As filed with the Commission on October 23, 2002, File No. 333-99101
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
PRE-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
STRATABID.COM, INC.
(Name of small business issuer in its charter)
Delaware 6531 98-0381367
- ------------------------------- ---------------------------- -------------------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code) Identification No.)
Suite 1400, 1500 West Georgia Street, Vancouver, British Columbia, V6G 2Z6
(Address and telephone number of principal executive offices)
Suite 1400, 1500 West Georgia Street, Vancouver, British Columbia, V6G 2Z6
(Address of principal place of business or intended principal place of business)
Derek Wasson, President and CEO
Stratabid.com, Inc.
Suite 1400, 1500 West Georgia Street
Vancouver, British Columbia, V6G 2Z6
(604) 734-9844
(Name, address and telephone number of agent for service)
Copy to:
Roger Linn, Esq.
Weintraub Genshlea Chediak Sproul
400 Capital Mall, 11th Floor
Sacramento, CA, 95814
Tel: (916) 558-6000
Approximate date of proposed sale to the public: As soon as practicable
after the registration statement becomes effective.
i
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following blocks and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Title of each Proposed Proposed
class of Maximum Maximum
securities to be Amount to be Offering price aggregate Amount of
registered registered per share offering price registration fee
- --------------------------------------------------------------------------------
Common stock to 504,000 $0.25 (1) $126,000 $12
be offered by
selling
stockholders
Common stock for 500,000 $0.25 (1) $125,000 $12
sale by the
company
Total 1,004,000 $251,000 $24(2)
- --------------------------------------------------------------------------------
(1) Fee calculated in accordance with Rule 457(c) of the Securities Act of 1933,
as amended ("Securities Act"). Estimated for the sole purpose of calculating the
registration fee.
(2) Fee previously paid.
The registrant hereby amends this registration statement on the 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 or until the registration statement shall become
effective on the date as the Commission, acting pursuant to said Section 8(a),
may determine.
ii
Subject to Completion
October 23, 2002
STRATABID.COM, INC.
SALE OF
COMMON STOCK
This prospectus relates to the sale of up to 1,004,000 shares of common stock of
Stratabid.com, Inc. referred to as "us," "we" or "Stratabid." Of the 1,004,000
shares, up to 500,000 shares may be sold by us at $0.25 per share. The common
stock will be sold through our sole officer and director to investors, both
inside and outside the United States. For purposes of this offering, the officer
and director involved in offering and selling the shares on behalf of Stratabid
may be deemed to be an underwriter of this offering. The shares will be sold on
a "best efforts" basis with no minimum number of shares required be sold in
order for us to accept funds. If the entire 500,000 shares of common stock are
sold, we will receive gross proceeds of $125,000 before expenses of
approximately $20,000. We will offer shares pursuant to this prospectus until
January 31, 2003. No assurance can be given on the number of shares we will sell
or that we will be able to sell any shares.
In addition, this prospectus relates to the resale of up to 504,000 shares of
common stock by selling stockholders. The selling stockholders may sell their
common stock from time to time in private negotiated transactions. The selling
stockholders will offer or sell shares of our common stock at $0.25 per share
unless and until the offering price is changed by subsequent amendment to this
prospectus or our shares are quoted on the OTC Bulletin Board. Should our shares
become listed on the OTC Bulletin Board, selling shareholders may then sell
shares at prevailing market prices or privately negotiated prices. We will not
receive any proceeds from the resale of shares of common stock by the selling
stockholders.
Our common stock is not currently traded on any exchange or quotation system.
Investing in the common stock involves a high degree of risk. You should
purchase shares only if you can afford a complete loss. YOU SHOULD CAREFULLY
REVIEW THE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
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 offence.
- --------------------------------------------------------------------------------
Price to the Maximum Proceeds to the
Public Selling Company (1)
Commission
- --------------------------------------------------------------------------------
Per Share $0.25 0 $0.25
Total 500,000 shares $125,000 0 $125,000
of common stock
- --------------------------------------------------------------------------------
- ---------------------------------------
(1) Before deducting expenses related to the offering anticipated to be $20,000.
iii
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
The date of this prospectus is __________, 2002.
iv
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY.......................................................1
RISK FACTORS.............................................................2
THE OFFERING.............................................................6
USE OF PROCEEDS..........................................................6
DILUTION.................................................................7
MARKET FOR OUR COMMON STOCK..............................................8
DIVIDEND POLICY..........................................................9
FORWARD-LOOKING STATEMENTS...............................................9
BUSINESS.................................................................9
PROPERTY................................................................14
MANAGEMENT'S DISCUSSION AND ANALYSIS....................................14
MANAGEMENT..............................................................17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........................19
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..........20
PLAN OF DISTRIBUTION....................................................20
SELLING STOCKHOLDERS....................................................22
DESCRIPTION OF SECURITIES...............................................23
LEGAL PROCEEDINGS.......................................................24
LEGAL MATTERS...........................................................24
AVAILABLE INFORMATION...................................................25
FINANCIAL STATEMENTS....................................................26
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PROSPECTUS SUMMARY
This summary is intended to highlight information contained elsewhere in this
prospectus. You should carefully read the entire prospectus, including the
section entitled "Risk Factors." All dollar amounts refer to United States
dollars unless otherwise noted.
Our Business
As used in this prospectus, the reference to "we" and "Stratabid" and the
business operations discussed in this prospectus refer to Stratabid.com, Inc.
We are a startup stage Internet based commercial mortgage origination business.
We intend to operate primarily through our wholly-owned subsidiary,
Stratabid.com Online (B.C.) Ltd. which was formed pursuant to the laws of the
Province of British Columbia on January 25, 2000.
We plan to offer an online alternative for arranging commercial term mortgages.
