of $157,500 was completed. Effective September 26,
1997 the name of the Company was changed to "Palmer Medical,
Inc." to reflect its new business in the field of medical device
manufacturing and sales. This business did not materialize and
the Company was again dormant at the end of its 1998 fiscal year.
In January 1999 the company undertook a 20:1 reverse split
of its issued stock. Effective February 3, 1999 its name was
changed to "Edatenow.com, Inc.". Equity financings for a total
of $280,000 were completed in February and April 1999 to finance
a portion of the acquisition cost of a private company in the
voice personals industry, and to commence the development of an
Internet dating program building upon newspaper voice personals.
The acquisition of the private company in the voice personals
industry was not completed, the Company abandoned its development
plans in the field and, by January, 2000 was again inactive.
Effective February 4, 2000 the Company completed a financial
reorganization wherein debts to prior management totaling
approximately $275,000 were settled by the issuance of a $100,000
promissory note, and a total of 24,726,198 shares were issued to
acquire the rights to the use of certain software and a new
business plan from Encounter.Com Acquisition Corp. ("EAC"). EAC
is a private company organized in Nevada for the purposes of this
transaction, and obtained the software rights and business plan
by assignment from its organizing shareholder Dennis Hinton. The
shares issued to acquire the above assets represented
approximately 75% of the shares outstanding on completion. All
Directors and Officers resigned at the completion of the
transaction and the Company is now controlled by Dennis Hinton.
The new business plan for the Company is to develop and
market Internet products and services including Internet access
(ISP), web site hosting, web site publishing and e-commerce
applications for small and intermediate size businesses. The
Company is considered to be in the development stage commencing
February 5, 2000, after the above reorganization and change of
control. To date the Company has not established any revenues,
and is dependent on its securing new equity financing for the
continued development of its business.
The Company's financial statements were prepared using
generally accepted accounting principles applicable to a going
concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. The
Company has raised $250,000 by way of equity financing in the
period February 5, 2000 to May 31, 2000, and a further $150,000
subsequently to finance on-going development and operations.
Management intends to continue to offer the issue of further
capital stock to finance its operations and acquisitions.
<PAGE>
=============================================================================
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
=============================================================================
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(i) Consolidation
The consolidated financial statements include the accounts
of Encounter.com, Inc. and its wholly owned subsidiary
Cybercastingcorp.com, organized in Nevada. All significant
intercompany balances and transactions are eliminated in
consolidation.
(ii) Use of estimates
The preparation of the consolidated 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
consolidated results could differ from those estimates.
(iii) Financial instruments and financial risk
The Company's financial instruments consist of cash, bank
indebtedness, accounts payable and accrued liabilities,
amounts due to a related party and note payable. The fair
value of the current assets and liabilities approximate the
carrying amounts due to the short-term nature of these
instruments.
(iv) Translation of foreign currencies
The Company's foreign operations comprised management and
administrative services in Canada relating to its former
business prior to reorganization on February 4, 2000. For
foreign operations with the local currency as the functional
currency, assets and liabilities are translated at year-end
exchange rates, and statements of income are translated at
the average exchange rates during the year. Gains or losses
resulting from foreign currency translation are included as
a component of other comprehensive income.
(v) Equipment and furniture
Equipment and furniture is recorded at cost on acquisition
and is amortized by charge to operations on a straight-line
basis over its estimated useful life.
(vi) Loss per share
Basic loss per common share has been calculated based on the
weighted average number of shares of common stock
outstanding during the period. Where reverse splits have
been completed in the year, for the purpose of calculating
the weighted average number of shares outstanding, these
reverse stock splits have been considered effective at the
beginning of the fiscal year.
(vii) Income taxes
The Company accounts for income taxes under an asset and
liability approach that required the recognition of deferred
tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the
Company's financial statements or tax returns. In
estimating future tax consequences, all expected future
events other than enactment of changes in the tax laws or
rates are considered.
<PAGE>
=============================================================================
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
=============================================================================
(viii) Recently issued accounting standard
In June 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended, which requires companies to
record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses
resulting from changes in the values of those derivatives
would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting.
