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As filed with the Securities and Exchange Commission on July 27, 2000
Commission File No.
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-SB
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GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
YAPALOT COMMUNICATIONS HOLDINGS INC.
(Name of Small Business Issuer in its charter)
Delaware (Applied for)
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4884 Dufferin Street, Unit 1, Toronto, Ontario, Canada M3H 5S8
(Address of principal executive offices) (Zip code)
Issuer's telephone number: (416) 736-8882
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Stock par value $.001
(Title of class)
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TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business...............................................3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................7
Item 3. Description of Property...............................................9
Item 4. Security Ownership of Certain Beneficial Owners and Management........9
Item 5. Directors, Executive Officers, Promoters and Control Persons.........10
Item 6. Executive Compensation...............................................11
Item 7. Certain Relationships and Related Transactions.......................11
Item 8. Description of Securities............................................11
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Stockholder Matters..........................12
Item 2. Legal Proceedings....................................................12
Item 3. Changes in and Disagreements with Accountants........................12
Item 4. Recent Sales of Unregistered Securities..............................12
Item 5. Indemnification of Directors and Officers............................13
.
PART F/S
Independent Auditors Report and Financial Statements.........................14
PART III
Index to Exhibits............................................................15
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Yapalot Communications Holdings Inc. was incorporated on April 6, 2000
under the laws of Delaware to deploy and market a global Internet Protocol
("IP") telecommunications network. Yapalot is the holding company for its
wholly-owned subsidiary, Yapalot Communications Inc. which was incorporated
under the laws of Canada on March 8, 2000. Yapalot Communications Holdings Inc.
and Yapalot Communications Inc. are referred to as a single entity throughout
this document as "Yapalot", "we" or "us".
Our initial public launch during July 2000 provided flat rate long
distance service in major cities spreading across eight different countries:
Toronto, Montreal and Vancouver, in Canada; Hong Kong, China; Moscow, Russia;
Chicago, Los Angeles, Miami and New York in the United States; all of the United
Kingdom, France, Italy and Israel. We anticipate launching into additional
locations throughout the rest of the year, including: Greece, Spain, Chile,
Argentina, Venezuela, Japan, Mexico and Iran. Thereafter, we will focus on
providing flat rate long distance service to every strategic international
location across the globe.
Principal Business Activities
Our principal services include the following:
1. Flat rate long distance tolls sold to households and small business on
a yearly subscription basis.
2. Corporate long distance solutions offered as an alternative to high
cost long distance carriers.
3. Prepaid cards sold throughout the world on a retail and wholesale level
featuring a time sensitive rather than a dollar sensitive limitation.
4. Franchises sold outside Canada to qualified persons in the
telecommunications industry. Franchisees will have access to our VoIP network
enabling them to market and offer flat rate long distance services to customers
in their territory.
Industry Background
As the telecommunication industry has been deregulated, competition has
corrected the high prices of long distance service with competitive cost
effective pricing. Our Voice over Internet Protocol ("VoIP") technology allows
for substantial cost savings over traditional telephone company switching
systems by eliminating all long distance tolls and replacing them with efficient
IP technology. Yapalot was formed by a team of experienced executives and
developed strategic alliances with manufacturers like Ericsson and Clarent. Our
purpose is to provide flexible long
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distance voice and data solutions to consumers and businesses by attempting to
achieve the following:
Provide flat rate long distance packages
Prepaid card service "One Card"
Post paid billing scenario
Free long distance calls: PC to Phone
Corporate long distance solutions
Corporate global voice mail
International conferencing
Global fax
During our first year of operations, we are focusing on global deployment
of our gateways, followed by a Canada-wide advertising campaign. Beginning in
our second year, we will focus on the respective international markets where
each gateway is located in an effort to drive long distance traffic from those
gateways back to Canada.
Yapalot's VoIP Network
Our VoIP network was developed using hardware (gateways) manufactured by
Clarent Corporation and software either manufactured by Clarent or proprietary.