We plan to give borrowers the opportunity to apply directly to a qualified
market of lenders interested in financing commercial properties. Borrowers will
be able to log on to our online marketplace where they will find a home page
featuring lenders' logos and links to three separate areas to work on their
financing needs. We plan to retain contract underwriters who will review the
borrower's applications. If the application is complete and meets our
underwriting guidelines it will be forwarded to our member lenders who have
expressed interest in financing such borrowers, based upon pre-determined
configurations. The application will also be posted to a bulletin board where it
can be viewed by all member lenders. The lenders will review the application and
provide bids. We will then work with the borrower to document and close the
loan. Loan transactions will be completed with no brokerage fees to the
borrower.
Our plan of business will provide two benefits to our member lenders. Firstly,
we will provide a targeted forum to promote our member lenders' products and
build their brand which is increasingly important in today's constantly changing
mortgage market. Secondly, we will generate financing opportunities at no cost
to our member lenders because a participating mortgage lender will not pay a fee
to be listed on our website. A member lender only pays us a referral fee when
and if a loan is consummated with the member lender.
Please refer to "Risk Factors" for a discussion of some of the risks effecting
our business and plan of business.
Our corporate offices and operations are located at Suite 1400, 1500 West
Georgia Street, Vancouver, British Columbia V6G 2Z6. Our telephone number is
(604) 734-9844. We have one wholly-owned subsidiary, Stratabid.com Online (B.C.)
Ltd., which maintains business offices at our principal business office in
Vancouver.
Offering Summary
Selling stockholders are offering for resale up to 504,000 shares of our common
stock which they currently own. Stratabid will not be involved in the offer or
sale of these shares other than registering such shares for resale pursuant to
this prospectus.
1
Stratabid is offering up to 500,000 shares of its common stock as summarized
below:
Common stock offered by the Company 500,000 shares
Common stock outstanding before the offering 1,254,000
Common stock outstanding after the offering 1,754,000 (1)
Offering Price $0.25 per share
Use of proceeds Approximately $105,000 after
expenses to further develop and
refine our website, to market our
services and for general working
capital purposes.
- ---------------------------------------
(1) Assumes the sale of 500,000 shares by the Company.
Summary of Consolidated Financial Data
Year Ended Six Months Six Months
December 31, Ended Ended
2001 June 30, 2001 June 30, 2002
- --------------------------------------------------------------------------------
(Unaudited)
Revenues $Nil $Nil $Nil
Operating Expenses 16,226 7,500 19,249
Earnings (Loss) (16,226) (7,500) (19,249)
Earnings (Loss) Per Share $(0.02) $(0.01) $(0.02)
As at As at
December 31, 2001 June 30, 2002
- --------------------------------------------------------------------------------
(Unaudited)
Total Assets $ 70 $ 35,156
Working Capital (Deficit) (1,180) 31,211
Stockholders' Equity (Deficit) $(1,180) 32,971
RISK FACTORS
An investment in our securities involves a high degree of risk. Before deciding
whether to invest, you should read and consider carefully the following risk
factors.
We expect to incur losses in the near future which could jeopardize our
long-term viability
We have incurred losses since inception and we have not generated any revenues.
Our net losses are expected to continue through at least the current fiscal
year. As a result of our losses and negative cash flows from operations, our
2
ability to continue operations will depend on our ability to generate revenues
and the availability of outside financing for working capital. Assuming the sale
of all 500,000 shares of common stock, the proceeds therefrom will be utilized
over the next twelve months as specified in the Section "Use of Proceeds". If we
are unable to generate sufficient revenues in the near future to cover our
expenses or obtain outside capital to cover operating expenses, we may be unable
to establish or maintain business operations.
The Independent Auditor's Report contains a going concern explanation
Our audited consolidated financial statements for the year ended December 31,
2001 were prepared on a going concern basis in accordance with United States
generally accepted accounting principles. The going concern basis of
presentation assumes that we will continue in operation for the foreseeable
future and will be able to realize our assets and discharge our liabilities and
commitments in the normal course of business. However, our auditor has indicated
that our inability to generate sufficient revenue raises substantial doubt as to
our ability to continue as a going concern.
We have no operating history with which to predict our future performance
We are a start-up company and are in the process of setting up our business and
website. We have not yet commenced our business operations or generated
revenues. As a result, we have no operating history upon which an evaluation of
our future performance can be made. Our prospects must be considered in light of
the risks and difficulties encountered by new companies which have not yet
established an operating track record. See "Business".
We have not yet generated any revenues from web-based services with which to pay
operating expenses
Our revenues will be derived primarily from referral fees paid by lenders who
consummate loan transactions through our online mortgage brokerage service.
Consequently, we may receive and process loan applications but receive no
compensation for such services if no participating lenders bid on such
application or if a loan transaction is not ultimately consummated between
borrower and lender. Neither the borrower nor the lender pays any up-front fees
and may terminate the loan application process at any time prior to consummating
the loan transaction. We will receive no fee or cost reimbursements for loan
transactions which are facilitated by our brokerage service but do not
ultimately close.
The offering price of $0.25 per share was arbitrarily determined by us and is
not based on any trading market value
The price of our common stock offered hereby has been arbitrarily determined by
us and bears no relationship to our earnings, book value or any other recognized
criteria of value. Our shares are not currently traded on any stock market.
Consequently, no established market value for our shares exists. As a result,
there is no assurance that shares purchased pursuant to this prospectus can be
resold at or above the offering price.
We will need to raise additional capital in order to sustain current operations
because we do not have any revenues, we intend to fund our initial operations
3
with additional outside capital. If we are unable to obtain financing in the
amounts and on terms acceptable to us, our business and future success may be
adversely affected. Our management has limited experience in raising capital,
which may reduce the likelihood of obtaining capital. To date, we have relied on
the sale of equity securities to meet our operational and capital requirements.
Any future equity financing could result in dilution to our stockholders. Debt
financing will result in interest expense and the risk we cannot repay the debt
when due.
