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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
/ / REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
/X/ ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________
COMMISSION FILE NUMBER 0-16778
STOCKSCAPE.COM TECHNOLOGIES INC.
(FORMERLY CORNUCOPIA RESOURCES LTD.)
(Exact name of registrant as specified in its charter)
BRITISH COLUMBIA, CANADA N/A
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
#410 - 325 HOWE STREET
VANCOUVER, BRITISH COLUMBIA V6C 1Z7
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER: (604) 687-0619
Securities registered or to be registered pursuant to Section 12(b) of the
Exchange Act: NONE
Securities registered or to be registered pursuant to Section 12(g) of the
Exchange Act: COMMON SHARES WITHOUT PAR VALUE
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act. NONE
Indicate the number of outstanding shares of each of the issuer's class of
capital or common shares as of the close of the period covered by the annual
report.
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ISSUED & OUTSTANDING
TITLE OF EACH CLASS AT DECEMBER 31, 1999
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COMMON SHARES, WITHOUT PAR VALUE 25,919,683
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 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. YES X NO
--- ---
Indicate by check mark which financial statement item the registrant has elected
to follow. ITEM 17 X ITEM 18
---
Documents incorporated by reference: NONE
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Page 1 of 203
Exhibit Index is on Page 203
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STOCKSCAPE.COM TECHNOLOGIES INC.
TABLE OF CONTENTS
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PART I 4
GENERAL......................................................................................................4
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS............................................................4
ITEM 1 DESCRIPTION OF BUSINESS......................................................................................4
History......................................................................................................4
Business Development.........................................................................................5
Significant Transactions of the Company......................................................................6
(1) Major Reorganization............................................................................6
(2) Ivanhoe Joint Venture Agreement and Sale of Touchstone Resources Company and the Ivanhoe
Property Interest......................................................................................6
(3) Acquisition of Stockscape Technologies Ltd......................................................7
(4) Sale of Mineral Ridge Mine......................................................................7
Business of the Company......................................................................................8
Industry Overview and Risk Factors Relating to the Company's Business........................................9
Early Development Stage and History of Losses................................................................9
Limited Operating History....................................................................................10
Future Capital Needs/Liquidity Deficiencies/Potential Lack of Financing......................................10
Potential Fluctuations in Quarterly Results..................................................................10
Dependence on Key Personnel..................................................................................11
Intense Competition..........................................................................................11
Technological Risks..........................................................................................11
Government Regulation and Legal Uncertainties................................................................12
Liability for Information Retrieved From the Web.............................................................12
Security Risks...............................................................................................12
Reliance On Intellectual Property and Proprietary Rights.....................................................12
Dependence On Continued Growth In Use of Internet............................................................13
Control By A.R. Rule Investments (B.C.) Ltd..................................................................13
Gold Price Volatility........................................................................................13
Inflation and Price Changes..................................................................................14
Foreign Operations...........................................................................................14
Currency and Conversion......................................................................................14
Market for Securities........................................................................................14
ITEM 2 DESCRIPTION OF PROPERTY......................................................................................14
Yakobi Island Property.................................................................................14
Red Mountain Property..................................................................................15
ITEM 3 LEGAL PROCEEDINGS............................................................................................15
ITEM 4 CONTROL OF REGISTRANT........................................................................................15
ITEM 5 NATURE OF TRADING MARKET AND RELATED STOCKHOLDER MATTERS.....................................................16
ITEM 6 EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS...........................................17
ITEM 7 TAXATION.....................................................................................................17
Dividends....................................................................................................18
Disposition of Common Shares.................................................................................18
United States Tax Consequences...............................................................................19
Share Capital and Stock Incentive Plan.......................................................................21
Anti-Take Over Provisions of Articles........................................................................21
ITEM 8 SELECTED FINANCIAL DATA......................................................................................21
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ITEM 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................22
ITEM 9A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...................................................24
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...........................................................25
Business Experience of Directors and Officers................................................................25
ITEM 11 COMPENSATION OF DIRECTORS AND OFFICERS.......................................................................27
Executive Compensation.......................................................................................27
Compensation of Directors....................................................................................28
Management Agreements and Termination of Employment and Change-In-Control Arrangements.......................28
Compensation Committee Interlocks and Insider Participation..................................................28
Board Compensation Committee Report on Executive Compensation................................................28
ITEM 12 OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES...............................................28
Stock Incentive Plan.........................................................................................28
Share Purchase Plan..........................................................................................29
Share Option Plan............................................................................................29
Share Bonus Plan.............................................................................................30
Stock Incentive Transactions During 1999.....................................................................30
Aggregated Options Cancelled, Expired or Surrendered in Last Fiscal Year.....................................31
ITEM 13 INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS...............................................................31
PART II....................................................................................................................33
ITEM 14 DESCRIPTION OF SECURITIES TO BE REGISTERED...................................................................33
PART III...................................................................................................................33
ITEM 15 DEFAULTS UPON SENIOR SECURITIES..............................................................................33
ITEM 16 CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES......................................33
ITEM 17 FINANCIAL STATEMENTS.........................................................................................33
ITEM 18 FINANCIAL STATEMENTS.........................................................................................33
ITEM 19 FINANCIAL STATEMENTS AND EXHIBITS............................................................................34
SIGNATURES
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STOCKSCAPE.COM TECHNOLOGIES INC.
PART I
GENERAL
Unless the context otherwise requires, the "Registrant or Stockscape.com" means
Stockscape.com Technologies Inc. and the "Company" means the Registrant and its
subsidiaries and "Registrant Board" means the Board of Directors of the
Registrant. The Registrant's CUSIP number is #861320-10-9. The Company's
principal office is located at #410 - 325 Howe Street, Vancouver, British
Columbia, V6C 1Z7, telephone (604) 687-0619, facsimile (604) 681-4170.
All references to number of common shares and per share amounts in this Annual
Report on Form 20-F reflect the subdivision of the Registrant's common shares
("Common Shares") on a two-for-one basis on July 7, 1987, and the consolidation
of the Registrant's Common Shares on a one-for-ten basis on July 12, 1999.
The information set forth in this form is as of March 31, 2000 except where an
earlier or later date is indicated, and all information included in this
document should only be considered correct as of such date, except as otherwise
expressly stated.
The Registrant is a Canadian foreign private issuer and has prepared its
consolidated financial statements in accordance with Canadian generally accepted
accounting principals ("Canadian GAAP"). A description of accounting principals
that differ in certain respects from United States generally accepted accounting
principles is explained and quantified in note 10 to the consolidated financial
statements that are included in response to Item 17 of this Form 20-F.
The Registrant uses the Canadian dollar as its reporting currency. Prior to the
reorganization of the Company in July 1999, the Registrant used the U.S. dollar
as its reporting currency. As such, all references in this document to "dollars"
or "$" are to Canadian dollars, unless otherwise indicated. See Item 1 for
currency and conversion information.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this report constitute "forward-looking statements" within
the meaning of the United States Private Securities Litigation Reform Act of
1995 (the "Reform Act"). Such forward-looking statements involve known and
unknown risks, uncertainties, and other factors, which may cause the actual
results, performance, or achievements of the Company to be materially different
from any future results, performance, or achievements express or implied by such
forward-looking statements. Such factors include, among others, results of
merger or sale of assets, precious metals exploration and development costs and
results, reclamation obligations, fluctuation of gold prices, competition,
uninsured risks, recovery of reserves, capitalization and commercial viability
and requirements for obtaining bonds, permits and licenses.
ITEM 1: DESCRIPTION OF BUSINESS
HISTORY
The Registrant was organized on November 14, 1985, under the laws of the
Province of British Columbia, Canada by the statutory amalgamation of Cyrano
Resources Inc. and Cornucopia Resources Ltd., two British Columbia companies
that were incorporated in 1980 and 1982, respectively. Subsequent to the
amalgamation in 1985, the Registrant assumed Cyrano Resources Inc.'s listing on
the Vancouver Stock Exchange, a predecessor to the Canadian Venture Exchange
("CDNX"). On January 29, 1988, Common Shares of the Registrant were listed on
the Toronto Stock Exchange (symbol CNP). The Common Shares were also quoted in
the United States on The NASDAQ Stock Market, National Market System until
January 17, 1992, and the NASDAQ SmallCap Market until October 29, 1998, and are
currently quoted on the NASD OTC Bulletin Board ("OTCBB") under symbol STKSF. At
the Registrant's request, its Common Shares were delisted from trading on the
Vancouver Stock Exchange on February 4, 1993, and as part of the reorganization
of the Company, the Registrant requested that its shares be delisted from the
Toronto Stock Exchange on March 31, 1999.
On March 2, 1999, the Company, under its former name, Cornucopia Resources Ltd.
("Cornucopia") announced a major reorganization involving the sale of its
principal and only active mining asset, a 25% interest in the Ivanhoe property
(the "Ivanhoe Property") in Nevada, and a change in the course of its business
from the mining sector to that of providing investment information and services
through an internet provider. At an extraordinary general meeting of the
shareholders of the Company held on June 30, 1999, the shareholders approved of
the sale of the Ivanhoe Property interest and the reorganization of the Company
(including a 10 for 1 share consolidation) and on July 9, 1999 the Registrant
changed its name from Cornucopia Resources Ltd. to Stockscape.com Technologies
Inc. On July 9, 1999, the Registrant acquired
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Stockscape.com Technologies (Canada) Ltd. ("Stockscape Canada"), a privately
held Internet company, and on July 13, 1999, the Registrant's shares began
trading on the OTC Bulletin Board under its new name and new stock symbol.
More detailed disclosure on this is provided in Item 1 - "Significant
Transactions of the Company"; (1) "Major Reorganization" and (3) "Acquisition
of Stockscape Technologies Ltd."
Stockscape.com is engaged in the rapidly growing field of e-commerce through its
100% ownership of Stockscape.com Canada, which maintains an established Internet
investment information portal at www.stockscape.com. Until its reorganization in
July 1999, the Company was historically involved in the exploration and
development of precious metal deposits.
The Registrant conducts its business affairs in Canada through its wholly owned
subsidiaries, Stockscape Canada, Stockscape Corporate Communications Canada Ltd.
("Stockscape CCC"), both incorporated under the COMPANY ACT (British Columbia),
Canada, and in the United States through its wholly-owned subsidiary, Cornucopia
Resources Inc. ("Cornucopia Inc."), a Nevada corporation, and through the latter
company's wholly-owned subsidiaries Red Mountain Resources, Inc. ("Red
Mountain"), a Colorado corporation, and Stockscape Corporate Communications U.S.
L.L.C. ("Stockscape U.S."), a Florida corporation.
The Registrant sold its 100% interest in Touchstone Resources Company, a Nevada
corporation ("Touchstone") to Great Basin Gold Ltd. on June 30, 1999. The
Registrant also sold its interest in Mineral Ridge Resources Inc. ("Mineral
Ridge"), a Nevada corporation, and its operating mine (the "Mineral Ridge Mine")
to Vista Gold Corp. on October 21, 1998. The Company retains a 100% interest in
certain mineral claims located in southeast Alaska ("Yakobi Island Property")
and interests in other mineral properties through Red Mountain. See Item 2:
"Yakobi Island Property".
BUSINESS DEVELOPMENT
From incorporation up to its reorganization in July 1999, the Company was
primarily involved in the acquisition, exploration, development and mining of
precious mineral resource properties in the United States. Until 1995, the
Company's principal project was the exploration, development and subsequent
production of gold at the Ivanhoe Property near Battle Mountain in Elko County,
Nevada. During 1995 and 1996, the Company's primary focus shifted to the Mineral
Ridge Mine in Silver Peak, Nevada.
In 1992, the Company sold half of its 50% working interest in the Ivanhoe
Property to Newmont Mining Corporation ("Newmont"), thus leaving the Company
with a 25% interest in the Ivanhoe Property. Newmont, by separate agreement,
acquired the remaining 50% interest in the Ivanhoe Property from a third party.
In August 1997, Newmont's 75% interest in the Ivanhoe Property was transferred
from Newmont to Great Basin Gold Ltd. ("Great Basin"), and the Company, through
its subsidiary Touchstone, entered into a Venture Agreement with Great Basin.
Great Basin is a British Columbia reporting company with shares listed for
trading on the CDNX and the OTC BB in the United States. On March 2, 1999, the
Company entered into an agreement with Great Basin, to sell its remaining
interest in the Ivanhoe Property. Touchstone and the Ivanhoe Property were sold
to Great Basin on June 30, 1999. See Item 1: "Significant Transactions of the
Company" - (1) "Major Reorganization" and (2) "Ivanhoe Joint Venture Agreement
and Sale of Ivanhoe Property Interest."
As part of the acquisition of Stockscape, the Registrant acquired another wholly
owned subsidiary, Stockscape CCC that was incorporated as a non-reporting
company under the provisions of the COMPANY ACT (British Columbia) on June 9,
1999, under the name 586937 B.C. Ltd. and subsequently changed its name to
Stockscape Corporate Communications Canada Ltd. effective October 7, 1999.
On January 10, 2000, the Registrant incorporated another wholly owned
subsidiary, Stockscape US, to conduct the Company's public relations business
and investor relations marketing activities in the United States.
The Registrant may incorporate additional subsidiary companies, if considered
advisable, to hold interests in other companies, properties, or projects it may
acquire.
The following chart sets forth the organization of Stocksckape.com Technologies
Inc. and its direct and indirect subsidiaries as of March 31, 2000, and their
jurisdictions of incorporation, as well as relevant stock exchange listings.
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STOCKSCAPE.COM TECHNOLOGIES INC.
NASDAQ - OTC BB
(BRITISH COLUMBIA)
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100% 100% 100% 100%
STOCKSCAPE CORPORATE STOCKSCAPE CORPORATE STOCKSCAPE.COM TECHNOLOGIES CORNUCOPIA RESOURCES INC.
COMMUNICATIONS U.S., L.L.C. COMMUNICATIONS CANADA LTD. (CANADA) LTD.
(FLORIDA) (BRITISH COLUMBIA) (BRITISH COLUMBIA) (NEVADA)
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100%
RED MOUNTAIN RESOURCES
INC.
(COLORADO)
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SIGNIFICANT TRANSACTIONS OF THE COMPANY
(1) MAJOR REORGANIZATION
On March 2, 1999, the Company announced that it had entered into arrangements
with arm's length parties which would result in a substantial reorganization of
the Company and its business. The reorganization, which was subject to
regulatory and shareholder approval, was approved at the Company's Annual and
Extraordinary General Meeting held on June 30, 1999.
The Company had entered into an agreement with Great Basin pursuant to which the
Company agreed to sell to Great Basin all of the issued and outstanding shares
of Touchstone. Because the Company's interest held by Touchstone in the Ivanhoe
Property was its sole remaining active mining interest, the sale of that asset
represented a major change in the status of the Company as a mining entity and
the sale of substantially all of the Company's undertaking. Details of the
agreement with Great Basin are outlined in the following section (2) "Ivanhoe
Joint Venture Agreement and Sale of Ivanhoe Property Interest".
Concurrently with the disposition of its remaining active mining asset the
Company completed the acquisition of StockscapeCanada), a British Columbia
company carrying on business as a privately held Internet investment research
provider in its third year of operations with an established website at
www.stockscape.com. More detailed disclosure on Stockscape and its business is
provided in Item 1: "Significant Transactions of the Company - (3) Acquisition
of Stockscape Technologies Ltd.".
As part of the reorganization, and as a condition precedent to the Stockscape
acquisition, the Registrant was required to consolidate its issued and
outstanding Common Shares on a 10-for-1 basis. At the Annual and Extraordinary
General Meeting shareholders passed a special resolution approving the
consolidation, a change of the name of the Registrant to "Stockscape.com
Technologies Inc.", and a restructuring of the Board of Directors of the Company
to reflect the nature of the Company's new business.
(2) IVANHOE JOINT VENTURE AGREEMENT AND SALE OF TOUCHSTONE RESOURCES COMPANY
AND THE IVANHOE PROPERTY INTEREST
On August 13, 1997, the Company, through Touchstone, entered into a Venture
Agreement with Great Basin Gold Ltd. Pursuant to the terms of this agreement,
Great Basin earned a 75% interest in the Ivanhoe Property. The agreement
provided that further expenditures and ownership of the Ivanhoe Property were to
be on a 75% Great Basin and 25% Cornucopia basis.
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Under the terms of the Venture Agreement, the Company was required to commit to
exploration budgets set by Great Basin. Provisions in the Venture Agreement
allowed the Company the option of not participating in exploration program
budgets but this would result in dilution of its interest. On March 2, 1999, the
Company entered into an agreement with Great Basin to sell Touchstone to Great
Basin in exchange for shares of Great Basin. See Item 2: "Properties" - "Ivanhoe
Property."
On June 30, 1999, Touchstone was sold to Great Basin in exchange for 2,750,000
common shares of Great Basin at a deemed price of $1.25 per share and 250,000
warrants of Great Basin, exercisable to purchase an additional 250,000 shares at
$2.00 per share for one year. The Company agreed to a voting trust in favor of
Great Basin management for a period of two years and was given representation on
the board of directors of Great Basin. The Company also holds the right to
participate in future financings of Great Basin in order to maintain its equity
interest. Resale of the shares issued in consideration for the Company's
interest is subject to certain restrictions.
(3) ACQUISITION OF STOCKSCAPE TECHNOLOGIES LTD.
On March 2, 1999, the Registrant reached an agreement in principle for the
acquisition of Stockscape. On July 9, 1999, the Registrant acquired Stockscape
by the purchase of all of its issued and outstanding shares from A. R. Rule
Investments B.C. Ltd. ("ARRI") the sole shareholder of Stockscape. ARRI is a
privately held British Columbia company controlled by Arthur R. (Rick) Rule.
Both the vendor and Stockscape were entirely at arm's length to the Registrant.
Under the terms of the agreement entered into between the Registrant and the
shareholder of Stockscape, the Registrant acquired all of the issued and
outstanding shares of Stockscape by the issuance of 10,000,000
post-consolidation Common Shares of the Registrant (the "Payment Shares"). The
Payment Shares were issued for a deemed value of $0.50 per share making the
overall deemed value of the transaction $5 million. The Payment Shares are
subject to trading restrictions under U.S. securities legislation for a minimum
of two years, and have been deposited in escrow with a trustee, under an
agreement by which they may not be released so long as trading restrictions
exist under U.S. securities laws.
At the time of the acquisition, Stockscape was in its third year of operation
and had financed its development and operations by equity financing and a loan
payable to its shareholder. As Stockscape's policy was to expense business and
software development costs, a deficit of $840,240 had accumulated as at December
31, 1998. Business and software development costs were expected to increase over
the next two years and to be financed from revenues and from equity financing
issued by the combined entity. The acquisition of Stockscape was subject to
conditions precedent, one of which was the commitment for a financing of the
Registrant for up to $2,000,000, by the private placement of 4,000,000 Units at
$0.50 per Unit, which was completed at the time of closing of the acquisition of
Stockscape on July 9, 1999. Proceeds of the financing were to be used for
working capital, hardware upgrades to accommodate increased traffic to the
website, and to further develop Stockscape's customer base.
