SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2000 and for the For the
quarter ended June 30, 2000
WSi INTERACTIVE CORPORATION
(Exact name of registrant as specified in its charter)
BRITISH COLUMBIA, CANADA 0-25860 NONE
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) Identification No.)
Suite 200 - 1200 West Pender Street, Vancouver, BC V6E 2S9
(Address of principal executive offices) (Zip code)
Issuer's telephone number: (604) 681-4911
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F
Form 20-F |X| Form 40-F |_|
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934
Yes |_| No |X|
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):
82- N.A.
<PAGE>
FORM 61
QUARTERLY REPORT
Incorporated as part of: |X| Schedule A
|_| Schedule B & C
ISSUER DETAILS:
NAME OF ISSUER WSI INTERACTIVE CORPORATION
ISSUER ADDRESS 200 - 1200 WEST PENDER STREET,
VANCOUVER, BRITISH COLUMBIA, V6E 2S9
ISSUER TELEPHONE NUMBER (604) 681-4911
CONTACT PERSON THEO SANIDAS
CONTACT'S POSITION PRESIDENT
CONTACT TELEPHONE NUMBER (604) 681-4911
FOR QUARTER ENDED JUNE 30, 2000
DATE OF REPORT SEPTEMBER 28, 2000
CERTIFICATE
THE SCHEDULES(S) REQUIRED TO COMPLETE THIS QUARTERLY REPORT ARE ATTACHED AND THE
DISCLOSURE CONTAINED THEREIN HAS BEEN APPROVED BY THE BOARD OF DIRECTORS. A COPY
OF THIS QUARTERLY REPORT WILL BE PROVIDED TO ANY SHAREHOLDER WHO REQUESTS IT.
PLEASE NOTE THIS FORM IS INCORPORATED AS PART OF BOTH THE REQUIRED FILING OF
SCHEDULE A AND SCHEDULES B & C.
"THEO SANIDAS" 00/10/03
---------------------------------- --------
NAME OF DIRECTOR SIGN (TYPED) DATE SIGNED (YY/MM/DD)
"MIKE DONALD" 00/10/03
---------------------------------- --------
NAME OF DIRECTOR SIGN (TYPED) DATE SIGNED (YY/MM/DD)
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
WSI INTERACTIVE CORPORATION
VANCOUVER, BRITISH COLUMBIA, CANADA
JUNE 30, 2000 AND 1999
1. AUDITORS' REPORT
2. CONSOLIDATED STATEMENTS OF EARNINGS AND DEFICIT
2. CONSOLIDATED BALANCE SHEETS
4. CONSOLIDATED STATEMENTS OF CASH FLOWS
5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
BEDFORD CURRY & CO.
CHARTERED ACCOUNTANTS
MICHAEL J. BEDFORD INC.
AUDITORS' REPORT
To the Shareholders of WSi Interactive Corporation
We have audited the consolidated balance sheets of WSi Interactive Corporation
as at June 30, 2000 and 1999 and the consolidated statements of earnings and
deficit and cash flows for the year ended June 30, 2000 and for the six months
ended June 30, 1999. 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 audits.
We conducted our audits in accordance with 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 June 30, 2000 and
1999 and the results of its operations and cash flows for the periods then ended
in accordance with generally accepted accounting principles in Canada. As
required by the British Columbia Company Act, we report that, in our opinion,
these principles have been applied on a consistent basis.
Vancouver, British Columbia, Canada BEDFORD CURRY & CO.
September 28, 2000 CHARTERED ACCOUNTANTS
<PAGE>
WSi Interactive Corporation
CONSOLIDATED STATEMENTS OF EARNINGS AND DEFICIT
Year ended June 30, 2000 and six months ended June 30, 1999
2000 1999
(12 Months) (6 Months)
--------------------------------------------------------------------------------
REVENUE [Note 13] .......................... $ 6,007,375 --
EXPENSES
Direct costs ............................... 3,405,916 --
General and administrative ................. 3,492,317 74,579
Amortization of capital assets ............. 702,125 --
--------------------------------------------------------------------------------
7,600,358 74,579
--------------------------------------------------------------------------------
Net loss before other items ................ (1,592,983) (74,579)
OTHER ITEMS
Write-off of license costs [Note 10] ....... (217,800) --
Write-off of goodwill ...................... -- (36,341)
--------------------------------------------------------------------------------
NET LOSS ................................... (1,810,783) (110,920)
Deficit, beginning of period [Note 1] ...... (22,823,995) (22,713,075)
--------------------------------------------------------------------------------
DEFICIT, end of period ..................... $(24,634,778) (22,823,995)
================================================================================
LOSS PER SHARE ............................. $ (0.05) (0.00)
================================================================================
<PAGE>
WSi Interactive Corporation
CONSOLIDATED BALANCE SHEETS
June 30, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents ...................................... $ 1,313,692 1,706,824
Accounts receivable ............................................ 2,364,938 300,532
Loans receivable [Note 3] ...................................... 350,000 --
Prepaid expenses ............................................... 198,073 45,956
------------------------------------------------------------------------------------------------------------
4,226,703 2,053,312
Capital assets [NOTE 4] ........................................... 2,517,852 217,586
Investments [NOTE 5] .............................................. 1,507,274 --
Deferred development costs [Note 6] .............................. 908,371 --
------------------------------------------------------------------------------------------------------------
$ 9,160,200 2,270,898
============================================================================================================
LIABILITIES
Current
Accounts payable and accrued expenses .......................... $ 1,646,752 257,941
Current portion of obligation under capital leases [NOTE 7] .... 18,422 --
------------------------------------------------------------------------------------------------------------
1,665,174 257,941
