U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NEWSGURUS.COM, INC.
(Formerly Annex Business Resources, Inc.)
(exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
2741
(Primary Standard Industrial Classification Code Number)
98-0204280
(I.R.S. Employer Identification Number)
5774 Deadpine Drive, Kelowna, British Columbia, V1P 1A3 Canada
(Address of Registrant's principal executive offices)
Gerald R. Tuskey, Personal Law Corporation
Suite 1000, 409 Granville Street
Vancouver, British Columbia, V6C 1T2 Canada
Telephone: (604)681-9588
Facsimile: (604)688-4933
(Name, Address and Telephone Number of Agent for Service)
TWO MILLION UNITS OFFERED BY THE COMPANY AT $2.00 PER UNIT, EACH UNIT BEING
COMPRISED OF ONE SHARE AND ONE WARRANT TO ACQUIRE ONE ADDITIONAL COMMON SHARE AT
$2.00 PER SHARE FOR SIX MONTHS FOLLOWING ACCEPTANCE OF THIS REGISTRATION
STATEMENT AND AT $2.50 PER SHARE FOR THE PERIOD WHICH IS SEVEN TO TWELVE MONTHS
FOLLOWING ACCEPTANCE OF THIS REGISTRATION STATEMENT AND AN ADDITIONAL 11,533,500
SHARES OFFERED BY SELLING STOCK HOLDERS WHICH MAY BE SOLD IF THE COMPANY'S
SHARES BECOME QUOTED OR LISTED ON AN EXCHANGE OR QUOTATION SERVICE
Approximate date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS AMOUNT PROPOSED PROPOSED AMOUNT OF
OF SECURITIES TO BE MAXIMUM MAXIMUM REGISTRATION
TO BE REGISTERED REGISTERED OFFERING PRICE AGGREGATE FEE
PER SHARE (1) OFFERING PRICE (2)
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Common Stock, $0.001 par value 4,000,000 $2.50 $9,000,000 $2376.00
- -----------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee and
pursuant to Rule 457.
(2) Assumes subscription for 2,000,000 shares at $2.00 per share and 2,000,000
shares at $2.50 per share on exercise of warrants.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
PART I - INFORMATION REQUIRED IN PROSPECTUS
Cross Reference Sheet Showing the Location in Prospectus of Information Required
by Items of Form SB-2:
ITEM NO. REQUIRED ITEM LOCATION OF CAPTION IN PROSPECTUS
- -------- ------------- ---------------------------------
1. Forepart of the Registration Statement and Cover Page; Outside Front Page of Prospectus
Outside Front Cover of Prospectus
2. Inside Front and Outside Back Cover Pages Inside Front and Outside Back Cover Pages of
of Prospectus
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Prospectus Summary - Determination of
6. Dilution Dilution
7. Selling Security Holders Selling Stockholders
8. Plan of Distribution Plan of Distribution
9. Legal Proceedings Legal Proceedings
10. Director, Executive Officer, Management and Management
Promoters and Control Persons
11. Security Ownership of Certain Beneficial Principal Shareholders
Owners and Management
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Not Applicable
i
14. Disclosure of Commission Position on Indemnification of Officers and Directors
Indemnification for Securities Act
Liabilities
15. Organization within Last Five Years Management, Certain Transactions
16. Description of Business Business
17. Management's Discussion and Analysis or Plan of Operation
Plan of Operation
18. Description of Property Description of Property
19. Certain Relationships and Related Certain Transactions
Transactions
20. Market for Common Equity and Related Prospectus Summary, Market for Our Common
Stockholder Matters Stock; Shares Eligible for Future Sale
21. Executive Compensation Executive Compensation
22. Financial Statements Financial Statements
23. Changes in and Disagreements with Changes in and Disagreements with
Accountants on Accounting and Financial Accountants on Accounting and Financial
Disclosure Disclosure
PART II
24. Indemnification of Directors and Officers Indemnification of Directors and Officers
25. Other Expenses of Issuance and Distribution Other Expenses of Issuance and Distribution
26. Recent Sales of Unregistered Securities Recent Sales of Unregistered Securities
27. Exhibits Exhibits
28. Undertakings Undertakings
ii
INITIAL PUBLIC OFFERING PROSPECTUS
NEWSGURUS.COM, INC.
TWO MILLION UNITS OFFERED BY THE COMPANY AT $2.00 PER UNIT, EACH UNIT BEING
COMPRISED OF ONE SHARE AND ONE WARRANT TO ACQUIRE ONE ADDITIONAL COMMON SHARE AT
$2.00 PER SHARE FOR SIX MONTHS FOLLOWING ACCEPTANCE OF THIS REGISTRATION
STATEMENT AND AT $2.50 PER SHARE FOR THE PERIOD WHICH IS SEVEN TO TWELVE MONTHS
FOLLOWING ACCEPTANCE OF THIS REGISTRATION STATEMENT AND AN ADDITIONAL 11,533,500
SHARES OFFERED BY SELLING STOCK HOLDERS WHICH MAY BE SOLD IF THE COMPANY'S
SHARES BECOME QUOTED OR LISTED ON AN EXCHANGE OR QUOTATION SERVICE
We currently provide Internet users with access to expert opinion and
information in the areas of money, health and lifestyle. Our common stock is not
quoted on any exchange or by any quotation service. If this prospectus is
accepted for filing by the U.S. Securities and Exchange Commission, the Company
will apply for a listing of its common stock on the OTC Bulletin Board. There is
no guarantee that the Company's shares will ever be listed on any exchange or by
any quotation service and existing shareholders of the Company and any person
who buys shares from the Company may never be able to re-sell their shares.
We are offering these securities through our president, Mr. Chris Bunka, without
the use of a professional underwriter. We will not pay commissions on stock
sales. In the event the Company elects to engage a professional underwriter, we
will file an amendment to this prospectus disclosing terms of the engagement.
This is our initial public offering, and no public market currently exists for
our shares. The offering price may not reflect the market price of our shares
after the offering.
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THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY
IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING ON PAGE 5.
----------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------------------------------------
Offering Information
PER UNIT TOTAL
Initial public offering price $2.00 $4,000,000
Underwriting discounts/commissions (1) $Nil $Nil
Estimated offering expenses (1) $Nil $Nil
Net offering proceeds to Newsgurus.com, Inc. $2.00 $4,000,000 (1)
(1) Does not include offering costs, including filing, printing, legal,
accounting, transfer agent and escrow agent fees estimated at $100,000. We
will pay these expenses.
(2) Does not include any proceeds which may be received by our company on the
exercise of warrants.
In addition to the 2,000,000 units offered for sale by the Company, the persons
named in this Prospectus under the caption "Selling Stockholders" are offering a
total of 11,533,500 shares of our common stock for sale to the public. We will
receive no part of the proceeds of any sales by the Selling Stockholders. All
selling and other expenses incurred by the Selling Stockholders will be paid by
the Selling Stockholders.
The date of this Prospectus is May 31, 2000
TABLE OF CONTENTS
PROSPECTUS SUMMARY................................................................................................3
SUMMARY FINANCIAL INFORMATION.....................................................................................3
RISK FACTORS......................................................................................................5
DILUTION..........................................................................................................7
USE OF PROCEEDS...................................................................................................8
CAPITALIZATION....................................................................................................9
DESCRIPTION OF BUSINESS..........................................................................................10
Principal Products or Services and Their Markets..............................................................10
Distribution Methods of the Products or Services..............................................................11
Competitive Business Conditions and Our Competitive Position in the Industry..................................12
Names of Principal Suppliers of Content on Our Web Site.......................................................16
Estimate of the Amount Spent During Each of the Two Last Fiscal Years on Research and Development Activities..17
Number of Total Employees and Number of Full Time Employees...................................................17
Material Contracts............................................................................................17
Reports to Security Holders...................................................................................18
PLAN OF OPERATION................................................................................................19
DESCRIPTION OF PROPERTY..........................................................................................21
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...................................................21
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.....................................................22
EXECUTIVE COMPENSATION - REMUNERATION OF DIRECTORS AND OFFICERS..................................................23
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................................................................24
LEGAL PROCEEDINGS................................................................................................24
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.........................................................24
Market Price..................................................................................................24
Holders.......................................................................................................25
Penny Stock Regulation........................................................................................26
Dividends.....................................................................................................27
Transfer Agent................................................................................................27
DETERMINATION OF OFFERING PRICE..................................................................................27
SELLING STOCKHOLDERS.............................................................................................28
DESCRIPTION OF SECURITIES........................................................................................29
SHARES ELIGIBLE FOR FUTURE RESALE................................................................................30
WHERE CAN YOU FIND MORE INFORMATION?.............................................................................31
PLAN OF DISTRIBUTION.............................................................................................31
LEGAL MATTERS....................................................................................................33
EXPERTS..........................................................................................................33
INTEREST OF NAMED EXPERTS AND COUNSEL............................................................................33
INDEMNIFICATION OF OFFICERS AND DIRECTORS........................................................................33
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES..............................33
FINANCIAL STATEMENTS............................................................................................F-1
2
PROSPECTUS SUMMARY
THIS SUMMARY IS QUALIFIED BY MORE DETAILED INFORMATION APPEARING ELSEWHERE IN
THIS PROSPECTUS, WHICH EXPANDS DISCLOSURE WITH RESPECT TO EACH OF THE MATTERS
SUMMARIZED IN THIS PROSPECTUS AS WELL AS OTHER MATTERS NOT SPECIFIED IN THE
SUMMARY. YOU SHOULD CAREFULLY REVIEW THE ENTIRE CONTENTS OF THE PROSPECTUS AND
THE EXHIBITS INDIVIDUALLY AND WITH YOUR OWN TAX, LEGAL AND BUSINESS ADVISORS.
Address and Telephone Our address is Suite 5774 Deadpine Drive,
Number of the Company: Kelowna, British Columbia, V1P 1A3 Canada;
our telephone number is (250)765-6424.
Business of the Company: The Company seeks to become an internet
based media company providing expert opinion
and information in the areas of money,
health and lifestyle. The Company will offer
both free and fee-based content within a
community interface that builds loyalty from
users and encourages e-commerce at the
Company's website.
State and Date of Organization of The Company was incorporated pursuant to the
the Company: provisions of the General Corporation Law of
the State of Nevada on May 16, 1997.
The Shares offered by the Company: The Company is offering 2,000,000 of its
common shares for sale to the public at
$2.00 per share and 2,000,000 shares for
sale at $2.50 per share.
The shares offered by the Selling The 11,533,500 shares offered by the Selling
Stockholders: Stockholders have already been issued by the
Company or are issuable on exercise of
options or warrants. The Company will not
receive any proceeds from the sale of shares
being offered by the Selling Stockholders
SUMMARY FINANCIAL INFORMATION
The table below contains certain summary historical financial data. The
historical financial data for the period ended February 29, 2000 has been
derived from our audited financial statements which are contained in this
Prospectus.
3
February 29, 2000
INCOME STATEMENT:
February 29, 2000
(Audited)
Revenue $Nil
Expenses $55,718.00
Net Income (loss) ($55,718.00)
Basic Earnings (loss) per share ($0.01)
Basic Number of Common Shares Outstanding 9,011,500
BALANCE SHEET (at end of period)
Total Assets $93,203.00
Total Liabilities $31,981.00
Total Shareholders Equity (Net Assets) $61,222.00
Net Income per share on a fully diluted basis ($0.01)
Expiration Date
This offering will expire 12 months from the date of this prospectus. There is
no minimum number of securities that must be sold in the offering. The offering
may be extended for an additional 90 days in our discretion.
Determination of Offering Price
The offering price of $2.00 per share for the shares has been arbitrarily
determined by us. This price bears no relation to our assets, book value, or any
other customary investment criteria, including our prior operating history.
Among factors considered by us in determining the offering price were:
Estimates of our business potential
Our limited financial resources
The amount of equity desired to be retained by present shareholders
The amount of dilution to the public
The general condition of the securities markets
4
RISK FACTORS
In addition to the other information specified in this Prospectus, the following
risk factors should be considered carefully in evaluating our business before
purchasing any of our common stock. A purchase of our common stock is
speculative in nature and involves numerous risks. No purchase of our common
stock should be made by any person who cannot afford to lose his or her entire
investment.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY. PROSPECTIVE PURCHASERS
OF SHARES MUST BE PREPARED FOR THE POSSIBLE LOSS OF THEIR ENTIRE INVESTMENTS.
THE ORDER IN WHICH THE FOLLOWING RISK FACTORS ARE PRESENTED IS ARBITRARY, AND
PROSPECTIVE PURCHASERS OF SHARES SHOULD NOT CONCLUDE, BECAUSE OF THE ORDER OF
PRESENTATION OF THE FOLLOWING RISK FACTORS, THAT ONE RISK FACTOR IS MORE
SIGNIFICANT THAN THE OTHER RISK FACTORS.