The Company presently does not use derivatives in its
operations, accordingly this pronouncement is not
applicable.
NOTE 3 - QUASI-REORGANIZATION AND NEW BUSINESS PLAN
The shareholders on December 27, 1999 approved a change of
control of the Company through the issuance of 24,726,198 shares
from treasury for the acquisition of software rights and a new
business plan to develop and market Internet products and
services including access, web site hosting, web site publishing
and e-commerce applications. In connection with this change of
control and business, the former management agreed to a reduction
in the amounts owing to related parties by $184,957.
The Company has accounted for this reorganization by
recognizing a gain on settlement of liabilities of $184,957 in
the period June 1, 1999 to February 4, 2000, the effective date
of the change of control.
The 24,726,198 shares issued to acquire the new assets have
been assigned a value of nil for accounting purposes. The fair
values assignable to the assets and liabilities of the Company by
Encounter.com Acquisition Corp., the acquirer, under accounting
principles for reverse acquisitions do not differ in any material
respect with their book values at February 4, 2000. Both fair
values and the net book values of the assets and liabilities of
Encounter.com, Inc. on reorganization are as follows:
Assets $ -
Liabilities - note payable (100,000)
-----------------------------------------
Net liabilities (100,000)
=========================================
Concurrently with this reorganization, the deficit account
of Encounter.com, Inc. ($616,124) and deficit accumulated during
the development stage with respect to its previous business at
February 4, 2000 ($381,287) were eliminated by a charge to
additional paid-in capital.
The development stage with respect to the new business plan
commenced on February 5, 2000, immediately after completion of
the reorganization. The consolidated statements of operations,
stockholders deficiency and cash flows presented consist of
comparative figures for the previous fiscal year ended May 31,
1999, the period from the end of the previous fiscal year to the
date of reorganization (February 4, 2000), the period from
reorganization to May 31, 2000 (and the Company's regular year-
end), and cumulative for the development stage which corresponds
with the period immediately after reorganization (February 5,
2000) to May 31, 2000.
<PAGE>
=============================================================================
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
=============================================================================
NOTE 4 - EQUIPMENT AND FURNITURE
Equipment and fixtures consist of:
Office Total
Equipment Furniture May 31, 2000 May 31, 1999
Cost $ 7,644 $ 12,638 $ 20,282 $ -
Accumulated
Amortization (424) (630) (1,054) -
------------------------------------------------------------------------------
Net book value $ 7,220 $ 12,008 $ 19,228 $ -
==============================================================================
Amortization is charged at the following annual rates:
office equipment - 33%, furniture and fixtures - 25%.
NOTE 5 - NOTE PAYABLE
The note payable was issued in connection with the
reorganization of the Company detailed in Note 3. The note is
payable at the rate of $20,000 each 3 months, commencing June 30,
2000, is unsecured and bears interest at the rate of 12% per
annum.
Face value of note payable $ 100,000
Less: closing adjustments relating
to sundry accounts payable (5,427)
----------------------------------------------------
94,573
Current portion of maturity (74,573)
----------------------------------------------------
Non current maturity $ 20,000
====================================================
<PAGE>
=============================================================================
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
=============================================================================
NOTE 6 - COMMON STOCK
(i) Common Stock Issued to May 31, 1998
The issued common stock was subject to reverse splits on a
500:1 basis in fiscal 1998, and a 20:1 basis in fiscal 1999. The
number of shares outstanding and the amounts recorded for common
stock and additional paid in capital have been restated
retroactively to inception to effect these reverse splits.