Obligation under capital leases [Note 7] .......................... 50,156 --
Amounts due to shareholder ........................................ -- 60,835
------------------------------------------------------------------------------------------------------------
1,715,330 318,776
SHAREHOLDERS' EQUITY
Share capital [Note 8] ............................................ 32,079,648 22,779,187
Share subscriptions ............................................... -- 1,996,930
Deficit ........................................................... (24,634,778) (22,823,995)
------------------------------------------------------------------------------------------------------------
7,444,870 1,952,122
------------------------------------------------------------------------------------------------------------
$ 9,160,200 2,270,898
============================================================================================================
</TABLE>
APPROVED ON BEHALF OF THE BOARD:
"THEO SANIDAS" "MIKE DONALD"
Director Director
<PAGE>
WSi Interactive Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended June 30, 2000 and six months ended June 30, 1999
2000 1999
(12 months) (6 months)
------------------------------------------------------------------------------
OPERATIONS
Net loss ............................................ $(1,810,783) (110,920)
Add (deduct) items not involving cash
Amortization of capital assets .................. 702,125 --
Write-off of license costs ...................... 217,800 --
Write-off of goodwill ........................... -- 36,341
Non-monetary exchanges [Note 13] ................ (2,228,625) --
------------------------------------------------------------------------------
(3,119,483) (74,579)
Net changes in non-cash working capital items:
Increase in accounts receivable ................. (2,064,406) (207,275)
Increase in accounts payable .................... 1,388,811 5,039
Increase in prepaid expenses and deposits ....... (152,117) --
------------------------------------------------------------------------------
(3,947,195) (276,815)
FINANCING
Issuance of share capital ........................... 7,303,531 5,000
Increase in obligations under capital leases ........ 68,578 --
Share subscriptions, net of issuance costs .......... -- 1,996,930
Decrease in amounts due to shareholder .............. (60,835) --
------------------------------------------------------------------------------
7,311,274 2,001,930
INVESTING
Purchase of capital assets .......................... (1,543,491) --
Purchase of investments ............................. (955,349) --
Increase in deferred development costs .............. (908,371) --
Increase in loans receivable ........................ (350,000) --
Acquisition of subsidiaries, net of bank indebtedness -- (32,808)
------------------------------------------------------------------------------
(3,757,211) (32,808)
------------------------------------------------------------------------------
Increase (decrease) in cash ......................... (393,132) 1,692,307
Cash and cash equivalents, beginning of period ...... 1,706,824 14,517
------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of period ............ $ 1,313,692 1,706,824
==============================================================================
<PAGE>
WSi Interactive Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended June 30, 2000 and six months ended June 30, 1999
1. NATURE OF OPERATIONS AND GOING CONCERN
WSi Interactive Corporation (the "Company"), incorporated in British Columbia,
Canada, has shares listed on the Canadian Venture Exchange (previously on the
Vancouver Stock Exchange) and on the OTC Bulletin Board in the United States.
Subsequent to the year end the Company obtained a listing on the third segment
of the Frankfurt Stock Exchange.
The Company is primarily engaged in the business of providing integrated
marketing, web services and business development services to both internet and
traditional businesses.
In June, 1999 the Company completed a reorganization which included changing its
name from JSS Resources Inc. and changing its fiscal year from December 31 to
June 30. It then acquired 100% of the shares of W.S.I. Management Group Inc.
("Management") pursuant to the transfer from existing shareholders of 15,000,000
common shares of the Company to the shareholders of Management, cash
consideration of $40 and a finders fee of 150,000 common shares. Management
owned all the issued and outstanding shares of Western Shores Direct Marketing
Group Inc., Medianet Solutions Inc. and Targetpacks Enterprises Corp. The
acquisitions were accounted for using the purchase method of accounting and
goodwill of $36,341 was written-off as the amount was considered immaterial and
not indicative of its economic value.
Prior to the acquisition of Management the Company had incurred losses of
$22,713,075 for the period from incorporation to June 30, 1999 from previous
business operations.
These consolidated financial statements have been prepared on the going concern
basis. The Company's ability to continue its operations and to realize assets at
their carrying values is dependent upon the continued support of its
shareholders, obtaining additional financing and generating revenues sufficient
to cover its operating costs in an industry characterized by rapid technological
change. There is no assurance that the Company will be successful in achieving
any or all of these objectives over the coming year and, accordingly, it is
possible that the company will be unable to continue as a going concern.
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation and basis of accounting - The consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries, D.N.S. Media.com Inc. and Stock Secrets Enterprises Ltd.