"Forward looking statements" can be identified by the use of forward-looking
terminology such as "believes", "could", "possibly", "probably", "anticipates",
"estimates", "projects", "expects", "may", "will", or "should". Such statements
are subject to certain risks, uncertainties and assumptions. No assurances can
be given that the future results anticipated by the forward looking statements
will be achieved. You should not place undue reliance on these forward looking
statements, which apply only as of the date of this Prospectus.
We have a very limited operating history upon which you can evaluate our
business. Anyone who is considering a purchase of our common stock must consider
that our business is speculative. We can give no assurance that unanticipated
technical or other problems will not occur which would result in material delays
in accomplishing our business plan. We can give no assurance that we will be
able to achieve profitable operations.
Our company may be unable to attract enough contributing writers to provide
content for our web site. Our possible inability to develop exclusive content on
our web site could have a negative impact on our ability to be profitable.
The ownership of our company's common shares is concentrated in the hands of
management and in the hands of contributing editors. This concentration gives
current management strong control over the affairs and business decisions of our
company.
Our industry is intensely competitive and we expect the competition to increase.
We have a lot of competition which includes, but is not limited to
TheStreet.com; Stockgroup.com; CNBC.com; Reuters.com; and others.
Many of our existing competitors have longer operating histories in the Web
market, greater name recognition, larger customer bases and databases and
significantly greater financial, technical and marketing resources. Competitors
may be able to undertake more extensive marketing campaigns, adopt more
aggressive pricing policies and make more attractive offers to potential
employees, distribution partners, advertisers and content providers. We can give
no assurance that our competitors will not develop financial, health and
lifestyle services that are equal or superior to ours or that achieve greater
market acceptance than ours in the areas of name recognition, performance, and
ease of use. We can give no
5
assurance that other Web content providers will not be perceived by advertisers
as having more desirable Web sites for placement of advertisements. In addition,
a number of our competitors have established collaborative relationships with
other Web content providers. Accordingly, we can give no assurance that we will
be able to retain advertisers or maintain or increase users on our network or
that competitors will not experience greater growth in the number of users than
we do. We can give no assurance that we will be able to compete successfully
against our current or future competitors.
We will rely on use of computer and telecommunications infrastructure provided
by third parties. Our success will depend on our continued investment in
sophisticated telecommunications and computer systems and computer software. We
anticipate making significant investments in the acquisition, development and
maintenance of such technologies and we believe that such expenditures will be
necessary on an on-going basis. Computer and telecommunication technologies are
evolving rapidly and are characterized by short product lifecycles, which
requires us to anticipate technological developments. We can give no assurance
that we will be successful in anticipating, managing or adopting such
technological changes on a timely basis or that we will have the resources
available to invest in new technologies. Our business is dependent on our
computer and telecommunications equipment and software systems, the temporary or
permanent loss of which, through physical damage or operating malfunction, could
have a material adverse effect on our business. Operating malfunctions in the
software systems of financial institutions, market makers and other parties
might have an adverse affect on our operations. We depend on service provided by
various local and long distance telephone companies. A significant increase in
the cost of telephone services that is not recoverable through an increase in
the price of our services, or any significant interruption in telephone
services, could have a material adverse effect on our business. Additionally, as
we continue to introduce new services that use new technologies, we may be
required to license technology from third parties. There can be no assurance
that these licenses will be available on commercially reasonable terms, if at
all. Our inability to obtain any of these licenses could result in delays or
reductions in the introduction of new services or could adversely affect our
existing business.
We will rely on use of the Internet. If the Internet continues to experience
significant growth in the number of users, we can give no assurance that the
Internet will continue to be able to support the demands placed upon it or that
the performance or reliability of the Web will not be adversely affected by
continued growth. In addition, the Internet could lose its viability due to
delays in the development or adoption of new standards required to accommodate
increased Internet activity, or due to increased governmental regulation. If the
Internet infrastructure does not effectively support growth that may occur, our
business would be materially and adversely affected.
We are subject to regulatory and related influences. The Internet is subject to
changing political, economic and regulatory influences, any of which could have
a material adverse effect on our business. Certain proposals to reform the
telecommunications and Internet systems are periodically considered by the
appropriate regulators. These proposals could increase government involvement in
Internet services and otherwise change the operating environment
6
for our customers. We cannot predict what impact, if any, such factors might
have on our business.
We are subject to market forces beyond our control. Many Internet financial,
health and lifestyle service providers are consolidating to create Internet
service delivery systems with greater regional market power. As a result, these
systems could have greater bargaining power, which may result in lower prices
for our products. Our failure to maintain adequate prices would have a material
adverse effect on our business. Changes in current Internet financial, health
and lifestyle service reimbursement systems could result in the need for
unplanned product enhancements, in delays or cancellations, or in the revocation
of endorsement of our services. Our results of operations may vary from period
to period due to a variety of factors, including our research and development,
our introduction of new products or services, cost increases from third-party
service providers, changes in marketing and sales expenditures, acceptance of
our products and services, competitive pricing, unforeseen marketing and
promotional expenses, unforeseen negative publicity, competition and general
economic and industry conditions that affect demand.
We have future capital needs and there is uncertainty of additional funding.
There can be no assurance that we will be able to obtain additional financing on
acceptable terms, or at all. We have expended, and will continue to expend in
the future, substantial funds on research and development. If we fail to obtain
additional financing, we will have to limit or eliminate our research and
development activities, or reduce or eliminate our marketing programs, either of
which would have a material adverse effect on our ability to compete.
Our success will depend on our ability to retain key personnel. Our success will
depend on our ability to retain our key personnel and identify, hire and retain
additional qualified personnel. There is intense competition for qualified
personnel in our industry, and there can be no assurance that we will be able to
continue to attract and retain such personnel necessary for the development of
our business. Because of the intense competition, we can give no assurance that
we will be successful in adding personnel as needed to satisfy our staffing
requirements.
DILUTION
The difference between the initial public offering price per share of common
stock and the net tangible book value per share after this offering constitutes
the dilution to investors in this offering. Net tangible book value per share of
common stock is determined by dividing our net tangible book value (total
tangible assets less total liabilities) by the number of shares of common stock
outstanding.
As of February 29, 2000, our net tangible book value was $13,249 or $0.001 per
share of common stock. Net tangible book value represents the amount of our
total assets, less any intangible assets and total liabilities. After giving
effect to the sale of the 2,000,000 shares of common stock offered through this
prospectus (at an initial public offering price of $2.00 per share), and after
deducting estimated expenses of the offering), our adjusted pro forma net
tangible book value as of February 29, 2000, would have been $4,013,249 or
$0.364 per share. This represents an immediate increase in net tangible book
value of $0.363 per share to existing shareholders and an immediate dilution of
$1.636 per share to investors in this offering. The following table illustrates
this per share dilution:
7
Public offering price per share $2.00
Net tangible book value per share before offering $0.001
Increase per share attributable to new investors $0.363
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Dilution per share to new investors $1.636
======
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NUMBER OF SHARES BEFORE MONEY RECEIVED FOR SHARES BEFORE NET TANGIBLE BOOK VALUE PER SHARE
OFFERING OFFERING BEFORE OFFERING
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9,011,500 $Nil $0.001
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NUMBER OF SHARES AFTER TOTAL AMOUNT OF MONEY PRO-FORMA NET TANGIBLE BOOK VALUE
OFFERING RECEIVED FOR SHARES PER SHARE AFTER OFFERING
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11,011,500 $4,000,000 $0.364
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As of the date of this prospectus, the following table sets forth the percentage
of equity to be purchased by investors in this offering compared to the
percentage of equity to be owned by the present stockholders, and the
comparative amounts paid for the shares by the investors in this offering as
compared to the total consideration paid by our present stockholders.
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SHARES PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
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NUMBER PERCENT AMOUNT PERCENT PAID PER SHARE
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New Investors 2,000,000 18% $4,000,000 97% $2.00
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Existing Shareholders 9,011,500 82% $113,675 3% $0.01
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USE OF PROCEEDS
Proceeds received by the Company from the sale of 2,000,000 shares at $2.00 per
share and 2,000,000 shares at $2.50 per share will be used for the following
purposes listed in order of priority:
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DESCRIPTION OF USE OF PROCEEDS DOLLAR AMOUNT TO BE SPENT PERCENTAGE AMOUNT TO BE
BY THE COMPANY IF MAXIMUM SPENT BY THE COMPANY IF
PROCEEDS OF $9,000,000 ARE LESS THAN MAXIMUM PROCEEDS
RAISED ARE RAISED
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Offering costs; Legal, and Accounting $400,000 8.75%
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Web-Site Development $1,900,000 18.75%
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Computer Software $750,000 7.5%
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Computer Hardware $750,000 7.5%
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Marketing $3,400,000 37.5%
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Administration $500,000 5.625%
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Salaries $1,000,000 11.25%
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General $300,000 3.125%
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TOTAL $9,000,000 100%
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The Company will not receive any proceeds from the sale of shares being offered
by the Selling Stockholders.
CAPITALIZATION
The following table sets forth our capitalization as of February 29, 2000, and
pro-forma as adjusted to give close to the sale of 2,000,000 shares offered by
us.
ACTUAL AS ADJUSTED
Stockholders' Equity:
Common stock, $0.001 par value;
Authorized 50,000,000 common shares and 25,000,000
preferred shares,
Issued and outstanding $9,012 $11,012
9,011,500 shares and 11,011,500 shares, pro-forma as
adjusted
Additional paid-in capital $108,663 $4,106,663
Deficit accumulated during the development period ($56,453) ($56,453)
Total stockholders equity $61,222 $4,061,222
Total Capitalization $61,222 $4,061,222
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DESCRIPTION OF BUSINESS
The Company was incorporated under the provisions of the General Corporation Act
of the State of Nevada on May 16, 1997 as Annex Business Resources, Inc. The
Company changed its name to Newsgurus.com, Inc. on February 4, 2000. The Company
has not undergone any bankruptcy, receivership or similar proceedings. There has
been no material reclassification, merger, consolidation or purchase or sale of
a significant amount of assets not in the ordinary course of business.
Principal Products or Services and Their Markets
NewsGurus.com will be the leading source of customized information and opinion
delivered by renowned experts. The NewsGurus.com multimedia Web site will
feature continuously updated, user-customized and exclusive content from many of
the world's best known writers, authors, celebrities, and analysts.
We are an internet-based consumer network that includes the customer-focused
interactive web site www.NewsGurus.com. Our network will provide active users
with trusted content in the areas of money, health, and lifestyles. Tools and
services to empower users to better manage their every-day needs will also be
provided through partnerships that enhance the NewsGurus brand. Our network
affiliates will include other Internet portals, on-line e-commerce sites,
service oriented web sites, organizations, and traditional sources of news.
Money, health, and entertainment decisions are made by individuals on a daily
basis. NewsGurus.com has evolved from the need to build a community where
members can express their changing information needs and have these needs
addressed by recognized experts - NEWSGURUS. NewsGurus will empower and educate
through interactive, thought provoking, timely content. Rich content will
provide an effective link between customers from various broadcast mediums and
e-commerce.
With renowned experts as shareholders, NewsGurus.com will be the leading source
of customized, concise, objective analysis of important events affecting one's
everyday life. NewsGurus.com keeps you informed and focused; and, ahead of
trends affecting you today and in the future. Many of the world's best known
independent writers, authors, celebrities, and analysts will be recruited to
become active shareholders and interact with members. The NewsGurus.com
multimedia customer interface web site will feature continuously updated,
user-customized and exclusive content from these content providers.
NewsGurus.com will become a leading provider of exclusive content available over
the Internet by capitalizing on the celebrity status of well-known writers. With
tens of millions of new Internet users each year, demand for high quality
content will remain strong. NewsGurus.com will provide experts in several fields
who are well known through prior business success in other media including the
newsletter industry, book publishing and other print media, and radio. The
public, already comfortable with these established writers in traditional media,
will become patrons of such writers and journalists within the new media
phenomenon offered by the Internet.
10
A unique aspect of NewsGurus.com is that contributing writers will have a
substantial equity position in the company through the ownership of common stock
and/or options. Traditional media journalists are not well compensated. Through
equity ownership, NewsGurus.com will entice many well-known writers to produce
exclusive content.
Not every writer is required to provide exclusive content, though many will. The
strategy of exclusive content ensures that NewsGurus.com will always remain a
unique site different from any other on the Internet.
Unlike other Internet sites that serve as de-facto archival sites of previously
published work, NewsGurus.com will not function as a simple repository for stale
content. These other Internet sites are good examples of how NOT to function on
the Internet: writers post their earlier-printed material to Internet users,
offering little new value.
Successful Internet media companies are those that provide content especially
crafted for the Internet audience. Internet users need to be given reasons to
return frequently to a content site. NewsGurus.com will publish new content on a
continual basis. Although NewsGurus.com will also accept previously published
material as an archival service provided to its subscribers, it is the new and
exclusive material that is not available within the print media that will
attract readers to NewsGurus.com.