We anticipate new competition in the online commercial mortgage business which
could impact our future revenues
We hope to take advantage of a new online mortgage banking service in Canada. As
one of the early entrants into this market, we anticipate only limited initial
competition. However, if we are successful, we anticipate increasing
competition. We may not be able to compete with other companies who enter the
market by providing similar services. Our competitors may develop Internet
services that are superior to, or have greater market acceptance than, our
services. If our competitors develop better Internet services or more effective
marketing than ours for commercial mortgage borrowers and lenders, we may be
unable to compete successfully and our business, financial condition and
operating results would be adversely affected.
Many of our competitors will have greater financial, marketing and other
resources than we do. This may place us at a disadvantage in responding to our
competitors' pricing strategies, technological advances, advertising campaigns,
strategic alliances and other initiatives.
If the commercial real estate financing industry does not adopt the electronic
commerce market for its business, our Internet business could fail in the long
term
The success of our Internet based business will depend on several factors
including:
o Electronic commerce is still developing and may not be suitable for the
commercial real estate financing industry and even if suitable, may not
capture sufficient business to generate profitable operations;
o The commercial real estate financing industry has traditionally relied
on non-Internet based means of doing business;
o We have no long term contracts or agreements with our customers or
lenders and, as a result, we have no assurance of ongoing revenues;
o Our ability to increase consumer awareness of and willingness to
utilize Internet-based services to apply for commercial real estate
loans;
o Government regulation or taxation may adversely affect the users of
electronic commerce.
Any of the above factors could prevent our commercial real estate related
Internet services and new products from attracting sufficient numbers of
customers to result in profits.
4
Since we rely on one provider to host our website, our technical systems could
fail if their service is interrupted
Although we have back up facilities for our computer systems, we rely on one
provider to host our website. If our website host failed to provide service to
our systems, we would be unable to maintain website availability. Interruptions
could result from natural disasters as well as power loss, telecommunications
failure and similar events. Our business depends on the efficient and
uninterrupted operation of our computer and communications hardware systems. Any
system interruptions that cause our website to be unavailable could materially
adversely affect our business. Furthermore, we will be depending on outside
expertise to maintain and expand our website design and capabilities. There is
no assurance that website consultants can be retained who will understand the
needs of and have the solution for a desirable, user-friendly commercial
mortgage website.
We are developing products based on information we obtain from third parties in
the commercial real estate financing industry, which could expose us to legal
liability
We may be subject to legal claims relating to the content in our website and
related products. Some of the content proposed for our online marketplace may be
drawn from data compiled by other parties, including governmental and commercial
sources. We will then reformat that data and produce specialized products based
on that market segment. This data may have errors. If our content is improperly
used or if we supply incorrect information, it could result in unexpected
liability. Our business, financial condition and operating results could suffer
a material adverse effect if costs or losses resulting from these claims are not
covered by our insurance or exceed our coverage.
You will suffer immediate and substantial dilution
Purchasers of the common stock offered hereby will suffer immediate and
substantial dilution. See "Dilution" below.
There is no trading market for our stock which will limit a stockholder's
ability to buy and sell our stock
No trading market currently exists for our common stock and no such market is
expected to develop in the near future. Due to this lack of a trading market,
stockholders will be limited in their ability to buy or sell our common stock.
Consequently, stockholders may not be able to sell their stock in a timely
manner or at a price they deem acceptable.
Stratabid's President owns a controlling interest in the company allowing him to
individually determine Stratabid's future direction
Stratabid's President, Derek Wasson, currently beneficially owns almost 80% of
the outstanding shares of Stratabid's common stock and would own over 43%
assuming he sells 250,000 of his shares and Stratabid sells all 500,000 shares
offered in this prospectus. Consequently, he is in a position to control or
influence the election of a majority of directors and other matters subject to
stockholder vote. See "Security Ownership of Certain Beneficial Owners and
Management."
5
THE OFFERING
We are registering, up to 500,000 shares of common stock for sale to the public.
The common stock will be sold by our sole officer and director Derek Wasson, to
investors inside and outside the United States. Other than possible
reimbursement for out-of-pocket selling costs incurred by the officers and
directors in their selling efforts and costs of preparing this prospectus, no
commissions or other deductions will be paid from the proceeds raised. There is
no minimum number of shares that must be sold on behalf of Stratabid in order to
accept funds and consummate investor purchases.
Determination of offering price
We have arbitrarily determined the initial public offering price of the shares
at $0.25 per share. We considered several factors in such determination.
Including the following:
o prevailing market conditions, including the history and prospects for
the industry in which we compete;
o our future prospects; and
o our capital structure.
Therefore, the public offering price of the shares does not necessarily bear any
relationship to established valuation criteria and may not be indicative of
prices that may prevail at any time or from time to time in the future. You
cannot be sure that a public market for any of our securities will develop and
continue or that the securities will ever trade at a price higher than the
offering price in this offering.
We are also registering on behalf of selling stockholders, for resale up to
504,000 shares of common stock. The shares of common stock offered for resale
may be sold in a secondary offering by the selling stockholders by means of this
prospectus. The shares will be sold at a price of $0.25 per share. Stratabid
will not participate in the resale of shares by selling stockholders.
USE OF PROCEEDS
The proceeds from the sale of the shares of common stock offered by Stratabid
are estimated to be up to $125,000 based on a public offering price of $0.25 per
share. We intend to utilize the estimated proceeds during the twelve month
period following this offering for the following purposes:
50% of Maximum Maximum Offering
Offering Amount Amount
Total Proceeds $ 62,500 $125,000
Expenses of Offering $ 15,000 $ 20,000
-------- --------
Net Proceeds from Offering $ 47,500 $105,000
Use of Net Proceeds
Website Development $ 5,000 $ 5,000
Marketing and Advertising $ 15,000 $ 15,000
Working Capital* $ 27,500 $ 85,000
----------------------
6
*Working capital includes expenditures for hiring new employees, acquiring
new office space, paying salary to the President and repaying approximately
$1,500 advanced to Stratabid by the President to cover start up expenses.
Working capital will also be used to pay various ongoing operating
expenses.