As at June 30, 1999, the Company's accounts included the wholly-owned
subsidiaries, W.S.I. Management Group Inc., Western Shores Direct Marketing
Group Inc., Targetpacks Enterprises Corporation and Medianet Solutions Inc. In
March of 2000, these subsidiaries were wound-up under the Company Act (British
Columbia) and continue to operate as divisions of the Company.
The Company's consolidated financial statements are prepared in accordance with
generally accepted accounting principles in Canada.
Cash and cash equivalents - The Company considers deposits in bank and
short-term investments with original maturities of three months or less to be
cash equivalents.
<PAGE>
WSi Interactive Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Year ended June 30, 2000 and six months ended June 30, 1999
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Capital assets - Capital assets are recorded at cost less accumulated
amortization. Amortization is provided over the estimated useful lives of the
assets using the following basis and annual rates:
Asset Basis Rate
--------------------------------------------------------------------------------
Computer software Straight-line 33% - 100%
Computer hardware Straight-line 33%
Office equipment, furniture
and fixtures Declining balance 20% - 30%
Automotive Declining balance 30%
Leasehold improvements Straight-line Over the term of the lease
and one renewal period.
One half of the above rates are used in the year of acquisition.
Investments - The Company makes investments in technology businesses. Such
investments, where the Company does not exert significant influence, have been
accounted for under the cost method whereby the investments are carried at cost.
When, in the opinion of management, the cost of an investment is permanently
impaired, the investment is written down to recognize the loss. Where the
Company does exert significant influence, investments are accounted for under
the equity method. Where the Company's initial investment is more than 20% but
where plans are in place for the investee to issue additional securities that
will dilute the ownership investment below 20%, such investments are accounted
for using the cost method.
Development costs - Development costs are expensed as incurred unless a product
meets generally accepted deferral criteria in accordance with generally accepted
accounting principles. The development costs consists primarily of labour costs
incurred in developing the Company's web businesses. Development costs are
amortized at the point that the product is available to the market and over its
estimated useful life.
Foreign currency translation and transactions - The Company's consolidated
financial statements are expressed in Canadian dollars. Monetary assets and
liabilities denominated in foreign currencies are translated into Canadian
dollars at the prevailing rates of exchange at the balance sheet date.
Non-monetary assets and liabilities are translated at historic exchange rates.
Revenues and expenses are translated into Canadian dollars at the rates of
exchange in effect at the related transaction dates. Exchange gains and losses
arising from translation of foreign currency items are included in the
determination of net income.
Use of estimates in the preparation of financial statements - The preparation of
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 disclosures of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenue and expenses for the period. Actual results could differ from those
estimates.
Revenue recognition - Revenue predominantly results from service-related
activities. Services can be on a time and materials basis or a fixed fee basis.
For fixed fee contracts, revenue is recognized on a percentage of completion
basis. For contracts that are on a time and materials basis, revenue is
recognized as the services are performed. Provisions for estimated losses on
contracts, if any, are recorded when identifiable.
<PAGE>
WSi Interactive Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Year ended June 30, 2000 and six months ended June 30, 1999
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Stock-based compensation - The Company has a stock-based compensation plan,
which is described in note 8. No compensation expense is recognized for this
plan when stock or stock options are issued to employees. Any consideration paid
by employees in exercise of stock options or purchase of stock is credited to
share capital.
Income taxes - Future income taxes relate to the expected future tax
consequences of differences between the carrying amount of balance sheet items
and their corresponding tax values. Future income tax assets, if any, are
recognized only to the extent that, in the opinion of management, it is more
likely than not that future income tax assets will be realized. Future income
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates at the date of enactment or substantive enactment.
Statement of cash flows - The Company has adopted the indirect method of
reporting cash flows, under which the net cash flow from operations is reported
by adjusting net income for the effects of non-cash items and changes in
non-cash working capital balances.
3. LOANS RECEIVABLE
Loans receivable includes a loan to E.R.S.S. Equity Retirement Savings Systems
Corp. in the amount of $200,000. The amount is due on demand and bears interest
at prime plus 1%.
Other loans aggregating $150,000 are due on demand and bear interest at rates
from 0% to prime plus 3%.
4. CAPITAL ASSETS
<TABLE>
<CAPTION>
Accumulated Net Book Value
Cost Depreciation 2000 1999
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Computer software [Note 13] ............... $1,791,406 475,250 1,316,156 61,095
Computer hardware ......................... 1,232,035 200,975 1,031,060 24,743
Office equipment, furniture and fixtures .. 146,612 21,700 124,912 131,748
Leasehold improvements .................... 29,524 1,100 28,424 --
Automotive ................................ 20,400 3,100 17,300 --
------------------------------------------------------------------------------------------------------------------
$3,219,977 702,125 2,517,852 217,586
==================================================================================================================
</TABLE>
Included in the June 30, 2000 amounts is computer hardware under capital leases,
having a cost of $77,804 (1999 - nil) and accumulated amortization of $11,670
(1999 - nil).
No depreciation was taken during the six months ended June 30, 1999 as the
assets were all acquired on that date.