We co-located our gateways with UUNET, an MCI-WorldCom company specializing in
data solutions and server location facilities for global companies, by
positioning our gateways, also known as points of presence, in specific
countries in rental space provided by UUNET. We purchased Internet bandwidth
from UUNET that can carry all data between our gateways to avoid data being
carried over public Internet service. Once our gateway is in place it is linked
via the Internet to other gateways owned and operated by Yapalot. The software
is responsible for routing all telephone, fax and video transmissions from
gateway to gateway and then terminating them through a PRI (regular telephone
line). Our initial deployment of 10 gateways in eight different countries has a
one time cost of $380,000 including installation, training and software. We
anticipate an additional fixed cost of $25,000 per gateway and an ongoing cost
of $ 4,000 per gateway to add an additional city to our network.
Yapalot's Products
In North America our services spread across two major markets: consumer
and corporate. The consumer market will be enticed by discounting long distance
and flat rate packages. While business will also be attracted by discounted
rates, they will be more anxious to use new services, such as global voice mail,
global fax and global conference.
We will provide an inbound call center located in Toronto. International
customers will subscribe to our service via e-commerce on Yapalot's website or
contact their local Yapalot representative to subscribe via phone.
Our services and products will be diverse and all share a common goal:
cost reduction in
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global communications via voice, fax or data. The network infrastructure will
yield substantial benefits over traditional telephone companies as follows:
Infrastructure - Based on the Internet standard of IP, which allows for
the flow of data across the globe. This data can then carry voice, fax and video
to almost anywhere.
Performance - Voice over IP or VoIP with a standard T1 data connection can
support over 120 simultaneous phone calls in every country of presence.
Products - The ability to market long distance voice services via phone to
phone, PC to phone and PC to PC. These services can be post paid, prepaid cards
or flat rate service. These services can also migrate to the corporate world
with enhanced network abilities to link corporate offices around the world with
both voice and data transfer, conference calling and global voice mail.
Flexibility - Because the infrastructure backbone is Internet IP based,
the marketing of the services can be done anywhere in the world even without a
point of presence, hence a global reach.
E-Commerce - The ability to subscribe clients internationally via commerce
giving them access to Yapalot's VoIP network.
Competition for Telecommunications Services
In the world of deregulated telecommunication, competition has corrected
the high prices of long distance service with competitive cost effective
pricing. Communication is expedited due to the Internet and e-commerce.
Management believes that they can capture a substantial portion of the
international market largely due to our "Flat Rate" program. Our services
address these issues by providing value added services that combine with flat
rate service to create a reoccurring revenue stream.
An increasing number of competitors must find ways to effectively create
revenue by attracting clients at lower rates and providing new services. The
competition in North America and many parts of Europe has led to the decline in
profit margins. Bell Canada owns the phone switches and cables, but with
deregulation must wholesale airtime to AT&T, Sprint, and now Telus who resell to
Canadian consumers. Other wholesalers also have entered the market and are
repackaging in the form of Prepaid Cards, and domestic flat rate service like
London Telecom. All these companies ultimately rely on Bell who owns the
network.
According to an October 1999 International Data Corp. report, the
worldwide Internet protocol telephony market will explode from 310 million
minutes of use in 1998 to 2.7 billion by year-end 1999. By 2004, IP telephony
minutes will reach 135 billion. Revenues for this service are estimated to grow
from US $480 million in 1999 to US $19 billion by 2004.
We plan to construct and deploy a new sophisticated network from the
ground up. This VoIP network is intended to bypass Bell and any regulatory body
by accessing the unregulated Internet IP
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network, hence Voice over IP. This is a new and emerging technology, one that
will reward first to market with greater market share and experience. We compete
with companies that are much larger and have far greater financial resources
than us. While there can be no assurances, we believe our approach to the
international telecommunications market will distinguish our services and yield
cost savings to our customers.
Equipment Suppliers
We entered an agreement with Clarent Corporation based in Redwood City,
California to manufacture our equipment. Clarent Corporation is the world's
leading IP telephony technology supplier to mainstream carriers and providers.