The company will provide content focused on investing and finance; health and
wellness; and lifestyles. These are each among the largest market segments on
the Internet. Writers providing content in our financial segment will be
successful investment newsletter editors and business journalists from
well-known business and financial newspapers. Authors of best-selling books will
also be invited to contribute regular articles. Corporate executives will offer
valuable insight into the going's on within their industries. Staff journalists
employed by NewsGurus.com will provide members with financial market update
information every 30 or 60 minutes during regular business hours.
Distribution Methods of the Products or Services
The goal of the web site interface is to enable NewsGurus to cost-effectively
distribute useful and information to a broad range of users. Achieving
effectiveness requires a strategy. Part of that strategy is to provide users
with a rich menu of products and services, as outlined above.
With the Internet, there are no more captive customers. The effective
organization will be one that moves to a structure focused on the needs of its
customers. It is the challenge of our customer service interface web site
developers to bring this structure to life.
NewsGurus must establish a web presence as soon as possible. This helps the
Company attract partners, establish memberships, attract analysts through share
offerings, and begin attracting members. The NewsGurus Website is being
developed in three stages - Gamma Version, Stage One, and Stage Two.
The Beta site was launched in May, 2000. Users have an opportunity to become a
member for free, with notification of full launch through e-mail.
11
Content will be categorized, searchable, and database driven. The site will have
the capability to advertise, interact with users, and accept credit cards for
subscription based services.
A complete site, with a fully designed backend engine, databases, and back
office software with exhaustive capabilities for integrating all functions, such
as accounting, should be in place during third quarter of 2000. Stage two
functionality will include personalization, e-commerce, and additional services
provided by brand compatible partnerships. The features and services provided by
the site will continue to grow with users' needs.
WWW.NEWSGURUS.COM will be an informative, dynamic, and fun Website to visit and
use. Our Guru-supplied content ensures that each visit will be informative. The
site is dynamic because it encourages interactivity - in stark contrast to so
many sites that seem to have forgotten that the Internet is a two-way medium.
And, above all else, the NewsGurus Website will be pleasant and entertaining,
inviting users to return over and over again.
Much of the content available at the Website is free of charge to all registered
users in return for their provision of nothing more than simple personal
information. As the site develops through subsequent phases, this will include
written, audio, and video content.
While the no-cost content is designed to draw people to the Website, important
value-added content is available to help the company generate revenue.
The no-charge content will include articles written by investment analysts that
are not stock-specific. Staff writers will provide a great deal of content on
current headlines and trends. Corporate news releases will be available here, as
will articles produced by guest Gurus. All registered users will be able to
access the NewsGurus archives, containing the full wealth of information
previously posted at NewsGurus by the experts.
The majority of the Your Health and Your Life content will be available at no
cost, though certain ground-breaking articles will be restricted for paying
subscribers.
There will be two tiers of service available only to paying members.
At $9.95 per month, users will have access to otherwise-restricted Website
content such as specific investment picks from the Your Money content providers
and a free print subscription to the NewsGurus monthly magazine.
At $19.95 per month, users will enjoy further benefits beyond those experienced
at the $9.95 monthly level. These will include but not be limited to; free
e-mail delivery of previously selected news stories as they are posted on the
Website; creation and delivery of a personalized newsletter; powerful analytical
tools for investors including real-time stock quotes; special offers from
on-line merchandisers; and, 5% off the price of any merchandise at any affiliate
Website.
Competitive Business Conditions and Our Competitive Position in the Industry
There are various services available on the Internet that act primarily as
content directories. An example is newsletteraccess.com. While
newsletteraccess.com boasts over 5,000 newsletters available, it provides very
little new content. Almost all material available at these sites is
12
restricted to paying customers. What is available for free view to all is
limited in scope. With newsletteraccess.com, for example, one can access "15
investment sectors and 30+ top analysts quoted each week". In fact searching for
articles on June 25, 1999, only three free feature articles were found, and
while of good quality from recognizable celebrities, each was in fact a reprint
from an earlier published newsletter.
Sites such as newsletteraccess.com cannot realistically be considered
competitors as they are not content providers. They are more accurately thought
of as distributors of existing content.
Competitors exist for each of the three main sectors of focus, "Your Money -
Your Health - Your Life."
These competitors include TheStreet.com and MarketWatch.com when compared to
NewsGurus - Your Money. They include WebMD.com and others when compared to
NewsGurus - Your Health. And, they include Martha Stewart Omnimedia, Webzine.com
when compared to NewsGurus - Your Life.
Each of these companies is far ahead of NewsGurus.com in terms of developing its
own on-line brand and in acquiring readers or subscribers. Each of these (and
other) companies is an Internet content provider.
There are four levels of perceived and real competitors to NewsGurus.com:
Non-Public Company "focus" Sites
These are smaller sites with a tight focus on a micro-segment of a larger
market. They generally have a limited subscriber base; limited financial
resources; little original material; and, little growth opportunity outside of
their market niche. These sites are difficult to value since there is no public
company behind the site. Unless backed by a corporate parent or by venture
capitalists, these private companies may not be able to raise funds to
effectively compete in the marketplace. These are the most common types of site
on the Internet but they are not true competitors to NewsGurus.com.
Newsletteraccess.com is one of many examples. There is no brand awareness.
Public Company "Stock.Com" Sites
These are the smallest niche-focused sites that enjoy the benefits of being a
public company. A typical focus might be on up to several micro-segments of the
financial markets. For example, resource, technology, and internet stocks might
be a focus of one site. These sites generally have between 10,000 and 40,000
subscribers and offer limited original content. The public company has weak
revenue streams and a limited audience, and may have raised between $1 million
and $10 million in capital. These companies have market capitalizations of
between $10 million and $50 million. Stockscape.com and Stockgroup.com are good
examples. These companies are beginning to build their brands.
Competitors in the "Stock.Com" category will affect only the "Your Money"
section of NewsGurus. They do not directly affect the "Your Health" or "Your
Life" sections.
13
Since virtually none of the "Focus" sites or "Stock.Com" sites offer comparable
incentives to content providers it is difficult to understand how they could
attract viewers and thus be considered serious competitors to NewsGurus.
Those public companies that wish to duplicate the NewsGurus stock option and
equity model will seriously dilute their capital structure. Existing public
companies were not designed for such latter-stage share dilution. NewsGurus was
designed to incorporate such plans from the beginning and as such enjoys a
non-dilutive share structure. Private companies wanting to duplicate the
NewsGurus business model face a six-to-twelve month competitive disadvantage in
that NewsGurus will have already secured contracts with many of the available
content providers.
As NewsGurus signs exclusive contracts with a growing number of feature writers
it can face only limited competition. There is a finite group of celebrity-style
writers from which to develop such media sites.
Public Company "Specific-Media" Sites
These are larger companies that have been successful in raising larger amounts
of capital and have built varying degrees of brand recognition. These sites have
a broader investment focus with 40,000 to 300,000 subscribers. Much of the
content is original and not found at other sites. Between $15 million and $100
million in capital has been raised by the public company, which enjoys a market
capitalization of between $300 million and $5 billion. The company enjoys
diverse revenue streams derived in large part from advertising revenue as well
as user fees. Examples here include TheStreet.com, CNET.com, and DrKoop.com.
Other examples include sites spawned from traditional media sites such as
MarketWatch.com (CBS); CNNfn.com (CNN); and, Bloomberg.com (Bloomberg).
Substantial brand awareness has been achieved.
Some competitors, such as TheStreet.com, force subscribers to pay a fee to view
most of the content provided.
Bill Gross is the founder of Idealab and a leading Internet visionary. He has
been involved in some of the most well-known Internet start-ups such as eToys;
GoTo.com; Shopping.com; and others. Gross says "People don't want to pay for
content."
NewsGurus.com will make the vast majority of its content available at no charge
to the registered subscriber. The registration process provides NewsGurus.com
with valuable marketing information that supports other revenue streams.
TheStreet.com may find its own subscriber base faltering if readers become aware
of the free content at NewsGurus.com
NewsGurus.com does face serious competition from this sector. The companies
within this sector are generally well-capitalized or are subsidiary companies of
traditional media companies. They often have substantial brand-name recognition.
NewsGurus.com will rely in part on the motivation of contributing writers to
help it entice other writers (and thus, subscribers) from some of these
competitors.
Still, with tens of millions of new Internet users each year there is room for
additional competition in this market sector. Successful companies here enjoy
market capitalizations on
14
average of well over one billion dollars, with revenue streams approaching or
exceeding $100 million per annum. By any definition this is a significant
company and one that NewsGurus.com expects to emulate.
As NewsGurus.com expands its content into the health and wellness and executive
lifestyle markets, the strategic competitive threats it faces in any single
market segment will be less influential upon the overall business model.
Public Company "General Media" Sites
These are the largest content providers on the Internet - and arguably the most
successful companies of any type utilizing the Internet. Their eventual success
had generally been impossible to predict early in their life cycle. The best
examples are companies such as Yahoo!, and AOL. Each of these giant media
companies is measured by market capitalizations at least in the tens of billions
of dollars. The smallest of them might measure an early subscriber base as low
as 100,000 but this must quickly grow to over 1 million before general media
status is reached. AOL has over 18 million subscribers. These companies have
successfully assembled content previously focused on several market sectors such
as finance, investment, technology, health, news, sports, community news and
others. Large subscriber bases can only be supported by diverse content. Revenue
is diverse and includes banner ads, marketing, Business-to-Business agreements;
co-branding, links, user fees, and others. Content is always exclusive and is
designed to foster a sense of community among subscribers. These early
competitors now have dominant brand recognition. If NewsGurus is capable of
penetrating into the "general media" category it will face stiff competition.
The investment world realized the extent of the demand for content in January
2000, when Time Warner was effectively acquired by AOL. Time Warner was one of
the oldest and largest media companies in the world, yet AOL - a relative
newcomer - was able to use its highly valued stock for purchasing leverage.
Another huge merger, this time between Time Warner and EMI Group, made investors
stand up and realize that Internet success, for many companies, will revolve
around issues of content.
Competitive Analysis
NewsGurus believes it will initially be seen by the marketplace as a budding
"Specific-Media" site. This market segment is likely to be one of the most
exciting in the future and could see a great deal of consolidation as the
companies in this sector try to evolve into "General Media" companies. There is
likely room for two or three additional General Media sites in North America
before the Internet is fully developed.
NewsGurus.com believes it can aggressively compete against much larger companies
in part because few if any competitors have built their business based on a
model in which each contributing writer is a substantial owner in the public
company. NewsGurus.com can continue to issue relatively small numbers of stock
options in the future as incentives to the best journalists and writers. These
writers may currently be working for NewsGurus competitors as well as for the
general media.
15
After the NewsGurus.com model comes into existence, the most well-known
contributing writers to other services may demand similar opportunities from
their existing "employers". Further, a newsletter editor who is a member of
NewsGurus.com and can potentially enjoy a strong financial return by
contributing good content to NewsGurus.com is less likely to spend time or
effort at another financial site that does not offer such a financial return.
Newsletter editors will also enjoy the benefits of building the brand
recognition of their own private newsletter while contributing to NewsGurus.com.
As a group, these are powerful incentives for writers to abandon less worthwhile
sites and join NewsGurus.com.
Existing financial and media sites have ignored the natural competitive
instincts shared by all successful people. Newsletter writers and journalists
who have a choice of contributing to an effort that offers strong financial
incentives will quickly abandon other, less rewarding efforts.
Dreams of financial success are a powerful incentive designed to attract
additional content providers. But money alone is not enough. This is why
NewsGurus.com has established a corporate structure that places great power and
responsibility in the hands of its content providers. The Editorial Advisory
Board is designed to give the NewsGurus content providers control over their own
destiny. This advantage is one that few public companies are willing to grant.
Names of Principal Suppliers of Content on Our Web Site
The list of people who have agreed to provide content to NewsGurus.com is
increasing rapidly. Writers are being contacted as quickly as possible and are
asked to sign non-disclosure statements.
Those persons who have negotiated contracts to supply content to NewsGurus, as
of May 15, 2000, are:
o Chris Bunka (exclusive) Various Investing
o CanStock (four editors and four newsletters - all exclusive) Various Investing
o Eric Dany (exclusive) Mutual Funds
o Andrew Davlin Aquaculture Investing
o Sudhir Khanna (exclusive) Various Investing
o Vivian Lewis (some exclusive) International Investing
o Robert Macallister (exclusive) Various Investing
o Jay Taylor (exclusive) Various Investing
o Don Wilcox (some exclusive) Currency Specialist
o William Thomson (some exclusive) Asian Institutional Investing
(About 30 articles per week, in total, from 13 writers and 13 newsletters.)