The above table assumes the sale of either 250,000 or 500,000 shares of common
stock being offered by Stratabid. If less than all the shares are sold, the
allocation of net proceeds would be adjusted proportionately.
Although the above table sets forth management's expected use of proceeds,
management may adjust the allocation of proceeds to the uses set forth above
based upon the amount of actual proceeds received and the operational needs of
Stratabid.
We will not receive any proceeds from the sale of the shares by the selling
stockholders.
DILUTION
Our book value per share, as of June 30, 2002, including the sale of 254,000
shares of common stock on July 5, 2002, was $0.026 per share. Without taking
into account any changes in our book value up to June 30, 2002 other than the
issuance of 254,000 shares of our common stock as stated above, and giving
effect to the sale by Stratabid of 500,000 shares of common stock offered hereby
(after deducting estimated offering expenses payable by Stratabid) the pro forma
book value at June 30, 2002, would have been approximately $147,971 or $0.085
per share. This amount represents an immediate dilution to new investors of
$0.165 per share. The following table illustrates this dilution per share:
Public offering price per share $0.25
Book Value per share a June 30, 2002* $0.026
Book value per share after offering $0.085
Increase per share attributable to existing stockholders $0.059
Dilution per share to new investors $0.165
*After giving effect to the issuance of 254,000 shares of our common stock on
July 5, 2002
The following table sets forth, as of October 15, 2002, the number of shares of
common stock outstanding and the percentage of shares of common stock purchased
by the existing stockholders and by the investors purchasing shares of common
stock in this offering:
Share Purchased
Number Percent
-------------------------------------
Existing Stockholders 1,254,000 71.5%
New investors 500,000 28.5%
-------------------------------------
Total 1,754,000 100.00%
========= =======
7
MARKET FOR OUR COMMON STOCK
Our common stock is not quoted on any exchange and there is no public trading
market.
As of October 15, 2002 we had 1,254,000 issued and outstanding shares of common
stock and 15 stockholders of record. We do not have any outstanding options,
warrants or other arrangements providing for the issuance of additional shares
of our capital stock. Of the 1,254,000 shares of common stock outstanding as of
October 15,2002, approximately none of these shares were eligible for resale
pursuant to Rule 144 of the 1933 Act. Except for the shares being registered in
this prospectus, we do not have any current intention or obligation to register
any additional shares of common stock for sale.
There is no public market for our common stock. Trades of our common stock,
should a market ever develop, will be subject to Rule 15g-9 of the Securities
and Exchange Commission ("SEC"), which rule imposes certain requirements on
broker/dealers who sell securities subject to the rule to persons other than
established customers and accredited investors. For transactions covered by the
rule, brokers/dealers must make a special suitability determination for
purchasers of the securities and receive the purchaser's written agreement to
the transaction prior to sale. The SEC also has rules that regulate
broker/dealer practices in connection with transactions in "penny stocks". Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with
respect to transactions in that security is provided by the exchange or system).
The penny stock rules require a broker/ dealer, prior to a transaction in a
penny stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prepared by the SEC that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker/dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker/dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker/dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before or
with the customer's confirmation. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for our
common stock. As a result of these rules, investors in this offering, even if a
market for our shares ever develops, may find it difficult to sell their shares.
The provisions in our Certificate of Incorporation allow our board of directors
to issue preferred stock with rights, preferences and privileges superior to our
common stock. The issuance of preferred stock with such rights may make the
removal of management difficult even if such removal would be considered
beneficial to stockholders generally. It would have the effect of limiting
stockholder participation in certain transactions such as mergers or tender
offers if such transactions are not favoured by our management. There are no
shares of preferred stock outstanding, and there are no current plans,
arrangements, commitments or undertakings to issue additional preferred stock.
However, the board of directors has the authority to issue additional shares of
preferred stock at any time up to the amount authorized in our Certificate of
Incorporation.
8
DIVIDEND POLICY
Holders of our common stock are entitled to receive such dividends as may be
declared by our board of directors and, in the event of liquidation, to share
pro rata in any distribution of our assets after payment of liabilities. We have
not paid any dividends on our common stock and we do not have any current plans
to pay any common stock dividends.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements, as that term is defined in
the Private Securities Litigation Reform Act of 1995. These statements relate to
future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may," "will,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors," that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
BUSINESS
Corporate History
We were incorporated in the State of Delaware on January 14, 2000. On that date
we issued 1,000,000 shares of our common stock to our initial founder, Steven
Bruk for $1,000. Mr. Bruk developed the initial concept for our business but was
unable to implement our business plan due to lack of financial resources and
other commitments on his time.
On January 25, 2001, Mr. Bruk sold his 1,000,000 shares of common stock to Derek
Wasson. In connection with the acquisition by Mr. Wasson of the shares from Mr.
Bruk, Mr. Bruk resigned as our sole director and officer and Derek Wasson was
appointed in his place.
Industry Overview
According to Statistics Canada, an agency of the Canadian government, almost $50
billion in commercial mortgage transactions are made every year in Canada.
Commercial mortgage transactions involve secured financing for the development
or purchase of apartment, industrial, retail and office buildings.
The past decade has been a time of significant change in the Canadian commercial
mortgage market. The traditional large volume lenders, such as life insurance
9
and trust companies, have merged or exited the market such that fewer lenders
are now engaged in the commercial lending business. We believe that trust
companies are handling only a quarter of the business they did ten years ago
while life insurance companies continue to be the largest volume lender that
represent only about half of the number of companies as compared to ten years
ago. Commercial banks have also been a source for commercial lending. However,
due to mergers and consolidations, fewer banks now compete in this industry. New
lenders in the commercial mortgage market include credit unions and caisse
populaires which have made strong inroads into the commercial lending market
along with several U.S. financial companies and MBS lenders who have also
recently entered this market. As a result, the commercial mortgage market has
become increasingly fragmented and confusing as viewed by the typical commercial
mortgage borrower.