In addition, Clarent will provide technical training for installing and
operating the hardware and software for the VoIP network. The agreement sets
forth a payment schedule according to the deployment, training and operation of
the VoIP network. We also will be utilizing other routing equipment manufactured
by Cisco Systems, Lucent and IBM. The equipment for the construction and
operation of our network is readily available from these manufacturers. We are
not dependent upon any single company for the purchase of hardware and software
necessary to construct our VoIP network. If any of our suppliers ceased to
exist, it would not affect our ability to operate our network.
Trademark Concerns
The name "Yapalot" is trademarked in Canada and is in the process of being
trademarked abroad. Our network cannot be registered because it is Internet
based and cannot be patented. Franchises will be available for sale outside of
Canada and will allow the franchisee the license to access our VoIP network.
Government Regulations
Our VoIP network is Internet based and, therefore, does not require
government approval or licensing.
One component of the network, called a "PRI", can be described as a
telephone line. These "PRI's" are necessary in any country in which our network
has a point of presence. Some countries require a license to operate a "PRI",
although most do not have such regulations. We will obtain the necessary
licensing in those countries that require it. To date, we have realized an
approximate legal cost of $5,000 per country to obtain the required licensing.
We are licensed in Hong Kong and Russia and we are seeking a license in the
Philippines. No licenses are required in Europe. We do not anticipate that the
time or cost involved in securing licensing will be a limiting factor in our
development and growth.
Employees
At present, we have a total of twenty full-time employees. They are
responsible for the construction of the VoIP network, software design and
business operations. In July 2000, we hired
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12 of our full-time employees to be dedicated to customer service. Over the
next 12 months and once the VoIP network is complete, we will require
approximately 13 additional full-time employees for various functions throughout
the company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
General
Through our wholly-owned subsidiary, Yapalot Communications Inc., we are
creating and marketing a global Internet Protocol telecommunications network.
During the next 12 months, we anticipate completing the launch of ten initial
gateways plus an additional 22 gateways.
To achieve our business plan, we plan to build a customer service team of
more than 12 full time employees and approximately ten full-time employees in
the areas of administration, marketing and sales.
Yapalot Communications Holdings Inc. is a holding company for and has
no independent operating history other than Yapalot Communications. Inc.
Revenues and expenses for the period ended April 30, 2000 represent
consolidated costs since inception.
SELECTED FINANCIAL DATA
The following table sets forth summary financial data for the date and
period indicated. The financial data is derived from financial statements of the
Company audited by Bromberg & Associate, Chartered Accountant, appearing under
PART F/S. All figures in this registration statement and the financial
statements are set forth in U.S. dollars.
Statement of Operations Data:
Revenues $ --
Expenses 26,509
Other Income (Expense) --
Net loss (26,509)
Balance Sheet Data:
Working capital (deficit) $ 58,640
Total assets 238,898
Total liabilities 249,407
Stockholders' equity 238,898
Results of Operations
From inception through April 30, 2000, we have not yet commenced
generating revenues. We anticipate revenues to commence with the initial launch
of our network during summer 2000.
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Expenses during the period generally related to start-up and incorporation
costs for Yapalot Communications Inc. and Yapalot Communications Holdings Inc.
Liquidity and Capital Resources
Since inception, our primary source of liquidity has been contributions to
operating capital by our founders. To date they have contributed approximately
$450,000.00 to finance the start-up of Yapalot Communications Holdings Inc. and
Yapalot Communications Inc. We anticipate conducting an offering pursuant to
Regulation D, Rule 504 of the Securities Act of 1933, as amended, of 4,000,000
shares of common stock at $0.25 during late summer 2000 to raise $1,000,000 for
working capital.
We anticipate that we will begin to generate revenues upon the launch of
our network. The initial launch in selected cities in eight countries (Canada,
the United States, the United Kingdom, France, Italy, Russia, China, Israel)
commenced on July 24, 2000. We plan to add an additional city every two to three
weeks to establish a presence in 16 countries by the end of 2000.
Assuming the business planned becomes operational with adequate funding,
the sources of revenues should be as follows in order of their launch sequence.