The combined total paid (15,500) and unpaid (16,000) circulation of the
above-noted content providers is over 31,500 per month. In addition, the above
writers have lists of users who have sampled their publication in the past or
who were previous subscribers. This list is estimated to be three times the size
of the paid list.
16
These editors already justify the viability of NewsGurus.com. As the Website
gains in popularity and exposure, and as the result of focused recruitment by
management, the list of content providers will grow quickly. When combined with
staff writers and reporters, and with exclusive content provided by associated
companies, the NewsGurus reach becomes even more compelling.
Estimate of the Amount Spent During Each of the Two Last Fiscal Years on
Research and Development Activities
There were no relevant expenses in the fiscal years ending June 30, 1998 or June
30, 1999. Since June 30, 1999, the Company has incurred expenses of some
$104,000 in the development of its website and business plan.
Number of Total Employees and Number of Full Time Employees
Beginning on April 1, 2000 the Company engaged Chris Bunka and Sudhir Khanna as
full-time paid consultants to the company. Mr. Bunka has worked on the Newsgurus
project without compensation since May, 1999. Mr. Khanna has worked full-time on
the Newsgurus project without compensation since July, 1999.
Beginning in November, 1999, the Company engaged the services of Nebular
Research and Development Co. of Toronto, Canada. Nebular was chosen to construct
the Newsgurus website under the direction of Sudhir Khanna. Nebular typically
has devoted four full-time persons to the Newsgurus project. There are no other
direct or indirect employees of the Company.
The Company expects, over the next 12 months, to hire as many as twelve persons
in positions of direct employment, sub-contractual relationships, and full-time
consultants. These positions will include but will not be limited to: Chief
Operating Officer; computer programmers; secretarial and back-office personnel;
editors; and, copy writers.
Material Contracts
The Company has one material contract which it has entered into outside the
ordinary course of business. The Company is a party to a financing and
management agreement dated March 1, 2000 (the "Financing Agreement") which was
entered into between our company and Canalaska Ventures Ltd. of 626 West Pender
Street, Mezzanine Floor, Vancouver, British Columbia, V6B 1V9 ("Canalaska").
Canalaska is a publicly traded company listed on the Canadian Venture Exchange
under the trading symbol "CVV" and is also quoted on the NASD OTC Bulletin Board
under the symbol "CVVLF". Canalaska is in the business of financing information
technology and software development companies. Under the Financing Agreement,
Canalaska has an option to finance the Company in three phases.
Canalaska has already completed Phase 1 financing of the Company by advancing
the Company $100,000 as a loan convertible into shares of the Company at $0.25
per share. Completion of the Phase 1 financing has entitled Canalaska to 400,000
warrants exercisable into 400,000 common shares of the Company at $1.30 per
share for two years expiring May 24, 2002. In the event
17
Canalaska does not convert the Phase 1 financing into common shares of the
Company, the loan of $100,000 will carry an interest rate of 7% per annum and is
repayable on March 1, 2001.
The Phase 2 financing is for a potential maximum investment of $440,000 at $0.40
per share which would result in the issuance of 1,100,000 common shares. Upon
completion of the Phase 2 investment, Canalaska will also have earned the right
to a 51% interest in a new joint venture company that is 49% owned by the
Company, tentatively called EuroNewsGurus. Each share subscribed for under the
Phase 2 financing earns Canalaska one warrant to acquire one additional common
share of the Company at $1.30 per share for a two year period. The Phase 2
investment schedule is as follows:
- $50,000 - 30 days after the Approval Date (1) ;
- $50,000 - 60 days after the Approval Date;
- $50,000 - 90 days after the Approval Date;
- $50,000 - 120 days after the Approval Date;
- $50,000 - 150 days after the Approval Date;
- $50,000 - 180 days after the Approval Date;
- $50,000 - 210 days after the Approval Date;
- $50,000 - 240 days after the Approval Date;
- $50,000 - 270 days after the Approval Date;
(1) Approval Date is defined as the date the Financing Agreement is
approved by the Canadian Venture Exchange.
The Phase 3 financing contemplates Canalaska exercising all 1.5 million warrants
which it receives in the Phase 1 and Phase 2 financings at $1.30 per share. This
would generate additional investment in the Company of $1,950,000.
Funds provided in the Phase 1 and Phase 2 financings will be used to complete a
beta version of the Company's web site and to complete a full commercial version
of the web site and a suite of products and services. The Company will also use
the funds to conduct marketing, sales and general operations of the Company to
advance the business plan.
If Canalaska completes financing Phases 1, 2 and 3 in their entirety, the
Company will issue an additional 3,000,000 common shares at an average price of
$0.83 per share. These shares will be restricted from trading.
Reports to Security Holders
Our company will send an annual report with audited financial statements to our
shareholders. We are a reporting company and file reports with the Securities
and Exchange Commission including Form 8K's, Form 10KSB's and Form 10QSB's.
Members of the public may read and copy any materials we file with the
Securities and Exchange Commission at the SEC's public reference room at 450
Fifth Street, N.W., Washington, D.C. 20549. Members of the public may obtain
information on the operation of the public reference room by calling the SEC at
1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy
and information statements and other information
18
regarding reporting issuers that file electronically with the SEC.
Electronically filed reports may be viewed by visiting the SEC website at
http://www.sec.gov. You may visit the Company's web site at www.newsgurus.com.
PLAN OF OPERATION
Before the appointment of Chris Bunka and Sudhir Khanna as management in May and
July, 1999, the Company had no operating history. There had been no operating
revenue and only minor expenses. Since the appointment of Mr. Bunka and Mr.
Khanna the company has raised certain funds and begun procedures to construct
the Newsgurus.com website.
At this point there can be no assurances that the Company is capable of raising
sufficient funds to complete the execution of the Newsgurus.com business plan.
Corporate operations commenced during May, 2000 with the launch of the
www.newsgurus.com website which is capable of processing customer transactions.
This beta-version website has substantial e-commerce capabilities allowing users
to select and purchase specified content contained within the website database,
including but not limited to individual pay-per-view content; monthly
subscriptions; user-selected personalized electronic magazines; and, more.
The Company will pursue partnerships and relationships with on-line entities
that are capable and interested in purchasing bulk quantities of the Company's
content for distribution to others. Wider distribution of content and material
appearing at the website can help the Company increase its revenues while
raising awareness of the www.newsgurus.com website among others who might not
otherwise be aware of the website.
The Company intends to eventually publish a monthly magazine to be distributed
by traditional methods such as newspaper inserts, etc, as a way of attracting a
wider audience for the NewsGurus content. If successful, this will produce
another revenue stream for the company through magazine subscriptions and
magazine advertising, while granting the Company a vehicle in which to market
its website. The goal of the magazine would be to popularize the content
appearing at the website, and to promote the NewsGurus brand, while at the same
time collecting revenue from magazine advertisers that will help offset the
costs of this marketing channel. The Company expects that some of the magazine
readers will be attracted to participate at the www.newsgurus.com website to
meet their needs of more timely content delivery.
The Company must raise additional funds in order to execute its business plan to
the extent and within the timelines anticipated. The company does not currently
have sufficient funds to do this. The Company anticipates that it will require
$4 million, in addition to revenues it will produce from the website, in order
to execute its business plan within the next 12 months.
However, the company can function at a reduced level for a period of 12 months
based on funds already raised and on funding agreements already completed.
Although this reduced level of funding will not permit aggressive deployment of
the business plan, it will allow basic operation of the website and of corporate
activities.
Continual development of the website is required. Ongoing development costs can
be substantial and will be necessary in order to compete in the marketplace. The
beta-version website requires
19
manual database indexing of submitted content, for example. Automated database
index systems are available and will be implemented in future versions of the
website. This is just one of many features and systems that will make the
website and the company competitive within its marketplace.
Assuming it is able to raise sufficient funds, the company expects to spend
$600,000 on computer hardware and software, and a further $750,000 on website
development, in order to properly pursue its business plan. Computer hardware
includes servers, routers and other communications equipment to house and
distribute the website content. Computer software includes commercial software
packages in the fields of communications, data management, database mining,
automated database indexing, and more.
Website development costs of an anticipated $750,000 include all costs of
customized and proprietary code-writing, including project management costs.
These initiatives are expected to result in an advanced website with extensive
customer management and processing capabilities; user-friendly content
submission features; data mining and list management tools; interactive content
request features; and, more.
The Company must rely on a substantial number of users availing themselves of
the content and features available at the website. To this end it is in the
Company's best interests to build a useful, informative, and attractive website
that will attract initial interest from users, and continue to hold that
interest over time.
The Company intends to launch an extensive marketing program using both
traditional and new media as its forums. If the Company is able to raise
sufficient funds then it plans to spend $1,500,000 over the next twelve months
on this marketing program. This will be sufficient to launch and operate a
controlled circulation magazine that will market the NewsGurus website and
brand; launch Internet-based marketing and awareness initiatives; conduct
marketing campaigns using traditional media such as print and radio; and
participate in investment conferences and trade shows as required.
On April 1, 2000 the Company engaged Chris Bunka and Sudhir Khanna as full-time
paid consultants to the company. Mr. Bunka has worked on the Newsgurus project
without compensation since May, 1999. Mr. Khanna has worked full-time on the
Newsgurus project without compensation since July, 1999.
Beginning in November, 1999, the Company engaged the services of Nebular
Research and Development Co. of Toronto, Canada. Nebular was chosen to construct
the Newsgurus website under the direction of Sudhir Khanna. Nebular typically
has devoted four full-time persons to the Newsgurus project. There are no other
direct or indirect employees of the Company.
The Company expects, over the next 12 months, to hire as many as twelve persons
in positions of direct employment, sub-contractual relationships, and full-time
consultants. These positions will include but will not be limited to: Chief
Operating Officer; computer programmers; secretarial and back-office personnel;
editors; and, copy writers.
20
DESCRIPTION OF PROPERTY
The Company maintains a Canadian office at 5774 Deadpine Drive, Kelowna, British
Columbia, Canada. This office is provided on a rent free basis to the Company by
its President, Mr. Chris Bunka. Currently, the Company's principal asset is its
URL www.newsgurus.com and the intellectual property and publications comprising
that web site. The Company owns no other material properties.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of February 29, 2000 by (i) each person or
entity known by us to be the beneficial owner of more than 5% of the outstanding
shares of common stock, (ii) each of the Company's directors and named executive
officers, and (iii) all directors and executive officers of the Company as a
group.
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNER OF CLASS
- -------------- ------------------- ------------------- --------
$.001 Par Value Christopher Bunka (1) President and Director 33.6%
Common Stock 5774 Deadpine Drive 3,025,000 common shares
Kelowna, B.C.
V1P 1A3
$.001 Par Value Sudhir Khanna (1) Secretary and Director 11.4%
Common Stock Suite 808 1,025,000 common shares
73 Widdicombe Hill Blvd.
Etobicoke, Ontario
M9R 4B3
$.001 Par Value Devinder Randhawa 5.5%
Common Stock 104 - 1456 St. Paul Street 500,000 common shares
Kelowna, B.C.
V1Y 2E6
(1) Messrs. Bunka and Khanna hold options and warrants which entitle them
to acquire an additional 600,000 and 450,000 common shares of the
Company respectively. See also "Selling Stockholders" and "Market for
Common Equity and Related Stockholder Matters".
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
Changes in Control. We are not aware of any arrangements which may result in
"changes in control" as that term is defined by the provisions of Item 403(c) of
Regulation S-B.
21
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The directors and principal executive officers of the Company are as specified
on the following table:
NAME AGE POSITION
- ---- --- --------
Christopher Bunka 37 Director, President
Sudhir Khanna 35 Director, Secretary
Biographical Information on our Officers and Directors:
CHRISTOPHER BUNKA, DIRECTOR AND PRESIDENT
Mr. Bunka has been a director of the Company since 1999. Mr. Bunka is not a
director of any other reporting companies.
Mr. Bunka brings entrepreneurial spirit to the business world and has founded
and managed successful small businesses in the USA and Canada. He interrupted
his MBA studies to pursue business interests. From 1980 until 1990, Mr. Bunka
was employed in the construction and development fields. Since 1990 he has
provided executive management and operational services as an independent
consultant to start-up companies.
Since 1996 Chris Bunka has been editor of the Outsider's Overture group of
publications that specializes in identifying economic trends that might benefit
specific investment sectors. Mr. Bunka has been quoted in many international
publications in the USA and Canada and has written articles for several
magazines.
In 1998 Mr. Bunka wrote and published "The Outsider's Guide to Speculative
Stocks", a "how to" book designed to aid investors in building a logical
approach to discovering temporarily undervalued investment sectors.
Since 1998, Chris Bunka has presented weekly radio commentary and has also
appeared on local and national television. He has developed an intense,
seven-hour workshop on strategic investing, focusing on the inter-relationships
between global economics, investor sentiment, and the equity markets.