<PAGE>
WSi Interactive Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Year ended June 30, 2000 and six months ended June 30, 1999
5. INVESTMENTS
2000
--------------------------------------------------------------------------------
Restaurant-Help.com, Inc. .................................. $ 364,725
Nerve Media Corporation .................................... 363,000
FlashCandy.com, Inc. ....................................... 255,000
HollywoodBroadcasting.com, Inc. ............................ 150,000
Digital Video Display Technology Corp. ..................... 108,000
Ariel Wireless Technologies Inc. ........................... 100,000
Other ...................................................... 166,549
--------------------------------------------------------------------------------
$1,507,274
================================================================================
There were no investments as at June 30, 1999.
Restaurant-Help.com, Inc. - On November 26, 1999 the Company entered into a
Letter of Intent to acquire a 25% (25,000 shares) interest in
Restaurant-Help.com, Inc. ("Restaurant"). In consideration for its interest the
Company provided services to build, manage and market the business of
Restaurant-Help.com. The services had a fair value of US $250,000. Restaurant
provides a resource web site for restaurants and employees in the restaurant
business.
Nerve Media Corporation - On March 20, 2000 the Company paid US $250,000 for a
12% interest (6,818 shares) of Nerve Media Corporation ("Nerve"). Nerve designs
multimedia marketing campaigns. Nerve is currently trying to raise new capital
to continue operations. The realization of this investment is dependent on their
success in this endeavour.
FlashCandy.com - On January 1, 2000 the Company entered into an agreement to
acquire a 25% interest in FlashCandy.com, Inc. ("FlashCandy"). In consideration
for its interest the Company provided web development services with a fair value
of $255,000 to FlashCandy. FlashCandy.com is in the business of developing a
greeting card web site.
HollywoodBroadcasting.com, Inc.- On June 30, 2000 the Company paid $150,000 for
166,667 shares, a nominal interest, of HollywoodBroadcasting.com, Inc. ("HBC").
HBC is in the business of creating, producing and distributing original
entertainment for the web by streaming video. The Company has been providing web
services to HBC.
Digital Video Display Technology Corp. - On January 20, 2000 the Company
acquired 75,000 common shares, a nominal interest, of Digital Video Display
Technology Corp. ("DVDT"). In consideration for its interest the Company
provided Internet services with a fair value of $108,000. The shares are
restricted from trading for one year from the date of issuance. DVDT shares
trade on the OTC Bulletin Board in the United States. As of June 30, 2000 they
had a value of $68,250
Ariel Wireless Technologies, Inc. - On May 8, 2000 the Company acquired a 40%
(66 shares) interest in Ariel Wireless Technologies, Inc. ("Ariel") for a cash
payment of $100,000. Ariel is in the wireless communications hardware and
software business. The investment complements the Company's interest in
broadband, rich media and convergence technologies. On August 21, 2000 Ariel
changed its name to Alphastream Wireless Inc.
<PAGE>
WSi Interactive Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Year ended June 30, 2000 and six months ended June 30, 1999
6. DEFERRED DEVELOPMENT COSTS
Deferred costs, beginning of period ............................... $ --
Add: Labour costs .............................................. 627,338
Domain name - Stocksecrets.com ............................ 187,500
Other costs ............................................... 93,533
--------------------------------------------------------------------------------
Deferred costs, end of period ..................................... $908,371
================================================================================
The Company has the following web businesses in development:
Stocksecrets.com .................................................. $325,577
HealthCreator.com ................................................. 188,431
Targetpacks.com ................................................... 161,086
Yourwinestore.com ................................................. 152,341
Shellco.com ....................................................... 61,529
Other ............................................................. 19,407
--------------------------------------------------------------------------------
$908,371
================================================================================
During the year ended June 30, 2000, there was no amortization charged to
operations on deferred development costs.
7. OBLIGATIONS UNDER CAPITAL LEASES
The Company has financed certain office equipment and computer hardware by
entering into capital lease arrangements.
Future minimum lease payments of the capital leases for the fiscal years ending
June 30 are as follows:
2001 ......................................................... $ 26,458
2002 ......................................................... 26,458
2003 ......................................................... 26,458
2004 ......................................................... 7,362
-------------------------------------------------------------------------------
Total minimum capital lease payments ......................... 86,736
Less imputed interest at rates averaging 12% ................. (18,158)
-------------------------------------------------------------------------------
Present value of capital lease payments ...................... 68,578
Less current portion ......................................... (18,422)
-------------------------------------------------------------------------------
$ 50,156
===============================================================================
<PAGE>
WSi Interactive Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Year ended June 30, 2000 and six months ended June 30, 1999
8. SHARE CAPITAL
The Company has authorized share capital of 100,000,000 common shares without
par value and 20,000,000 preferred shares with a par value of $0.001 per share.
The issued share capital consists of common shares as follows:
<TABLE>
<CAPTION>
2000 1999
----------------------------- -----------------------------
Number Amount Number Amount
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, beginning of period ............ 31,203,447 $ 22,779,187 31,020,114 $ 22,717,187
Shares issued for cash:
Special warrants .................... 5,250,000 1,996,930 -- --
Finder's fee ........................ -- -- 150,000 57,000
Warrants ............................ 5,337,334 4,367,057 33,333 5,000
Private placement ................... 3,031,000 1,800,130 -- --
Stock options ....................... 2,770,397 1,125,320 -- --
Performance shares .................. 3,000,000 30,000 -- --
Shares issued for other consideration:
Finder's fee ........................ 50,000 -- -- --
Cash share issuance costs ........... -- (18,976) -- --
-----------------------------------------------------------------------------------------------------------------
Balance, end of period .................. 50,642,178 $ 32,079,648 31,203,447 $ 22,779,187
=================================================================================================================
</TABLE>
Escrow Shares - There are 3,112,500 (1999: 112,500) shares held in escrow
subject to release only with regulatory approval.