Business of Stratabid
Stratabid intends to create an Internet based solution for arranging commercial
term mortgages. In order to take advantage of its streamlined processing
procedures, and its lower cost basis, Stratabid will target term loans secured
by income producing properties in amounts of between $1 and $10 million. We
believe that the $1-$10 million loan size will comport to our online application
process and underwriting review and provide the best application-to-consummation
ratio. In addition, focusing on income producing properties is deemed to provide
the most straightforward underwriting evaluation and lend themselves well to the
abbreviated loan applications prepared on our website.
To implement our strategic plan, we developed and launched our website in June
2002. The website address is "www.stratabid.com." Initially, website visitors
could review the online loan application and utilize a mortgage calculator. As
of September 1, 2002, the first four member lenders were added to the website
which is now fully functional. Customers can now visit the website, learn about
the services offered by Stratabid, review interest rates, use online tools to
compare financing scenarios, and complete and submit a commercial property loan
application. The application will be screened, initially by Stratabid's
President, and, if the application meets certain underwriting criteria, will be
submitted to one or more member lenders for funding consideration.
We plan to give borrowers the opportunity to apply directly to a qualified list
of lenders interested in financing commercial properties. Borrowers will be able
to log on to our online marketplace where they will find a home page with links
to three separate areas to work on their financing needs. In one area they will
find a set of software tools allowing borrowers to perform technical analysis
such as compare interest rates, loan payments and amortization, financing
scenario comparisons and pay-out calculations. A second area will be a showcase
of our participating lenders ("member lenders") and their products. The third
area will allow borrowers to complete an online application form and return it
to us. We plan to contract with experienced loan underwriters who will review
the applications. If the application is complete and meets our underwriting
guidelines it will be forwarded to our member lenders who, based upon
pre-determined configurations of each lender, have expressed interest in
financing such borrowers. The application will also be posted to a bulletin
board where it can be viewed by all member lenders. The lenders will review the
application and if interested will provide bid letters to Stratabid which will
10
forward them to the borrower. We will then work with the borrower and the lender
selected by the borrower to document and close the loan. Loan transactions will
be completed with no brokerage fees to the borrower.
Our plan of business will provide two benefits to our member lenders. Firstly,
we will provide a targeted forum featuring lenders' logos to promote our member
lenders' products and build their brand name which is increasingly important in
today's constantly changing mortgage market. Secondly, we will generate
financing opportunities at no cost to our member lenders who can be listed on
our website for free. Our member lenders only pay referral fees to us when and
if a loan transaction is consummated.
Referral fees will range from 1/4% to 1/2% of the loan principal amount.
Referral fee percentages will vary depending on the size and complexity of the
loan with larger loans typically assessed a lower fee percentage. The referral
fee will be negotiated by Stratabid and documented in the closing loan
documentation.
We anticipate having a minimum of five member lenders by the end of the year.
Member lenders will agree to a one-year listing term with Stratabid during which
term they will agree not to list their services with any other online commercial
mortgage aggregator. These listing terms are oral arrangement and Stratabid does
not currently require a written agreement from the lender members. Listing terms
can be renewed at the end of each term subject to request by the lender and
approval by Stratabid. Our initial member lenders include TD Canada Trust, Maple
Mortgage Trust, First Marathon Mortgage Corporation and Canada Life Mortgage
Services, Inc.
After the mortgage lending business is established, we plan to start soliciting
for advertising on our website. We anticipate that various property service
providers such as escrow companies, property managers, building contractors,
etc. will pay a fee to have their advertising posted on our website. Member
lenders will be charged a fee for advertising only if such member lender wishes
to place advertising in addition to the lender listing provided at no charge. As
of the date of this prospectus, no advertising had yet been added to our
website.
Stratabid will focus its business development in Canada, particularly in the
Provinces of British Columbia, Alberta and Ontario. Stratabid's mission is to
create Canada's first national online commercial mortgage brokerage service.
Recent Events
On July 5, 2002 we issued 254,000 shares of common stock to 14 investors at a
price of .20 per share for gross proceeds to us of $50,800. The proceeds of this
offering will be used to pay outstanding liabilities, further develop our
website, www.stratabid.com, and for general working capital purposes.
Through this offering we are attempting to raise additional capital to implement
our plan of business.
Principal Products or Services
Stratabid plans to provide an Internet-based marketplace where commercial
mortgage borrowers and mortgage lenders come together to make commercial
11
mortgage transactions. The online marketplace will be a "no user fee" commercial
mortgage aggregator, which will offer the services of traditional mortgage
brokers.
We will provide commercial mortgage borrowers with a readily available website
which will give them access to mortgage calculation tools, an online application
capability and direct access to a list of qualified lenders who are interested
in financing commercial properties. Borrowers will have the ease of making one
loan application from the convenience of their own computer and promptly
evaluated by qualified underwriters retained by Stratabid. Such underwriters
will promptly review the application and either return it if it fails to meet
underwriting guidelines or forward it to those member lenders who will be most
likely to be interested in and bid for the loan transaction. The borrower also
has the benefit of having to pay no fee for utilizing our services.
As a commercial mortgage brokerage firm, we expect that lenders will be drawn to
participate in our marketplace because it will generate financing opportunities
in the market's most desirable segments. As mortgage origination is competitive
and costly for lenders, our service is planned to generate deal opportunities
for our member lenders with no upfront marketing costs. We also plan to provide
the underwriting services required to document and evaluate each application and
facilitate closing the loan. Our member lenders will pay a referral fee to us
only when a deal has been successfully completed.
As our business matures, we plan to add new services until we operate a fully
integrated commercial real estate portal. Initially, such new services will
include the addition of paid advertising by vendors and service providers. Up to
$5,000 of proceeds from this offering will be utilized to design and display
advertising on our website. Longer term services could include strategic
partnerships with other related service providers and hosting commercial
property listings.