Through the analysis of scores of technology companies and meetings and
discussions with their executive teams, Mr. Bunka understands the broad
implications of new media. He believes that start-up companies can become
empowered to a degree never possible before the creation of the Internet.
SUDHIR KHANNA, DIRECTOR AND SECRETARY
Mr. Khanna has been a director of the Company since 1999. Mr. Khanna was elected
to the board of directors of Latitude Minerals Corp., symbol "LTU" on the
Canadian Venture Exchange on April 11, 2000.
22
Sudhir Khanna is a Professional Engineer having graduated with First Class
Honours in Systems Design Engineering in 1989 from the University of Waterloo.
He also has a minor in Statistics and Management Sciences.
Beginning in January, 1992, and until 1997, Mr. Khanna developed the policy
framework in the areas of Sewage Biosolids, Hazardous Waste, and Recycling for
the Province of Ontario, Canada. He also modeled, evaluated, funded, and managed
approximately 80 projects dealing with Ontario recycling infrastructure with a
budget of more than $20 million.
Mr. Khanna has also worked as an independent consultant since 1992 and
continuing until the present day, completing work with Procter & Gamble,
Scarborough Board of Education, the Province of Ontario and award-winning work
for IBM.
In January, 1997, Mr. Khanna launched The Resource Indicator, a successful
investment publication. Mr. Khanna is both the Editor and the publisher of the
newsletter, since renamed eKHANNA, and has been successful in increasing the
letter's exposure by creating mutually beneficial partnerships with content
providers. He has also been invited to speak at investment conferences and
quoted in resource related journals.
Mr. Khanna is overseeing the development of our web-site.
There are no family relationships among the directors or executive officers of
the Company.
No director or executive officer of the Company has been a director or executive
officer of any business which has filed a bankruptcy petition or had a
bankruptcy petition filed against it. No director or executive officer of the
Company has been convicted of a criminal offence or is the subject of a pending
criminal proceeding. No director or executive officer of the Company has been
the subject of any order, judgment or decree of any court permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities.
No director or officer of the Company has been found by a court to have violated
a federal or state securities or commodities law.
EXECUTIVE COMPENSATION - REMUNERATION OF DIRECTORS AND OFFICERS
Any compensation received by officers, directors, and management personnel of
the Company will be determined from time to time by our Board of Directors.
Officers, directors, and management personnel of the Company will be reimbursed
for any out-of-pocket expenses incurred on behalf of the Company.
Beginning April 1, 2000, C.A.B. Financial Services Ltd., a private company
wholly owned by Chris Bunka, will receive fees of US$2,500 per month as a
management fee for services provided. At such time that the Company has raised a
cumulative total of US$1,000,000 in equity financing, this fee will be raised to
US$5,000 per month.
23
Beginning April 1, 2000, S.K. Services Ltd., a private company wholly owned by
Sudhir Khanna, will receive fees of US$1,750 per month as a management fee for
services provided. At such time that the Company has raised a cumulative total
of US$1,000,000 in equity financing, this fee will be raised to US$3,500 per
month.
Mr. Bunka has been granted options to acquire 400,000 shares of our common stock
and Mr. Khanna has been granted options to acquire 200,000 shares of our common
stock at $1.00 per share. These options expire February 1, 2005.
Other than as described above, none of our company's directors or officers
receive any other compensation for their services.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company acquired its Newsgurus.com URL and the business plan which it is
developing from Gurus International Corp., a private Nevada company which was
owned by Mr. Chris Bunka and Mr. Sudhir Khanna. Messrs. Bunka and Khanna were
subsequently elected to the Company's board of directors and appointed President
and Secretary respectively. Mr. Bunka and Mr. Khanna are responsible for
developing the Company's business plan. Mr. Bunka owned 297,500 shares of Gurus
International Corp. and Mr. Khanna owned 52,500 shares of Gurus International
Corp. In consideration for selling these share positions to the Company, Mr.
Bunka received 2,975,000 shares of the Company and Mr. Khanna received 525,000
shares of the Company.
Christopher Bunka and Sudhir Khanna were appointed directors of the Registrant
on November 20, 1999. Both Mr. Bunka and Mr. Khanna abstained from voting on the
motion by the Registrant's Board of Directors to acquire GIC. The acquisition of
GIC was approved by the disinterested directors of our company, Mr. Dev Randhawa
and Mr. Ron Schlitt after reviewing the business plan for GIC and considering
the experience of Mr. Bunka and Mr. Khanna in the investment newsletter
industry.
LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no trading market for our common stock at present and there has been no
trading market to date. Management has not undertaken any discussions with any
prospective market maker concerning the participation in the aftermarket for the
Company's securities and management does not intend to initiate any discussions
until we have consummated a merger or acquisition. We cannot guarantee that a
trading market will ever develop or if a market does develop, that it will
continue.
Market Price
Our common stock is not quoted at the present time. The Securities and Exchange
Commission has adopted a Rule that established the definition of a "penny
stock," for purposes relevant to us,
24
as any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, stating the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, before any
transaction in a penny stock, a disclosure schedule prepared by the Commission
relating to the penny stock market, which, in highlight form, (i) sets forth the
basis on which the broker or dealer made the suitability determination; and (ii)
that the broker or dealer received a signed, written agreement from the investor
prior to the transaction. Disclosure also has to be made about the risks of
investing in penny stock in both public offering and in secondary trading, and
about commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in penny stock transactions.
Finally, monthly statements have to be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in
penny stocks.
Holders
The following table sets forth the number of shares of our common stock which
may be offered for sale from time to time by the Selling Stockholders. The
shares offered for sale constitute all of the shares known to us to be
beneficially owned by the Selling Stockholders. None of the Selling Stockholders
has held any position or office with the Company, except as specified in the
following table. Other than the relationships described below, none of the
Selling Stockholders had or have any material relationship with the Company.
- ---------------------------------------------------------------------------------------
NAME OF STOCKHOLDER AND/OR OPTION NUMBER OF NUMBER OF SHARES
HOLDER SHARES ISSUABLE UPON THE
CURRENTLY HELD EXERCISE OF OPTIONS
OR WARRANTS
- ---------------------------------------------------------------------------------------
Dev Randhawa 500,000 N/A
(former director)
- ---------------------------------------------------------------------------------------
Dave Ward 343,000 N/A
- ---------------------------------------------------------------------------------------
Bob Hemmerling 343,000 N/A
- ---------------------------------------------------------------------------------------
Scott Mundell 343,000 N/A
- ---------------------------------------------------------------------------------------
Phil Morehouse 343,000 N/A
- ---------------------------------------------------------------------------------------
Richard Newbury 343,000 N/A
- ---------------------------------------------------------------------------------------
Gurbakash Randhawa 343,000 N/A
- ---------------------------------------------------------------------------------------
Kate Himsworth 343,000 N/A
- ---------------------------------------------------------------------------------------
Phil Mudge 343,000 N/A
- ---------------------------------------------------------------------------------------
Chris Bunka 3,075,000 600,000
(President and Director)
- ---------------------------------------------------------------------------------------
Sudhir Khanna 1,025,000 450,000
(Secretary and Director)
- ---------------------------------------------------------------------------------------
Dave Abercrombie 62,500 N/A
- ---------------------------------------------------------------------------------------
Agorot Ltd. 218,000 118,000
- ---------------------------------------------------------------------------------------
H. Roderick Anderson 5,000 N/A
- ---------------------------------------------------------------------------------------
25
- ---------------------------------------------------------------------------------------
Canadian Gravity Recovery 10,000 N/A
- ---------------------------------------------------------------------------------------
Francis Biscan 20,000 N/A
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Cal Bunka 145,000 N/A
- ---------------------------------------------------------------------------------------
Gloria Czegledi 20,000 N/A
- ---------------------------------------------------------------------------------------
Eric Dany 148,500 148,500
- ---------------------------------------------------------------------------------------
Andrew Davlin 60,000 60,000
- ---------------------------------------------------------------------------------------
Navdeep Dhaliwal 10,000 N/A
- ---------------------------------------------------------------------------------------
Mandeep Dhaliwal 10,000 N/A
- ---------------------------------------------------------------------------------------
Chris Dougans 20,000 N/A
- ---------------------------------------------------------------------------------------
Valerie Dougans 20,000 N/A
- ---------------------------------------------------------------------------------------
Irene Dougans 20,000 N/A
- ---------------------------------------------------------------------------------------
Shamila Gupta 40,000 N/A
- ---------------------------------------------------------------------------------------
Susan Herunter 20,000 N/A
- ---------------------------------------------------------------------------------------
Samir Khanna 20,000 N/A
- ---------------------------------------------------------------------------------------
Cheryl A. Lane 100,000 N/A
- ---------------------------------------------------------------------------------------
Leif Corp. 70,000 35,000
- ---------------------------------------------------------------------------------------
Robert McAllister 100,000 200,000
- ---------------------------------------------------------------------------------------
Monaco Investment Corp. 40,000 N/A
(Darcy Higgs)
- ---------------------------------------------------------------------------------------
Menace Capital Corp. 20,000 N/A
(Dennis Higgs)
- ---------------------------------------------------------------------------------------
Nebular Vision R&D Inc. 20,000 N/A
John Crispo, Ruey Seng Li
Toomas Karmo, David
McCarthy, Donald Wong,
Dave Ng
- ---------------------------------------------------------------------------------------
Rajkumar Singh 20,000 N/A
- ---------------------------------------------------------------------------------------
Ross Smyth 60,000 N/A
- ---------------------------------------------------------------------------------------
Syntropy Inc. 25,000 N/A
- ---------------------------------------------------------------------------------------
Bob Stranks 5,000 N/A
- ---------------------------------------------------------------------------------------
Jay Taylor 125,000 125,000
- ---------------------------------------------------------------------------------------
Don Wilcox 147,000 147,000
- ---------------------------------------------------------------------------------------
Christine Lundahl 5,000 N/A
- ---------------------------------------------------------------------------------------
Canstock (Al Budai) 360,000 360,000
- ---------------------------------------------------------------------------------------
TOTAL: 9,290,000 2,243,500
- ---------------------------------------------------------------------------------------
Penny Stock Regulation
"Penny" Stock Regulation of Broker-Dealer Sales of Company Securities. For
transactions covered by Rule 15g-9 under the '34 Act, a broker-dealer must
furnish to all investors in penny stocks, a risk disclosure document required by
the rule, make a special suitability determination of the purchaser and have
received the purchaser's written agreement to the transaction prior to the sale.
In order to approve a person's account for transactions in penny stock, the
broker or dealer must (i) obtain information concerning the person's financial
situation, investment experience and investment objectives; (ii) reasonably
determine, based on the information required by paragraph (i) that transactions
in penny stock are suitable for the person and that the person has sufficient
knowledge and experience in financial matters that the person reasonably may be
expected to be capable of evaluating the rights of transactions in penny stock;
and (iii) deliver to the person a written statement setting forth the basis on
which the broker or dealer made the determination required by paragraph (ii) in
this section, stating in a highlighted format that it is unlawful for the broker
or dealer to effect a transaction in a designated security subject
26
to the provisions of paragraph (ii) of this section unless the broker or dealer
has received, prior to the transaction, a written agreement to the transaction
from the person; and stating in a highlighted format immediately preceding the
customer signature line that the broker or dealer is required to provide the
person with the written statement and the person should not sign and return the
written statement to the broker or dealer if it does not accurately reflect the
person's financial situation, investment experience and investment objectives
and obtain from the person a manually signed and dated copy of the written
statement.
A penny stock means any equity security other than a security (i) registered, or
approved for registration upon notice of issuance on a national securities
exchange that makes transaction reports available pursuant to 17 CFR 11Aa3-1
(ii) authorized or approved for authorization upon notice of issuance, for
quotation on the Nasdaq NMS ; (iii) that has a price of five dollars or more or
. . . . (iv) whose issuer has net tangible assets in excess of $2,000,000
demonstrated by financial statements dated less than fifteen months previously
that the broker or dealer has reviewed and has a reasonable basis to believe are
true and complete in relation to the date of the transaction with the person.
Consequently, the rule may affect the ability of broker-dealers to sell the
Company's securities.
Dividends
We have not paid any dividends to date, and have no plans to do so in the
immediate future.
Transfer Agent
Our transfer agent is The Nevada Agency and Trust Company of Suite 880, Bank of
America Plaza, 50 West Liberty Street, Reno, Nevada, 89501.
DETERMINATION OF OFFERING PRICE
There is no public market for our common stock. The offering price of $2.00 per
share for the shares has been arbitrarily determined by us. This price bears no
relation to our assets, book value, or any other customary investment criteria,
including our prior operating history. Among factors considered by us in
determining the offering price were:
Estimates of our business potential
Our limited financial resources
The amount of equity desired to be retained by present shareholders
The amount of dilution to the public
The general condition of the securities markets
We became a reporting company on or about November 20, 1999, the effective date
of the Registration Statement on Form 10-SB which we filed with the Securities
and Exchange Commission on September 21, 1999. Our common stock offered by the
Selling Stockholders has already been issued by us, or will be outstanding after
the exercise of options or warrants. The Selling Stockholders may from time to
time sell their common stock on the OTC Bulletin Board, on any other national
securities exchange or automated quotation system on which our common stock may
be listed or traded, in negotiated transactions or otherwise, at prices then
prevailing or related to the then current market price or at negotiated prices.