Warrants - The Company has stock purchase warrants outstanding as follows:
<TABLE>
<CAPTION>
Outstanding Outstanding
Exercise June 30, June,
Price 1999 Granted Exercised 2000 Expiry date
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$0.17 500,334 -- (500,334) -- June 18, 2000
(a) $1.00/$1.15 -- 5,250,000 (3,912,000) 1,338,000 September 30, 2000
(b) $0.40/$0.46 -- 1,250,000 (925,000) 325,000 November 26, 2001
$0.91 -- 1,781,000 -- 1,781,000 June 2, 2002
-------------------------------------------------------------------------------------------------------------------
500,334 8,281,000 (5,337,334) 3,444,000
===================================================================================================================
</TABLE>
(a) On June 20, 2000, the terms of the warrants were amended commencing July
1, 2000 to extend the expiry date from June 30, 2000 to September 30, 2000
and to increase the exercise price from $1.00 to $1.15.
(b) The exercise price of the warrants prior to November 30, 2000 is $0.40.
The exercise price after December 1, 2000 is $0.46.
<PAGE>
WSi Interactive Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Year ended June 30, 2000 and six months ended June 30, 1999
8. SHARE CAPITAL (continued)
Stock Option Plan - On May 18, 1999 and by amendment dated June 25, 1999, the
Company established a stock option plan for employees, directors and
consultants, reserving a total of 7,200,000 shares. Under the plan, the exercise
price of each option equals the market price of the Company's stock on the last
business day prior to the date of the grant. An option's maximum term is five
years from the date of the grant. Options granted vest at various dates ranging
from the date of grant to the end of the eighteenth month from the date of
grant.
A summary of the change in the Company's stock options plan for the year ended
June 30, 2000 is presented below.
Weighted Average
Options Exercise Price
----------------------------------------------------------------------------
Outstanding, beginning of year ........ -- $ --
Granted ............................. 7,265,000 0.46
Exercised ........................... (2,770,397) 0.41
Cancelled or expired ................ (785,334) 0.63
----------------------------------------------------------------------------
Outstanding, end of year .............. 3,709,269 $ 0.47
============================================================================
The following table summarizes the information about stock options outstanding
and exercisable at June 30, 2000:
Options outstanding Options exercisable
-------------------------- ----------------------
Number Weighted
Exercise Outstanding Exercisable Average
Price At June 30, Expiry at June 30, Exercise
Per Share 2000 Date 2000 Price
-------------------------------------------------------------------------------
$0.50 1,738,735 July 12,2004 1,063,734
$0.35 1,175,000 July 30, 2004 450,000
$0.35 296,734 November 8, 2004 116,734
$0.52 315,400 December 21, 2004 114,500
$1.45 13,400 January 26, 2005 3,400
$1.10 170,000 June 8, 2005 33,333
-------------------------------------------------------------------------------
3,709,269 1,781,701 $0.47
===============================================================================
<PAGE>
WSi Interactive Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Year ended June 30, 2000 and six months ended June 30, 1999
9. RELATED PARTY TRANSACTIONS
Accounts receivable includes amounts due from an officer and a director of the
Company of $185,446, which was repaid after the year end (1999 - nil).
The Company entered into the following related party transactions with
individuals or companies that were controlled by directors or by officers of the
Company.
a) Legal fees of $199,721 (1999 - $48,472) were paid to a director of the
Company; b) Management fees of $162,465 were paid to an officer and director of
the Company; c) Consulting fees of $45,000 were paid to a director of the
Company; d) A business was acquired from a partnership, of which a partner was
an officer of the Company, for consideration of $20,134; and e) An automobile
was purchased from a director and officer of the company for $20,400.
10. WRITE-OFF OF LICENSE COSTS
On March 10, 2000 the Company entered into 6 letters of intent with Global
Communications, Inc. ("Global"). The letters of intent gave the Company the
right to purchase the exclusive marketing rights of Global products and certain
communication capabilities and information services for the licensed areas. In
consideration for entering into the agreements the Company paid non-refundable
fees aggregating US $150,000. Due to a dispute between Global and the Company,
management has decided not to pursue the licensing agreement and the fees were
written-off. The Company is evaluating its legal options in this matter.
11. INCOME TAXES
The company has non-capital losses for income tax purposes which may, subject to
certain restrictions, be available to offset future taxable income or taxes
payable. No benefit in respect of the future application of these losses has
been recognized in the financial statements. The tax losses expire as follows:
2001 $291,000
2002 $775,000
2003 $493,000
2005 $290,000
2006 $160,000
2007 $3,115,000
The Company also has $19,765,101 in capital losses which are available to be
applied against future capital gains without time limit.