Each of the 4,000,000 Units consisted of one Common Share and two share purchase
warrants of the Registrant. One Series A share purchase warrant was exercisable
in the first year to acquire one additional Common Share in the capital of the
Registrant at $0.65. The second Series B warrant was exercisable for a period of
two years to acquire one additional Common Share at $0.95. Both Series A and B
warrants had forced conversion features. On closing, 4,000,000 Common Shares of
the Registrant were issued. In September 1999, the Registrant forced conversion
of all the Series A warrants to expire on October 30, 1999 and 3,358,000 Series
B warrants expiring on November 30, 1999. See Item 19 - "Financial Statements",
"Notes to the consolidated Financial Statements" for more detailed information.
(4) SALE OF MINERAL RIDGE MINE
Mineral Ridge Resources Inc., and its principal project the Mineral Ridge Mine,
was 100% owned by the Company until its sale to Vista Gold Corp. ("Vista Gold")
of Suite 3000, 370 Seventeenth Street, Denver, Colorado, 80202 on October 21,
1998. Consideration for the sale was 1,562,500 common shares of Vista Gold
valued at US$250,000, plus the assumption of all of the liabilities of the
Company with respect to the mine, and Vista Gold also subscribed to a private
placement of 2,777,777 Common Shares of the Registrant valued at US$250,000. At
October 21, 1998, the Company was in default of its obligations for project
financing of the Mineral Ridge Mine in the amount of US$14.4 million combined
principal and interest and certain contracts relating to the construction of
facilities and the plant at the Mineral Ridge Mine were outstanding. All
indebtedness and contracts were settled by, or assumed by Vista Gold under the
terms of the agreement of sale of Mineral Ridge. The Company recorded a gain of
US$180,972 on the sale of the Mineral Ridge Mine.
MINE DEBT FINANCING FACILITY
On January 1997, the Company entered into a loan agreement with Dresdner
Kleinwort Benson ("Dresdner") for senior secured loan facilities of US$13.0
million for construction and development purposes and working capital for the
Mineral Ridge Mine.
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Dresdner was given 1,500,000 warrants as part of the consideration for
providing the loan and 250,000 warrants in consideration for establishing a
letter of credit in the amount of $1.1 million to facilitate construction of
power lines and ancillary electrical distribution equipment at the mine site.
The original warrants were exercisable at $1.35 per share at any time until
December 31, 2000. In October 1998, as part of the sale agreement of Mineral
Ridge, regulatory approval was sought and obtained to reprice and extend the
term of the warrants held by Dresdner to purchase 1,750,000 Common Shares, at
$0.20 per share expiring December 31, 2001. Upon the 1 for 10 consolidation
of the Registrant's shares, the number of warrants has been reduced to
175,000 exercisable at $2.00 per share.
BUSINESS OF THE COMPANY
The Company currently is engaged in the rapidly growing field of e-commerce
through its 100% ownership of Stockscape Canada, which maintains an Internet
investment portal for investors at www.stockscape.com. The Company plans to grow
through the development of its core business and strategic acquisitions of
e-commerce businesses and continue to refine and enhance its current publishing
and marketing products. The Company plans to research and develop new products
based on evolving publishing and marketing models.
OPERATIONS
Stockscape's operations are based in Vancouver, British Columbia. The Company
leases office space for its technical group, marketing team and management staff
all of whom are directly employed by Stockscape. As of March 31, 2000, the
Company had 18 full time and part time staff, of which 14 were marketing and
technical support staff involved in the research and development of the programs
required to implement the Stockscape marketing and publishing products.
USER SERVICES
Stockscape.com offers free access to all of its web pages to Internet users and
currently has a dedicated user community (users who regularly visit the
Stockscape.com website) of approximately 53,000 unique users, comprised largely
of individual investors. Some users scan the site for free, others sign-up for
web-based services and/or request information through e-mail. To provide the
range of financial information required by its diverse investor community,
Stockscape.com has established a website at www.stockscape.com. Stockscape.com
provides quotes with 20 minutes delay market data, charting, portfolio tracking,
investment newsletter publications newsstand, daily news and information about
industry sectors, IPO reports by industry sector, general investment information
and links to sites covering hundreds of domains. The website is organized by
market sector, has an established newsletter marketing network which matches
segments of its investor communities with financial publications focused on
their areas of interest and many other features. Stockscape.com acts as an
aggregator and disseminator of financial information for the investor community
and in early 2000 plans also to provide free e-mail services to visiting
investors.
The Company derives its revenue primarily from fees paid by sponsoring companies
for services including the design, construction and maintenance of web sites for
sponsor companies and Internet marketing campaigns and from the sale of
advertising space in its e-mail publications and through banner ads. The Company
also receives commission revenue from the sale of newsletter subscriptions over
the Internet through NewsStandExpress.com. Another growing source of revenue for
the Company is streaming videos offered on StockscapeTV.com .
MARKETING PRODUCTS
Stockscape.com offers companies a number of diverse internet marketing products
and services which can be customized into packages to strategically meet
corporate objectives. The following is a brief description of Stockscape's
products:
WEBSITE DESIGN, HOSTING & MAINTENANCE:
For companies that do not have a website, Stockscape.com can create a website
and hyper-link under Featured Companies on the Stockscape.com website. The fee
for creating the website varies depending upon the size and complexity of the
desired site. A flat fee is charged monthly for maintenance to cover programmer
time.
WEBSITE HOSTING & MAINTENANCE:
For companies with an existing website, Stockscape can update the website and
move it to the Stockscape.com web server and create a hyper-link to the sponsor
company's section of the Stockscape.com website.
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MICROSITES:
For companies with a website which Stockscape.com does not host, Stockscape.com
can create and maintain a "microsite" with a full link under "featured
companies" on the Stockscape.com site for a monthly fee.
BANNER ADVERTISING:
Companies may place corporate banner ads on Stockscape's pages on a cost per
thousand impression basis.
INVESTOR LEAD GENERATION:
This program generates investor leads (names, e-mail address, phone numbers) by
featuring the sponsor at www.investorleadgenerator.com. Stockscape.com actively
promotes this site through links of Stockscape.com's web pages, e-mail
broadcasts to users and sponsorship of newsletters. Sponsor companies receive
names of investors who have specifically requested to receive more information
on sponsor companies.
DIRECT MAIL ADVERTISING PROGRAMS:
Stockscape.com manages direct mail advertising programs for clients on a
contract basis through Stockscape Corporate Communications U.S. L.L.C.
INVESTOR E-MAIL BROADCAST
Companies can transmit news releases or analyst reports to opt-in investors.
Recipients of the e-mail have the option to click through to a company's
microsite hosted by www.stockscape.com and request that information packages be
forwarded.
In the e-mail advertising sponsorship program Stockscape.com's registered users
receive, at their request, regular e-mail dispatches from the Stockscape.com
editorial team or the Stockscape.com newsletter partners. Sponsoring companies
can advertise in the e-mail program. The sponsor company is charged a flat rate
for each e-mail dispatch which includes information on the sponsoring company.
NEWSLETTER SPONSORSHIP
Companies may sponsor newsletters that Stockscape.com and its partner writers
distribute on a daily, weekly or monthly basis. Stockscape.com has several
targeted options with an expanding newsstand of publications.
INVESTOR LEAD GENERATION
The lead machine combines four Investor Relations Tools into a single package
that generates investor leads. Companies receive a Video CEO Interview, hosting
of a one page micro website, plus e-mail Newsletter Sponsorships and e-mail
broadcasts.
NEWSSTANDEXPRESS SPONSORSHIP
Investor Harvest Program is a lead generation program that generates freshly
qualified investor leads. When Internet users subscribe for NewsStandExpress
they are presented with the name of the sponsor company (at the same time the
fees paid by the company to Stockscape are disclosed) and are asked whether they
would like to receive more information on the company. If the user answers
"yes", their contact information is provided to the sponsor company for
follow-up. The sponsor company is charged a flat fee for each lead generated.
VIDEO CEO INTERVIEW
StockscapeTV provides investor exposure for companies. Stockscape will film an
interview between a client company spokesperson and a well-known investment
personality. The video is posted on the website in RealVideo format for
on-demand viewing. As an added bonus, the video text is e-mailed to
Stockscape.com's growing database of opt-in subscribers.
INDUSTRY OVERVIEW AND RISK FACTORS RELATING TO THE COMPANY'S BUSINESS
EARLY DEVELOPMENT STAGE AND HISTORY OF LOSSES
Stockscape.com is in the early stage of developing its business. Revenues
realized by Stockscape.com have not been sufficient to meet operating costs.
From inception in October, 1996 through to December 31, 1999, its total revenues
were $1.465 million of which 83% is attributable to its operations in fiscal
1999. As at December 31, 1999, it has accumulated losses of approximately $1.8
million. Stockscape has not achieved profitability on an annual basis to date,
and it anticipates that it may continue to incur net losses for some time in the
future. The extent of these losses will be dependent, in part, on Stockscape's
net revenues, if any, from advertisers and e-commerce transactions. Stockscape
expects its operating expenses to increase significantly, especially in the
areas of customer generation, brand marketing and e-commerce promotion. If net
revenue does not increase, or increases in operating expenses precede or are not
immediately followed by commensurate
<PAGE>
increases in net revenue, Stockscape's business, results of operations and
financial condition will be materially and adversely affected. At its present
stage of development period-to-period comparisons of Stockscape's operating
results will not be meaningful and the results for any period should not be
relied upon as an indication of future performance. There can be no assurance
that Stockscape's operating losses will not increase in the future or that
Stockscape will ever achieve or sustain profitability.
LIMITED OPERATING HISTORY
Stockscape.com has had a very limited operating history upon which an evaluation
of its current business plan and its prospects can be based. The Company began
operations in July 1996. As at December 31, 1999, Stockscape Canada had been in
operation for about 3 1/2 years. Much of the first two years was spent solely on
the development of its own site and the sites of the publishers and newsletter
writers. Neither of these activities produced revenues but both were essential
to the business plan in making Stockscape.com's site unique. Once this
development work was completed some companies were invited to locate on the site
and setup fees were waived in some circumstances. There are a number of risks,
expenses and problems frequently encountered by companies in the early stages of
development, and particularly by companies entering new and rapidly developing
markets like the Internet. Such risks include, without limitation, the
possibility that the Internet will fail to achieve broad acceptance as a
commercial medium, lack of acceptance by consumers of e-commerce, possible
failure to generate sufficient e-commerce-based revenues from its Website,
failure or inadequacy of network infrastructure (including its server, hardware
and software), changes in laws that adversely affect the Internet and e-commerce
generally and Stockscape.com's business in particular, direct and indirect
competition for investor communities and advertisers by entities with greater
financial, technical and marketing resources, failure to attract, retain and
motivate qualified personnel, failure to properly manage the amount and timing
of operating costs and capital expenditures in the development of
Stockscape.com's business, operations and infrastructure. There can be no
assurance that Stockscape.com will be successful in addressing such risks, and
any failure to do so could have a material adverse effect on Stockscape.com's
business, results of operation and financial condition.
FUTURE CAPITAL NEEDS/LIQUIDITY DEFICIENCIES/POTENTIAL LACK OF FINANCING
Stockscape.com currently has available the funds necessary to meet its
anticipated capital needs. However, there can be no assurance that existing
funds will be sufficient to meet its working capital requirements and planned
expenditures beyond the next two years. The Company may need to raise additional
funds to fund further development of its business and to implement its business
plan. There can be no assurance that any additional financing will be available
on terms favorable to Stockscape.com or at all. If adequate funds are not
available or are not available on acceptable terms, the Company may not be able
to fund expansion of the Stockscape.com business or to implement its business
plan, which would have a material adverse effect on the Company's business,
results of operations and financial condition. Additional funds raised through
the issuance of equity or convertible debt securities of the Company will reduce
the percentage ownership of the Company's current stockholders. Stockholders may
experience additional dilution and securities issued in any future financing may
have rights, preferences or privileges senior to those of current shareholders
of the Company.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
The Company expects operating results of its business to fluctuate significantly
in the future as a result of a variety of factors, many of which are beyond its
control. These factors include fluctuating demand for the advertising products
Stockscape.com offers relative to the state of the capital markets, consumers'
acceptance of e-commerce, the level of traffic on the Stockscape.com website,
the introduction of new or enhanced services by its competitors, changing
personnel requirements to address changes in technology, competition and
promotion campaigns by Stockscape.com or any of its competitors, engineering or
development fees required to be paid in connection with adding new website
development and publishing tools, general economic conditions, and economic
conditions specific to the Internet or all or a portion of the technology
market. As a strategic response to changes in the competitive environment,
Stockscape.com may from time to time make certain pricing, service or marketing
decisions or business combinations that could have a material adverse effect on
Stockscape.com's business, results of operations and financial condition.
Stockscape.com expects to experience seasonality in its business, with user
traffic on the Stockscape.com website potentially being lower during the summer
and year-end vacation and holiday periods when overall usage of the Web is
lower. Because Web-based e-commerce is an emerging market, additional seasonal
and other patterns may develop in the future as the market matures. Any
seasonality is likely to cause quarterly fluctuations in Stockscape.com's
operating results.
<PAGE>
DEPENDENCE ON KEY PERSONNEL
Competition for senior management, experienced sales and marketing personnel,
qualified Web engineers and other employees is and is expected to continue to be
intense, and there can be no assurance that Stockscape.com will be successful in
attracting and retaining such personnel. Success of the Stockscape.com business
is dependent on the contacts, abilities and performance of its executive
officers and other key employees. The loss of the services of any of its
executive officers or other key employees could have a material adverse effect
on the prospects, business development, and results of operations and financial
condition of Stockscape.com.
As of December 31, 1999, the Company had a total of 16 full time employees,
including management. As of March 31, 2000 the Company had 18 full time and part
time staff, of which 14 were marketing and technical support staff involved in
research and development of the programs required to implement the Stockscape
marketing and publishing products. The Company believes its future results of
operations will depend in large part on its ability to attract and retain highly
skilled employees. None of the Company's employees are represented by a labor
union. The Company considers its employee relations to be good.
INTENSE COMPETITION
The market for community-based e-commerce on the Internet is new and rapidly
evolving and competition for visitors, advertisers, strategic partners and
E-Providers is intense and is expected to increase significantly in the future.
Barriers to entry are relatively insubstantial. There is a significant number of
other companies who also are primarily focused on creating a Web-based investor
community on the Internet. Many of these competitors are significantly larger
than Stockscape.com and more established and known in the Internet industry.
Stockscape.com will face competition in the future from Web directories, search
engines, shareware archives, content sites, commercial online service providers
("OSPs"), sites maintained by Internet service providers ("ISPs") and other
entities. There can be no assurance that Stockscape.com's competitors and
potential competitors will not develop investor communities that are equal or
superior to those to Stockscape.com or that achieve greater market acceptance
than Stockscape.com's community. Accordingly, Stockscape.com will likely face
increased competition, resulting in pressure on its advertising revenues.
Many of the Company's existing and potential competitors have longer operating
histories, greater name recognition, larger customer bases and significantly
greater financial, technical and marketing resources than the Company. Entities
with which the Company might in the future seek to enter into a strategic
relationship may have already established collaborative relationships with the
Company's competitors or potential competitors, and other high-traffic websites.
There can be no assurance that the Company will be able to compete successfully
or that competition will not have a material adverse effect on the Company's
business, results of operations and financial condition.
TECHNOLOGICAL RISKS
The performance of the Company's server and network hardware and software
infrastructure is critical to its business and its ability to attract Web users
and advertisers to its website. Any system failure that causes an interruption
in service or a decrease in responsiveness or failure of Stockscape.com's server
and networking systems to handle the volume of traffic of Stockscape.com's
website could impair the attractiveness of its website, thereby reducing the
Company's marketing and e-commerce revenues. It is expected that as the business
develops the Company will need to purchase additional servers and networking
equipment to maintain adequate data transmission speeds, the availability of
which may be limited or the cost of which may be significant. The successful
delivery of Stockscape.com's services is also dependent, in substantial part,
upon the ability of Stockscape.com to protect its server and network
infrastructure against damage from human error, power loss, telecommunications
failure, sabotage, intentional acts of vandalism and similar events. The market
in which Stockscape.com competes is characterized by rapidly changing
technology, increasing competition for financing, evolving industry standards,
frequent new products and service announcements and enhancements and changing
customer demands. Stockscape.com's success will depend on its ability to adapt
to rapidly changing technologies and industry standards, and its ability to
continually improve the speed, performance, features, ease of use and
reliability of its server and networking system. Any failure to rapidly adapt in
a changing environment would have a material adverse effect on Stockscape.com's
competitiveness. Introducing new technology into Stockscape.com's systems will
require significant amounts of capital, substantial amounts of personnel
resources and will take time to complete. There can be no assurance that
Stockscape.com will be successful at integrating such technology into its
website on a timely basis or without degrading the responsiveness and speed of
its website or that, once integrated, such technology will function as expected.
<PAGE>
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
Stockscape.com is not currently subject to direct regulation by any government
agency, other than regulations applicable to business generally, and there are
currently few laws or regulations directly applicable to access to or commerce
on the Internet. However, due to the increasing popularity and use of the
Internet, a number of legislative and regulatory proposals are under
consideration by U.S. and Canadian federal, state, provincial, local and foreign
governmental organizations, and it is possible that a number of laws or
regulations may be adopted with respect to the Internet on matters including
user privacy, user screening and taxation, which could, in turn, decrease the
demand for Stockscape.com's services, and increase Stockscape.com's cost of
doing business. The applicability to the Internet of existing laws governing
issues such as property ownership, copyright, trademark, trade secrets,
obscenity, libel and personal privacy is uncertain and developing. Any new
legislation or regulation, or application or interpretation of existing laws,
could have a material adverse effect on Stockscape.com's business, results of
operations and financial condition.
A number of legislative proposals have been made at the U.S. and Canadian
federal, state, provincial and local levels that would impose additional taxes
on the sale of goods and services over the Internet and certain jurisdictions
have taken measures to tax Internet-related activities. It is possible that some
type of taxes will be imposed upon Internet commerce in the future, and there
can be no assurance that such legislation or other attempts at regulating
commerce over the Internet will not substantially impair the growth of commerce
on the Internet and, as a result, adversely affect Stockscape.com's opportunity
to derive financial benefit from such activities. Due to the global nature of
the Web, it is possible that, although transmissions by Stockscape.com over the
Internet originate primarily in British Columbia, Canada, the governments of
various states in the United States and foreign countries might claim
jurisdiction over Stockscape.com or its transmissions. There can be no assurance
that violations of local laws will not be alleged or charged by state or foreign
governments, that Stockscape.com might not unintentionally violate such laws or
that such laws will not be modified, or new laws enacted, in the future.
Stockscape.com is qualified to do business only in British Columbia, and failure
by Stockscape.com to qualify as a foreign corporation in a jurisdiction where it
is required to do so could subject Stockscape.com to taxes and penalties and
could result in the inability of Stockscape.com to enforce contracts in such
jurisdictions. Any of the foregoing developments could have a material adverse
effect on Stockscape.com's business, results of operations and financial
condition.
LIABILITY FOR INFORMATION RETRIEVED FROM THE WEB
Because materials may be downloaded by users of Stockscape.com's website and
subsequently distributed to others, there is a possibility that claims will be
made against Stockscape.com for defamation, negligence, copyright or trademark
infringement, personal injury or other theories based on the nature, content,
publication and distribution of such materials. Such claims have been brought,
and sometimes successfully pressed, against OSPs in the past. Stockscape.com
could be exposed to liability with respect to third party content accessible
through Stockscape.com's website. If any third party content provided on
Stockscape.com's website contains errors, a claim could be brought against
Stocksckape.com for losses incurred in reliance on such information.