Flat rate long distance: Will be sold to households and small businesses
throughout the country on a yearly subscription basis creating re-occurring
revenues. Subscribers will be billed a monthly fee for unlimited long distance
to one or more countries of their preference. Customers will subscribe via our
inbound customer service order center or via e-commerce from any where in the
world.
Prepaid "One-Card" plan: Will be sold to retail locations across the
country at a fixed cost rate per card. For a pay in advance set price customers
can purchase a disposable or rechargeable card, which gives them access to our
VoIP network via a personal PIN number. Once purchased customers dial into our
network and are prompted to chose one country of their choice to have one month
of unlimited long distance to that country.
Corporate long distance solutions: All corporations doing business outside
of their local area can take advantage of our VoIP network. We intend to offer
corporations large reductions in their long distance costs with contracted flat
rate monthly service.
Franchising: We currently are speaking to International Franchising
Specialists to locate highly qualified persons outside of Canada in the
telecommunications industry. Management expects franchises will be sold to
qualified persons who will generate revenues from franchise and master franchise
agreements. Franchisees will be given complete access to our VoIP network
connecting them to the world. Billing and System Access will be monitored by our
Central Command Center (CCC) located in Toronto, Canada. Ongoing royalty fees
will be charged to all franchisees generating increasing re-occurring monthly
revenues.
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Global voice mail and fax and international conferencing services are
being developed at present.
Forward Looking Statements
Statements that are not historical facts included in this registration
statement are "forward-looking statements" (as that term is defined in the
Private Securities Litigation Reform Act of 1995) and involve risks and
uncertainties that could cause actual to differ from projected results. Such
statements address activities, events or developments that we expect, believe,
project, intend or anticipate will or may occur, including such matters as
future capital, business strategies, expansion and growth of our operations and
future net cash flows. Factors that could cause actual results to differ
materially are described throughout this registration statement. Cautionary
disclosures include, among others: general economic conditions, the markets for
and market price of our services, the strength and financial resources of our
competitors, our ability to find and retain skilled personnel, the results of
financing efforts and regulatory developments and compliance. We disclaim any
obligation to update or revise any forward-looking statement to reflect events
or circumstances occurring hereafter or to reflect the occurrence of anticipate
or unanticipated events.
ITEM 3. DESCRIPTION OF PROPERTY
We lease offices at 4884 Dufferin Street, Unit 1, Toronto, Ontario, Canada
M3H 5S8. The 6,000 square foot facility is occupied pursuant to a five year
lease that commenced on April 1, 2000 with an option to renew for an additional
five years. The monthly rental is $4,083.00 per month including taxes,
maintenance and insurance.
The headquarters were designed as an open concept, forty employee facility
with the capacity to oversee and manage worldwide operations, handle customer
service and support, house sales and marketing staff, conduct billing and offer
a retail sales outlet. Management believes these facilities are adequate for our
current needs and anticipated future needs.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of June 30, 2000 with
respect to persons known to us to be beneficial owners of more than 5% of our
voting common stock. The table also states the beneficial ownership of such
common stock by each director of us and by all directors and executive officers
of us as a group.
Name and Address of
Beneficial Owner Number of Shares Percent
---------------- ---------------- -------
Yuval Barzakay 9,600,000 60%
4884 Dufferin Street, Unit 1
Toronto, Ontario
Canada M3H 5S8
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Marilyn Benlolo 6,400,000 40%
4884 Dufferin Street, Unit 1
Toronto, Ontario
Canada M3H 5S8
Directors and executive officers
As a group (2 persons) 16,000,000 100%
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth certain information about our directors,
executive officers and significant employees.
Name Age Position
---- --- --------
Yuval Barzakay (1) (2) 29 Chairman, President and CEO
Marilyn Benlolo 56 Chief Operating Officer and
Director
Meyer Keslassy 55 Chief Financial Officer and
Director
Albert Kshoznicer(1) 54 Director
Alon Barzakay (2) 27 Director
Dimitra Kagiannis 28 Secretary
(1) Yuval Barzakay is a son-in-law to Albert Kshoznicer.
(2) Yuval Barzakay and Alon Barzakay are brothers.