<PAGE>
WSi Interactive Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Year ended June 30, 2000 and six months ended June 30, 1999
12. COMMITMENTS
The Company is committed to minimum annual lease payments under various
operating leases for certain office premises and equipment rentals.
Minimum annual lease payments for the fiscal years ending June 30 are as
follows:
2001 $ 635,136
2002 443,448
2003 56,776
2004 4,111
------------------------------------------------------------------------------
$ 1,139,471
==============================================================================
13. NON-MONETARY EXCHANGES
During the year the Company acquired a restricted license to certain computer
software source code and its underlying source code, for application in its
marketing web services businesses. In exchange for the source code, the Company
provided to the licensor certain of its custom data base information. The market
value of the database and computer software source code was considered by the
parties to be $1,458,900 and this amount is included in revenue and capital
assets as the exchange amount of the transaction. In addition, the Company also
provided various services in exchange for shares of certain companies in the
amount of $769,725. This exchange is recorded at the fair market value of these
services provided by the Company. Total non-monetary transactions amounted to
$2,228,625 for the year ended June 30, 2000 (1999 - nil).
14. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash equivalents,
accounts receivable, loans receivable, investments, accounts payable and accrued
expenses and obligations under capital lease.
It is management's opinion that the Company is not exposed to significant
interest, currency or credits risks on its financial instruments.
The fair values of cash and cash equivalents, accounts receivable, loans
receivable and accounts payable and accrued expenses approximate their carrying
amounts due to their relative short terms of maturity.
The fair value of investments in private companies is not readily determinable
because these investments are not publicly traded. The fair value of investments
in public companies is provided in Note 5.
The fair value of obligations under capital leases approximate their carrying
value because the rates used reflect current rates charged for similar leases.
<PAGE>
WSi Interactive Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Year ended June 30, 2000 and six months ended June 30, 1999
15. SEGMENTED INFORMATION
The Company has identified three separate operating segments:
Integrated marketing - This segment provides conventional and on line
direct marketing services.
Web services - This segment provides high-end web development and
advanced hosting services.
Investment and other - This segment includes business development
services, hardware sales and corporate costs.
<TABLE>
<CAPTION>
Integrated Web Investment &
June 30, 2000 Marketing Services Other Consolidated
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue .......................... $ 3,733,913 $ 1,823,954 $ 449,508 $ 6,007,375
Amortization of capital assets ... 217,439 484,686 -- 702,125
Segment profit (loss) ............ 843,294 (937,838) (1,716,239) (1,810,783)
Significant non-cash items ....... 1,458,900 769,725 -- 2,228,625
Capital asset additions .......... 477,999 1,065,492 -- 1,543,491
Total assets ..................... 4,681,211 2,670,465 1,808,524 9,160,200
================================================================================================================
</TABLE>
Geographic segments - The Company derives a majority of its business and revenue
from its segments in Canada.
16. CONTINGENCIES
A claim has been filed against the Company and its directors for damages of an
unspecified amount in the Supreme Court of British Columbia, Canada. The claim
alleges that the Company and its directors did not meet certain contractual
obligations with respect to a reorganization of the Company in June, 1999.
Management is of the opinion that the claim is without merit and plans to defend
the action.
Management has been notified of a possible claim to be filed against it by
Tech-Web Graphics Ltd. ("Tech"). Tech alleges that services of $77,077 were not
paid for Web design services. Management is of the opinion that the claim is
without merit.
17. SUBSEQUENT EVENTS
Stock options - Subsequent to the year-end 175,067 stock options were exercised
for proceeds of $66,226, and 39,200 options were cancelled. On September 5, 2000
542,500 stock options were granted at a price of $0.70 per share.
On July 14, 2000, subject to shareholder and Canadian Venture Exchange approval,
the Company established a second stock option plan for employees, directors and
consultants. A total of 5,000,000 shares are to be reserved under the second
stock option plan. The terms are the same as the 1999 plan, except that the
second plan requires a four-month hold period from the date the options are
granted. Canadian Venture Exchange approval was received on August 14, 2000.
Warrants - Subsequent to the year-end 250,000 warrants were exercised for an
aggregate consideration of $100,000.
<PAGE>
FORM 61
QUARTERLY REPORT
Incorporated as part of: |_| Schedule A
|X| Schedule B & C
ISSUER DETAILS:
NAME OF ISSUER WSI INTERACTIVE CORPORATION
ISSUER ADDRESS 200 - 1200 WEST PENDER STREET,
VANCOUVER, BRITISH COLUMBIA, V6E 2S9
ISSUER TELEPHONE NUMBER (604) 681-4911
CONTACT PERSON THEO SANIDAS
CONTACT'S POSITION PRESIDENT
CONTACT TELEPHONE NUMBER (604) 681-4911
FOR QUARTER ENDED JUNE 30, 2000
DATE OF REPORT OCTOBER 10, 2000
CERTIFICATE
THE SCHEDULES(S) REQUIRED TO COMPLETE THIS QUARTERLY REPORT ARE ATTACHED AND THE
DISCLOSURE CONTAINED THEREIN HAS BEEN APPROVED BY THE BOARD OF DIRECTORS. A COPY
OF THIS QUARTERLY REPORT WILL BE PROVIDED TO ANY SHAREHOLDER WHO REQUESTS IT.