Stockscape.com could incur significant costs in investigating and defending
against such claims, regardless of the outcome. Stocksckape.com does not carry
general liability insurance intended to protect Stocksckape.com from any
liability arising out of the foregoing and insurance may not be available to
cover all such potential claims or may not be adequate to indemnify
Stockscape.com for all liabilities that may be imposed. Any imposition of
liability that is not covered by insurance or is in excess of insurance overage
would have a material adverse effect on Stockscape.com's business, results of
operations and financial condition.
SECURITY RISKS
There can be no assurance that experienced programmers or "hackers" may not from
time to time attempt to penetrate Stockscape.com's network security. To the
Company's knowledge, none of this activity has occurred. A party who is able to
penetrate Stockscape.com's network security could misappropriate proprietary
information or cause interruption in Stockscape.com's website. Concerns over the
security of Internet transactions and the privacy of users may also inhibit the
growth of the Internet generally, particularly as a means of conducting
commercial transactions. Security breaches or the inadvertent transmission of
computer viruses could expose Stockscape.com to loss, litigation and possible
third party liability. There can be no assurance that any contractual provisions
or legal disclaimers intended to limit Stockscape.com's liability in such areas
will be successful or enforceable.
RELIANCE ON INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
Stockscape.com regards certain of its technology and certain advertising
programs, including E-mail Broadcast, Investor Harvest Program and NewsStand
Express as proprietary and relies on common law trademark, service mark,
copyright and trade secret laws and restrictions on disclosure for protection.
The Stockscape.com name is the subject of a registered
<PAGE>
trademark in Canada and in the United States. Apart from the Stockscape.com
trademark brand names and registered URL's, the company has no other
registered trademarks and has no present plans to seek registration of any
other trademarks. Stockscape.com's programs have been developed by its
employees and contractors. These contractors are now employed by the Company.
While the Company considers its current programs and methodologies
proprietary, the nature of the Internet and marketing on the Internet,
necessitates ongoing modification, updating and evolution of all proprietary
technology. Accordingly, Stockscape.com does not generally require those
involved to enter into confidentiality or technology transfer agreements but
controls access to and distribution of its documentation and other
information.
Despite these precautions, it may be possible for a third party to copy or
otherwise obtain and use Stockscape.com's proprietary information without
authorization or to develop similar technology independently. Effective
trademark, service mark, copyright and trade secret protection may not be
available in every country in which Stockscape.com's services are distributed or
made available through the Internet, and policing unauthorized use of
proprietary information is difficult. Legal standards relating to the validity,
enforceability and scope of protection of certain proprietary rights in
Internet-related business are uncertain and still evolving, and no assurance can
be given as to the future viability or value of any proprietary rights of
Stockscape.com. There can be no assurance that Stockscape.com's business
activities will not infringe upon the proprietary rights of others, or that
other parties will not assert infringement claims against Stockscape.com.
Stockscape.com may be subject to claims of alleged infringement of the
trademarks, service marks and other intellectual property rights of third
parties by Stockscape.com. Although no such claims have been made to date, such
claims and any resultant litigation could be time consuming and expensive to
defend. Stockscape.com currently licenses from third parties certain
technologies incorporated into Stockscape.com's website. As Stockscape.com
continues to introduce new services that incorporate new technologies, it may
require to license additional technology from others. There can be no assurance
that these third party technology licenses will continue to be available to
Stockscape.com on commercially reasonable terms, if at all.
DEPENDENCE ON CONTINUED GROWTH IN USE OF INTERNET
Stockscape.com's future success is dependent upon continued growth in the use of
the Internet and the Web. There can be no assurance that the number of Internet
users will continue to grow or that e-commerce over the Internet will become
more widespread. Further, there can be no assurance that the Web infrastructure
will continue to be able to support the demands placed on it by continued growth
or that the performance or reliability of the Web will not be adversely affected
by continued growth.
CONTROL BY A.R. RULE INVESTMENTS (B.C.) LTD.
On July 9, 1999, A.R. Rule Investments (B.C.) Ltd. became the beneficial owner
of approximately 55% of the outstanding Common Shares of the Registrant and as
of March 31, 2000 holds 38% of the issued and outstanding shares of the
Registrant. As a result, this shareholder will possess significant influence
over the Company, giving it the ability, among other things, to influence the
election of a majority of the Company's Board of Directors and approve
significant corporate transactions. Such share ownership and control may also
have the effect of delaying or preventing a change in control of the Company,
impeding a merger, consolidation, takeover or other business combination
involving the Company, or discourage a potential acquirer from making a tender
offer or otherwise attempting to obtain control of the Company and could have a
material adverse effect on the market price of the Company's Common Shares.
TITLE TO PROPERTIES
The Company owned and leased unpatented mining claims that constituted the
majority of the Company's property holdings in the United States. The ownership
and validity of unpatented mining claims are often uncertain and may be
contested. In view of the withdrawal of the Company from active mining and
exploration, it has minimal residual property interests, which are described in
Item 2 - "Properties",
REGULATORY AND ENVIRONMENTAL MATTERS
Due to the withdrawal of the Company from active mining and exploration
activities, it is unlikely that the Company will be exposed to any significant
residual liabilities relating to reclamation since these obligations have been
assumed by the purchasers of the Company's interests.
GOLD PRICE VOLATILITY
The Registrant sold the Ivanhoe project to Great Basin Gold Ltd. in exchange for
2,750,000 common shares of Great Basin, at a deemed price of $1.25 per share,
and 250,000 warrants of Great Basin exercisable to purchase an additional
250,000 common
<PAGE>
shares at $2.00 per share for one year. Resale of the shares issued is
subject to certain restrictions under the terms of the agreement with Great
Basin. The volatility of gold prices has been evident over recent years as
the price of gold dropped to a 20 year low. There can be no assurance that
the price of gold will be such that the Company's investments in gold
companies will generate profits.
INFLATION AND PRICE CHANGES
Inflation could affect the profitability of the Company's investments in gold
companies. Inflation is not expected to have any other material impact on the
Company beyond the general impact on all businesses, such as higher costs of
materials, services and wages.
FOREIGN OPERATIONS
Foreign properties, operations and investments may be adversely affected by
local political and economic developments, exchange controls, currency
fluctuations, taxation and laws or policies, as well as by laws and policies
affecting foreign trade, investment and taxation. The Company has not been
adversely affected by any risks inherent in foreign operations to date.
CURRENCY AND CONVERSION
The Registrant's financial statements are presented in Canadian dollars. Until
the reorganization of the Company in July 1999, the financial statements were
denominated in United States dollars.
The Canadian/United States currency exchange rate at the end of each of the past
five calendar years and the average high and low rates of exchange are set out
in the table below. These rates, which are expressed in Canadian dollars, are
noon rates of exchange for the conversion of United States dollars into Canadian
dollars calculated on the basis of rates of exchange as reported by The Bank of
Canada.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31 AVERAGE LAST DAY HIGH LOW
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999 1.4733 1.4433 1.4551 1.4420
1998 1.4831 1.5333 1.5845 1.4040
1997 1.3844 1.4305 1.4399 1.3345
1996 1.3630 1.3706 1.3865 1.3287
1995 1.3724 1.3640 1.4267 1.3275
----------------------------------------------------------------------------------------------
</TABLE>
On April 28, 2000, the noon rate of exchange quoted by The Bank of Canada for
the conversion of the United States dollars into Canadian dollars was $1.4811
(Canadian $1.00 equals US $0.67517).
MARKET FOR SECURITIES
The Common Shares of the Registrant commenced trading on the OTC BB (symbol
CNPGF) effective October 29, 1998. The Registrant remains a reporting company
under the United States Securities Exchange Act of 1934. Due to the
reorganization of the Company, the Registrant on March 31, 1999 voluntarily
delisted from The Toronto Stock Exchange its Common Shares formerly traded in
Canada under the symbol "CNP". The Registrant's shares traded on the NASDAQ
Stock Market (Nasdaq) from October 18, 1988 to October 28, 1998. The minimum bid
price of the Registrant's shares did not meet the new requirements to remain on
Nasdaq and the Registrant's shares were moved to the NASD OTC BB in October
1998.
ITEM 2: DESCRIPTION OF PROPERTY
STOCKSCAPE.COM TECHNOLOGIES INC.
The Company's principal operations are located at suite 410, 325 Howe Street,
Vancouver, B.C. V6C 1Z7. The Company currently leases office space consisting of
3856 square feet and there is sufficient space in the building for the Company
to expand its operations.
YAKOBI ISLAND PROPERTY
The Yakobi Island property is located approximately 70 miles west of Juneau in
the Sitka Recording District, at the northernmost end of the Alexander
Archipelago of Southeast Alaska. Access to the property is by helicopter or by
boat to the
<PAGE>
dock at Bohemia Basin. The property consisted of 39 unpatented federal claims
and 11 patented federal claims at Bohemia Basin. It also includes a 1.95 acre
Alaska Tidelands Lease that covers a 200-foot dock at the Lower Camp access
to Bohemia Basin. The Company held an undivided 100 percent interest in
certain patented and unpatented mineral claims on the Yakobi Island property.
In August 1997, all rental payments on the unpatented claims held by the
Company on this property were allowed to lapse. The property is without a
known body of commercial ore and the Company's activities on the property to
date have been exploratory in nature. The Company intends to hold its
interest in the patented claims and maintain the tidelands lease for use of
the dock at Bohemia Basin. The property is held by the Company's subsidiary,
Red Mountain Resources, Inc.
The Company has granted an option to a Land Trust to acquire the Yakobi Island
properties. If concluded, the agreement would provide for clean up activities on
the site and proceeds to the Company for the 155 acre property at appraised
value, less an administrative fee payable to the Land Trust.
INVESTMENTS IN OTHER PROPERTIES
RED MOUNTAIN PROPERTY
The Company acquired this property, situated approximately 13 miles from
Silverton and Ouray, Colorado, in November 1985 and sold it in September 1989.
The Division of Minerals and Geology (previously the Colorado Mined Land
Reclamation Division) inspected the property in 1992 and 1993 and concluded that
a full release of reclamation funds in trust of $60,000 was dependent on further
evaluation of the revegetation on the property. In 1994, weather conditions
prohibited inspection by the authorities. Another inspection was performed in
1995 when it was determined that further monitoring of vegetation was required
prior to full release of the reclamation bond. In 1996, the Company received a
release for $50,000 of the funds held in trust. No inspection was performed in
1997, 1998 or 1999 and the $10,000 balance will be held in trust by the Forestry
Department until restoration of the land is considered complete. The Company
intends to seek release of the remaining funds in 2000.
ITEM 3: LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings.
ITEM 4: CONTROL OF REGISTRANT
Under the terms of the Share Exchange Agreement dated March 2, 1999, between the
Registrant and the owner of Stockscape Technologies Ltd., the Registrant
acquired all of the issued and outstanding shares of Stockscape Technologies
Ltd. by issuing 10,000,000 post-consolidation Common Shares of the Registrant
(the "Payment Shares") to A. R. Rule Investments (B.C.) Ltd. (approximately 55%
of the outstanding Common Shares of the Registrant). The Payment Shares are
subject to trading restrictions under U.S. securities legislation for a minimum
of two years. As at March 31, 2000, A. R. Rule Investments (B.C.) Ltd. holds 38%
of the Common Shares of the Registrant.
There are no other persons who are known by the Registrant to be the beneficial
owners, directly or indirectly, of more than 10% of the Registrant's issued and
outstanding Common Shares as at March 31, 2000.
The following table lists information with respect to the total amount of the
Registrant's voting securities owned by the officers and directors as a group,
including director and officer incentive options to purchase shares of the
Registrant as of April 30, 2000:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
DIRECTORS AND OFFICERS COMMON EXERCISE PRICE EXPIRY DATE PERCENT OF
AS A GROUP (8 PERSONS) SHARES OWNED CLASS
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
April 30, 2000 * 804,290 C$0.50 July 12, 2004 **3%
---------------------------------------------------------------------------------------------------------
</TABLE>
* Includes 750,000 Common Shares held by directors and officers in the
form of incentive stock options.
** Assumes that all incentive stock options held by directors and
officers have been exercised.
The information as to shares beneficially owned, not being within the knowledge
of the Registrant, has been furnished by the respective individuals or has been
extracted from the register of shareholdings maintained by the Registrant's
transfer agent.
<PAGE>
As at the date of this report, there are no arrangements known to the Registrant
that would result in a change of control of the Registrant.
ITEM 5: NATURE OF TRADING MARKET AND RELATED STOCKHOLDER MATTERS
On January 29, 1988, the Company's common shares were listed on The Toronto
Stock Exchange (symbol CNP). The common shares were also quoted in the United
States on the NASDAQ, National Market System until January 17, 1992 and the
NASDAQ SmallCap Market until October 29, 1998. At the Registrant's request, its
common shares were delisted from trading on the Vancouver Stock Exchange on
February 4, 1993; and as part of the reorganization of the Company, the
Registrant delisted its common shares from The Toronto Stock Exchange on March
31, 1999. The Registrant's common shares currently trade on the NASD OTC
Bulletin Board under the symbol STKSF.
The high and low trade prices of the Registrant's Common Shares as reported on
the TSE until March 31, 1999, and as quoted on NASDAQ and the OTCBB for each
quarter during the past two years are as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
HIGH LOW
PERIOD TSE (C $) (C $)
<C> <S> <C> <C>
1998 First quarter 0.49 0.19
Second quarter 0.33 0.04
Third quarter 0.15 0.05
Fourth quarter 0.13 0.035
1999 First quarter 0.20 0.035
Second quarter N/A N/A
Third quarter N/A N/A
Fourth quarter N/A N/A
------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth, for the periods indicated, the high and low bid
prices of the Registrant's Common Shares as quoted on NASDAQ Small Cap Market
before October 29, 1998, and currently on the OTC Bulletin Board:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
HIGH LOW
PERIOD (US $) (US $)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
1998 First quarter 0.37 0.12
Second quarter 0.21 0.03
Third quarter 0.09 0.03
Fourth quarter 0.09 0.02
1999 First quarter 0.11 0.02
Second quarter 0.20 0.07
Third quarter * 2.25 0.10
Fourth quarter * 1.01 0.57
2000 First quarter (to March 31, 2000) * 2.50 0.65
* After 1 for 10 consolidation on July 12, 1999
------------------------------------------------------------------------------------------
</TABLE>
The TSE, Nasdaq SmallCap Market and OTCBB quotations above reflect inter-dealer
prices, without retail mark-up, mark-down or commission.
As at March 31, 2000, there were approximately 1924 registered shareholders of
record holding a total 26,282,183 Common Shares of the Registrant. To the best
of the Registrant's knowledge there were 81 registered Canadian shareholders, 9
non-Canadian and non-U.S. shareholders, and 1,834 shareholders resident in the
United States holding approximately 18,972,116, 389,723 and 6,920,344 shares
respectively, which represented 72.19%, 26.33% and 1.48% respectively of the
Company's shares then outstanding.
The Company has not declared or paid any dividends on its Common Shares and
currently intends to utilize its funds to finance its business development
activities and for the acquisition of capital assets relating to its business.
It does not foresee paying any dividends on its Common Shares in the near
future.
<PAGE>
There are currently no limitations imposed by Canadian federal or provincial
laws on the rights of non-resident or foreign owners of Canadian securities to
hold or vote the securities held. There are no such limitations imposed by the
Registrant's Memorandum, Articles or contracts of which the management of the
Registrant is aware.
There are no decrees or regulations in Canada or its several provinces that
restrict the import or export of capital, including, but not limited to foreign
exchange controls, or that affect the remittance of dividends or other payments
to holders of the Registrant's securities. Any such remittances to United States
residents, however, are subject to withholding tax.
ITEM 6: EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY
HOLDERS
There are currently no restrictions on the export or import of capital out of or
into Canada, nor are there foreign exchange controls or other laws, decrees or
regulations of Canada or the province of British Columbia restricting remittance
of dividends or other payments to non-resident holders of the Registrant's
common shares, other than any applicable withholding taxes. However, no
assurance can be given that legislation enacted in the future will not have an
adverse impact on non-Canadian shareholders.
Except as provided in the Investment Canada Act (the "Investment Act"), there
are no limitations under the laws of Canada, the province of British Columbia or
in the charter or any other constituent documents of the Registrant on the right
of foreigners to hold or vote the Registrant's common shares.
The Investment Act generally prohibits implementation of a reviewable investment
on an individual, government (or agency thereof), corporation, partnership,
trust or joint venture that is not a "Canadian" as defined in the Investment Act
(a "non-Canadian"), unless after review the minister responsible for the
Investment Act is satisfied that the investment is likely to be of net benefit
to Canada. An investment in the Registrant's common shares by a non-Canadian
(other than an "American" as defined in the Investment Act) would be reviewable
under the Investment Act if it was an investment to acquire control of the
Registrant and the value of the assets of the Registrant was $5 million or more.
A non-Canadian (other than an American) would be deemed to acquire control of
the Registrant for the purposes of the Investment Act if he acquired a majority
of the common shares outstanding (or less than a majority but controlled the
Registrant in fact through the ownership of one-third or more of the common
shares outstanding) unless it could be established that, on the acquisition, the
Registrant was not controlled in fact by the acquirer through the ownership of
such shares. Certain transactions in relation to the Registrant's common shares
would be exempt from review under the Investment Act, including, among others,
the following:
(a) acquisition of shares by a person in the ordinary course of that person's
business as trader or dealer in securities;
(b) acquisition of control of the Registrant in connection with the realization
of security granted for a loan or other financial assistance and not for
any purpose related to the provision of the Investment Act; and
(c) acquisition of control of the Registrant by reason of any amalgamation,
merger, consolidation or corporate reorganization following which the
ultimate direct or indirect control of the Registrant, through the
ownership of voting interests, remains unchanged.
The Investment Act was amended with the Canada-United States Free Trade
Agreement to provide for special review thresholds for Americans (including
"American-controlled entities" as defined in the Investment Act). Under the
Investment Act, as amended, an investment in the Registrant's common shares by
an American would be reviewable only if it was an investment to acquire control
of the Registrant and the value of the assets of the Registrant was equal to or
greater than a specified amount (the "Review Threshold"), which increases in
stages. The Review Threshold is currently $150 million, and remains at $150
million in constant 1992 dollars (calculated as prescribed in the Investment
Act) after 1992.