Yuval Barzakay, Chairman, President and CEO - Mr. Barzakay has been our
Chairman, President and CEO since inception. He was CEO of Absolute Mobility
Inc. from 1990 to April 2000 and founder and CEO of Absolute Total Security
since 1992. Mr. Barzakay attended York University in Toronto.
Marilyn Benlolo, Chief Operating Officer and Director - Mrs. Benlolo has been
our Chief Operating Officer and Director since inception. From May 1999 until
April 2000, she was president and founder of Nations Discount Finance Corp., a
finance company specializing in business development financing, auto leasing and
mortgaging with annual revenues in excess of ten million dollars. She was a
teacher specializing in languages with the North York Board of Education in
Toronto, Canada, from 1962-1998. Mrs. Benlolo received her Bachelor of Arts from
the University of Toronto in 1962.
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Meyer Keslassy, Chief Financial Officer and Director - Mr. Keslassy has been our
Chief Financial Officer and Director since April 2000. Since August 1998, he was
CFO of Bolton Steel Corp., with annual revenues in excess of $50 Million. From
1980 to 1998, he was the owner and President of M.K. Accounting Services in
Toronto, Canada. He graduated from the University Hautes Etudes Commerciales,
Paris with a H.E.C. degree (accounting degree) in 1965 .
Albert Kshoznicer, Director - Mr. Kshoznicer has been a Director since April
2000. He is President and Treasurer of ABS Woodworking Inc., a
multimillion-dollar company located in Toronto, Ontario, since 1980. He is
Chairman of Shelby Investments Inc., a Toronto based property developer, from
1985 to present. From 1970 to 1975, he was President and founder of Vital Hotel,
Winnipeg, Manitoba and prior to that he was President of Balik Development Inc.,
a home development company in Toronto.
Alon Barzakay, Director - Mr. Barzakay has been a Director since April 2000. He
practices corporate and commercial litigation at Bienstock and Clark, Attorneys
at Law, since 1998. He received his J.D. from Detroit College of Law at Michigan
State University in 1998.
Dimitra Kagiannis, Secretary - Ms. Kagiannis has been Secretary since April
2000. Previously she was Accounts Administrator of Absolute Mobility and
Absolute Security from 1996 to April, 2000. She received her Administration
Diploma from the CDI Institute for Office Administration in Toronto in 1993.
Directors serve for a term of one year or until their successors are
elected and qualified. Executive officers are appointed by and serve at the will
of the Board of Directors.
ITEM 6. EXECUTIVE COMPENSATION
No remuneration currently is being paid to our officers and senior
management. Compensation will commence once the Company becomes profitable.
There is no employment agreement with any executive officer.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Yapalot Communications Inc. currently has two outstanding loans to its two
founders: Yuval Barzakay $166,000 and Marilyn Benlolo $267,000. Both loans are
interest free and the funds were used to finance Yapalot Communications Inc.
since its inception in March 2000. Both loans are for a term of no less than one
year and are payable after one year or when revenues reach a level in which the
loans can be repaid. They are non-interesting bearing loans.
ITEM 8. DESCRIPTION OF SECURITIES
Yapalot has authorized 50,000,000 shares of common stock, $.001 par value
per share. As
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of June 30, 2000, there were 16,000,000 shares issued and outstanding.
All shares are of the same class and have the same rights, preferences and
limitations. Holders of shares are entitled to receive dividends in cash,
property or shares when and if dividends are declared by the Board of Directors
out of funds legally available therefore. The By-Laws impose no limitations on
the payment of dividends. A quorum for any meeting of shareholders is a majority
of shares then issued and outstanding and entitled to be voted at the meeting.
Holders of shares are entitled to one vote per share. Upon liquidation,
dissolution or winding up of the business of the Company, any assets will be
distributed to the holders of shares after payment or provision for payment of
all debts, obligations or liabilities of the Company. Except as provided in this
Offering, there are no preemptive rights, subscription rights, or redemption
provisions relating to the shares and none of the shares carries any liability
for further calls.
Dividend Policy
Dividends may be declared by the Board of Directors and paid from time to
time to the holders of common stock, on such record dates as may be determined
by the Board of Directors out of the net profits or surplus of the Company.