PLEASE NOTE THIS FORM IS INCORPORATED AS PART OF BOTH THE REQUIRED FILING OF
SCHEDULE A AND SCHEDULES B & C.
"THEO SANIDAS" 00/10/10
-------------------------------------------- --------
NAME OF DIRECTOR SIGN (TYPED) DATE SIGNED (YY/MM/DD)
"MIKE DONALD" 00/10/10
-------------------------------------------- --------
NAME OF DIRECTOR SIGN (TYPED) DATE SIGNED (YY/MM/DD)
<PAGE>
Schedule B: Supplementary Information
1. TWELVE MONTHS TO JUNE 30, 2000
Breakdown of direct costs:
Labour .................................................. $1,318,117
Lists ................................................... 159,612
Mailing ................................................. 764,365
Printing ................................................ 307,992
Distribution ............................................ 25,848
Computer Hardware ....................................... 206,119
Media Placement ......................................... 482,029
Website Hosting and e-mail .............................. 90,509
Other ................................................... 51,325
==========
TOTAL ................................................... $3,405,916
Breakdown of General and Administrative Expenses:
Accounting and legal .................................... $ 450,361
Advertising and promotion ............................... 522,277
Automotive .............................................. 28,785
Bad debts provision ..................................... 68,670
Bank charges and interest ............................... 9,210
Brokerage fees/regulatory ............................... 67,304
Computer maintenance .................................... 36,039
Couriers and freight .................................... 13,486
Donations ............................................... 31,356
Education and training .................................. 16,846
Equipment lease ......................................... 98,075
Insurance ............................................... 3,267
Miscellaneous ........................................... 49,367
Office .................................................. 200,924
Office rent ............................................. 249,158
Salaries and consultants ................................ 1,189,927
Telephone ............................................... 127,777
Travel and entertainment ................................ 329,488
==========
TOTAL ................................................... $3,492,317
Related party transactions:
The aggregate amount of transactions made with parties not at arms-length
was $447,720, as detailed in Note 9 to the annual financial statements.
<PAGE>
2. QUARTER ENDED JUNE 30, 2000
(a) Securities issued during the quarter:
<TABLE>
<CAPTION>
Common Shares
Type of Issue Number of Shares Price Total Proceeds Type of Commission
Consideration Paid
<S> <C> <C> <C> <C>
Exercise Option 477,000 $0.35 $166,950 cash $0
Exercise Option 103,000 $0.50 $51,500 cash $0
Exercise of Warrants 425,000 $0.40 $170,000 cash $0
Exercise of Warrants 420,000 $1.00 $420,000 cash $0
Private Placement 1,781,000 $0.73 $1,300,130 cash $0
--------- ----------
Total 3,206,000 $2,108,580
Warrants:
Type of Issue Number of Shares Exercise Potential Type of Commission
Price Proceeds Consideration Paid
Private Placement 1,781,000 $0.91 $1,620,710 cash $0
(b) Options granted during the quarter:
Number of Shares Exercise Expiry Date
Price
170,000 $0.70 June 8, 2005
</TABLE>
3. AS AT JUNE 30, 2000
(a) Share capital:
Authorized: 100,000,000 Common Shares without par value
20,000,000 Preferred Shares with $0.001 par value
Issued: 50,642,178 Common Shares without par value
(b) Summary of options outstanding:
Number of Shares Exercise Expiry Date
Price
1,738,735 $0.50 July 12, 2004
1,175,000 $0.35 July 30, 2004
296,734 $0.35 November 8, 2004
315,400 $0.52 December 21, 2004
13,400 $1.45 January 26, 2005
170,000 $0.70 June 8, 2005
---------
3,709,269
=========
(b) Summary of warrants outstanding:
Number of Exercise Expiry Date
Warrants and Price
Shares
(1)1,338,000 $1.15 September 30, 2000
325,000 $0.40 November 26, 2000
or $0.46 November 26, 2001
1,781,000 $0.91 June 2, 2002
---------
3,444,000
=========
(1) On June 20, 2000, CDNX approved an amendment to the terms of
these warrants to extend the expiry date from June 30, 2000 to
September 30, 2000 and increase the exercise price from $1.00
to $1.15.
(c) Escrow shares: 3,112,500 subject to release only by regulatory approval.
(d) List of directors:
Theo Sanidas
Mike Donald
Marcus New
<PAGE>
SCHEDULE C:
WSi generates revenue by marketing and selling products and services based on
its core competencies of integrated marketing, web and business development
services and its investments in content and infrastructure Internet related
businesses.
The first year under the new company structure has been extremely active; WSi
has achieved rapid growth and gained a wealth of valuable experience. By
identifying and investing in strategically complementary businesses, WSi has
levered its core strengths to build a network of businesses that are either
wholly owned subsidiaries or held in partnership.
WSi has been streamlining the organization to improve communication, increase
efficiency and reduce expenses. Currently WSi has a workforce of sixty-three
people committed to the company's success.