The provisions of the Investment Act and Free Trade Agreement may have an
anti-takeover effect as they may operate to prevent U.S. or other non-Canadian
persons from directly or indirectly acquiring control of the Company
ITEM 7: TAXATION
The discussion under this heading summarizes the principal Canadian federal
income tax consequences of acquiring, holding and disposing of Common Shares of
the Registrant for a shareholder of the Registrant who is not resident in Canada
but is resident in the United States and who will acquire and hold Common Shares
of the Registrant as capital property for the purpose of the Income Tax Act
(Canada) (the "Tax Act"). This summary does not apply to a shareholder who
carries on
<PAGE>
business in Canada through a "permanent establishment" situated in Canada or
performs independent personal services in Canada if the shareholder's holding
in the Registrant is effectively connected with such permanent establishment
or fixed base. This summary is based on the provisions of the Tax Act and the
regulations thereunder and on counsel's understanding of the administrative
practices of Revenue Canada, and takes into account all specific proposals to
amend the Tax Act or regulations made by the Minister of Finance of Canada to
the date hereof. It has been assumed that there will be no other relevant
amendment of any governing law although no assurance can be given in this
respect. The existing tax treaty between the United States and Canada
essentially calls for taxation of shareholders by the shareholder's country
of residence. In those instances in which a tax may be assessed by the other
country, a corresponding credit against the tax owed in the country of
residence is generally available, subject to limitations. This discussion is
general only and is not a substitute for independent advice from a
shareholder's own Canadian and US tax advisors.
The provisions of the Tax Act are subject to income tax treaties to which Canada
is a party, including the Canada-United States Income Tax Convention (1980) (the
"Convention").
DIVIDENDS
The Registrant has not, since the date of its amalgamation, declared or paid any
dividends on its Common Shares and currently intends to utilize all of its funds
to finance its business development activities and for the acquisition of
capital assets relating to its business. It does not foresee paying any
dividends on its Common Shares in the near future.
Under the Tax Act, a nonresident of Canada is generally subject to Canadian
withholding tax at the rate of 25% on dividends paid or deemed to have been paid
to him by a corporation resident in Canada. The Convention limits the rate to
15% if the shareholder is resident in the United States and the dividends are
beneficially owned by and paid to him, and to 5% if the shareholder is also a
corporation that beneficially owns at least 10% of the voting stock of the payor
corporation.
DISPOSITION OF COMMON SHARES
Under the Tax Act, a taxpayer's capital gain or capital loss from a disposition
of a Common Share of the Registrant is the amount by which his proceeds of
disposition exceed (or are exceeded by, respectively) the aggregate of his
adjusted cost base of the share and reasonable expenses of disposition.
Three-quarters of a capital gain (the "taxable capital gain") is included in
income, and three-quarters of a capital loss in a year (the "allowable capital
loss") is deductible from taxable capital gains realized in the same year. The
"three-quarters" amount used to calculate the taxable capital gains and
allowable capital loss is being reduced to two-thirds. The change is effective
for dispositions made after February 27, 2000. The amount by which a
shareholder's allowable capital loss exceeds the taxable capital gain in a year
may be deducted from a taxable capital gain realized by the shareholder in the
three previous or any subsequent year, subject to certain restrictions in the
case of a corporate shareholder and subject to adjustment when the capital gains
inclusion rate in the year of disposition differs from the inclusion rate in the
year the deduction is claimed.
If a Common Share of the Registrant is disposed of to the Registrant other than
in the open market in the manner in which shares would normally be purchased by
the public, the proceeds of disposition will, in general terms, be considered as
limited to the paid-up capital of the share and the balance of the price paid
will be deemed to be a dividend. In the case of a shareholder that is a
corporation, the amount of any capital loss otherwise determined may be reduced,
in certain circumstances, by the amount of dividends previously received in
respect of the shares disposed of, unless the corporation owned the shares for
at least 365 days prior to sustaining the loss and (together with corporations,
persons and other entities, with whom the corporation was not dealing at arm's
length) did not own more than 5% of the shares of any class of the payor
corporation at the time the dividend was received. These loss limitation rules
may also apply where a corporation is a member of a partnership or a beneficiary
of a trust that owned the shares disposed of.
Under the Tax Act, a nonresident of Canada is subject to Canadian tax on taxable
capital gains and may deduct allowable capital losses, realized on a disposition
of "taxable Canadian property." Common Shares of the Registrant will constitute
taxable Canadian property of a shareholder at a particular time if the
shareholder used the shares in carrying on business in Canada, or if at any time
in the sixty months immediately preceding the disposition 25% or more of the
issued shares of any class or series in the capital stock of the Registrant
belonged to one or more persons with whom the shareholder did not deal at arm's
length and in certain other circumstances.
The Convention relieves United States residents from liability for Canadian tax
on capital gains derived on a disposition of shares unless:
<PAGE>
a) The value of the shares is derived principally from "real property" in
Canada, including the right to explore for or exploit natural resources
rights to amounts computed by reference to production, and shares of the
capital stock of a company that is resident in Canada, the value of whose
shares is derived principally from real property situated in Canada, or
b) The shareholder was resident in Canada for 120 months during any period of
20 consecutive years, preceding, and at any time during the 10 years
immediately preceding, the disposition and the shares were owned by him
when he ceased to be resident in Canada.
UNITED STATES TAX CONSEQUENCES
UNITED STATES SHAREHOLDERS ("US HOLDERS")
The conclusions expressed below are rendered only with respect to the specific
facts, circumstances and assumptions discussed herein. If any of the facts,
circumstances, or assumptions is not entirely complete or accurate, the
incompleteness or inaccuracy could have a material effect on such conclusions.
The discussion herein is based upon the relevant provisions of the Internal
Revenue Code ("IRC") of 1986 and the regulations thereunder, and judicial and
administrative interpretation thereof, which are subject to change or
modification, including on a retroactive basis, by subsequent legislative,
regulatory, administrative or judicial decisions, and the Canada-U.S. Income Tax
Convention of 1980, including all protocols (the "Treaty"). Any such changes
could have an effect on the validity of the conclusions herein.
As used herein, a "US Holder" includes a holder of Common Shares who is a
citizen or resident of the United States, a corporation created or organized in
or under the laws of the United States or of any political subdivision thereof
and any other person or entity whose ownership of Common Shares is effectively
connected with the conduct of a trade or business in the United States. A US
Holder does not include persons subject to special provisions of federal income
tax law, such as tax-exempt organizations, qualified retirement plans, financial
institutions, insurance companies, real estate investment trusts, regulated
investment companies, broker-dealers, nonresident alien individuals or foreign
corporations whose ownership of Common Shares is not effectively connected with
the conduct of a trade or business in the United States and shareholders who
acquired their stock through the exercise of employee stock options or otherwise
as compensation.
PASSIVE FOREIGN INVESTMENT COMPANY RULES
Under Section 1296 of the Internal Revenue Code of the United States, a foreign
corporation is treated as a passive foreign investment company (a "PFIC") if a
corporation not formed in the United States earns 75% or more of its income from
passive sources. Because the Company may have been a PFIC for its fiscal year
ended December 31, 1998, and may have been a PFIC for some of its fiscal years
ending before that date, each US shareholder of the Company should consult a tax
advisor with respect to how the PFIC rules may affect such shareholder's tax
situation. In particular, a US shareholder should determine whether such
shareholder should elect to have the Company be treated as a Qualified Electing
Fund in the event the Company is a PFIC. This might avoid adverse US federal
income tax consequences that may otherwise result from the Company should it be
treated as a PFIC.
A US Holder will be deemed to hold shares of a PFIC if he holds shares in a
foreign corporation and at any time during the holding period of the shareholder
the foreign corporation constituted a PFIC under the above definition.
Generally, a US Holder of PFIC shares is subject to a special addition to tax
and interest charge with respect to certain dispositions of and "excess
distributions" with respect to shares of stock of a PCIF. (An excess
distribution is defined as the amount of distributions received by a shareholder
in a year with respect to stock in a PFIC which exceeds 125% of the average
amount of the distributions to such shareholder during the three years prior to
the year of the distribution.) This addition to tax is determined by allocating
the amount of the gain on disposition or excess distribution to each day during
the holding period of the shareholder of such stock. The amount of the gain or
excess distribution which is allocated to taxable years after 1986 and prior to
the present year is deemed to generate an additional tax (computed at the
highest rate of federal income tax applicable to such shareholder in such year)
and an interest charge, calculated at the statutory rate applicable to
underpayments of federal income taxes.
Because the Company may have been a PFIC for its fiscal year ending December 31,
1998, and may have been a PFIC for some of its fiscal years ending before that
date, each US shareholder of the Company should consult a tax advisor with
respect to how the PFIC rules may affect such shareholder's tax situation. In
particular, a US shareholder should determine whether such shareholder should
elect to have the Company be treated as a Qualified Electing Fund in the event
the Company is a PFIC. This might avoid adverse US federal income tax
consequences that may otherwise result from the Company should it be treated as
a PFIC.
<PAGE>
BECAUSE THE REGISTRANT'S STOCK IS "MARKETABLE" UNDER SECTION 1296(e), IF THE
REGISTRANT IS A PFIC WITH RESPECT TO A US HOLDER, THE US HOLDER MAY ELECT TO
MARK THE STOCK TO MARKET EACH YEAR. IN GENERAL, A PFIC SHAREHOLDER WHO ELECTS
UNDER SECTION 1296 TO MARK THE MARKETABLE STOCK OF A PFIC INCLUDES IN INCOME
EACH YEAR AN AMOUNT EQUAL TO THE EXCESS, IF ANY, OF THE FAIR MARKET VALUE OF THE
PFIC STOCK AS OF THE CLOSE OF THE TAXABLE YEAR OVER THE SHAREHOLDER'S ADJUSTED
BASIS IN SUCH STOCK. A SHAREHOLDER IS ALSO GENERALLY ALLOWED A DEDUCTION FOR THE
EXCESS, IF ANY, OF THE ADJUSTED BASIS OF THE PFIC STOCK OVER THE FAIR MARKET
VALUE AS OF THE CLOSE OF THE TAXABLE YEAR. DEDUCTIONS UNDER THIS RULE, HOWEVER,
ARE ALLOWABLE ONLY TO THE EXTENT OF ANY NET MARK TO MARKET GAINS WITH RESPECT TO
THE STOCK INCLUDED BY THE SHAREHOLDER FOR PRIOR TAXABLE YEARS. WHILE THE
INTEREST CHARGE REGIME UNDER THE PFIC RULES GENERALLY DOES NOT APPLY TO
DISTRIBUTIONS FROM AND DISPOSITIONS OF STOCK OF A PFIC WHERE THE US HOLDER HAS
ELECTED TO MARK THE STOCK TO MARKET, COORDINATION RULES FOR LIMITED APPLICATION
WILL APPLY IN THE CASE OF A US HOLDER THAT MARKS TO MARKET PFIC STOCK LATER THAN
THE BEGINNING OF THE SHAREHOLDER'S HOLDING PERIOD FOR THE PFIC STOCK.
THE CONCLUSIONS SET OUT ABOVE ARE BASED ON EXISTING LAW AND THE FACTS,
CIRCUMSTANCES AND ASSUMPTIONS INDICATED, AND ARE SUBJECT TO CHANGE.
DISTRIBUTIONS ON COMMON SHARES
US Holders receiving dividend distributions (including constructive dividends)
with respect to the Registrant's Common Shares are required to include in gross
income for the United States federal income tax purposes the gross amount of
such distribution to the extent that the Registrant has current or accumulated
earnings and profits, without reduction for any Canadian income tax withheld
from such distributions. Such Canadian tax withheld (see above) may be credited,
subject to certain limitations, against the US Holder's United States federal
income tax liability or, alternatively, may be deducted in computing the US
Holder's United States federal income tax by those who itemize deductions. (See
more detailed discussion at "Foreign Tax Credit" Below). To the extent that
distributions by the Registrant exceed current or accumulated earnings and
profits of the Registrant, they will be treated first as a return of capital up
to the US Holder's adjusted basis in the Common Shares and thereafter as gain
from the sale or exchange of such shares. Preferential tax rates for long-term
capital gains are applicable to a US Holder, which is an individual, estate or
trust. There are currently no preferential tax rates for long-term capital gains
for a US Holder, which is a corporation.
Dividends paid on the Registrant's Common Shares will not generally be eligible
for the dividends received deduction provided to corporations receiving
dividends from certain United States corporations. A US Holder, which is a
corporation, may, under certain circumstances, be entitled to a 70% deduction of
the United States source portion of dividends received from the Registrant if
such US Holder owns shares representing at least 10% of the voting power and
value of the Registrant. The availability of this deduction is subject to
several complex limitations, which are beyond the scope of this discussion.
FOREIGN TAX CREDIT
A US Holder who pays (or has withheld from distributions) Canadian income tax
with respect to the ownership of the Registrant's Common Share may be entitled,
at the option of the US Holder, to either a deduction or a tax credit for such
foreign tax paid of withheld. There are extremely complex rules and limitations,
which apply to the credit and deduction. The availability of the foreign tax
credit or a deduction for foreign taxes and the application of the limitations
on the credit to a specific taxpayer will be determined based on the specific
circumstances of such shareholder. Accordingly, holders and prospective holders
of Common Shares should consult their own tax advisors regarding their
individual circumstances.
DISPOSITIONS OF COMMON SHARES
SUBJECT TO THE DISCUSSION ABOVE RELATED TO THE CONSEQUENCES OF THE REGISTRANT
BEING TREATED AS A PASSIVE FOREIGN INVESTMENT COMPANY OR A FOREIGN INVESTMENT
COMPANY, GAIN OR LOSS REALIZED BY A US HOLDER (OTHER THAN A 10-PERCENT
SHAREHOLDER OF THE REGISTRANT) ON THE SALE OR OTHER DISPOSITION OF COMMON SHARES
WILL BE SUBJECT TO UNITED STATES FEDERAL INCOME TAX AS CAPITAL GAIN OR LOSS IN
AN AMOUNT EQUAL TO THE DIFFERENCE BETWEEN SUCH US HOLDER'S BASIS IN THE COMMON
SHARES AND THE AMOUNT REALIZED ON THE DISPOSITION. SUCH CAPITAL GAIN OR LOSS
WILL BE LONG-TERM CAPITAL GAIN OR LOSS IF THE US HOLDER HAS HELD THE COMMON
SHARES FOR MORE THAN ONE YEAR AT THE TIME OF THE SALE OR EXCHANGE. IN GENERAL,
GAIN FROM A SALE, EXCHANGE OR OTHER DISPOSITION OF THE COMMON SHARES BY A US
HOLDER WILL BE TREATED AS US SOURCE INCOME.
The foregoing discussion is based upon the sections of the Code, Treasury
Regulations, published Internal Revenue Service rulings, published
administrative positions of the Internal Revenue Service and court decisions
that are currently applicable, any or all of which could be materially adversely
changed, possibly on a retroactive basis, at any time. In addition, this
discussion does not consider the potential effects, both adverse and beneficial,
of proposed legislation, which if enacted, could be applied, possibly on a
retroactive basis, at any time. The foregoing discussion is for general
information only and is not intended to be,
<PAGE>
nor should it be construed to be, legal or tax advise to any holder or
prospective holder of the Registrant's Common Shares, and no opinion or
representation with respect to the United States federal income tax
consequences to any such prospective holders of the Registrant's Common
Shares should consult their own tax advisors about the federal, state, local
and foreign tax consequences of purchasing, owning and disposing of Common
Shares of the Registrant.
SHARE CAPITAL AND STOCK INCENTIVE PLAN
The Registrant's Common Shares authorized, issued and outstanding and the
Registrant's Stock Incentive Plan (the "Plan") are described in "Notes to
Financial Statements", note 8 - Share Capital: (a) Shares Authorized, Issued and
Outstanding; (b) Stock Incentive Plan, and (c) Grant of Options. As at December
31, 1999, there were 25,919,683 Common Shares outstanding, a total of 1,022,500
stock options outstanding under the Plan and no options have been granted
outside of the Stock Option Plan.
ANTI-TAKE OVER PROVISIONS OF ARTICLES
The overall effect of the Registrant's Articles may be to render more difficult
or discourage the accomplishment of mergers, tender offers and forms of business
combinations, reorganizations and sales of assets, as well as to discourage the
assumption of control of the Registrant by a principal shareholder.
In August 1992, the Registrant adopted a Shareholder Protection Rights Plan
Agreement, amended in July 1996, (the "SPRPA") which will remain in effect for
ten years and is intended to protect the Company from unfair, abusive or
coercive takeover strategies. The Rights issued to shareholders under the SPRPA
will entitle the holder upon the occurrence of certain triggering events
(including the acquisition of 10% or more of the Common Shares of the Registrant
in a transaction not approved by the Registrant Board) to acquire additional
equity interest in the Registrant at a 50% discount to the market. However, the
Rights are not triggered by a "Permitted Bid" which is a bid that is made to all
shareholders for all of their Common Shares in accordance with relevant
securities legislation and other reasonable conditions, provided that a majority
of the Common Shares held by independent shareholders are deposited in
acceptance of such a bid.
The SPRPA is designed to prevent creeping takeovers and other coercive
acquisition tactics. The SPRPA's Permitted Bid provision allows bidders to take
bids directly to all of the shareholders without the cooperation of the
Registrant Board. The SPRPA thus preserves the shareholders' right to consider
such bids on a fully-informed basis. The SPRPA is not intended to deter fair
offers for the Common Shares of the Registrant. The SPRPA also does not impose
indebtedness or other burdens upon the Registrant's operations, and does not
impair the Registrant Board's continuing efforts to enhance shareholder value.
The Registrant was not aware of any pending or threatening takeover bids for the
Company on implementation of the SPRPA. A copy of the Shareholder Protection
Rights Plan Agreement was filed as an exhibit to the Registrant's Form 6-K dated
June 30, 1992.
ITEM 8: SELECTED FINANCIAL DATA
The following selected financial information has been derived from the
consolidated financial statements of the Company for the periods indicated.
During 1999, Stockscape.com completed a significant reorganization and change of
principal activity from that of mineral exploration and development to that of
providing investment information and services. During 1999, the Company acquired
Stockscape Canada, which has been in operation since October 1996. As required
by reverse takeover accounting, the comparative financial information of
Stockscape Canada has been presented for the three months ended December 31,
1998 and the years ended September 30, 1998 and 1997.
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
THREE MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED
DECMEBER 31 DECEMBER 31 SEPTEMBER 30 SEPTEMBER 30
1999 1998 1998 1997
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING DATA
Revenues $1,210,042 $68,422 $170,157 $15,250
Gross loss 8,444 5,943 167,337 169,508
General & Administrative Expenses 945,935 77,386 332,018 88,048
Net Loss 954,379 83,329 499,355 257,556
Net Loss per Share 0.06 0.09 0.53 0.27
Weighted average number of Common Shares 14,998,008 950,000 950,000 950,000
outstanding
BALANCE SHEET AND OTHER DATA DECEMBER 31 DECEMBER 31 SEPTEMBER 30 SEPTEMBER 30
1999 1998 1998 1997
Total Assets - Canadian GAAP 10,333,300 245,978 243,507 101,035
Total Assets - U.S. GAAP 15,464,052 245,978 243,507 101,055
Working Capital 6,987,354 (13,336) (27,845) 11,890
Long Term Debt -- 672,988 579,311 90,832
Shareholders' Equity - Canadian GAAP 10,003,563 (582,740) (499,411) (56)
Shareholders' Equity - U.S. GAAP 14,128,563 (582,740) (499,411) (56)
Increase (decrease) in cash 889,574 (40,313) 97,330 778
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
There have been no changes in accounting methods over the above reported
periods.
The Company uses the Canadian dollar as its reporting currency. See Item 1
"Description of Business" - "Industry Overview and Risk Factors Relating to the
Company's Business" - "Currency and Conversion."