Number Warrants Additional
Of to Acquire Subscription Paid-In
Shares Amount Common shares Receivable Capital
Balance at inception,
June 4, 1986 - $ - $ - $ - $ -
Issued for cash
$0.001 - $0.05
per share 195 69,350
$0.10 per share 500 1 100 499,999
Issued for services
$0.001 per share 185 1,850
Issued for
distribution rights
$0.001 per share 140 -
Share issue costs (135,418)
------------------------------------------------------------------------------
Balance, May 31, 1987 1,020 1 100 - 435,781
Issued for cash
$0.02 per share 10 2,000
------------------------------------------------------------------------------
Balance, May 31, 1988 1,030 1 100 - 437,781
Warrants expired in
year (100) 100
------------------------------------------------------------------------------
Balance, May 31, 1989
and 1990 1,030 1 - - 437,881
Issued for services
$0.002 per share 1,518 2 28,472
------------------------------------------------------------------------------
Balance, May 31, 1991 2,548 3 - - 466,353
Issued for services
$0.002 per share 652 1 12,582
------------------------------------------------------------------------------
Balance, May 31, 1992 3,200 4 - 478,935
Issued in settlement
of liabilities 1,366 1 (2,407) 6,378
------------------------------------------------------------------------------
Balance, May 31, 1993 4,566 5 - (2,407) 485,313
Subscription settled - - 2,407 (2,407)
------------------------------------------------------------------------------
Balance, May 31, 1994,
1995, 1996 and 1997 4,566 5 - - 482,906
Issued for cash
$0.05 per share 157,500 157 157,343
Share issue costs -
legal fees paid (18,000)
------------------------------------------------------------------------------
Balance, May 31, 1998 162,066 $162 $ - $ - $ 622,249
==============================================================================
<PAGE>
=============================================================================
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
=============================================================================
(ii) Stock Option Plan
The Company has adopted a Stock Option Plan (the "Plan") to
be administrated by a Compensation Committee of the Board of
Directors. The purpose of the Plan is to provide incentive stock
options as a means to attract and retain key corporate personnel
and consultants. The shares to be offered under the Plan consist
of authorized but unissued common shares of the Company. The
aggregate number of shares subject to options under the Plan at
any one time shall not exceed 2,500,000 shares. The maximum
number of shares for which an option may be granted to any
optionee during any calendar year shall not exceed 500,000
shares. The exercise price of the options when granted shall not
be less than 85% of the fair market value of the shares on the
date the option is granted. The term of the options granted may
not extend beyond 10 years, and are subject to earlier
cancellation on termination of employment. The Plan stipulates
vesting of stock option rights at the rate of at least 20% per
year, and it is intended that options when granted will vest on a
cumulative basis as to 1/3 of the shares under option annually,
unless otherwise provided by the Plan administrator.
To date there have been no stock options granted under the
Plan.
NOTE 7 - RELATED PARTY TRANSACTIONS
(i)
February 5, 2000 June 1, 1999 Year
To To Ended
May 31, 2000 February 4, 2000 May 31, 1999
General and administrative
expenses for administrative
and shareholder relations
fees, promotion,
entertainment, travel and
accommodation expenses to
574125 B.C. Ltd. under a
Management Agreement
terminated February 4, 2000 $ - $ 174,846 $ 247,725
Gain on settlement of amounts
owing to 574125 B.C. Ltd. - (184,957) -
Management and consulting
fees to stockholders of
Encounter.com Acquisition
Corp. 21,311 - -
Due to 574125 B.C. Ltd. at
period end - - 82,434
Note payable to affiliate of
574125 B.C. Ltd. at period
end 94,573 100,000 -
(ii) The Company in the 1999 fiscal year issued 80,000 shares to
574125 B.C. Ltd. at a price of $2.50 per share for total
consideration of $200,000.
=============================================================================
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
=============================================================================
NOTE 8 - INCOME TAXES
At May 31, 2000, the Company has tax operating losses
carryforwards of approximately $185,000 expiring in fiscal 2015.
Due to ownership and business purpose changes, the net operating
loss carryforwards at May 31, 1999 of approximately $1,000,000
are subject to restriction under tax laws and any tax benefit is
expected to be minimal.
The tax benefit of the cumulative tax loss carryforwards
have been offset by a valuation allowance of the same amount.