We have never declared or paid a dividend on our common stock. We intend
to retain our earnings to finance the growth and development of our business.
PART II
ITEM 1. MARKET PRICE OF DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
Yapalot's common stock currently is not traded.
ITEM 2. LEGAL PROCEEDINGS
Neither Yapalot nor its officers or directors are a party to any
litigation affecting the Company or its assets. To our knowledge, no litigation
has been threatened or is anticipated against the Company or its officers and
directors acting in their fiduciary capacity.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have had no changes in or disagreements with our accountants since
inception.
ITEM 4. RECENT SALE OF UNREGISTERED SECURITIES
The following sets forth certain information for all securities the
Company sold since inception without registration under the Securities Act of
1933, as amended. All transactions were
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effected in reliance on the exemption from registration afforded by Rule 144 of
the Securities Act for transactions not involving a public offering.
In March 2000, Yuval Barzakay and Marilyn Benlolo were issued 60 and 40
shares of Common Stock of Yapalot Communications Inc. in consideration for
U.S. $67 (Canadian $100). Upon creation of Yapalot Communications Holdings
Inc., all 100 issued and outstanding shares of Yapalot Communications Inc.
were transferred to Yapalot Communications Holdings Inc. In exchange for
their shares, Mr. Barzakay and Mrs. Benlolo were issued 9,600,000 and
6,400,000 shares of Yapalot Communications Holdings Inc., respectively.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article XII of our Bylaws provides for indemnification of officers and
directors against expenses incurred in connection with any legal action they
become a party to by reason of being or having been a director or officer of us.
Such indemnification is not available if such officer or director is adjudged to
be liable for negligence or misconduct in the performance of their duties.
We currently do not maintain indemnity insurance for our officers and
directors.
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PART F/S
The following financial statements are filed as part of this registration
statement on Form 10-SB. The financial statements as of April 30, 2000 have been
audited by Bromberg & Associate, Chartered Accountants, as stated in their
report appearing herein.
Index to Financial Statements
April 30, 2000
<TABLE>
<S> <C>
Auditors'Report................................................................................ F-2
Consolidated Balance Sheet as of April 30, 2000................................................ F-3
Consolidated Statement of Operations for the period ended April 30, 2000....................... F-4
Consolidated Statement of Cash Flows for the period ended April 30, 2000....................... F-5
Notes to Consolidated Financial Statements..................................................... F-6
</TABLE>
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[LETTERHEAD OF BROMBERG & ASSOCIATE]
AUDITORS' REPORT
Board of Directors and Shareholders
Yapalot Communications Holdings Inc.
We have audited the consolidated balance sheet of Yapalot Communications
Holdings Inc as at April 30, 2000 and the consolidated statements of operations
and cash flows for the period then ended. These financial statements are the
responsibility of the corporation'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.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the consolidated financial statements are free of material
misstatement. An audit includes examining on test basis evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the corporation as at April 30,
2000 and the results of its operations and its cash flows for the period then
ended in conformity with generally accepted accounting principles.
/s/ Bromberg & Associate
CHARTERED ACCOUNTANTS
TORONTO, CANADA
June 14, 2000
<PAGE>
YAPALOT COMMUNICATIONS HOLDINGS INC
CONSOLIDATED BALANCE SHEET
AS AT APRIL 30, 2000
US FUNDS
ASSETS
CURRENT
Bank $ 58,640
Prepaid expenses 16,956
----------
$ 75,596
CAPITAL ASSETS (Notes 3 & 4) 159,196
INCORPORATION COSTS 4,106
------------
238,898
------------
LIABILITIES
CURRENT
Accounts payable and accrued liabilities 34,479
ADVANCES BY SHAREHOLDERS (Note 5) 214,928
------------
249,407
SHAREHOLDERS' EQUITY
SHARE CAPITAL
Authorized
50,000,000 common shares with par value of $0.001.