ITEM 9: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
During 1999, Stockscape.com Technologies Inc. ("Stockscape, Stockscape.com, or
the Company") continued designing and hosting websites for public and private
companies, performing internet marketing for these companies, and expanded the
internet products that it offers. In addition, the Company continued to expand
NewsStandExpress.com by adding more newsletters to the site and assisting the
newsletter writers in their conversions from regular mailings to internet
distribution. The revenues, clients and general activity of the Company have
increased significantly over 1998 as outlined below. Stockscape's expanded
services also include the coordination of the dissemination of information on
its clients to interested parties. This new service was implemented during the
fourth quarter of 1999 and is planned to become a growth area for the Company.
<PAGE>
The Company became publicly listed on the NASD OTCBB market in the United States
in July 1999, through a reverse takeover with Cornucopia Resources Ltd. This
transaction was combined with a share offering to raise $2 million. Warrants
were also issued with this financing and were subsequently exercised to generate
further share issue proceeds of $5.8 million in the last half of 1999.
Cornucopia's main asset was an interest in Great Basin Gold Ltd., a publicly
traded company, the fair market value of which was $8.1 million at December 31,
1999.
Due to the acquisition of Stockscape Canada and the application of reverse
takeover accounting, the comparative figures reflect the results of the
operations of this subsidiary, which had a September 30 year end. The audited
financial statements reflect the year ended December 31, 1999, the three months
ended December 31, 1998 and the years ended September 30, 1998 and 1997. All
amounts are expressed in Canadian dollars.
RESULTS OF OPERATIONS
Stockscape's main sources of revenues are the internet services, website design
and hosting, and other related internet services. This area has grown from
revenues of $15,250 in the year ended September 30, 1997, $170,157 in the year
ended September 30, 1998, and $68,422 in the three months ended December 31,
1998, to $759,832 in the year ended December 31, 1999. This increase is mainly
due to the addition of more clients and newsletters to the website. During 1999,
Stockscape further expanded the investor relations services aspects by beginning
to coordinate large volume mail services. Such a mailing would be done in
coordination with the internet website hosting, e-mail blasts to Stockscape's
"opt-in" database, video interviews posted on the internet, advertising placed
on certain newsletters sent out, and conferences coordination. The revenues from
these programs was $368,575 for the year ended December 31, 1999. Overall, sales
increased by approximately 517% from the prior year. The interest income of
$81,635, which increased from nil in 1998 and 1997, was due to the larger cash
balance.
The cost of sales for Stockscape includes all costs, other than corporate
overhead, related to generating the sales and operating the websites. Cost of
sales increased from $184,758 and $337,494 for the years ended September 30,
1997 and 1998 and $74,365 for the three months ended December 31, 1998 to
$1,218,486 for the year ended December 31, 1999. The cost of sales increased by
approximately 272% over the prior year. This increase was mainly due to
additional staff hired during 1999 and the associated costs such as benefits,
computer and office equipment and supplies. At December 31, 1999, there were 16
full time staff members compared to 8 at the end of 1998.
General and administration costs also increased significantly from prior
periods. In 1999, these costs totaled $945,935, compared with $77,386 for the
three months ended December 31, 1998, $332,018 for the year ended September 30,
1998, and $88,048 for the year ended September 30, 1997. The increase is
commensurate with the increased activity of the Company in general. Specific
areas of increase included audit and legal fees of $127,434, generally due to
additional costs incurred on and after the conversion to a public company,
consulting and management fees of $261,447 (prior periods - $nil) due to the
engagement of management staff and consultants in line with the increased
business requirements, and investor relations costs of $131,294 (prior periods -
$nil) which the Company had not previously incurred as a private company. In
addition, office, travel costs, listing and maintenance fees, and amortization
also increased primarily due to costs incurred as a public company.
The loss for the period increased from $257,556 for the year ended September 30,
1997, $499,355 for the year ended September 30, 1998, and $83,329 for the three
months ended December 31, 1998, to $954,379 or $0.06 per share for the year. On
a per share basis, the loss decreased due to the increased number of shares
outstanding during 1999.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, the Company had cash and short term investments of $6.8
million (1998 - $57,795). Most of these funds were received from the financing
done in conjunction with the Cornucopia transaction ($2.0 million) and the
subsequent exercise of the Series A ($2.6 million) and Series B ($3.2 million)
Warrants. During 1999, Stockscape raised $8.0 million from the issuance of
common shares.
The 4 million common shares issued in July were part of a unit offering combined
with an A and a B warrant. The A warrants were all exercised to buy 4 million
common shares at $0.65 per common share in September. In November, 3.4 million
of the B warrants were exercised to buy the same number of common shares at
$0.95 each. The exercise of the A warrants raised proceeds of $2.6 million and
the exercise of the B warrants raised $3.2 million. In addition, there were
402,500 common shares issued on the exercise of employee stock options. At
December 31, 1999, there were 25.9 million common shares outstanding, of which
10 million are escrowed.
<PAGE>
Another potential source of working capital is the unrestricted share investment
in Great Basin Gold Ltd., which Cornucopia held prior to the transaction. At
December 31, 1999, the Company had 2.75 million common shares of Great Basin
with a fair market value of $2.95 per common share or $8.1 million. These shares
are subject to various resale restrictions and Stockscape can sell a minimum of
25,000 common shares per month such that the majority of this investment is
shown as a long term investment.
Stockscape's major shareholder was financing the Company via loans prior to the
conversion to public status in July, 1999. These loans totaled $825,000 by
March, 1999, including accrued interest at 12% and were repaid by issuing
8,250,000 common shares to the shareholder, prior to the conversion to a public
company. Interest on the loans totaled $21,084 in 1999 ($18,973 for the three
months ended December 31, 1998, and $nil in prior periods). No loans are
outstanding at December 31, 1999.
RISKS AND UNCERTAINTIES
The Company's business is substantially dependent on the functionality of the
world wide web, generally known as the internet, through the website
www.stockscape.com. Factors outside of the Company's control such as general
internet failures, software or hardware faults, viruses, or direct attacks could
disable the internet system for periods of time. Such external factors are
substantially beyond the control of the Company, but steps are taken to mitigate
any such factors within the control of the Company including using only proven
software and hardware; using certain security and back up features to detect and
prevent computer problems; and hiring senior personnel to maintain the internal
computer systems.
The investment in Great Basin Gold Ltd. is one of the Company's largest assets
and is subject to market fluctuation in the price due to the results of this
company. While Stockscape does have a representative on the Board of Directors
of Great Basin Gold Ltd., the common shares are restricted from resale over
various periods of time. There is also no certainty that such a large amount of
shares being sold would not reduce the price of the shares of Great Basin Gold
Ltd. given that Stockscape's investment at December 31, 1999 represented
approximately 9.9% of the outstanding common shares of Great Basin Gold.
The Company has been operating since October 1996, and has incurred losses every
year. The Company must earn higher revenues in order to reach the breakeven
point and begin to earn profits. There are a number of factors which the Company
must address to reach this point. The main objective is to increase the number
of revenue producing clients using the Company's services, while maintaining
tight controls on costs. There is no assurance that the Company can address all
of the factors to reach profitability.
OUTLOOK
Stockscape has been able to increase its revenues over the past three periods.
Expenses have only increased, as a percentage of sales, in the current year due
to the associated expenses with respect to the transition from a private company
to a public company. Management believes Stockscape is well positioned to take
advantage of the growing internet business and expects that revenues will
continue to increase while costs will continue to decrease as a percentage of
sales.
The cash and short term investments of the Company are $6.8 million and during
2000, significant investments are expected to be made in marketing and
advertising to build the business and increase the awareness of Stockscape's
activities. Losses incurred due to continued business expansion expenditures
during 2000 and beyond are anticipated to be mitigated by revenues and cash flow
from the ultimate sale of Great Basin Gold shares. Management currently
anticipates that cash and short-term investments in place at December 31, 1999
will be sufficient to fund operating losses in 2000 and that equity sales will
not be required to fund operating cash requirements.
Stockscape is also considering expanding its operations through the acquisition
of complementary businesses. Although no specific acquisition agreements have
been signed, it is expected that such transactions will be undertaken through
the issuance of common shares and minimal cash payments.
ITEM 9A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Risk factors related to the Company business are described in Part 1 "Industry
Overview and Factors Relating to the Company's Business".
<PAGE>
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors of the Registrant are elected at each Annual General Meeting and
hold office until the next annual general meeting of shareholders or until their
successors are appointed. Executive officers are appointed by the Registrant's
Board to serve until terminated by the Registrant's Board or until their
successors are appointed.
The Registrant's Board of Directors has a Compensation Committee, Executive
Committee, Corporate Governance Committee and is required to have an Audit
Committee. Members of these committees are as set out below. The names, ages,
positions, offices with the Registrant, business experience, and periods of
service of all directors and executive officers are also listed below:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH REGISTRANT
---- --- ------------------------
<S> <C> <C>
CURRENT DIRECTORS AND OFFICERS
John J. Brown (1)(2)(3)(4) 68 Director since June 30, 1999; Chief Financial Officer from June 1999.
Sargent H. Berner (1)(2) 59 Director since October 12, 1990; Corporate Secretary from May 1990 to
June 1992.
Barry F. Duggan 56 Director since April 17, 2000; President and Chief Executive Officer
effective April 17, 2000.
Andrew F. B. Milligan (3)(4) 75 Director since November 17, 1986; Chairman of the Board from April 1987
to June 1989; President and Chief Executive Officer from November 1986
to April 1987 and from September 1991 to April 17, 2000.
A. Murray Sinclair (1)(2)(3)(4) 39 Director since June 30, 1999.
David R. Williamson 58 Director since October 1989.
Karyn E. Bachert 48 Corporate Secretary since June 1992; Assistant Secretary from November
1988 to June 1992.
Mark T. Brown 31 Treasurer since June 30, 1999.
Eric T. H. Cardey 61 General Manager of Stockscape.com Technologies (Canada) Ltd. since
September 23, 1999.
PAST DIRECTORS AND OFFICERS
Charles J. G. Russell (1)(2) 66 Director from July 1991 to June 1999.
Stephen R. Sopher (2) 64 Director from March 1990 to June 1999.
Glenn H. Friesen 43 Chief Financial Officer from February 1998 to June 1999;
Corporate Controller from May 1997.
</TABLE>
(1) Member of the Audit Committee
(2) Member of the Corporate Governance Committee
(3) Member of the Executive Committee
(4) Member of the Compensation Committee (see Item 11 - "Board Compensation
Committee Report on Executive Compensation").
BUSINESS EXPERIENCE OF DIRECTORS AND OFFICERS
The present and principal occupations during the last five years of the
Registrant's directors and officers are set forth below.
<PAGE>
CURRENT DIRECTORS
JOHN J. BROWN, B.Comm., C.A. is Chief Financial Officer of the Company. Mr.
Brown is a Director and President of Pacific Opportunity Company Ltd. a
financial consulting and merchant-banking firm in Vancouver, BC. He is a
director of several private and public firms including United States Lime &
Minerals, Inc., Spartacus Capital Inc. and Globemin Resources Ltd. He was a
Director of and helped organize KeyWest Energy Corporation. Mr. Brown was an
investment advisor with a Canadian brokerage firm, was a senior partner with the
public accounting firm of Deloitte & Touche, Chartered Accountants, in Vancouver
for many years, was a Director and is a past Chairman of the British Columbia
Automobile Association and a former Director of the Canadian Automobile
Association. Mr. Brown's son, Mark T. Brown, is Treasurer of the Company
SARGENT H. BERNER is a partner of DuMoulin Black, a law firm in Vancouver,
British Columbia. Mr. Berner is also a director of Aurizon Mines Ltd., Emgold
Mining Corporation, Valerie Gold Resources Ltd., Cream Minerals Ltd. and Sultan
Minerals Inc. and Titan Pacific Resources Ltd., which are Vancouver-based
companies listed (except for Aurizon Mines Ltd.) on the Canadian Venture
Exchange. Aurizon Mines Ltd. is listed on the Toronto and Montreal stock
exchanges. Aurizon Mines Ltd. has a class of securities registered pursuant to
Section 12 of the United States Securities Exchange Act of 1934 (the "Exchange
Act"), or subject to the requirements of Section 15(d) of the Exchange Act.
BARRY F. DUGGAN, C.G.A. and a telecommunications executive with over 20 years of
industry experience, has been President and Chief Executive Officer of the
Company since April 17, 2000. Mr. Duggan was Vice President Finance and
Administration, Secretary of Streamscape Networks Inc., from June 1998 to April
2000. He was formerly Presient and CEO of BCTV/CHEK in Vancouver and Victoria,
President & CEO of ITV in Edmonton, Alberta and Executive Vice President/General
Manager of U-TV (CKVU) in Vancouver, B. C. Mr. Duggan contributed to the
development of Canadian Film Production, was a past president of the Alberta
Broadcasters Association and a member of the Television Executive Committee of
the Bureau of Broadcast Measurement.
ANDREW F. B. MILLIGAN, a business executive, is Chairman of the Company and was
President and Chief Executive Officer of the Company from September 1991 to
April 17, 2000. Mr. Milligan was Chairman of the Company from April 1987, to
June 1989, and was President of the Company from November 1986, to April 1987.
Mr. Milligan also was Chairman of Carlin Resources Corp. from November 1994, to
June 1997, and was a director of Carlin Resources Corp. from November 1994, to
January 1998, he is also a director of Advanced Projects Limited, Lysander
Mining Corporation, and Great Basin Gold Ltd., all of which are Vancouver-based
mining companies with shares listed on the Canadian Venture Exchange.
A. MURRAY SINCLAIR, has been a Partner both of Quest Management Corp., (a
private management company) and of Quest Ventures Ltd., (a private merchant
banking company) since December 1996. Previously, Mr. Sinclair was Managing
Director of Quest Oil & Gas Inc. (formerly Quest Capital Corporation) from May
1993 to April 1997. Quest Oil & Gas Inc. was a publicly traded oil and gas
company whose shares traded on The Toronto Stock Exchange. Prior to that he was
President and Director of Noramco Capital Corp. from June 1991 to January 1996
and Vice President, Finance of Noramco Capital Corp. from July 1988 to June
1991. Mr. Sinclair currently serves as Director and/or officer for the following
companies: Arapaho Capital Corp., Belvedere Resources Ltd., Breakwater Resources
Ltd., Cheni Resources Inc., Foxpoint Resources Ltd., International Mahogany
Corp. Magnifoam Technology Inc., Marchwell Capital Corp., New Inca Gold Ltd.,
Sextant Entertainment Group Inc., Reserve Royalty Corp., RTO Enterprises Inc.,
Fifty-Plus Net International Inc., Villaret Resources Ltd./Ressources Villaret
Ltee.
DAVID R. WILLIAMSON, a mining engineer and business executive, is principal of
his own business, David Williamson Associates Limited, financial consultants to
the mining industry and publishers of International Mining Review, based in
London, England. In 1982 Mr. Williamson joined Shearson Lehman Hutton and formed
their metals and mining research team. From 1987 to 1989 he held the positions
of Executive Director of Shearson Lehman Hutton and director of Metals and
Mining Research for Shearson Lehman Hutton Commodities. He is also a former
governor of the Camborne School of Mines in England. Mr. Williamson is a
director of Crown Resources Corporation, Asia Pacific Resources Ltd. and Crew
Development Corporation, which are publicly traded mining companies listed on
Nasdaq and the Toronto Stock Exchange.
CURRENT OFFICERS
KARYN E. BACHERT has been Corporate Secretary of the Company since June 1992,
and was Assistant Secretary of the Company from November 1988, to June 1992. Ms.
Bachert has been employed by the Company since January 1987. Ms. Bachert was
also Corporate Secretary of Carlin Resources Corp. from November 1994, to June
1997.
MARK T. BROWN, C.A., has been Treasurer of the Company since June 1990. Mr.
Brown is President and a Director of Spartacus Capital Inc., Vice President of
Pacific Opportunity Company Ltd., and Chief Financial Officer or Treasurer of
three
<PAGE>
publicly-traded companies (Elkhorn Gold Mining Corporation, Nevada Pacific
Gold Ltd., and Golden Sitka Resources Ltd.). Between 1990 and 1994, Mr. Brown
worked with PricewaterhouseCoopers. More recently, Mr. Brown was the
controller of Miramar Mining Corporation, Northern Orion Explorations Ltd.
and Eldorado Gold Corporation.
ERIC T. H. CARDEY, P.Eng., is an entrepreneurial executive with international
"hands on" experience in business development, manufacturing, marketing,
technology transfers, start-ups and management consulting. He has worked with
private and public companies in Canada, USA, Europe, China, South East Asia,
Mexico and Central Europe. He has a background in advanced technologies,
resource-based industries and energy. He is a principal of Presidents Network
Inc. and was Vice President of Genstar Cement and BC Hydro's subsidiary, Power
Smart Inc. Mr. Cardey is a director of Spartacus Capital Inc.
ITEM 11: COMPENSATION OF DIRECTORS AND OFFICERS
The Company's executive and employee compensation program is administered by the
Compensation and Executive Committees. The Compensation Committee establishes or
recommends general compensation levels and policies for executive officers and
employees of the Company. The Stock Incentive Plan is administered by the Board
of Directors. The Registrant's Board designates the Members of each committee on
an annual basis.
EXECUTIVE COMPENSATION
Between 1998 and 1999, there were six executive officers of the Company: Andrew
F. B. Milligan, John J. Brown, Glenn H. Friesen, Karyn E. Bachert, Mark T. Brown
and Eric Cardey. The following table sets forth certain summary information
concerning the compensation awarded to, earned by, or paid to the Chief
Executive Officer and those senior executive officers of the Company whose
combined salary and bonuses exceeded C$100,000 for services in all capacities to
the Company during the last fiscal year ended December 31, 1999. The aggregate
value of other annual compensation paid to Senior Executive Officers during 1999
did not exceed 10% of the aggregate cash compensation set forth in the following
table.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
AGGREGATE AMOUNT OF COMPENSATION PAID
ALL DIRECTORS AND OFFICERS AS A GROUP (6 PERSONS)
SALARY BONUS SECURITIES(1) ALL OTHER
NAME AND PRINCIPAL POSITION(1) YEAR $ $ UNDER OPTIONS COMPENSATION (2)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
President and Chief Executive Officer 1999 114,000 -- 200,000 6,972
All Directors and Officers 1999 218,303 -- 812,500 55,717
(as a Group of 8 persons)
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) As of December 31, 1999.
(2) Includes car allowances and other benefits
The services of Mr. Milligan are provided under an Agreement dated December 1,
1991, as subsequently amended, between the Company and Glencoe Management Ltd.,
a company owned and controlled by Mr. Milligan. See Item 11 - "Management
Agreements and Termination of Employment and Change-In-Control Arrangements" and
Item 13 - "Interest of Management in Certain Transactions".
The services of Mr. John J. Brown and Mark T. Brown are provided under an
Agreement between the Company and Pacific Opportunity Company, a company owned
and controlled by John J. Brown. See Item 13 - "Interest of Management in
Certain Transactions.
Sargent H. Berner, a director of the Registrant, is a partner in the Vancouver
law firm of DuMoulin Black, which received fees for services provided to the
Company by Mr. Berner or his firm in 1999. See Item 13 - "Interest of Management
in Certain Transactions".
David R. Williamson, a director of the Registrant, is principal of David
Williamson Associates Limited, which received fees for services provided to the
Company by Mr. Willliamson or his firm in 1999.