Our marketplace will also serve mortgage brokers that may represent commercial
borrowers but lack the tools to identify financing sources. These mortgage
brokers may be located away from major centers and lack access to the commercial
lending market, or may be residential specialists that lack the expertise in
commercial mortgage finance. A mortgage broker can utilize our services much
like a borrower by submitting commercial mortgage applications on behalf of his
or her clients. Stratabid will earn a referral fee if the loan is funded and the
broker can bill his or her client for the services he or she has provided. In
the future, we plan to create a broker center to service the mortgage brokerage
community whereby brokers, for a fee, will be able to take advantage of
customized online marketplace technologies and lender base as well as our
underwriting services.
Marketing
Borrowers have traditionally arranged financing of commercial real estate
properties in one of two ways: through lenders directly or through mortgage
brokers. More recently, in the United Stated borrowers have been able to access
mortgage funds online through commercial mortgage brokerage sites.
Lenders are the providers of funds for commercial mortgage financing. In the
Canadian market, these lenders would include trust companies, life insurance
companies, credit unions and caisse populaires. In addition, several United
12
States based financial companies have been making inroads into the Canadian
commercial mortgage market. In addition to providing mortgage funding, lenders
also solicit mortgages directly from the borrowers. Our competitive edge over
lenders is our ability to offer a borrower a list of member lenders to select
from. Our application process allows a borrower to be considered by lenders for
whom he/she is deemed to be a qualified applicant. In addition, a borrower could
receive bids from more than one lender, thus giving the borrower a choice of
lenders. From the lenders' point of view, our service provides a free marketing
tool and the advantage of receiving only pre-screened mortgage applications. The
lender is charged a referral fee only if and when a loan transaction is
consummated.
Our business plan involves working directly with established lenders to connect
them with borrowers directly and by doing so replace the traditional mortgage
brokers as intermediaries between borrowers and lenders. Traditional mortgage
brokers market their financing expertise and market knowledge to borrowers.
However, the transparency of our online marketplace will enable borrowers with
quality commercial real estate financing opportunities to access a selection of
lenders who can then bid on the opportunity similar to a broker, but without the
fees typically associated with utilizing mortgage brokers. However, it is
anticipated that many mortgage brokers, who represent under served areas or lack
experience in commercial (as opposed to residential) mortgage lending, will find
our online marketplace a convenient and cost effective method of securing a
commercial mortgage for their client.
We are aware of no online commercial mortgage brokers currently operating in
Canada. In the United States, several companies offer an online commercial
mortgage brokerage model. By being one of the first companies to offer this
online mortgage loan capability in Canada, we hope to establish our web-based
program and lender participation before other competitors enter the market.
Competition
Our principal sources of competition will include established lenders,
traditional mortgage brokers and eventually other online mortgage originators.
As an early entrant into the online commercial mortgage origination market in
Canada, we will have to heavily promote our name and services in order to create
consumer awareness. However, even if borrowers become aware of our services,
there is no assurance that borrowers will choose to utilize our web-based
services as an alternative to more traditional mortgage transactions with
lenders or through a mortgage broker. There is the possibility that our online
services will be utilized by fewer, perhaps less qualified borrowers which would
result in fewer consummated transactions and lower revenues.
Conversely, if we are successful in implementing our business plan by drawing
significant numbers of qualified borrowers, we anticipate additional competition
to be forthcoming very quickly. The mortgage brokerage business has relatively
low barriers to entry which allow participates to enter the market with relative
ease. Many of such competitors would have greater name recognition and financial
resources than we do. As a result, competitors could acquire significant market
share. Our inability to generate awareness of our web-based services and
establish competitive advantages in the commercial mortgage marketplace would
have a material adverse effect on our operations and profitability.
13
Intellectual Property, Government Approvals and Regulation
Our trade name, web site designs and business plan are not protected by any
patents or copyrights. Our website domain name is registered with Network
Solutions, Inc. and our website is maintained by Combustion Hosting. We are not
subject to government regulation nor do we require any government approvals in
either Canada or the United States to provide Internet or web design services to
our customers. We may be subject to regulations in the future if state or
federal agencies choose to impose regulations applicable to the Internet.
Persons performing mortgage broker services are subject to licensing by each
Canadian province in which they do business. Mr. Wasson is a licensed mortgage
broker in the Canadian provinces of Alberta, British Columbia and Ontario. No
further licensing is required by Stratabid in order to commence its online
mortgage brokerage business.
Research and Development Expenditures
During fiscal year 2001, we did not spend any funds on website research and
development. We spent approximately $4,000 during the first six months of 2002
for website research and development.
Employees
We currently have one full-time employee, Derek Wasson who is our sole officer
and director. Mr. Wasson currently devotes substantially all of his time to the
development and operation of Stratabid including the underwriting service on
loan applications until a full-time mortgage underwriter is hired. Stratabid
also utilizes the services of a public relations consultant and a web designer
on an as needed basis. We expect to have one mortgage underwriter and one sales
person on staff within the next nine months. The hiring of initial employees
will depend on securing sufficient funding to cover employee costs. Hiring of
other management, staff and consultants will occur incrementally as funds become
available and the need arises. We have no collective bargaining agreement or
employment agreements in existence.
PROPERTY
Our corporate and operational offices are located at Suite 1400, 1500 West
Georgia Street, Vancouver, British Columbia, Canada V6G 2Z6 where we lease
office space under a month-to-month lease at a rental rate of $250 a month. Rent
for the first four months from January to April of 2002 was donated by the
president of Stratabid. As of May 1, 2002, Stratabid has paid the monthly rent
for this office space. We believe this space is sufficient at this time and
plans to move to expanded office space are contingent upon completion of this
offering and the hiring of full-time employees. We do not have any material
assets and, as such, we do not own any real or personal property.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AND PLAN OF OPERATIONS
General
The following discussion may contain forward-looking statements and projections.
Because these forward-looking statements and projections are based on a number
14
of assumptions and are subject to significant uncertainties and contingencies,
many of which are beyond our control, there is no assurance that they will be
realized, and actual results may vary significantly from those shown.