Our common stock may be sold
27
directly or through brokers or dealers. The purchase prices paid by officers,
directors, promoters and affiliated persons for our common stock purchased by
them, or which they have rights to purchase, or which they acquired by means of
related party transactions, are specified in this Prospectus under the captions
"Security Ownership of Certain Beneficial Owners and Management", "Organization
Within Last Five Years", and "Certain Relationships and Related Transactions".
SELLING STOCKHOLDERS
The following table sets forth the number of shares of our common stock which
may be offered for sale from time to time by the Selling Stockholders. The
shares offered for sale constitute all of the shares known to us to be
beneficially owned by the Selling Stockholders or which may be acquired by the
Selling Stockholders on the exercise of options or warrants. None of the Selling
Stockholders has held any position or office with the Company, except as
specified in the following table. Other than the relationships described below,
none of the Selling Stockholders had or have any material relationship with the
Company.
- ---------------------------------------------------------------------------------------
NAME OF STOCKHOLDER AND/OR OPTION NUMBER OF NUMBER OF SHARES
HOLDER SHARES ISSUABLE UPON THE
CURRENTLY HELD EXERCISE OF OPTIONS
OR WARRANTS
- ---------------------------------------------------------------------------------------
Dev Randhawa 500,000 N/A
(former director)
- ---------------------------------------------------------------------------------------
Dave Ward 343,000 N/A
- ---------------------------------------------------------------------------------------
Bob Hemmerling 343,000 N/A
- ---------------------------------------------------------------------------------------
Scott Mundell 343,000 N/A
- ---------------------------------------------------------------------------------------
Phil Morehouse 343,000 N/A
- ---------------------------------------------------------------------------------------
Richard Newbury 343,000 N/A
- ---------------------------------------------------------------------------------------
Gurbakash Randhawa 343,000 N/A
- ---------------------------------------------------------------------------------------
Kate Himsworth 343,000 N/A
- ---------------------------------------------------------------------------------------
Phil Mudge 343,000 N/A
- ---------------------------------------------------------------------------------------
Chris Bunka 3,075,000 600,000
(President and Director)
- ---------------------------------------------------------------------------------------
Sudhir Khanna 1,025,000 450,000
(Secretary and Director)
- ---------------------------------------------------------------------------------------
Dave Abercrombie 62,500 N/A
- ---------------------------------------------------------------------------------------
Agorot Ltd. 218,000 118,000
- ---------------------------------------------------------------------------------------
H. Roderick Anderson 5,000 N/A
- ---------------------------------------------------------------------------------------
Canadian Gravity Recovery 10,000 N/A
(Harry Barr)
- ---------------------------------------------------------------------------------------
Francis Biscan 20,000 N/A
- ---------------------------------------------------------------------------------------
Cal Bunka 145,000 N/A
- ---------------------------------------------------------------------------------------
Gloria Czegledi 20,000 N/A
- ---------------------------------------------------------------------------------------
Eric Dany 148,500 148,500
- ---------------------------------------------------------------------------------------
Andrew Davlin 60,000 60,000
- ---------------------------------------------------------------------------------------
Navdeep Dhaliwal 10,000 N/A
- ---------------------------------------------------------------------------------------
Mandeep Dhaliwal 10,000 N/A
- ---------------------------------------------------------------------------------------
Chris Dougans 20,000 N/A
- ---------------------------------------------------------------------------------------
Valerie Dougans 20,000 N/A
- ---------------------------------------------------------------------------------------
Irene Dougans 20,000 N/A
- ---------------------------------------------------------------------------------------
28
- ---------------------------------------------------------------------------------------
Shamila Gupta 40,000 N/A
- ---------------------------------------------------------------------------------------
Susan Herunter 20,000 N/A
- ---------------------------------------------------------------------------------------
Samir Khanna 20,000 N/A
- ---------------------------------------------------------------------------------------
Cheryl A. Lane 100,000 N/A
- ---------------------------------------------------------------------------------------
Leif Corp. 70,000 35,000
- ---------------------------------------------------------------------------------------
Robert McAllister 100,000 200,000
- ---------------------------------------------------------------------------------------
Monaco Investment Corp. 40,000 N/A
(Darcy Higgs)
- ---------------------------------------------------------------------------------------
Menace Capital Corp. 20,000 N/A
(Dennis Higgs)
- ---------------------------------------------------------------------------------------
Nebular Vision R&D Inc. 20,000 N/A
John Crispo, Ruey Seng Li,
Toomas Karmo, David
McCarthy, Donald Wong,
Dave Ng
- ---------------------------------------------------------------------------------------
Rajkumar Singh 20,000 N/A
- ---------------------------------------------------------------------------------------
Ross Smyth 60,000 N/A
- ---------------------------------------------------------------------------------------
Syntropy Inc. 25,000 N/A
- ---------------------------------------------------------------------------------------
Bob Stranks 5,000 N/A
- ---------------------------------------------------------------------------------------
Jay Taylor 125,000 125,000
- ---------------------------------------------------------------------------------------
Don Wilcox 147,000 147,000
- ---------------------------------------------------------------------------------------
Christine Lundahl 5,000 N/A
- ---------------------------------------------------------------------------------------
Canstock (Al Budai) 360,000 360,000
- ---------------------------------------------------------------------------------------
TOTAL 9,290,000 2,243,500
- ---------------------------------------------------------------------------------------
(1) After the offering by the Company assuming all units are sold and all
outstanding options and warrants are exercised (fully diluted basis),
Mr. Randhawa will own 3.2%; Mr. Bunka will own 23.6% and Mr. Khanna
will own 9.5% of the Company's common shares.
DESCRIPTION OF SECURITIES
The Company is authorized to issue 75,000,000 shares consisting of 50,000,000
shares of common stock having a par value of $0.001 per share and 25,000,000
shares of Preferred Stock having a par value of $0.001 per share and the
designations, preferences, limitations and relative rights of the shares of each
such class are as follows:
Preferred Shares
The Company may divide and issue the Preferred Shares into series.
Preferred Shares of each series, when issued, shall be designated to
distinguish them from the shares of all other series of the class of
Preferred Shares. The Board of Directors is vested with authority to
fix and determine the relative rights and preferences of the shares of
any such series so established to the fullest extent permitted by the
Articles of Incorporation and Nevada Revised Statutes in respect to the
following:
(a) the number of shares to constitute each series, and their
distinctive designations;
(b) the rate and preference of dividend, if any, the time of
payment of dividend, whether dividends are cumulative and the
date from which any dividend shall accrue;
29
(c) whether the shares may be redeemed and, if so, the redemption
price and the terms and conditions of redemption;
(d) the amount payable on shares in the event of involuntarily
liquidation;
(e) the amount payable on shares in the event of voluntary
liquidation;
(f) sinking fund or other provisions, if any, for the redemption
or purchase of shares;
(g) the terms and conditions on which shares may be converted, if
the shares of any series are issued with the privilege of
conversion;
(h) voting powers, if any; and
(i) any other relative rights and preferences of shares of each
series, including, without limitation, any restriction on an
increase in the number of shares of any series authorized and
any limitation or restriction of rights or powers to which
shares of any further series are subject.
Common Shares
(a) The rights of holders of the Common Shares to receive
dividends or share in the distribution of assets in the event
of liquidation, dissolution or winding up of the affairs of
the Corporation are subject to the preferences, limitations
and relative rights of the Preferred Shares fixed in the
resolution or resolutions which may be adopted from time to
time by the Board of Directors of the corporation providing
for the issuance of one or more series of the Preferred
Shares.
(b) The holders of the Common Shares shall be entitled to one vote
for each share of Common Shares held by them of record at the
time for determining the holders entitled to vote.
Dividend Policy
We have never declared or paid a cash dividend on our capital stock and
we do not expect to pay cash dividends on our common stock in the
future. We currently intend to retain our earnings, if any, for use in
our business. Any dividends declared in the future will be at our
discretion and subject to any restrictions that may be imposed by our
lenders.
SHARES ELIGIBLE FOR FUTURE RESALE
There has been no public market for our common stock and we cannot assure you
that a significant public market for our common stock will be developed or be
sustained after this offering. Sales of substantial amounts of common stock in
the public market after this offering, or the possibility of substantial sales
occurring, could adversely affect prevailing market prices for the common stock
or our future ability to raise capital through an offering of equity securities.
30
Upon completion of this offering and assuming exercise of all warrants forming
part of the Units, we will have 15,533,500 shares outstanding. The 4,000,000
shares sold in this offering and the 11,533,500 shares offered for sale to the
public by the Selling Stockholders will be freely tradeable without restriction
or further registration under the Securities Act unless purchased by
"affiliates" of Newsgurus.com, Inc., as that term is defined in Rule 144 under
the Securities Act ("Rule 144") described below. Sales of outstanding shares to
residents of certain states or jurisdictions may only be effected by
registration in or applicable exemption from the registration provisions of the
securities laws of those states or jurisdictions.
WHERE CAN YOU FIND MORE INFORMATION?
We are a reporting company and are subject to the reporting requirements of the
Exchange Act. We voluntarily filed a Form 10-SB on September 21, 1999. We have
filed a registration statement with the SEC on Form SB-2 to register the offer
and sale of the shares. This prospectus is part of that registration statement
and as permitted by the SEC's rules, does not contain all of the information in
the registration statement. For further information about us and the shares
offered under this prospectus, you may refer to the registration statement and
to the exhibits and schedules filed as a part of the registration statement. You
can review the registration statement an its exhibits and schedules at the
public reference facility maintained by the SEC at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of
the SEC at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, Suite 1400, 500 Madison Street, Chicago, Illinois 60661. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
room. The registration statement is also available electronically on the World
Wide Web at http://www.sec.gov.
You can also call or write us at any time with any questions you may have. We'd
be pleased to speak with you about any aspect of our business and this offering.
PLAN OF DISTRIBUTION
The 2,000,000 units being offered at $2.00 per unit by the Company will be sold
by management of the Company in jurisdictions where the shares are qualified for
sale. The Company will not employ any underwriters to assist in the sale of its
shares. If necessary the Company will pay finder's fees to parties who may
assist in the sale of the Company's shares. In the event the Company elects to
engage a professional underwriter, we will file an amendment to this prospectus
disclosing terms of the engagement.
The Selling Stockholders may sell all or a portion of their common stock in the
over-the-counter market, or on any other national securities exchange on which
our common stock is or becomes listed or traded, in negotiated transactions or
otherwise, at prices then prevailing or related to the then current market price
or at negotiated prices. The shares will not be sold in an underwritten public
offering. Their common stock may be sold directly or through brokers or dealers.
The methods by which the common stock may be sold include (a) a block trade
(which may involve crosses) in which the broker or dealer will attempt to sell
the common stock as agent but may buy and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
31
Prospectus; (c) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and (d) privately negotiated transactions. Brokers
and dealers engaged by Selling Stockholders may arrange for other brokers or
dealers to participate. Brokers or dealers may receive commissions or discounts
from Selling Stockholders (or, if any such broker-dealer acts as agent for the
purchaser of such shares, from such purchaser) in amounts to be negotiated.
Broker-dealers may agree with the Selling Stockholders to sell a specified
number of shares at a stipulated price per share, and, to the extent such
broker-dealer is unable to do so acting as agent for a Selling Stockholder, to
purchase as principal any unsold shares at the price required to fulfill the
broker-dealer commitment to the Selling Stockholder. Broker-dealers who acquire
shares as principal may resell the shares from time to time in transactions
(which may involve crosses and block transactions and sales to and through other
broker-dealers, including transactions of the nature described above) in the
over-the-counter market or at prices and on terms then prevailing at the time of
sale, at prices then related to the then-current market price or in negotiated
transactions and, in connection with such resales, may pay to or receive
commissions from the purchasers.
In connection with the distribution of the common stock, the Selling
Stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
our common stock. The Selling Stockholders (except for officers and directors of
the Company) may also sell their common stock and redeliver their common stock
to close out their short positions. The Selling Stockholders may also enter into
option or other transactions with broker-dealers which require the delivery to
the broker-dealer of their common stock. The Selling Stockholders may also lend
or pledge their common stock to a broker-dealer and the broker-dealer may sell
their common stock so lent or, upon a default, the broker-dealer may sell the
pledged shares. In addition to the foregoing, the Selling Stockholders may enter
into, from time to time, other types of hedging transactions.