<PAGE>
COMPENSATION OF DIRECTORS
Directors of the Registrant do not receive any fee or other compensation for
attending meetings of the Registrant Board. The Directors may, however, be
reimbursed for actual expenses incurred by them in connection with attending
meetings of the board. Directors are also eligible to receive bonus shares or
options to purchase Common Shares of the Company (see "Stock Incentive Plan").
MANAGEMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The services of Andrew F. B. Milligan, a director, Chairman, and formerly
President and Chief Executive Officer of the Company, are provided to the
Company pursuant to a Consultant/Management Agreement with Glencoe Management
Ltd. dated December 1, 1991, and amended on December 19, 1992, June 29, 1994,
June 1, 1995 and May 20, 1998. Mr. Milligan is the principal shareholder of
Glencoe Management Ltd. The agreement included provisions by which Mr. Milligan
was entitled to receive an amount equal to three years' management fees, and to
participate in all employee insurance and benefit plans in place for a period of
up to three years if the Company should terminate the agreement or the
employment of Mr. Milligan without cause. In order to facilitate the
reorganization of the Company, Mr. Milligan agreed that effective June 1, 1999,
Glencoe Management Ltd. would accept a 44.4% reduction in salary and the
substitution of a 3-year fixed term employment contract in lieu of the three
year severance provisions of the Consultant/Management Agreement. As
consideration, for relinquishing these benefits, Glencoe Management Ltd. was
granted warrants to purchase 400,000 Common Shares of the Registrant on a
post-consolidation basis at a price of $0.50 per share, in addition to any other
options to which Mr. Milligan may be entitled in his continuing capacity as a
director and officer of the Company.
The services of Barry F. Duggan, who was appointed President and Chief Executive
Officer of the Company as at April 17, 2000, are provided pursuant to an
employment agreement dated March 14, 2000 by which Mr. Duggan may receive an
amount equivalent to three years' remuneration if he should elect within six
months of a takeover of control of the Company to resign, based on the sole
reason that there has been such a takeover of control. In addition, in such
circumstances, Mr. Duggan, in lieu of his right to exercise existing stock
options, would be entitled to a cash payment equal to the aggregate spread
between the exercise price of all options held by him and the higher of (a) the
average of the closing prices of the Company's shares for 30 business days
preceding the date of termination or (b) the average price actually paid for the
most highly priced 1% of the Company's common shares by any person who achieves
control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Andrew F. B. Milligan, a Director and Executive Officer of the Registrant,
served as a member of the Compensation Committee during 1996 and part of 1997.
From June 1997 to June 1999, the Compensation Committee was made up of
non-executive directors of the Registrant. Mr. Milligan again became a member of
the Compensation Committee along with two non-executive directors of the
Registrant on June 30, 1999.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Registrant's compensation program for its executive officers is administered
and reviewed by the Compensation Committee (the "Committee") of the Board of
Directors. The function of the Compensation Committee is to investigate and
recommend to the directors appropriate levels and types of compensation for
directors and officers of the Company. During 1999, there were two meetings held
by the Compensation Committee.
Due to the change in direction and business of the Company resulting from the
disposition of its active mining asset and acquisition of Stockscape the
Compensation Committee did not recommend any increase in base salaries or
benefits for its officers or the award of any bonuses for 1999. It is expected
that a newly constituted Compensation Committee will review such matters
following the Registrant's upcoming Annual General Meeting on May 29, 2000.
ITEM 12: OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
STOCK INCENTIVE PLAN
On June 30, 1999, the shareholders of the Registrant approved the adoption of a
Stock Incentive Plan. The Stock Incentive Plan (the "Plan") consists of a share
purchase plan (the "Share Purchase Plan"), a share option plan (the "Share
Option Plan"), and a share bonus plan (the "Share Bonus Plan") for directors,
executive officers and employees of the Company. The purpose of the plan is to
advance the interests of the Company by encouraging equity participation in the
Company by directors, officers and employees of the Company through acquisition
of Common Shares.
<PAGE>
Subject to certain limits stated in the Share Option Plan and the Share Bonus
Plan, the number of Common Shares available or made available for the Share
Purchase Plan, the Share Option Plan and the Share Bonus Plan, individually and
collectively, will be determined from time to time by the Registrant's Board of
Directors (the Registrant's Board"), but the aggregate maximum number of Common
Shares which the Registrant may at any time reserve for issuance under the Stock
Incentive Plan to any individual shall not exceed 5% of the issued and
outstanding Common Shares at any time.
The Stock Incentive Plan is administered by the Registrant Board. The Registrant
Board has the right to amend, modify or terminate the Stock Incentive Plan, in
whole or in part, at any time if and when it is advisable in the absolute
discretion of the Registrant Board. However, any amendment of the Stock
Incentive Plan which would materially modify the requirements as to eligibility
for participation in any plan comprising the Stock Incentive Plan or would
materially change the number or value of Common Shares that may be granted under
the Share Option Plan will be effective only upon the approval of the
shareholders of the Registrant, and any amendment to the Stock Incentive Plan
will require any necessary approval of any regulatory body having jurisdiction
over the securities of the Registrant.
It is presently contemplated that future stock options granted by the Registrant
will be granted pursuant to the Share Option Plan. The Registrant does not have
any immediate plans to implement the Share Purchase Plan.
SHARE PURCHASE PLAN
Participants in the Share Purchase Plan will be full-time or seasonal full-time
employees of the Company or any of its subsidiaries (including employees who are
officers thereof; whether or not directors) who have been continuously employed
by the Company, or any of its subsidiaries for at least 12 consecutive months,
and who have been designated by the Company as participants in the Share
Purchase Plan. The Registrant Board has the right in its absolute discretion to
waive such 12-month period or refuse any employee or group of employees the
right of participation or continued participation in the Share Purchase Plan.
An employee may contribute up to 10 per cent of his annual basic salary to the
Share Purchase Plan. The Company makes contributions based on a proportion of
the employee's contribution on a quarterly basis. During the first year of the
employee's participation, the Company's contribution will equal one-sixth of the
participant's contribution and, thereafter, will increase to one-third of the
participant's contribution.
At the end of each calendar quarter each participant will then be issued Common
Shares having a value equal to the amount contributed to that date by the
participant and the Company to the Share Purchase Plan. Common Shares issued to
a participant will be held in safekeeping and delivered to the participant six
months after issue.
If, prior to the delivery of such Common Shares, the participant's employment is
terminated other than due to death, disability or normal retirement (in which
case the Common Shares will be delivered), such Common Shares will be purchased
for cancellation or sold at market and the participant will receive, without
interest, an amount equal in value to the lesser of (i) his contribution and
(ii) a portion of the proceeds of any sale such shares equal to six-sevenths of
the proceeds if the shares were issued during the first year of participation,
or three-quarters of the proceeds of the shares were issued thereafter. Any
portion of a participant's contribution than held in trust for a participant
will be returned to him or his estate, as the case may be, in the event of his
termination of employment, for any reason.
SHARE OPTION PLAN
The Share Option Plan authorizes the grant of options to acquire Common Shares
of the Registrant, subject to adjustment in the event of a subdivision or
consolidation of the Common Shares, a reorganization of the Registrant or other
event affecting the Common Shares. Options granted pursuant to the Share Option
Plan are to be either options intended to qualify under Section 422A of the
United States Internal Revenue Code (the "Code") or options designated by the
Registrant that do not so qualify.
Participants in the Share Option Plan may be directors, full-time or part-time
employees of the Company, who, by the nature of their jobs, are, in the opinion
of the Registrant Board, in a position to contribute to the success of the
Company or who, by virtue of their length of service to the Company, are, in the
opinion of the Registrant Board, worthy of special recognition.
In determining the number or value of optioned Common Shares that may be granted
to each participant pursuant to an option, consideration is given to the
participant's present and potential contribution to the success of the Company,
the prevailing policies of the stock exchanges on which the Common Shares are
then listed, and the relevant provisions of the Code, if applicable. The date of
grant, the number of Common Shares, the exercise price per Common Share and
certain other terms of
<PAGE>
options are determined by the Registrant Board. The exercise price will not
be less than the fair market value per Common Shares on the date of grant,
except as permitted by the rules and policies of the stock exchange on which
the Common Shares are then listed in the case of options which are not
intended to qualify as "incentive stock options" within the meaning of the
Code. In order to ensure that the Registrant will receive the benefits
intended from the grant of options, no option is exercisable until it has
vested. The vesting schedule for each option is specified by the Registrant
Board at the time of grant of the option.
An option is exercisable for any period specified by the Registrant Board up to
a maximum of five years after the date of grant. Any Common Shares not purchased
pursuant to an option prior to the participant's termination of employment or
directorship or death may be exercised, to the extent entitled, within 30 days
after the termination of employment or directorship or within up to one year
after death (as specified in his option agreement). An option is not
transferable, except by will or the laws of descent and distribution.
SHARE BONUS PLAN
The Share Bonus Plan permits the Registrant Board to enter into agreements for
the issuance of Common Shares to full-time or seasonal full-time employees of
the Company who have rendered meritorious service, which contributed to the
success of the Company. The Registrant Board may determine in its sole and
absolute discretion to enter into agreements with such full-time or seasonal
full-time employees, on any terms and conditions, subject to any provisions and
restrictions, and for such cash consideration, if any, as the Registrant Board
may determine for the issuance of any number of Common Shares to any such
employee. No shares can be issued pursuant to the Share Bonus Plan unless the
employee has entered into such an agreement with the Registrant Board.
The maximum number of Common Shares that may be issued under the Share Bonus
Plan, in any calendar year, may not exceed 500,000 Common Shares.
STOCK INCENTIVE TRANSACTIONS DURING 1999
The Registrant has not set side or accrued any funds during the last fiscal year
to provide pension, retirement or similar benefits for any directors, officers
or employees. The Registrant has no existing pension or retirement plan.
However, stock options have been granted to directors and officers and employees
of the Registrant. Stock options are a significant component of the compensation
received by the Named Executive Officers and serve to provide incentive to such
individuals to act in the best interests of the Company and its shareholders.
On June 30, 1999, the shareholders approved of a new Stock Incentive Plan as
part of the corporate reorganization described in Item 1: "Significant
Transactions of the Company". All outstanding stock options granted to
directors, officers and employees of Cornucopia Resources Ltd. were cancelled
and replaced by new incentive options granted under the new Stockscape.com
Technologies Inc. Stock Incentive Plan. The following table sets out the details
of all stock options granted to the Named Senior Executive Officers after the
reorganization of the Company in July 1999 to December 31, 1999.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
STOCKSCAPE.COM NUMBER OF PERCENT OF C$ VALUE ON
TECHNOLOGIES INC. COMMON SHARES TOTAL OPTIONS EXERCISE PRICE EXPIRATION DATE DECEMBER 31, 1999
UNDERLYING GRANTED IN
OPTIONS GRANTED FISCAL YEAR
NAME US$
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Andrew F.B. Milligan 200,000 14% $0.50 July 12, 2004 $126,000
John J. Brown 200,000 14% $0.50 July 12, 2004 $126,000
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
During 1999, a total of 1,410,000 options were granted under the Registrant's
new Stock Incentive Plan. Of the total, 810,000 were granted to Directors and
Officers and 600,000 to employees. These options were granted at an exercise
price equal to the closing price of the Company's Common Shares on the NASDAQ
OTC Bulletin Board on the trading day immediately preceding the date of grant.
On January 10, 2000, the Board of Directors granted an aggregate 695,000 stock
options at a price of US$0.75 per Common Share, expiring after five years. The
options were granted to directors, officers and employees of the Company, and of
the total options granted 550,000 were granted to directors and officers and
145,000 were granted to employees of the Company.
<PAGE>
On April 5, 2000, the Board of Directors granted an aggregate 147,500 incentive
stock options to new employees of the Company. These options are exercisable at
a price of US$1.00 and expire five years from the date of grant.
As of April 30, 2000, a total of 1,757,500 stock options were outstanding under
the Company's Stock Option Plan. The following table sets out the details of the
stock options granted to all directors, officers and employees of the Company
outstanding at April 30, 2000.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
TOTAL
STOCKSCAPE.COM OPTIONS EXERCISE EXPIRY
TECHNOLOGIES INC. GRANTED PRICE DATE
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Director and Officers 455,000 C$0.50 July 12, 2004
550,000 US$0.75 January 9, 2005
300,000 US$0.81 April 17, 2005
Employees 45,000 C$0.50 July 12, 2004
115,000 US$0.60 November 30, 2004
145,000 US$0.75 January 9, 2005
147,500 US$1.00 March 22, 2005
-----------
1,757,500
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
AGGREGATED OPTIONS CANCELLED, EXPIRED OR SURRENDERED IN LAST FISCAL YEAR
The following table sets out the details of all stock options cancelled or
expired during the most recently completed financial year by the Named Senior
Executive Officers and the financial year end values of the stock options held
by Senior Executive Officers.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
OPTIONS NUMBER OF SECURITIES
CANCELLED, UNDERLYING UNEXERCISED
EXPIRED OR OPTIONS FROM 07/12/99 TO
STOCKSCAPE.COM TECHNOLOGIES INC. SURRENDERED VALUE 03/31/00
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Andrew F. B. Milligan 500,000 -- 500,000 --
----------------------------------------------------------------------------------------------------------
</TABLE>
No stock options of Cornucopia Resources Ltd. were exercised during 1999. On
June 30, 1999, a total of 1,470,000 options were cancelled, of which 1,070,000
had been granted to directors and officers and 400,000 granted to employees.
During the year ended December 31, 1999, no directors or executive officers of
the Registrant were participants in the Share Purchase Plan and no Common Shares
were issued under the Share Bonus Plan.
ITEM 13: INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
The following is interest of management in certain transactions for the period
January 1, 1999 to December 31, 1999.
Andrew F. B. Milligan, President and Chief Executive Officer of the Registrant,
is the principal shareholder of Glencoe Management Ltd., which receives
management fees from the Registrant (see Item 11 - "Compensation of Directors
and Officers").
John J. Brown, Chief Executive Officer of the Registrant, is the principal
shareholder of Pacific Opportunity Company Ltd., which received management
fees and expense reimbursements of $191,578 from the Registrant for the year
ended December 31, 1999 (see Item 11 - "Compensation of Directors and
Officers". Mark T. Brown, Treasurer of the Registrant, son of John J. Brown,
is President and a Director of Pacific Opportunity Company Ltd.
<PAGE>
Sargent H. Berner, a director of the Registrant, is a partner in the Vancouver
law firm of DuMoulin Black, which received fees for legal services provided to
the Company for the year ended December 31, 1999 of $120,282.
David R. Williamson, a director of the Registrant, is principal of David
Williamson Associates Limited, which received fees for services provided to the
Company for the year ended December 31, 1999 of $6,970.
The only other material transaction of Stockscape.com in which any director,
senior officer, or any principal shareholder of Stockscape.com has had an
interest, direct or indirect, are as follows:
As of July 12, 1999, A. R. Rule Investments B.C. Ltd., beneficially owned by
Arthur R. Rule, held more than 10% of the Registrant's voting securities. As of
March 31, 2000 A.R. Rule Investments (B.C.) Ltd. holds 38% of the issued and
outstanding shares of the Registrant. Also see Item 1 - "Significant Transaction
of the Company". Preliminary discussions are in train to acquire certain
database management companies. These transactions are being conducted with the
assistance of Global Resources Investments Ltd., a California based brokerage
firm associated with Rick Rule who, together with his associates, is a major
shareholder of Stockscape.com.
<PAGE>
PART II
ITEM 14: DESCRIPTION OF SECURITIES TO BE REGISTERED
Not applicable.
PART III
ITEM 15: DEFAULTS UPON SENIOR SECURITIES
NONE.
ITEM 16: CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED
SECURITIES
NONE.
ITEM 17: FINANCIAL STATEMENTS
See Item 19 below for financial statements included in and filed as part of this
annual report.
ITEM 18: FINANCIAL STATEMENTS
Not Applicable.
<PAGE>
ITEM 19: FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
PAGE(S)
<C> <S> <C>
(i) Report of Independent Chartered Accountants. 38
(ii) Consolidated Balance Sheet as at December 31, 1999 and December 31, 1998. 39
(iii) Consolidated Statement of Operations and Deficit for the year ended December 31, 1999, for the 40
three month period ended December 31, 1998 and the years ended September 30, 1998 and
September 30, 1997
(iv) Consolidated Statements of Cash Flow for the year ended December 31, 1999, for the three month 41
period ended December 31, 1998 and the years ended September 30, 1998 and September 30, 1997
(vi) Notes to the Consolidated Financial Statements. 42
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(b) EXHIBITS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
PAGE(S)
* Incorporated herein by reference to the corresponding exhibit filed with the Registrant's original
Form 10 dated April 29, 1988 for Cornucopia Resources Ltd.
<C> <S> <C>
* 1.1 Certificate of Amalgamation dated November 14, 1985 and Amalgamation Agreement dated
April 24, 1985 between Cyrano Resources Inc. and Cornucopia Resources Ltd.
* 1.2 Memorandum of the Registrant, as amended June 24, 1986 and June 25, 1987.
* 1.3 Articles of the Registrant, as amended June 24, 1986.
* 1.4 Article 25.1 of the Registrant.
* 1.5 Specimen Certificate for Common Shares without par value.
1.6 Certificate of Change of Name, British Columbia Company Act. 60
4.1 Cornucopia Resources Ltd. Stock Incentive Plan as amended and approved by the Registrant
shareholders on May 27, 1993 and further amended by the directors on January 5, 1994, May 15,
1995, September 18, 1995 and January 4, 1996. Directors' and Employees' Share Option Program.
Incorporated herein by reference to Exhibit 4.2 to the Registrant's Form S-8 (Reg. No. 33-25974)
and the most recent amendment received approval from the Registrant shareholders at the
Company's Annual General Meeting on June 20, 1996. Incorporated herein by reference to Exhibit
4.3 of the Registrant's Form 10-K for year ended December 31, 1996.
4.2 Stockscape.com Technologies Inc. Stock Incentive Plan as approved by the Registrant shareholders 61
on June 30, 1999.
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(b) EXHIBITS (Cont'd)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
PAGE(S)
<C> <S> <C>
4.3 Great Basin Gold Ltd. Purchase and Sale Agreement, dated March 2, 1999. 70
4.4 Share Purchase and Sale Agreement among Cornucopia Resources Inc. and Cornucopia Resources 105
Ltd. and Vista Gold Holdings Inc. and Vista Gold Corp.
4.5 Form of Warrant, Common Shares Purchase Warrant made as of July 20, 1999 between the 189
Registrant and Glencoe Management Ltd.
4.6 Revised Management Agreement dated July 1, 1999, between the Registrant and Glencoe 192
Management Ltd.
8.1 Subsidiaries of the Registrant. The subsidiary companies of the Registrant are described in Item 1 -
"Business Development" of this Form 20-F.
10.1 News release dated March 2, 1999. Incorporated hereby by reference to an exhibit filed with the
Registrant's Form 8-K dated March 11, 1999.
10.2 Consent of KPMG LLP dated June 5, 2000. 200
10.3 Consent of Ellis Foster dated June 5, 2000. 201
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
c.) REPORTS ON FORM 8K AND FORM 6K
During 1999, and as of March 31, 2000, the Registrant has filed reports on Form
8-K and Form 6-K on the following dates:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
DATE SUMMARY
---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Form 8-K Registrant announced the resignation of a director of the Company and its subsidiary.