Significant investment has been made in building a technology data centre. The
data centre delivers state-of-the-art reliability, ironclad security, and
scalable capacity to meet the escalating demands of e-business activities. The
facility will be used specifically for Web technologies, Web hosting
applications, data warehousing and the latest in streaming video technologies.
This data centre/ISP is capable of handling 750 million hits per day and 9,000
simultaneous on-demand video streams. Due to the immense, scalable capabilities
of the data centre, WSi is actively seeking partners to fully utilize this
resource.
WSi's objective for fiscal 2000-2001 is to increase revenues by focusing the
company's efforts on core business sales with its increased sales force.
Reducing general and administrative costs will also be a priority for the year.
WSi is aggressively seeking opportunities to acquire undervalued competitors
that will complement and enhance its core divisions.
During the quarter, WSi raised $1.3 million in the form of a non-brokered
private placement.
In April, 2000 WSi announced that it had formed an alliance with IBM Canada Ltd.
Under this arrangement, IBM will submit business plans to WSI's incubation
program and will provide hardware, software and services to selected start up
projects. WSi will be given access to IBM's Industry Solutions Lab, be
registered in IBM's Service Provider Business Partner Program, and become an
official IBM reseller.
During the quarter, WSi signed an agreement to launch an Internet business
through a strategic alliance with RG Diamonds Inc., of Chicago, Illinois. This
e-commerce based business is designed to become the leading online supplier of
replacement diamonds and jewelry in both the business and consumer marketplace.
The parties are currently in the early stage of development of a website under
the name "diamondreplacement.com".
In April, 2000 WSi started a new division, DNSMedia, Inc., a full-services media
streaming solutions company which will service the broadcast markets in the
United States and Canada.
WSi holds a 40% interest in AlphaStream Wireless Inc. (formerly called Ariel
Wireless Technologies Inc.), During the quarter, Petra Resource Corp., a CDNX
listed company, announced an agreement to acquire all of the issued shares of
AlphaStream in exchange for 6,000,000 shares of Petra. Upon completion of the
acquisition, WSi will be issued 2,400,000 shares of Petra and Theo Sanidas,
President of WSi will become a director of Petra.
In March, 2000 WSi announced a letter of intent for the acquisition of exclusive
rights to a broadband telecommunications system from Global Communications Inc.
The Board of Directors has decided not to proceed with this transaction. WSi is
currently looking for other opportunities in the broadband and wireless sectors.
<PAGE>
WSi formed a business alliance with eReservation Systems Inc. whereby WSi will
facilitate eReservation going public through its acquisition by Techgroup
Ventures Inc., a CDNX capital pool company. WSi will be issued 642,000 shares as
a finder's fee. The business of eReservation is the development of a website to
provide commercial services to the travel and leisure industry focusing on
electronic transaction fee processing and on-line reservation services for golf
courses and resorts throughout the world.
The following events occurred subsequent to the quarter end:
1. WSi announced the acquisition of a 50.1% interest in iaNett.com Internet
Technologies Ltd., a developer of Internet searching solutions. On August
11, 2000, iaNett announced a strategic alliance with ClickHouse.com Online
Inc., a leader among online banner advertising network companies. IaNett
announced the launch of its newly developed Theme Based Search Engine on
September 7, 2000.
2. WSi entered into an investor relations services agreement with CEOcast,
Inc. of New York to provide investor relations services in the US.
Compensation is US $5,000 per month.
3. Marcus New, founder, Chairman and CEO of Stockgroup.com was appointed as a
director of the Company. Randy Buchamer and James L. Harris resigned as
directors. Mr. Harris will continue in his role as the corporate
secretary. Mr. Buchamer has increased his involvement in the Company's
operations and is currently engaged on a full time basis.
4. WSi secured a listing on the Third Segment "Freiverkehr" of the Frankfurt
Stock Exchange trading under the symbol "WSJ". The German Securities
Identification number, or WKN, is 929348.
5. Formed a new website, Shellco.com for WSi's Internet business development
unit.
6. Announced new stock option plan (2000 Plan) on July 14, 2000 pursuant to
which options to purchase up to 5,000,000 shares of the Company may be
granted. The 2000 Plan has now received CDNX approval, subject to
disinterested shareholder approval at the Company's Annual General and
Special Meeting scheduled for November 20, 2000.
7. In August, 2000, WSi filed a statement of claim in the Supreme Court of
British Columbia to recover a loan of $200,000 made to ERSS Equity
Retirement Savings System Corp. by a subsidiary of WSi and consequential
damages. The action is being defended and is presently pending.
8. WSi and IBM hosted an Internet Incubation Seminar in Vancouver on
September 19, 2000.
9. On September 29, 2000, the Company announced the completion of a
world-class technology data centre. The data centre delivers
state-of-the-art reliability, ironclad security, and scalable capacity to
meet the escalating demands of e-business activities. This facility will
be used specifically for Web technologies, Web hosting applications, data
warehousing and the latest in streaming video technologies. The data
centre is strategically located at Harbour Centre, the central Internet
hub for Vancouver.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 18, 2000
WSi INTERACTIVE CORPORATION
(Registrant)
By:/s/ THEO SANIDAS
Name: Theo Sanidas
Title: President