The Selling Stockholders and any broker-dealers participating in the
distributions of the our common stock may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act of 1933, and any profit on
the sale of our common stock by the Selling Stockholders, and any commissions or
discounts given to any such broker-dealer, may be deemed to be underwriting
commissions or discounts pursuant to the Securities Act of 1933.
Our common stock may also be sold under Rule 144 of the Securities Act of 1933
beginning one year after the shares of our common stock were issued, provided
such date is at least 90 days after the date of this Prospectus.
The Company has filed the Registration Statement, of which this Prospectus forms
a part, for the sale of 2,000,000 shares by the Company and the sale of the
Selling Stockholders' shares of our common stock. We can give no assurance that
the Selling Stockholders will sell any or all of the shares of our common stock.
Under the Securities Exchange Act of 1934, any person engaged in a distribution
of the common stock offered by this Prospectus may not simultaneously engage in
market making activities for our common stock during the applicable "cooling
off" periods before the commencement of the distribution. In addition, the
Selling Stockholders will be subject to applicable provisions of the Securities
Exchange Act of 1934.
32
The Company will pay all of the expenses incident to the offering and sale of
the Selling Stockholders' common stock, other than commissions, discounts and
fees of underwriters, dealers or agents.
LEGAL MATTERS
The validity of the shares offered under this prospectus is being passed upon
for us by Antoine Devine of Evers & Hendrickson. LLP of San Francisco,
California.
EXPERTS
Our financial statements as of the period ended February 29, 2000, included in
this prospectus and in the registration statement, have been so included in
reliance upon the reports of Davidson & Company, independent certified public
accountants, included in this prospectus, and upon the authority of said firm as
experts in accounting and auditing.
INTEREST OF NAMED EXPERTS AND COUNSEL
No "expert", as that term is defined pursuant to Regulation Section 228.509(a)
of Regulation S-B, or our "counsel", as that term is defined pursuant to
Regulation Section 228.509(b) of Regulation S-B, was hired on a contingent
basis, or will receive a direct or indirect interest in the Company, or was a
promoter, underwriter, voting trustee, director, officer, or employee of the
Company, at any time prior to the filing of this Registration Statement.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article XIII of our Bylaws sets forth certain indemnification rights. Our Bylaws
provide that we will possess and may exercise all powers of indemnification of
officers, directors, employees, agents and other persons and all incidental
powers and authority. Our Board of Directors is authorized and empowered to
exercise all of our powers of indemnification, without shareholder action. Our
assets could be used or attached to satisfy any liabilities subject to
indemnification. See Exhibit 3.3 hereto.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
The Nevada Revised Statutes, as amended, authorize us to indemnify any director
or officer under certain prescribed circumstances and subject to certain
limitations against certain costs and expenses, including attorneys' fees
actually and reasonably incurred in connection with any action, suit or
proceedings, whether civil, criminal, administrative or investigative, to which
the person is a party by reason of being a director or officer if it is
determined that the person acted in accordance with the applicable standard of
conduct set forth in the statutory provisions. Our Bylaws provide for the
indemnification of directors and officers to the full extent permitted by Nevada
law.
We may also purchase and maintain insurance for the benefit of any director or
officer that may cover claims for situations where we could not provide
indemnification.
33
In the opinion of the Securities and Exchange Commission, indemnification for
liabilities arising pursuant to the Securities Act of 1933 is contrary to public
policy and, therefore, unenforceable.
34
FINANCIAL STATEMENTS
The following financial statements are attached to this report and filed as a
part of this Registration Statement.
Table of Contents - February 29, 2000 Financial Statements.............................................F-2
Independent Auditor's Report...........................................................................F-3
Balance Sheet as of February 29, 2000..................................................................F-4
Statement of Operations as of February 29, 2000........................................................F-5
Statement of Cash Flow as of February 29, 2000.........................................................F-6
Statement of Shareholders' Equity as of February 29, 2000..............................................F-7
Notes to Financial Statements as of February 29, 2000..................................................F-8
F-1
NEWSGURUS.COM, INC.
(A Development Stage Company)
Consolidated Financial Statements
FEBRUARY 29, 2000
NEWSGURUS.COM, INC.
TABLE OF CONTENTS
Independent Auditor's Report...........................................................................F-3
Financial Statements
Balance Sheet..........................................................................................F-4
Statement of Operations................................................................................F-5
Statement of Cash Flow.................................................................................F-6
Statement of Shareholders' Equity......................................................................F-7
Notes to Financial Statements..................................................................F-8 to F-15
F-2
[DAVIDSON & COMPANY LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
NewsGurus.Com, Inc.
(A Development Stage Company)
We have audited the consolidated balance sheet of NewsGurus.Com, Inc. (A
Development Stage Company) as at February 29, 2000 and the consolidated
statements of operations, changes in stockholders' equity and cash flows for the
eight month period then ended and the period from incorporation on May 16, 1997
to February 29, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform 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. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at February 29, 2000
and the results of its operations, changes in stockholders' equity and its cash
flows for the eight month period then ended and the period from incorporation on
May 16, 1997 to February 29, 2000 in accordance with generally accepted
accounting principles in the United States.
The audited financial statements as at June 30, 1999 and 1998 and for the years
then ended were examined by other auditors who expressed an opinion without
reservation on those statements in their report dated August 26, 1999.
The accompanying consolidated financial statements have been prepared assuming
that NewsGurus.Com, Inc. will continue as a going concern. As discussed in Note
2 to the financial statements, unless the Company attains future profitable
operations and/or obtains additional financing, there is substantial doubt about
the Company's ability to continue as a going concern. Management's plan in
regards to these matters are discussed in Note 2. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
"DAVIDSON & COMPANY"
Vancouver, Canada Chartered Accountants
April 5, 2000
F-3
NEWSGURUS.COM, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
===============================================================================================================================
February 29, June 30,
2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT
Cash and cash equivalents $ 42,674 $ -
-------------- -------------
Total current assets 42,674 -
CAPITAL ASSETS (Note 4) 2,556 -
WEB SITE DEVELOPMENT COSTS (Note 5) 47,973 -
-------------- --------------
$ 93,203 $ -
===============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 31,981 $ 235
-------------- ---------------
Total current liabilities 31,981 235
-------------- ---------------
STOCKHOLDERS' EQUITY
Capital stock (Note 7)
Authorized
50,000,000 common shares with a par value of $0.001
25,000,000 preferred shares with a par value of $0.001
Issued and outstanding
9,011,500 common shares (June 30, 1999 - 7,000,000 common shares) 9,012 7,000
Additional paid in capital 108,663 (6,500)
Deficit accumulated during the development stage (56,453) (735)
-------------- ---------------
61,222 (235)
-------------- ---------------
$ 93,203 $ -
===============================================================================================================================
HISTORY AND ORGANIZATION OF THE COMPANY (Note 1)
COMMITMENT (Note 10)
SUBSEQUENT EVENT (Note 16)
ON BEHALF OF THE BOARD:
/s/ Chris Bunka, Director /s/ Sudhir Khanna, Director
- ------------------------------------ --------------------------------
The accompanying notes are an integral part of these financial statements.
F-4
NEWSGURUS.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
==============================================================================================================================
Period From
May 16,
1997 Eight Month
(Incorporation) Period Ended Year Ended Year Ended
to February 29, February 29, June 30, June 30,
2000 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Amortization $ 207 $ 207 $ - $ -
Bank charges 49 49 - -
Licences and fees 235 - 235 -
Office and miscellaneous 611 111 - -
Professional fees 53,283 53,283 - -
Telephone 26 26 - -
Travel and promotion 2,042 2,042 - -
--------------- --------------- -------------- --------------
LOSS FOR THE PERIOD $ (56,453) $ (55,718) $ (235) $ -
==============================================================================================================================
BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ (0.01) $ -
==============================================================================================================================
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 5,128,058 7,000,000 7,000,000
==============================================================================================================================
The accompanying notes are an integral part of these financial statements.
F-5
NEWSGURUS.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
===============================================================================================================================
Period From
May 16,
1997 Eight Month
(Incorporation) Period Ended Year Ended Year Ended
to February 29, February 29, June 30, June 30,
2000 2000 1999 1998
- -------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (56,453) $ (55,718) $ (235) $ -
Items not affecting cash:
Amortization 207 207 - -
Stock issued for services 4,000 3,500 - -
Changes in non-cash working capital items:
Increase in accounts payable 31,981 31,746 235 -
--------------- --------------- -------------- --------------
Net cash used in operating activities (20,265) (20,265) - -
--------------- --------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock 113,675 113,675 - -
--------------- --------------- -------------- --------------
Net cash provided by financing activities 113,675 113,675 - -
--------------- --------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of capital assets (2,763) (2,763) - -
Web site development costs (47,973) (47,973) - -
--------------- --------------- -------------- --------------
Net cash used in investing activities (50,736) (50,736) - -
--------------- --------------- -------------- --------------
CHANGE IN CASH POSITION DURING THE PERIOD 42,674 42,674 - -
CASH POSITION, BEGINNING OF THE PERIOD - - - -
--------------- --------------- -------------- --------------
CASH POSITION, END OF THE PERIOD $ 42,674 $ 42,674 $ - $ -
===============================================================================================================================
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS (Note 12)
The accompanying notes are an integral part of these financial statements.
F-6
NEWSGURUS.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
==============================================================================================================================
Deficit
Accumulated
During
Common Stock Additional the Total
--------------------------------- Paid in Development Stockholders'
Shares Amount Capital Stage Equity
- ------------------------------------------------------------------------------------------------------------------------------
BALANCE, MAY 16, 1997 - $ - $ - $ - $ -
Common stock issued for services 7,000,000 7,000 (6,500) - 500
Loss for the period - - - (500) (500)
-------------- ------------- ------------- -------------- --------------
BALANCE, JUNE 30, 1997 AND 1998 7,000,000 7,000 (6,500) (500) -
Loss for the period - - - (235) (235)
-------------- -------------- -------------- -------------- --------------
BALANCE, JUNE 30, 1999 7,000,000 7,000 (6,500) (735) (235)
Common stock issued to acquire
subsidiary 3,500,000 3,500 (3,500) - -
Common stock issued for cash 1,147,500 1,148 60,027 - 61,175
Common stock issued for cash 278,000 278 13,622 - 13,900
Common stock issued for cash 100,000 100 24,900 - 25,000
Common stock issued for cash 20,000 20 980 - 1,000
Common stock issued for services 20,000 20 980 - 1,000
Common stock issued for services 50,000 50 2,450 - 2,500
Cancellation of shares (3,756,000) (3,756) 3,756 - -
Common stock issued for cash 152,000 152 7,448 - 7,600
Common stock issued for cash 500,000 500 4,500 - 5,000
Loss for the period - - - (55,718) (55,718)
-------------- -------------- -------------- -------------- --------------
BALANCE, FEBRUARY 29, 2000 9,011,500 $ 9,012 $ 108,663 $ (56,453) $ 61,222
==============================================================================================================================
The accompanying notes are an integral part of these financial statements.
F-7
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
1. HISTORY AND ORGANIZATION OF THE COMPANY
NewsGurus.Com, Inc. ("the Company") was incorporated on May 16, 1997
under the laws of Nevada to engage in any lawful business or activity
for which corporations may be organized under the laws of the State of
Nevada. The Company's principal business consists of providing expert
opinion and information in the areas of money, health and lifestyles
and eventually into e-commerce through the Internet.
The Company entered the development stage in accordance with SFAS No. 7
on May 16, 1997. Its purpose is to evaluate, structure and complete a
merger with, or acquisition of a privately owned corporation. During
the period ended February 29, 2000, the Company acquired a 100%
interest in Gurus International Corp.
2. GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company has no current
source of revenue. Without realization of additional capital, it would
be unlikely for the Company to continue as a going concern. It is
management's plan to seek additional capital through equity financing.
====================================================================================================================
February 29, June 30,
2000 1999
--------------------------------------------------------------------------------------------------------------------
Deficit accumulated during the development stage $ (56,453) $ (735)
Working capital (deficiency) 10,693 (235)
====================================================================================================================
3. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
These consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Gurus International Corp. The
subsidiary was incorporated on October 29, 1999 under the laws of
Nevada. All significant intercompany balances and transactions have
been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenues
and expenses during the period. Actual results could differ from these
estimates.
BASIC LOSS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" ("SFAS 128"). Under SFAS 128, basic and diluted earnings per
share are to be presented. Basic earnings per share is computed by
dividing income available to common shareholders by the weighted
average number of common shares outstanding during the year. Diluted
earnings per share takes into consideration common shares outstanding
(computed under basic earnings per share) and potentially dilutive
common shares.
F-8
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments with
original maturities of three months or less.
CAPITAL ASSETS
Capital assets, being computer equipment, are recorded at cost.
Amortization of capital assets is calculated using the declining
balance method at an annual rate of 30%.