Plan of Operations
We were incorporated in the State of Delaware on January 14, 2000. Since
inception, we have relied on equity financings to fund our operations. Funds
required to finance our future Internet services, marketing efforts and ongoing
business are expected to come primarily from debt and equity financing with the
remainder provided from operating revenues. We have not generated any operating
revenues to date. Future financings may be necessary to meet our anticipated
working capital needs over the current fiscal year. Potential sources of
additional capital include private placements with institutional investors
and/or a public offering of our common stock.
Our plan of business encompasses the following steps.
o Raise capital of up to $125,000 through the sale of equity securities
o During the next four months develop and refine our website including
expending approximately $5,000 to design and display vendor
advertising.
o Continue discussions with additional mortgage lenders with the goal of
adding two more member lenders during November 2002 and two more member
lenders by the end of 2002. The cost of this effort is estimated at
$500.
o Aggressively market our commercial mortgage services including print
advertising commencing in or about November 2002 and hosting a booth at
the International Conference of Shopping Centers ("ICSC") in Whistler,
B.C. in January. Print advertising is estimated to cost $300 per week
while the participation in the ICSC conference is estimated to cost
$3,000.
o By the end of the year, hire and train a mortgage underwriter,
a sales/marketing person and one or more support staff.
All of the above milestones are expected to be financed primarily from the
proceeds of this offering and to a lesser extent by operating revenues and
outside capital investment.
We have made initial progress in implementing our business. Our website,
www.stratabid.com became active in June 2002 and the first four member lenders
were added to the website as of October 1, 2002.
We will face considerable risks in each step of our business plan, such as the
anticipated difficulty in persuading the commercial real estate financing
industry to embrace the Internet. Other anticipated challenges include finding
and developing our employees, meeting increasing competitive pressures and
overcoming continuing negative economic conditions which tend to reduce
commercial property development and investment.
We hope to begin generating revenues from operations in early 2003 but we do not
anticipate generating positive cash flow during the first year of operations.
15
Therefore, we anticipate obtaining the capital which we will require to fund
operations and growth through a combination of debt and equity financing. We
anticipate that in the next 12 months, we will need approximately $100,000 to
establish and promote our web-based business. Consequently, if we raise the
maximum proceeds in this offering ($125,000), we would expect to have sufficient
funds to meet cash requirement for the next 12 months. If we raise only 50% of
the maximum proceeds ($62,500), we would expect to have sufficient funds to meet
cash requirements for the next 6-8 months assuming a program of reduced capital
expenditures would be implemented. There is no assurance that we will be able to
obtain necessary amounts of capital or that our estimates of our capital
requirements will prove to be accurate. As of the date of this prospectus we did
not have any commitments from any source to provide additional capital.
If lesser amounts of proceeds are realized from this offering, we would curtail
print advertising expenditures and delay the hiring of full-time staff and
securing larger office space. We will be forced to rely on our existing cash in
the bank and funds loaned by management if insufficient investment capital
threatens our ongoing operations. Our management has no formal commitments or
arrangements to advance or loan funds to us. In such a restricted cash flow
scenario, we would be unable to complete our business plan, and would, instead,
delay all cash intensive activities. Without necessary cash flow, we may be able
to sustain only limited operations until such time as necessary funds can be
raised.
Results of Operation
Six Months ended June 30, 2002 and June 30, 2001
- ------------------------------------------------
We have not yet commenced operations and, as a result, have not yet received any
revenues. Start-up expenses of $19,249 in the first six months of 2002 increased
substantially over the comparable period in fiscal year 2001 which had start-up
expenses of $7,500. This increase represents our continued development in
preparation of commencing operations during fiscal year 2002. Professional and
consulting fees were approximately $15,600 in the first six months of 2002 as we
are using outside consultants in such areas as legal, accounting, web design and
marketing in developing our business. Included in operating expenses in the six
months ended June 30, 2002 is $3,000 of donated services and rent compared to
$7,500 of donated services and rent for the six months ended June 30, 2001. We
anticipate receiving additional donated services and rent until additional
funding is obtained.
We incurred a net loss of $19,249 during the six months ended June 30, 2002
compared to a net loss of $7,500 during the six months ended June 30, 2001. This
increase in net loss reflects the significant increase in the operating expenses
relating to our preparations to commence business operations during fiscal year
2002 as discussed above.
Liquidity and Capital Resources
We have incurred losses since the inception of our business (January 14, 2000),
and, as of June 30, 2002, we have an accumulated deficit of $36,429. At June 30,
2002, we had cash and cash equivalents of $31,978 and net working capital of
$29,793.
16
To date, we have funded our operations through a combination of short-term debt
and the issuance of common stock. During the first six months of fiscal year
2002, we had raised $50,800 from the sale of 254,000 shares of common stock
through private placement channels. We also realized $3,000 of donated services
and rent from a related party.
We expect our expenses will continue to increase during the foreseeable future
as a result of increased marketing expenses and the development of our website.
We are dependent on the proceeds from future debt or equity investments to
commence our operations and implement our business plan. If we are unable to
raise sufficient capital, we will be required to delay or forego some portion of
our business plan, which may have a material adverse effect on our anticipated
results from operations and financial condition. Alternatively, we may seek
interim financing in the form of bank loans, private placement of debt or equity
securities, or some combination of these. Such interim financing may not be
available in the amounts or at the times when we require, and will likely not be
on terms favourable to us.
MANAGEMENT
Directors and Executive Officers
Our director and executive officer, and his age and positions, and duration as
such, are as follows:
Name Position Age Director Since
- ------------ ---------------- --- --------------
Derek Wasson President, Secretary, Chief Financial 37 January 25, 2001
Officer and Director
Business Experience
The following is information on the business experience of our officer and
director.
Derek Wasson is the sole full-time employee, officer and director of Stratabid.