January 21, 1999
Form 8-K Registrant announced a major reorganization involving the disposition of the Ivanhoe Joint Venture
March 11, 1999 Interest, a consolidation, the acquisition of Stockscape Technologies Ltd., a name change and new
composition of Board of Directors.
Form 8-K Registrant announced that it had signed a definitive agreement for the acquisition of a privately-held
April 28, 1999 Internet investment research provider, Stockscape Technologies Ltd.
May 13, 1999 Registrant filed Report of independent auditors to Stockscape Technologies Ltd. along with
Form 8-K/A supplementary financial statements and notes of Stockscape Technologies Ltd at December 31, 1998
and September 30, 1998, and unaudited pro forma consolidated financial statements at December 31,
1998.
July 9, 1999 Registrant announced shareholder approval of reorganization of the Company at the Annual General
Form 8-K Meeting held on June 30, 1999, including the sale of the Ivanhoe Property, the consolidation of the
Company' Common Shares, increasing the Company's authorized Common Share Capital to its pre-
consolidation level, change of name to Stockscape.com Technologies Inc. and the approval of the
new Stock Incentive Plan and the grant of new options.
July 15, 1999 Company announced that the reorganization of the Company was complete.
Form 8-K
August 16, 1999 Company files interim financial statements for the period ended June 30, 1999. The Registrant
Form 6-K became a foreign private issuer due to the reorganization of the Company in July 1999.
November 16, 1999 Company files interim financial statements for the period ended September 30, 1999.
Form 6-K
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
D.) During 1999, the Registrant filed two reports on Form 10-Q for the periods
March 31, 1999 and June 30, 1999.
<PAGE>
STOCKSCAPE.COM TECHNOLOGIES INC.
(Formerly Cornucopia Resources Ltd.)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1999,
THREE MONTHS ENDED DECEMBER 31, 1998 AND
YEARS ENDED SEPTEMBER 30, 1998 AND 1997
<PAGE>
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the consolidated balance sheet of Stockscape.com Technologies
Inc. as at December 31, 1999 and the consolidated statements of operations and
deficit and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 1999
and the results of its operations and its cash flows for the year ended December
31, 1999, in accordance with Canadian generally accepted accounting principles.
As required by the Company Act (British Columbia), we report that, in our
opinion, these principles have been applied on a basis consistent with that of
the preceding year.
Canadian generally accepted accounting principles vary in certain significant
respects from accounting principles generally accepted in the United States.
Application of accounting principles generally accepted in the United States to
these consolidated financial statements would have affected total assets and
shareholders' equity as at December 31, 1999 and net loss for the year then
ended to the extent summarized in note 10 to the consolidated financial
statements.
The consolidated financial statements as at December 31, 1998 and for the three
months ended December 31, 1998 and the years ended September 30, 1998 and 1997
were audited by other auditors who expressed an opinion without reservation on
those statements in their report dated March 25, 1999.
KPMG LLP
Chartered Accountants
Vancouver, Canada
March 10, 2000
<PAGE>
STOCKSCAPE.COM TECHNOLOGIES INC.
(Formerly "Cornucopia Resources Ltd.")
Consolidated Balance Sheets as at December 31
(Expressed in Canadian Dollars unless otherwise stated)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
1999 1998
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 947,369 $ 57,795
Short-term investments 5,847,601 -
Marketable securities 426,039 937
Accounts receivable 73,881 74,742
Prepaid expenses 22,201 8,920
------------ ----------
7,317,091 142,394
2,656,466 -
LONG-TERM INVESTMENTS (Note 4)
348,414 95,314
CAPITAL ASSETS (Note 5)
RESOURCE PROPERTY (Note 6) 1 -
INTANGIBLE ASSETS (Note 5) 11,328 8,270
------------ ----------
$ 10,333,300 $ 245,978
============ ==========
-------------------------------------------------------------------------------------------------------------
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 262,480 $ 100,506
Unearned revenue 67,257 55,224
------------ ----------
329,737 155,730
LONG-TERM DEBT (Note 7) - 672,988
SHAREHOLDERS' EQUITY
- 200,000
SHARE SUBSCRIPTIONS
SHARE CAPITAL (Note 8) 11,798,182 57,500
(1,794,619) (840,240)
------------ ----------
DEFICIT
10,003,563 (582,740)
------------ ----------
Nature of operations (Note 1)
Commitments (Note 13)
Subsequent events (Note 15)
$ 10,333,300 $ 245,978
============ ==========
-------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Approved by the Board of Directors
-------------------------------- -----------------------------------
ANDREW F.B. MILLIGAN, JOHN J. BROWN
DIRECTOR DIRECTOR
<PAGE>
STOCKSCAPE.COM TECHNOLOGIES INC.
(Formerly "Cornucopia Resources Ltd.")
Consolidated Statements of Operations and Deficit
(Expressed in Canadian Dollars unless otherwise stated)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Three Months
Year Ended Ended Year Ended Year Ended
December 31, December 31, September 30, September 30,
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE
Web-site sales and service $ 759,832 $ 68,422 $ 170,157 $ 15,250
Investor on-line services 368,575 - - -
Interest 81,635 - - -
------------ -------------- -------------- ----------
1,210,042 68,422 170,157 15,250
1,218,486 74,365 337,494 184,758
------------ -------------- -------------- ----------
COST OF SALES
GROSS LOSS 8,444 5,943 167,337 169,508
GENERAL AND ADMINISTRATIVE
EXPENSES
Advertising and promotion 25,008 12,398 48,661 23,948
Depreciation 73,106 - - -
Audit and legal fees 127,434 403 18,140 3,361
Bad debt expense 25,101 - 6,657 -
Management and administration fees 261,447 - - -
Foreign exchange 6,698 - - -
Interest on debt 29,718 18,973 44,479 832
Investor and shareholder relations 131,294 - - -
Listing and transfer fees 27,505 - - -
Office and miscellaneous 104,686 8,904 42,120 20,506
Salaries, wages and benefits 95,917 36,708 171,961 39,401
Travel 36,552 - - -
Loss on disposal of fixed assets 16,042 - - -
Gain on sale of marketable securities (14,573) - - -
------------ ------------- ------------- ---------
945,935 77,386 332,018 88,048
------------ ------------- ------------- ---------
954,379 83,329 499,355 257,556
NET LOSS FOR THE PERIOD
840,240 756,911 257,556 -
------------ ------------ ------------ ----------
DEFICIT, BEGINNING OF PERIOD
$ 1,794,619 $ 840,240 $ 756,911 $ 257,556
============ ============ ============ ==========
DEFICIT, END OF PERIOD
LOSS PER SHARE $ 0.06 $ 0.09 $ 0.53 $ 0.27
============ ============ ============ ==========
-------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
STOCKSCAPE.COM TECHNOLOGIES INC.
(Formerly "Cornucopia Resources Ltd.")
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars unless otherwise stated)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Three Months
Year Ended Ended Year Ended Year Ended
December 31 December 31, September 30 September 30,
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
CASH PROVIDED BY (USED FOR)
OPERATIONS
Net loss for the year $ (954,379) $ (83,329) $ (499,355) $ (257,556)
Items not involving cash
Depreciation 73,106 8,416 35,895 17,539
Loss on disposal of fixed assets 16,042 - - -
Interest paid by issuance of shares 21,105 - - -
Gain on sale of marketable
securities (14,573) - - -
Changes in non-cash working capital items (239,801) (54,822) 137,065 (11,112)
------------ ----------- ----------- -----------
(1,098,500) (129,735) (326,395) (251,129)
INVESTING
Proceeds on disposal of marketable
securities 144,218 - - -
Purchase of short-term investments (5,847,601) - - -
Purchase of capital assets (343,817) (2,497) (59,604) (92,573)
Proceeds from sale of capital assets 4,200 - - -
Purchase of intangible assets (5,689) (1,758) (5,150) (3,852)
Cash acquired on business combination
(Note 3) 36,819 - - -
------------ ----------- ----------- -----------
(6,011,870) (4,255) (64,754) (96,425)
FINANCING
Share subscriptions - - - 200,000
Short-term financing 102,500 - - -
Repayment of short-term financing (177,500) - - -
Private placement proceeds, net of issue
costs 1,952,687 - - 57,500
Proceeds on exercise of Series A Warrants 2,600,000 - - -
Proceeds on exercise of Series B Warrants 3,190,100 - - -
Proceeds on exercise of options 201,250 - - -
Long-term debt (Note 7) 130,907 93,677 488,479 90,832
------------ ----------- ----------- -----------
7,999,944 93,677 488,479 348,332
------------ ----------- ----------- -----------
INCREASE (DECREASE) IN CASH 889,574 (40,313) 97,330 778
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 57,795 98,108 778 -
------------ ----------- ----------- -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 947,369 $ 57,795 $ 98,108 $ 778
============ ========== =========== ===========
----------------------------------------------------------------------------------------------------------------
</TABLE>
Supplementary information (note 14)
See accompanying notes to consolidated financial statements.
<PAGE>
STOCKSCAPE.COM TECHNOLOGIES INC.
(Formerly "Cornucopia Resources Ltd.")
For the Year Ended December 31, 1999, three months ended December 31, 1998 and
years ended September 30, 1998 and 1997
(Expressed in Canadian Dollars unless otherwise stated)
------------------------------------------------------------------------------
1. NATURE OF OPERATIONS
During 1999, Stockscape.com Technologies Inc. ("Stockscape" or the
"Company"; formerly Cornucopia Resources Ltd.), completed a
reorganization and change of principal activity from that of
exploration and development of mineral properties to that of providing
investment information and services through an internet provider. In
March 1999, the Company sold its sole remaining active resource
property located on the Carlin Trend in the State of Nevada, USA.
Effective July 9, 1999, the Company acquired Stockscape.com
Technologies (Canada) Ltd. ("Stockscape Canada"), a privately-held
internet research Company which maintains an Internet portal for
investors at www.stockscape.com which has been in operation since
October 1996 (note 3). Effective July 9, 1999, the Company changed its
name to Stockscape.com Technologies Inc. on completion of the business
combination with Stockscape Canada.
2. SIGNIFICANT ACCOUNTING PRINCIPLES
(a) BASIS OF PRESENTATION AND CONSOLIDATION
THESE FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH
CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. SIGNIFICANT
DIFFERENCES FROM THOSE IN THE UNITED STATES OF AMERICA ARE DISCLOSED IN
NOTE 10.
The consolidated financial statements include the accounts of the
Company and its subsidiaries, all of which are wholly-owned. All
significant intercompany balances and transactions have been
eliminated.
Effective July 9, 1999, the Company completed the acquisition of 100%
of the outstanding common shares of Stockscape Canada. Since the former
sole shareholder of Stockscape Canada obtained control of the Company
through the share exchange, this transaction has been accounted for in
these financial statements as a reverse takeover. Consequently, the
consolidated statements of operations and deficit and cash flows
reflect the results of operations of Stockscape Canada, the legal
subsidiary, for the year ended December 31, 1999, combined with those
of Stockscape, the legal parent, from July 9, 1999 to December 31,
1999. In addition the comparative figures presented are those of
Stockscape Canada.
(b) REVENUE RECOGNITION
(i) Revenues from services provided to create web-sites are
recognized as the services are provided.
(ii) Revenues from investor on-line services, including web-site
maintenance and digital dispatches, are recognized as the
services are provided.
<PAGE>
2. SIGNIFICANT ACCOUNTING PRINCIPLES, (CONTINUED)
(iv) Unearned revenue arises from cash received in advance of services
provided and is recorded as revenue when the services are
provided.
(c) INCOME TAXES
Income taxes are accounted for using the deferral method of income tax
allocation. Under this method, a provision for deferred income taxes
arises as a result of differences in the timing of income recognition
for financial statement and income tax purposes.
(d) CASH EQUIVALENTS
Cash equivalents consist of highly liquid investments that are readily
convertible to known amounts of cash and have maturity dates of three
months or less from date of purchase.
(e) SHORT-TERM INVESTMENTS
Short term investments consist of highly liquid investments that have
maturity dates greater than three months but less than one year from
date of purchase. Short-term investments are recorded at cost which
does not materially differ from fair value.
(f) INVESTMENTS
The Company's investments represent common shares of publicly listed
companies and are carried at the lower of cost or market. Investments
in common shares which are subject to trading restrictions for the next
year are classified as long-term investments.
(g) TRANSLATION OF FOREIGN CURRENCIES
The Company's functional and reporting currency is the Canadian dollar.
The Company's United States operations conducted during the year are
considered to be integrated operations for purposes of foreign currency
translation. Amounts stated in United States dollars are translated
into Canadian dollars as follows: monetary assets and liabilities are
translated at the exchange rate in effect at the balance sheet date;
non-monetary assets and liabilities are translated at the rate in
effect on the date of the transaction; revenues and expenses are
translated at average rates during the reporting period. Gains and
losses arising from the conversion of foreign currency balances and
transactions are reported in income as they occur.
<PAGE>
2. SIGNIFICANT ACCOUNTING PRINCIPLES, (CONTINUED)
(h) CAPITAL AND INTANGIBLE ASSETS
Capital and intangible assets are stated at cost less accumulated
depreciation.
(i) The following fixed assets are depreciated on a declining
balance basis at the following rates:
Computer equipment 30%
Office equipment 20%
(ii) Computer software is depreciated on a straight-line basis over
twelve months.
(iii) Leasehold improvements are depreciated on a straight-line
basis over their three year lease term.
(iv) Trademarks and other organization costs are depreciated on a
straight-line basis over five years.
(v) Development and maintenance costs of the corporate web-site
are expensed as incurred.
(i) SHARE CAPITAL
The Company records proceeds from the issuances of common shares net of
issue costs. Shares issued for other than cash consideration are valued
at the quoted price on the stock exchange on the date the agreement to
issue the shares was reached.
The Company has a stock-based compensation plan which is described in
note 8(c). No compensation expense is recognized for this plan when
stock or stock options are issued to directors or employees. Any
consideration paid by directors or employees on exercise of stock
options or purchase of stock is credited to share capital.
(j) FINANCIAL INSTRUMENTS
The carrying value of cash, short-term investments, marketable
securities, accounts receivable, long-term investments and accounts
payable and accrued liabilities approximate fair values due to their
short term nature. The fair value of long term investments is
disclosed in Note 4.
<PAGE>
2. SIGNIFICANT ACCOUNTING PRINCIPLES, (CONTINUED)
(k) USE OF ESTIMATES
The preparation of the financial statements in conformity with Canadian
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from these estimates.
(l) LOSS PER SHARE
The loss per share is computed using the weighted average number of
common shares outstanding during the reporting period. For periods
prior to the date of the reverse takeover, the weighted average number
of shares equals that proportion of the Stockscape Canada shares issued
at the date of transaction times the 10,000,000 common shares issued on
the transaction. Fully diluted loss per share is not presented as the
effect on basic loss per share would be anti-dilutive.
(m) COMPARATIVE FIGURES
Certain of the prior years comparative figures have been reclassified
to conform to the presentation adopted for the current year.
The Canadian Institute of Chartered Accountants established a new
standard for the presentation of cash flows and related information.
The Company has adopted the new standard during the year ended December
31, 1999 and has restated the comparative amounts and disclosures to
reflect the new standard.
3. BUSINESS COMBINATION
Effective July 9, 1999, Cornucopia Resources Ltd. ("Cornucopia") and
Stockscape Canada received all of the necessary approvals to complete
their agreements to merge. Cornucopia consolidated its shares, changed
its name to Stockscape, and issued 10,000,000 post-consolidation common
shares to the sole shareholder of Stockscape Canada in consideration
for all of its outstanding common shares on a one for one basis. Since
the former sole shareholder of Stockscape Canada obtained control of
the Company through the share exchange, this transaction has been
accounted for in these financial statements as a reverse takeover and
the purchase method of accounting has been applied. Under reverse
takeover accounting, Stockscape Canada is considered to have acquired
Cornucopia.
<PAGE>
3. BUSINESS COMBINATION, (CONTINUED)
Net assets acquired at fair values:
<TABLE>
<S> <C>
Cash $ 36,819
Marketable securities 229,465
Non-cash working capital (476,388)
Long-term investment 2,981,748
Resource property 1
--------------
$ 2,771,645
==============
Consideration assigned to common shares issued $ 2,771,645
==============
</TABLE>
Since, for accounting purposes, the continuing entity is deemed to be
Stockscape Canada, the share capital of the Company has been reduced by
$56,233,689, which amount results in an assigned value to share capital
after the transaction equal to that of Stockscape Canada immediately
prior to the transaction plus the value assigned to the consideration
issued on the transaction.
Supplementary financial information presenting the results of
operations and cash flows of Cornucopia for the period from January 1,
1999 to June 30, 1999 is presented below. This information covers the
period from the date following its most recent audited financial
statements presented to its shareholders to the quarter end immediately
prior to the effective combination date.
(a) CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 1
---------------------
TO JUNE 30, 1999
----------------
<S> <C>
REVENUE
Interest $ 9,788
General and administrative expenses (c) (677,479)
----------
LOSS BEFORE THE FOLLOWING (667,691)
Gain on sale of short-term investments 19,950
Gain on sale of subsidiary 217,321
----------
LOSS FOR THE PERIOD $ (430,420)
==========
</TABLE>
<PAGE>
3. BUSINESS COMBINATION, (CONTINUED)
(b) CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 1
---------------------
TO JUNE 30, 1999
----------------
<S> <C>
CASH PROVIDED BY (USED FOR)
OPERATIONS
Loss for the period $ (430,420)
Items not involving cash
Depreciation 17,520
Gain on sale of subsidiary (217,321)
Write-down of resource properties 4
--------------
(630,217)
Change in non-cash working capital items 513,690
--------------
(116,527)
Decrease in cash (116,527)
CASH, beginning of period 153,346
--------------
CASH, end of period $ 36,819
==============
(c) CONSOLIDATED SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
<CAPTION>
PERIOD FROM JANUARY 1
---------------------
TO JUNE 30, 1999
----------------
<S> <C>
Depreciation $ 17,520
Audit & legal 171,378
Consulting and management fees 149,522
Foreign Exchange 3,618
Investor and shareholder information 4,638
Listing and transfer fees 133,916
Office and miscellaneous 36,249
Rent 21,586
Salaries, wages and benefits 117,952
Travel 21,100
-------------
$ 677,479
=============
</TABLE>
<PAGE>
3. BUSINESS COMBINATION, (CONTINUED)
(d) RELATED PARTY TRANSACTIONS
During the period from January 1, 1999 to June 30, 1999, Cornucopia
paid a total of $108,000 to a company controlled by the president and
director of the Company in return for management services. In addition,
Cornucopia incurred legal fees of $97,227 to a legal firm of which a
director is a partner.