SOFTWARE DEVELOPMENT
The Company has adopted Statement of Position 98-1 ("SOP 98-1"),
"Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use", as its accounting policy for internally developed
computer software costs. Under SOP 98-1, computer software costs
incurred in the preliminary development stage are expensed as incurred.
Computer software costs incurred during the application development
stage are capitalized and amortized over the software's estimated
useful life.
INCOME TAXES
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". A deferred
tax asset or liability is recorded for all temporary differences
between financial and tax reporting and net operating loss
carryforwards. Deferred tax expenses (benefit) result from the net
change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133") which establishes
accounting and reporting standards for derivative instruments and for
hedging activities. SFAS 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. In June 1999, the FASB
issued SFAS 137 to defer the effective date of SFAS 133 to fiscal
quarters of fiscal years beginning after June 15, 2000. The Company
does not anticipate that the adoption of the statement will have a
significant impact on its financial statements.
REPORTING ON COSTS OF START-UP ACTIVITIES
In April 1998, the American Institute of Certified Public Accountant's
issued Statement of Position 98-5 ("SOP 98-5"), "Reporting on the Costs
of Start-Up Activities" which provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs
of start-up activities and organization costs to be expensed as
incurred. SOP 98-5 is effective for fiscal years beginning after
December 15, 1998 with initial adoption reported as the cumulative
effect of a change in accounting principle. The adoption of SOP 98-5 by
the Company during the year had no effect on its financial statements.
COMPREHENSIVE INCOME
In 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income". This
statement establishes rules for the reporting of comprehensive income
and its components. The adoption of SFAS 130 had no impact on total
stockholders' equity as of February 29, 2000.
F-9
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require, companies
to record compensation cost for stock-based employee compensation plans
at fair value. The Company has chosen to account for stock-based
compensation using Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees." Accordingly, compensation
cost for stock options is measured as the excess, if any, of the quoted
market price of the Company's stock at the date of the grant over the
amount an employee is required to pay for the stock.
4. CAPITAL ASSETS
===================================================================================================================
Net Book Value
------------------------------
Accumulated February 29, June 30,
Cost Amortization 2000 1999
-------------------------------------------------------------------------------------------------------------------
Computer equipment $ 2,763 $ 207 $ 2,556 $ -
===================================================================================================================
5. WEB SITE DEVELOPMENT COSTS
Web site development costs of $47,973 are comprised of software costs
incurred by the Company in developing its web site. The Company's
amortization policy concerning these costs is to amortize the costs
over a period of five years commencing from the date of operations. As
at February 29, 2000, no amortization has been taken.
6. BUSINESS COMBINATION
During the year, the Company entered into an acquisition agreement
whereby the Company acquired all the outstanding shares of Gurus
International Corp. ("Gurus"). The Company issued 3,500,000 of its
common shares at an agreed value of $3,500 to acquire the shares of
Gurus. At the date of acquisition, Gurus' net assets had a fair value
of $Nil.
7. CAPITAL STOCK
On August 16, 1999, the Company implemented a 1,000:1 forward stock
split and on December 17, 1999, a 7:1 forward stock split. The
statements of changes in stockholders' equity has been restated to give
retroactive recognition of the stock splits by reclassifying to common
stock from additional paid in capital, the par value of shares arising
from the split. In addition, all references to number of shares and per
share amounts of common stock have been restated to reflect the stock
split.
On May 16, 1997, the Company issued 7,000,000 shares with a par value
of $0.001 for services valued at $500.
On December 17, 1999, the Company issued 3,500,000 shares with a par
value of $0.001 to acquire all of the outstanding shares of Gurus
International Corp.
F-10
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
7. CAPITAL STOCK (cont'd.....)
On January 12, 2000, the Company issued 1,147,500 shares at $0.05 per
share for a total value of $61,175.
On February 1, 2000, the Company issued 278,000 shares at $0.05 per
share for a total value of $13,900.
On February 24, 2000, the Company issued 100,000 shares at $0.25 per
share for a total value of $25,000.
On February 24, 2000, the Company issued 20,000 shares at $0.05 per
share for a total value of $1,000.
On February 24, 2000, the Company issued 20,000 shares at an agreed
value of $1,000 as payment of fees for services received.
On February 28, 2000, the Company issued 50,000 shares at an agreed
value of $2,500 as payment of fees for services received.
On February 28, 2000, the Company cancelled 3,756,000 shares gifted
back to treasury.
On February 28, 2000, the Company issued 152,000 shares at $0.05 per
share for a total value of $7,600.
On February 28, 2000, the Company issued 500,000 shares at $0.01 per
share for a total value of $5,000.
8. STOCK OPTIONS AND WARRANTS
As at February 29, 2000, the Company had outstanding stock options,
enabling the holders to acquire the following:
===================================================================================================================
Number Exercise
of Shares Price Expiry Date
-------------------------------------------------------------------------------------------------------------------
600,000 $ 1.00 February 1, 2005
===================================================================================================================
As at February 29, 2000, the Company had outstanding share purchase
warrants, enabling the holders to acquire the following:
===================================================================================================================
Original
Number Exercise
of Shares Price Expiry Date
-------------------------------------------------------------------------------------------------------------------
60,000 $ 1.00 January 25, 2003
35,000 1.00 February 28, 2003
125,000 1.00 November 29, 2004
200,000 1.00 November 29, 2004
200,000 1.00 November 30, 2004
148,500 1.00 December 13, 2004
118,000 1.00 January 3, 2005
147,000 1.00 February 15, 2005
360,000 1.00 February 25, 2005
250,000 1.00 February 25, 2005
===================================================================================================================
F-11
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
9. STOCK BASED COMPENSATION EXPENSE
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation", encourages but does not require companies to
record compensation cost for stock-based employee compensation plans at
fair value. The Company has chosen to account for stock-based
compensation using Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees". Accordingly, compensation
cost for stock options is measured as the excess, if any, of quoted
market price of the Company's stock at the date of grant over the
option price. No stock based compensation has resulted from the use of
this standard.
Following is a summary of the status of the plan during 1999 and 2000:
====================================================================================================================
Weighted
Average
Number Exercise
of Shares Price
--------------------------------------------------------------------------------------------------------------------
Outstanding at June 30, 1999 and 1998 - $ -
Granted 600,000 $ 1.00
Forfeited - $ -
Exercised - $ -
-------------
Outstanding at February 29, 2000 600,000 $ 1.00
====================================================================================================================
Weighted average fair value of options granted $ 0.03
====================================================================================================================
Following is a summary of the status of options outstanding at February
29, 2000:
=====================================================================================================================
Outstanding Options Exercisable Options
------------------------------------------- -------------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Contractual Exercise Exercise
Exercise Price Number Life Price Number Price
- ---------------------------------------------------------------------------------------------------------------------
$ 1.00 600,000 4.80 $ 1.00 600,000 $ 1.00
=====================================================================================================================
F-12
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
9. STOCK BASED COMPENSATION EXPENSE (cont'd.....)
COMPENSATION
Had compensation cost been recognized on the basis of fair value
pursuant to Statement of Financial Accounting Standards No. 123, net
loss and loss per share would have been adjusted as follows:
====================================================================================================================
February 29, June 30, June 30,
2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------
NET LOSS
As reported $ (55,718) $ (235) $ -
==============================================
Pro forma $ (55,718) $ (235) $ -
==============================================
BASIC AND DILUTED LOSS PER SHARE
As reported $ (0.01) $ - $ -
==============================================
Pro forma $ (0.01) $ - $ -
====================================================================================================================
The fair value of each option granted is estimated using the Black
Scholes Model. The assumptions used in calculating fair value are as
follows:
====================================================================================================================
February 29, June 30, June 30,
2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------
Risk-free interest rate 6.434% - -
Expected life of the options 2 years - -
Expected volatility .001% - -
Expected dividend yield - - -
====================================================================================================================
10. COMMITMENT
On November 20, 1999, the Company entered into a letter of intent to
pay $100,000 to a company controlled by a former director for
consulting services for a period of three months. As of February 29,
2000, the Company has paid a total of $30,000 and the remaining balance
of $70,000 will be paid when services are completely rendered (Note
11).
11. RELATED PARTY TRANSACTION
During the eight month period ended February 29, 2000, the Company
entered into the following related party transactions:
a) The Company paid consulting fees of $30,000 (June 30, 1999 -
$Nil; June 30, 1998 - $Nil) to a company controlled by a
former director (Note 10).
b) The Company issued 3,500,000 common shares at an agreed value
of $3,500 to acquire all of the outstanding shares of Gurus
International Corp., a company controlled by common directors
(Note 6).
F-13
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
12. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
====================================================================================================================
February 29, June 30, June 30,
2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------
Cash paid for income taxes $ - $ - $ -
Cash paid for interest - - -
====================================================================================================================
Non-cash investing and financing transactions during the eight month
period ended February 29, 2000 were as follows:
a) The Company issued 3,500,000 shares of common stock at an
agreed value of $3,500 to acquire 100% of the outstanding
shares of Gurus International Corp.
b) The Company issued a total of 70,000 shares of common stock at
an agreed value of $3,500 for services rendered.
No significant non-cash investing and financing transactions occurred
during the years ended June 30, 1999 and 1998.
13. INCOME TAXES
The Company's total deferred tax asset is as follows:
======================================================================================================================
February 29, June 30, June 30,
2000 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
Tax benefit relating to net operating loss carryforwards $ 19,194 $ 80 $ -
Valuation allowance (19,194) (80) -
--------------- -------------- --------------
$ - $ - $ -
======================================================================================================================
The Company has a net operating loss carryforward of approximately
$56,453 which expires in 2007 and 2008. The Company provided a full
valuation allowance on the deferred tax asset because of the uncertainty
regarding realizability.
14. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash
equivalents, accounts payable and accrued liabilities. Unless otherwise
noted, it is management's opinion that the Company is not exposed to
significant interest, currency or credit risks arising from these
financial instruments. The fair value of these financial instruments
approximate their carrying values, unless otherwise noted.
F-14
NEWSGURUS.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
15. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition,
similar problems may arise in some systems which use certain dates in
1999 to represent something other than a date. Although the change in
date has occurred, it is not possible to conclude that all aspects of
the Year 2000 Issue that may affect the entity, including those related
to customers, suppliers, or other third parties, have been fully
resolved.
16. SUBSEQUENT EVENT
The following event occurred subsequent to February 29, 2000, the
Company entered into a Financing and Management Agreement with
Canalaska Ventures Ltd. ("Canalaska") to obtain financing for
information technology and software development .
The terms of the agreement between the Company and Canalaska includes
the following provisions:
Canalaska has the exclusive right to earn up to a 26.6% (three million
shares) interest in the Company by purchasing an equity position in the
Company in three phases, subject to specific terms and conditions.
Phase One requires Canalaska to issue a $30,000 convertible loan
(received) to the Company and a further $70,000 subject to regulatory
approval. The entire convertible loan must be converted to common
shares of the Company at a price of $0.25 per common share within 30
days of the Approval Date.
Phase Two requires Canalaska to make an investment of $440,000 by
purchasing 1,100,000 shares at a price of $0.40 per share of the
Company. After each increment of financing provided, Canalaska earns a
warrant that allows Canalaska the right to purchase an equal number of
additional shares in the Company at a price $1.30 per common share for
a period of two years from the date each increment is executed or
exercised.
Phase Three gives Canalaska the right to invest up to an additional
$1,950,000 in the common shares of the Company by executing its
warrants to purchase up to 1,500,000 common shares at a price of $1.30
per share, on a pro rata basis.
Subject to completion of the Phase II financing of the Company,
Canalaska has the exclusive right to own 51% and be the operator of an
exact Clone of the Company for Europe, South America, Mexico, the
Caribbean and Central and South America.
F-15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24 Indemnification of Directors and Officers
Item 25 Other Expenses of Issuance and Distribution
Item 26 Recent Sales of Unregistered Securities
Item 27 Exhibits
3.1** Articles of Incorporation
3.2 Amendment to Articles of Incorporation
3.3** Bylaws
5.1 Opinion of Evers & Hendrickson with respect to the legality of the shares being registered
23.1 Consent of Davidson & Company
23.2 Consent of Evers & Hendrickson (included in Exhibit 5.1)
27.1 Financial Data Schedule
99.1* Escrow Agreement
* To be filed in an amendment.
** Previously filed with Form 10SB on September 21, 1999.
Item 28 -- Undertakings
We undertake that we will:
1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to
be the bona fide offering.
3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
II-1
We undertake to provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as the underwriter requires to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Kelowna,
Province of British Columbia on May 26, 2000.
NEWSGURUS.COM, INC.
Per:
/s/ Chris Bunka
------------------------------
Authorized Signatory
President and Director
------------------------------
Title
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
/s/ Chris Bunka
- ------------------------------
(Signature) - Chris Bunka
President and Director
- ------------------------------
(Title)
May 26, 2000
- ------------------------------
(Date)
II-2