Issued
16,000,000 common shares 16,000
Deficit (26,509)
------------
$ 238,898
APPROVED ON BEHALF OF THE BOARD
------------ ------------
Director Director Page 2
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YAPALOT COMMUNICATIONS HOLDINGS INC
CONSOLIDATED STATEMENT OF OPERATIONS
FROM THE PERIOD OF THE DATE OF INCORPORATION
MARCH 8, 2000 TO APRIL 30, 2000
US FUNDS
Revenue $ -
--------------
Expenses
Professional Fees $ 5,195
Office and General $ 4,813
Amortization $ 4,469
Consulting Fees $ 3,497
Wages $ 2,718
Rent $ 2,246
Foreign Exchange $ 1,516
Telephone $ 1,006
Utilities $ 459
Data Expense $ 396
Payroll Costs $ 176
Bank Charges $ 18
--------------
$ 26,509
--------------
Net Loss $ (26,509)
==============
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YAPALOT COMMUNICATIONS HOLDINGS INC
CONSOLIDATED STATEMENT OF CASH FLOWS
FROM THE PERIOD OF THE DATE OF INCORPORATION
MARCH 8, 2000 TO APRIL 30, 2000
US FUNDS
Cash flows from operating activities
Net Loss $ (26,509)
Less-item not requiring cash outlay
Amortization 4,469
--------------
Adjustments to reconcile with net cash used (22,040)
For operating activities
Increase in prepaid expenses (16,956)
Increase in accounts payable 34,479
--------------
Net cash used for operating activities (4,517)
--------------
Cash flows from financing activities
Advances by shareholders 214,928
Issue of common shares 16,000
--------------
Net cash provided by financing activities 230,928
--------------
Cash flows from investing activities
Purchase of capital assets (163,665)
Incorporation costs (4,106)
--------------
(167,771)
--------------
Bank, end of period $ 58,640
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YAPALOT COMMUNICATIONS HOLDINGS INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS AT APRIL 30, 2000
1. Nature of business
Yapalot Communications Holdings Inc was incorporated on April 6, 2000 in the
state of Delaware. The Company will be involved in many aspects of the
communications industry.
2. Consolidated Financial Statements -
The consolidated financial statements include the assets, liabilities, revenue
and expenses of its wholly owned subsidiary, Yapalot Communications Inc, which
was incorporated on March 8, 2000.
3. Summary of significant accounting policies.
a) Capital assets and amortization
Capital assets are recorded at cost, Amortization is recorded as
follows:
Network equipment - 20% declining balance method
Leasehold improvements - straight line balance method over the terms of
the lease
Office furniture and equipment 20% declining balance method
Computer equipment - 30% declining balance method
b) General
These financial statementshave been prepared in accordance with United
States generally accepted accounting principles (GAAP), as they relate
to these financial statements.
4. Capial assets
Accumulated
Cost Amortization Net
Network Equipment $ 93,259 $ 1,856 $ 91,403
Leasehold Improvements $ 30,518 $ 903 $ 29,615
Office Furniture and Equipment $ 4,112 $ 123 $ 3,989
Computer Equipment $ 35,776 $ 1,587 $ 34,189
----------- -----------------------------
$ 163,665 $ 4,469 $ 159,196
----------- -----------------------------
5. Advances by Shareholders
The advances by shareholders are non-interets bearing. The advances by
shareholders will not be repaid for a minimum period of one year from
the date of inception.
Page 6
<PAGE>
PART III
Index of Exhibits
2.1 Articles of Incorporation of Yapalot Communications Holdings Inc.
2.2 Bylaws of Yapalot Communications Holdings Inc.
2.3 Articles of Incorporation of Yapalot Communications Inc.
2.4 Bylaws of Yapalot Communications Inc.
4.1 Specimen Stock Certificate
10.1 Office Lease Agreement
16.1 Consent of Independent Auditors --Bromberg & Associate
16.2 Consent and Opinion of Counsel - Shustak Jalil & Heller
27 Financial Data Schedule
15
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, hereunto duly authorized this 27 day of July, 2000.
YAPALOT COMMUNICATIONS HOLDINGS INC.
BY: /s/ Yuval Barzakay
--------------------------------------------
Yuval Barzakay, President, Chief Executive
Officer and Chairman
16