4. LONG TERM INVESTMENTS
In June 1999, Cornucopia completed the sale of a subsidiary to Great
Basin Gold Ltd., ("Great Basin"). The consideration received for this
sale was 2,750,000 common shares and 250,000 share purchase warrants of
Great Basin which are exercisable at $2.00 per share for a period of
one year from June 30, 1999. The closing market price of the Great
Basin common shares on June 30, 1999 was approximately $1.45 per share,
($0.98 US). An additional 25% discount has been applied to the carrying
value of these Great Basin common shares to reflect the restrictions
placed on their resale and voting rights. The total value attributable
to the common shares and purchase warrants was $2,981,748. The material
continuing restrictions on the rights attached to these shares are as
follows:
(i) The Company is entitled to sell, without restriction, up to 25,000
of the Great Basin shares in any thirty calendar day period or to
carry over any or all of that number of shares to the next thirty
calendar day period and thereafter for up to four such periods, so
that, in effect the Company may sell up to 100,000 Great Basin
shares during the last thirty days of a 120 calendar day period.
(ii) Notwithstanding the above, the Company is entitled to sell up to
100,000 Great Basin shares in any thirty calendar day period
provided that it first gives to Great Basin the right to cause
such shares to be acquired by a person designated by Great Basin
at a price at least equal to the five day average closing price of
Great Basin's shares on the five trading days before it received
such notice, less a 10% discount. If Great Basin does not exercise
that right, the Company is free to sell up to 100,000 Great Basin
shares for a period of forty-five days.
(iii) Under the terms of the agreement, Great Basin has an assignable
right to purchase Great Basin shares in excess of 2,000,000
(fully-diluted) held from time to time by the Company at a price
based on the five day average closing price of Great Basin's
shares, plus 10%, subject to a minimum price of $1.00 per share.
The agreement provides for adjustments to the price in the event
that the five day average closing price post-sale is more than a
specified percentage of the price paid.
<PAGE>
4. LONG TERM INVESTMENTS, (CONTINUED)
(iv) The Company has agreed to a voting trust in favour of Great Basin
management for a period of two years and has been given
representation on the board of directors of Great Basin.
(v) The Company will have the right to participate in future
financings of Great Basin in order to maintain its equity interest
if so desired.
The market value of the Great Basin common shares at December 31, 1999
was approximately $8,112,500 ($2.95 per share).
5. CAPITAL AND INTANGIBLE ASSETS
<TABLE>
<CAPTION>
1999 1998
Accumulated ---- ----
CAPITAL ASSETS Cost Depreciation Net Book Value
-------------- ---- ------------ --------------
<S> <C> <C> <C> <C>
Computer equipment $ 352,349 $ 69,091 $ 283,258 $ 79,599
Computer software 87,234 35,716 51,518 2,200
Office equipment 12,054 3,588 8,466 6,779
Leasehold improvements 13,430 8,258 5,172 6,736
--------- -------- --------- --------
$ 465,067 $116,653 $ 348,414 $ 95,314
========= ======== ========= ========
<CAPTION>
1999 1998
Accumulated ---- ----
INTANGIBLE ASSETS Cost Depreciation Net Book Value
----------------- ---- ------------ --------------
<S> <C> <C> <C> <C>
Trademarks $ 15,192 $ 5,121 $ 10,071 $ 8,270
Organization costs 1,257 - 1,257 -
--------- -------- --------- --------
$ 16,449 $ 5,121 $ 11,328 $ 8,270
========= ======= ======== ========
</TABLE>
6. RESOURCE PROPERTY
The Company holds an undivided 100% interest in certain mineral claims
on the Yakobi Island property located in Southeastern Alaska. This
property is carried at a nominal value of $1.
7. LONG-TERM DEBT
As at December 31, 1998, Stockscape Canada had a long-term loan
outstanding to its shareholder of $672,988. Additional advances
totaling $130,907 were made to Stockscape Canada during 1999. During
March, 1999 this loan plus accrued interest charged at 12% per annum
totaled $825,000 and was converted into 8,250,000 common shares of
Stockscape Canada.
<PAGE>
8. SHARE CAPITAL
(a) AUTHORIZED
100,000,000 Preferred Shares without par value, with rights to be
determined upon issue 200,000,000 Common Shares without par value
During 1999, the Company consolidated its authorized common share
capital on a 10 old for 1 new basis and subsequently increased its
authorized share capital to its pre consolidation level of 200,000,000
Common Shares
(b) ISSUED AND OUTSTANDING
<TABLE>
<CAPTION>
Number of
Stockscape.com Technologies (Canada) Ltd. Shares Amount
----------------------------------------- ------ ------
<S> <C> <C>
BALANCE AS AT OCTOBER 1, 1996 - $ -
Shares issued for cash 950,000 57,500
----------- ------------
BALANCE AS AT SEPTEMBER 30, 1997 AND 1998
AND DECEMBER 31, 1998 950,000 57,500
Shares issued for cash subscriptions 800,000 200,000
Shares issued on conversion of debt (Note 7) 8,250,000 825,000
----------- ------------
BALANCE AS AT JUNE 30, 1999, PRIOR TO THE ARRANGEMENT
WITH CORNUCOPIA RESOURCES LTD. (BELOW AND NOTE 3) 10,000,000 $1,082,500
========== ==========
</TABLE>
<PAGE>
8. SHARE CAPITAL, (CONTINUED)
All of the above outstanding common shares were exchanged into
post-consolidation Stockscape common shares on a 1 for 1 basis at time
of business combination, (see below).
<TABLE>
<CAPTION>
Number of
Stockscape.com Technologies Inc. Shares Amount
-------------------------------- ------ ------
<S> <C> <C>
BALANCE AS AT DECEMBER 31, 1997 38,556,040 $55,805,794
Issued for services 107,500 31,717
Issued for services 150,517 27,378
Issued for cash 2,777,777 368,800
---------- ------------
BALANCE AS AT DECEMBER 31, 1998 41,591,834 56,233,689
Consolidation of common shares on a
10 old for 1 new basis (37,432,651) -
----------- ------------
BALANCE AS AT JUNE 30, 1999, prior to business combination
4,159,183 56,233,689
Shares of Stockscape issued in exchange for shares
of Stockscape Canada, valued at the fair value of
the net tangible assets of Cornucopia prior to the
transaction (Note 3) 10,000,000 2,771,645
Adjustment to record business combination
Reduction in book value of the Company's share capital
to that of Stockscape Canada (Note 3) - (55,151,189)
----------- ------------
BALANCE, after business combination 14,159,183 3,854,145
Issued for cash due to private placement 4,000,000 1,952,687
Issued for cash on exercise of Series A Warrants 4,000,000 2,600,000
Issued for cash on exercise of Series B Warrants 3,358,000 3,190,100
Issued for cash on exercise of Stock Options 402,500 201,250
------------- ------- -------
BALANCE AS AT DECEMBER 31, 1999 25,919,683 $11,798,182
============= ===========
</TABLE>
<PAGE>
8. SHARE CAPITAL, (CONTINUED)
(c) STOCK OPTIONS
The Company has adopted a stock option plan that allows it to grant
options to its officers, directors, employees and consultants. The
exercise price of each option is determined by the board of directors,
but may not be less than the market price on the date on which the
option is granted. The number of share options granted is determined by
the board of directors with the aggregate number of share options
granted to any individual not to exceed 5% of the issued and
outstanding common shares of the Company. Options have a maximum term
of five years and terminate thirty days following the termination of
the optionee's employment, except in the case of retirement, death or
disability, in which case they terminate one year after the event. The
vesting period of options is determined at the time of granting at the
discretion of the board of directors. Once approved and vested, options
are exercisable at any time.
<TABLE>
<CAPTION>
Number Weighted-Average
of Shares Exercise Price
--------- --------------
<S> <C> <C>
Granted during the year 1,410,000 $ 0.54
Exercised (402,500) 0.50
----------- --------
Outstanding at December 31, 1999 1,007,500 $ 0.56
========= =======
Exercisable at December 31, 1999 872,500
==========
</TABLE>
<TABLE>
<CAPTION>
Number Number
Outstanding at Remaining Exercisable at
Exercise December 31, Contractual December 31,
Price 1999 Life 1999
-------- ------------------- ------------ --------------
<S> <C> <C> <C>
$0.50 872,500 4.5 years 872,500
$0.60 USD 135,000 5 years -
---------- ----------- -------------
1,007,500 872,500
========= =======
</TABLE>
(d) SHARE PURCHASE WARRANTS
<TABLE>
<CAPTION>
Number Exercise Price Expiry Date
----- -------------- -----------
<S> <C> <C>
175,000 $ 2.00 December 31, 2001
400,000 $ 0.50 July 12, 2004
-------
575,000
=======
</TABLE>
<PAGE>
8. SHARE CAPITAL, (CONTINUED)
(e) ESCROWED SHARES
The 10,000,000 common shares issued in exchange for Stockscape Canada
have been placed in escrow and are not subject to release so long as
trading restrictions exist under U.S. securities laws.
9. SEGMENTED INFORMATION
The Company operates in a single operating segment, being the
maintenance of an internet portal for investors. At December 31, 1999
all of the Company's material assets were held in Canada.
10. DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN CANADA
AND THE UNITED STATES
These financial statements have been prepared in accordance with
Canadian generally accepted accounting principles ("Canadian GAAP"). A
description of accounting principles that differ in certain respects
from United States generally accepted accounting principles ("U.S.
GAAP") follows:
(a) INCOME TAXES
Under the asset and liability method of United States Statement of
Financial Accounting Standards No. 109, ("SFAS 109"), deferred income
tax assets and liabilities are measured using enacted tax rates for the
future income tax consequences attributable to differences between the
financial statement carrying amount of existing assets and liabilities
and their respective tax bases. There is no effect of adopting the
provisions of SFAS 109 on the Company's financial statements as the
recognition criteria for deferred tax assets has not been met.
(b) STOCK-BASED COMPENSATION
The Financial Accounting Standards Board in the U.S. has issued
Financial Accounting Standards Board Statement No. 123, "Accounting for
Stock-Based Compensation". As permitted by the statement, the Company
has elected to continue measuring stock-based compensation costs for
employees using the intrinsic value based method of accounting.
Under the intrinsic value method, compensation cost is the excess, if
any, of the quoted market value of the stock at grant date over the
amount an employee or director must pay to acquire the stock. As the
exercise prices of options granted by the Company to employees and
directors approximate market value at the grant date, the Company has
determined that the adoption of this accounting policy for U.S. GAAP
purposes does not result in a Canadian/U.S. GAAP difference.
<PAGE>
10. DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN CANADA
AND THE UNITED STATES, (CONTINUED)
(b) STOCK-BASED COMPENSATION, (CONTINUED)
Stock options granted to non-employees for services rendered to the
Company are required to be accounted for based on the fair value of the
services provided or the consideration issued. As the Company has not
granted any stock options to non-employees during any of the periods
presented, the Company has determined that the adoption of this
accounting policy for U.S. GAAP purposes does not result in a
Canadian/U.S. GAAP difference.
(c) INVESTMENTS
Under Financial Accounting Standard No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" ("FAS 115") the Company's
investments in securities would be classified as available-for-sale
securities and carried at fair value. Unrealized holding gains and
losses on available-for-sale securities are excluded from earnings
under U.S. GAAP and reported as a net amount in a separate component of
shareholders' equity until realized.
Under practices proscribed by the Securities and Exchange Commission,
the Company would not apply a 25% discount to the carrying value of the
Great Basin equity securities received as consideration for the sale of
its wholly-owned subsidiary (Note 4).
(d) COMPREHENSIVE INCOME
The Financial Accounting Standards Board in the U.S. has issued
Financial Accounting Board Statement No. 130 ("FAS 130"), "Reporting
Comprehensive Income". This statement establishes standards for
reporting and display of comprehensive income and its components in
financial statements. Comprehensive income includes all changes in
equity during a period except those resulting from transactions and
other events and circumstances from owner sources. Under FAS 130,
unrealized holding gains and losses on available-for-sale securities
would be included as a component of comprehensive income.
(e) NEW ACCOUNTING STANDARDS
Effective for fiscal years beginning after June 15, 2000, the Financial
Accounting Standards Board Statement No. 133 ("FAS 133") "Accounting
for Derivative Instruments and Hedging Activity" is applicable for U.S.
GAAP purposes. FAS 133 established accounting and reporting standards
for derivative instruments and for hedging activities. As at December
31, 1999, the Company does not have any derivative instruments and,
therefore, believes that the adoption of FAS 133 would not have
resulted in a material Canadian/U.S. GAAP difference.
<PAGE>
10. DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN CANADA
AND THE UNITED STATES, (CONTINUED)
(f) RECONCILIATION
The effect of the differences between Canadian GAAP and U.S. GAAP on
the balance sheets and statements of operations and deficit are
summarized as follows:
<TABLE>
<CAPTION>
==================================================================================================
December 31, December 31,
1999 1998
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets under Canadian GAAP $ 10,333,300 $ 245,978
Adjustment for unrealized holding gain (note 10(c)) 4,125,000 -
Adjustment for discount on investments (Note 10(c)) 1,005,752 -
---------------- ---------
Assets under U.S. GAAP $ 15,464,052 $ 245,978
============= ==========
<CAPTION>
===================================================================================================
December 31, December 31,
1999 1998
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholders' equity, under Canadian GAAP $ 10,003,563 $ (582,740)
Adjustment for unrealized holding gain (note 10(c)) 4,125,000 -
------------- -----------
Shareholders' equity under U.S. GAAP $ 14,128,563 $ (582,740)
============= ============
<CAPTION>
===================================================================================================
Three months
Year ended ended Year ended
December 31, December 31, September 30,
1999 1998 1998
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net loss under U.S. GAAP $ (954,379) $ (83,329) $ (499,355)
Other comprehensive income:
Adjustment for unrealized holding
gain (Note 10(c)) 4,125,000 - -
--------- ---------- -----------
Comprehensive income (loss) $ 3,170,621 $ (83,329) $ (499,355)
============ =========== ============
</TABLE>
<PAGE>
11. INCOME TAXES
The Company has non-capital losses available in Canada of approximately
$12.1 million which may be carried forward and applied to reduce future
taxable income. If not utilized these losses will expire during the
years ended 2000 to 2006.
The Company also has net operating loss carry forwards for United
States income tax purposes of approximately $16 million USD which if
not utilized to reduce United States taxable income in future periods,
expires through 2011. These available tax losses may only be applied to
offset future taxable revenues from the Company's current US
subsidiaries and to offset specific types of revenues.
The potential tax benefits, if any, relating to these tax losses have
not been recorded in the accounts of the Company.
12. RELATED PARTY TRANSACTIONS
The following amounts represent totals paid to related parties of
Stockscape.com Technologies Inc. for the period July 1, 1999 to
December 31, 1999 and Stockscape Canada for the full calendar year of
January 1, 1999 to December 31, 1999.
(a) The Company paid a total of $66,972, (three months ended December 31,
1998 - nil; years ended September 30, 1998 and 1997 - nil), to a
company controlled by the president and director of the Company in
return for management services.
(b) A Company controlled by the Chief Financial Officer and a director of
the Company provides reception, accounting, administrative and
management services to the Company. During the year, the Company
incurred charges totaling $191,578, (three months ended December 31,
1998 - $14,490; year ended September 30, 1998 - $65,794, year ended
September 30, 1997 - $47,306), for these services of which $68,076 was
outstanding at year end (1998 - $17,934).
(c) The Company incurred legal fees totaling approximately $23,055, (three
months ended December 31, 1998 - nil; years ended September 30, 1998
and 1997 - nil), to a legal firm of which a director is a partner.
(d) The Company paid a total of $6,970, (three months ended December 31,
1998 - nil; years ended September 30, 1998 and 1997 - nil), to company
controlled by a director for foreign news release dissemination fees.
<PAGE>
12. RELATED PARTY TRANSACTIONS, (CONTINUED)
(e) As at December 1998, Stockscape Canada had an outstanding loan due to
its shareholder of $672,988. Additional advances were made by this
shareholder totaling $130,907 up to March of 1999. Interest of $21,105
(three months ended December 31, 1998 - $18,973; years ended September
30, 1998 and 1997 - $6,372) was accrued during this period with the
entire loan balance then converted into common shares of Stockscape
Canada at the option of this shareholder.
Subsequent to the conversion of this shareholder's long term loan, this
shareholder made additional short term advances to Stockscape Canada of
$102,500. This short-term loan plus accrued interest of $2,790 was
repaid in full during the year.
This same related party also made short term advances to Cornucopia
before the reverse takeover totaling $75,000 in order to fund its
operations. This short term loan plus accrued interest of $2,175 was
also repaid in full subsequent to the reserve takeover.
13. COMMITMENTS
The Company has the following commitments relating to lease
obligations. The future minimum lease payments are as follows:
<TABLE>
<CAPTION>
Year Payments
---- --------
<S> <C>
2000 $ 73,046
2001 49,810
2002 4,139
-------
$ 126,995
=========
</TABLE>
The Company has the right to purchase certain capital assets outright
at 10% of the original purchase price of the assets. This option must
be exercised three months before expiry of its corresponding lease.
14. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information is as follows:
Changes in non-cash working capital:
<TABLE>
<CAPTION>
=======================================================================================================
Three months
Year ended ended Year ended Year ended
December 31, December 31, September 30, September 30,
1999 1998 1998 1997
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Accounts receivable $ 15,656 $ (45,737) $ (10,002) $ (19,940)
Prepaid expenses 2,865 (1,208) (6,281) (1,431)
Accounts payable and accrued
liabilities (270,355) 23,923 66,324 10,259
Client deposits - (11,926) 11,926 -
Unearned revenue 12,033 (19,874) 75,098 -
------------ ----------- ---------- ----------
$ (239,801) $ (54,822) $ 137,065 $ (11,112)
============ =========== ========== ===========
</TABLE>
<PAGE>
14. SUPPLEMENTAL CASH FLOW INFORMATION, (CONTINUED)
<TABLE>
<CAPTION>
=======================================================================================================
Three months
Year ended ended Year ended Year ended
December 31, December 31, September 30, September 30,
1999 1998 1998 1997
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest paid $ 8,613 $ 18,973 $44,479 $ 832
Taxes paid - - - -
Non-cash investing and financing
activities:
Shares issued on business
combination, net of cash received 2,734,826 - - -
Shares issued for prior year's
cash subscriptions 200,000 - - -
Shares issued on long-term
debt conversion 825,000 - - -
Marketable securities received
in exchange for amounts owing - - 937 -
========================================================================================================
</TABLE>
15. SUBSEQUENT EVENTS
(a) Subsequent to December 31, 1999, the Company incorporated a new wholly
owned United States operating company, Stockscape Corporate
Communication USA, LLC, for the purpose of providing investor on-line
services to companies incorporated in the United States.
(b) The Company granted a total of 695,000 stock options to directors,
officers and employees. These options have an exercise price of $0.75
USD per option and have an expiry date of January 9, 2005.
(c) The Company issued 362,500 common shares for proceeds of $181,250.
<PAGE>
SIGNATURES
Pursuant to the requestments of Section 12 of the Securities Exchange Act of
1934, the Registrant certifies that it meets all of the requirements for filing
on Form 20-F and has fully caused this annual report to be signed on its behalf
by the undersigned, thereunto duly authorized.
STOCKSCAPE.COM TECHNOLOGIES INC.
Date: June 5, 2000 /s/ Andrew F. B. Milligan
------------------------- ----------------------------------------
Andrew F. B. Milligan
President & Chief Executive Officer
Director
Date: June 5, 2000 /s/ John J. Brown
------------------------- ----------------------------------------
John J. Brown
Chief Financial Officer
Director