NOTE 9 - PROJECTS NOT PROCEEDED WITH
Voice personals and Internet dating program
The Company in the year ended May 31, 1999 advanced $40,333
under a Letter of Intent to acquire 100% of the shares of SA
Interactive Information Technology, Inc., a private British
Columbia, Canada corporation. The Letter of Intent also required
the Company to issue 9,000,000 common shares, advance a further
$140,000, raise a total of $2,500,000 in financing within 18
months of closing, and issue options to the vendors of the
private company to acquire 750,000 shares at a price of $0.20 per
share exercisable within 2 years of closing. The proposed
acquisition, which was not proceeded with, was intended to
provide the Company with an entry into the field of voice
personals, upon which to develop an Internet presence.
An additional $30,000 was advanced for development costs
towards an Internet presence for the above business. These
costs, together with the $40,333 advanced under the Letter of
Intent have been charged to operations in the 1999 fiscal year
(Note 10 - Contingency).
NOTE 10 - CONTINGENCY
The Company entered into a Letter of Intent dated February
5, 1999 to acquire 100% of the shares of SA Interactive
Information Technology, Inc. ("Interactive") (Note 9). The
acquisition was not proceeded with.
Interactive and its shareholder filed a Statement of Claim
in the Supreme Court of British Columbia (Canada) on April 23,
1999 against the Company, and certain companies and individuals
related to the Company at the time.
The claim pertains to the termination of the proposed
acquisition of Interactive, and the continued development of
businesses by the Company in the same or similar fields as
Interactive. The Plaintiff seeks various injunctions restricting
the Company from competing against Interactive, damages for
breach of contract and breach of fiduciary duty, punitive damages
and interest.
The Company filed a Statement of Defense on November 12,
1999 responding that the actions of the Plaintiff in attempting
to renegotiate the terms of the Letter of Intent abrogated all
agreements between them, and that the Company has no fiduciary
duties to the Plaintiff and that the Plaintiff has no exclusive
rights to the businesses being developed by the Company.
There have been no filings with the Court following the
Statements of Defense filed by the Company on November 12, 1999
and the other defendants on November 17, 1999. No motions have
been calendered and no hearings have been set.
<PAGE>
=============================================================================
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
=============================================================================
The Company intends to continue to defend itself vigorously
against this action. The probable outcome of this action is not
determinable at this time.
The Company is also continuing with its Action against the
plaintiffs above for return of the funds advanced ($40,333)
towards the proposed acquisition.
NOTE 11- PREMISES LEASE COMMITMENT
The Company has entered into a premises lease commitment to
its office in Las Vegas, Nevada expiring June 30, 2003. Future
minimum base rentals due are as follows:
Year ended May 31, 2001: $ 35,864
May 31, 2002: 38,384
May 31, 2003: 39,091
May 31, 2004: 3,260
NOTE 12 - COMPARATIVE FIGURES
Certain of the figures for the 1999 comparative financial
statements have been reclassified to conform to the presentation
adopted for the current periods.
NOTE 13 - SUBSEQUENT EVENT
On July 1, 2000, the Company's wholly-owned subsidiary
Cybercastingcorp.com has by a Private Offering Memorandum
expiring September 1, 2000 offered to sell a maximum of 4,000,000
shares of its capital stock at a price of $0.50 per share The
net proceeds are to be used primarily to acquire an internet
service provider, working capital and general corporate purposes.
There is no minimum number of shares to be sold. This offering
will not have a dilutive effect on the net assets of the Company.
NOTE 14 - UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems
use two digits rather than four to identify a year. Date-
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using year 2000
dates is processed. In addition, similar problems may arise in
some systems which use certain dates in 1999 to recognize
something other than a date. The Company's own financial
accounting functions are not technologically dependent. Although
the change in date has occurred, it is not possible to conclude
that all aspects of the Year 2000 Issue that may affect the
entity, including those related to customers, suppliers, or other
third parties, have been fully resolved.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Encounter.com Inc.
By: /s/ Dennis Hinton
----------------------------------------------------
Dennis Hinton, Sole Director, President, CEO and CFO
Date: November 17, 2000
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