From 1995 to 2002, he has been a Senior Associate Commercial Mortgage Broker
with Realtech Capital Group Inc. of Vancouver, British Columbia. Realtech is a
full service commercial mortgage brokerage firm operating in Canada. Their
services include commercial and multi-family term and construction lending and
equity syndications. From 1991-1995, Mr. Wasson was employed as a mortgage
broker for Mortgage Centre Firstline of Vancouver, British Columbia where he
arranged commercial and residential mortgages. Mr. Wasson holds a B.A. in
International Relations from the University of British Columbia.
Each director holds office until his successor is duly elected by the
stockholders. Executive officers serve at the pleasure of the Board of
Directors.
EXECUTIVE COMPENSATION
The following table sets forth the compensation of our Chief Executive Officer
during the last two complete fiscal years. No other officers or directors
received annual compensation in excess of $100,000 during the last two complete
fiscal years.
17
Summary Compensation Table
Annual Compensation Long Term Compensation
----------------------------------- --------------------------------------
Awards Payout
------------------------ --------
Other Annual Restricted Securities LTIP All Other
Bonus Compensation Stock Underlying Payout Compensation
Year Salary ($) ($) Award(s) Options (#) ($) ($)
- ----------------------------------------------------------------------------------------------------
Derek Wasson 2001(1) - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
CEO
Steven Bruk 2001(2) - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
(Former CEO) 2000(3) - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - - 0 -
- -----------------------------
(1) For the period January 25, 2001 to December 31, 2001. (2) For the period
January 1, 2001 to January 25, 2001 (3) For the period January 14, 2000
(incorporation) to December 31, 2000.
During March, April and May 2002, Mr. Wasson was paid consulting fees of $1,910.
Since June 2002, Mr. Wasson has been paid consulting fees of $11,500. As of
November 1, 2002, Mr. Wasson intends to draw a salary of $3,000 per month but
only if Stratabid has funds available to do so. Until a monthly salary can be
sustained by Stratabid, Mr. Wasson expects to continue receiving consulting fees
of $2,875 per month which are paid periodically when funds are available to do
so.
Employment/Consulting Agreements
We do not have any employment agreements.
We have entered into a consulting agreement with Big Sky Management Ltd. of
Vancouver, British Columbia dated March 21, 2002 pursuant to which we have
retained Big Sky Management Ltd. to serve as our financial consultant in
connection with our organization and financing. We have agreed to pay Big Sky
Management Ltd. the sum of $1,500 per month. This consulting agreement may be
terminated by either party with 30 days notice. We have also agreed to reimburse
Big Sky Management Ltd. for all out of pocket expenses incurred by it. Neither
Big Sky Management nor any of its employees are affiliates of Stratabid.
Stock Option Plan
We do not have a stock option plan and we have not issued any warrants, options
or other rights to acquire our securities.
Employee Pension, Profit Sharing or other Retirement Plans
We do not have a defined benefit, pension plan, profit sharing or other
retirement plan, although we may adopt one or more of such plans in the future.
18
Director's Compensation
At present we do not pay our directors for attending meetings of our Board of
Directors, although we expect to adopt a director compensation policy in the
future. We have no standard arrangement pursuant to which our directors are
compensated for any services provided as a director or for committee
participation or special assignments.
Limitation of liability and indemnification matters
The General Corporation Law of the State of Delaware permits indemnification of
directors, officers, and employees of corporations under certain conditions
subject to certain limitations. Article XIII of our Certificate of Incorporation
states that we may provide indemnification of our agents, including our officers
and directors to the maximum extent permitted by the Delaware Corporation Law.
In the event that a claim for indemnification (other than the payment by us of
expenses incurred or paid by our sole director and officer in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, we
will, unless in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is appropriate and will be governed
by the final adjudication of such issue.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons pursuant to
the foregoing provisions, or otherwise, we have been advised that in the opinion
of the Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as otherwise indicated below, we have not been a party to any
transaction, proposed transaction, or series of transactions in which the amount
involved exceeds $60,000, and in which, to our knowledge, any of our directors,
officers, five percent beneficial security holder, or any member of the
immediate family of the foregoing persons has had or will have a direct or
indirect material interest.
Should a transaction, proposed transaction, or series of transactions involve an
officer or director of Stratabid or a related entity or an affiliate of a
related entity, or holders of stock representing 5% or more of the voting power
(a "related entity") of the then outstanding voting stock, the transactions must
be approved by the unanimous consent of our board of directors. In the event a
member of the board of directors is a related party, that member will abstain
from the vote.
We have issued shares of our common stock or approved the sale of our common
stock to the following persons during the past two years, who, at the time of
issuance, were affiliated with us:
19
Name Date of Issuance Number of Shares Share Value Consideration
------------------------------------------------------------------------------
Steven Bruk 01/00 1,000,000 $1,000 Cash
On January 25, 2001 Steven Bruk sold the 1,000,000 shares held by him to Derek
Wasson. In addition, Mr. Bruk resigned as our sole officer and director and Mr.
Wasson was appointed in his place.
Derek Wasson has been paid approximately $13,400 in consulting fees since March
2002. Commencing November 1, 2002 Stratabid intends to pay Mr. Wasson a monthly
salary of $3,000 but only to the extent funds are available to do so without
curtailing Stratabid's operational requirements. If a monthly salary cannot be
sustained, Stratabid will continue to pay a consulting fee of approximately
$2,875 per month periodically as and if funds are available to do so.
On June 12, 2002, Mr. Wasson was repaid a non-interest bearing demand promissory
note in the principal amount of $7,500.
As of September 30, 2002, Mr. Wasson had advanced approximately $1,550 including
a $250 loan to Stratabid for the purpose of paying various costs and expenses
associated with establishing its business and website. The advances do not bear
interest and are payable upon demand. This amount is intended to be repaid from
the proceeds of this offering.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 15, 2002, information with respect
to those persons owning beneficially 5% or more of our outstanding common stock
and the number and percentage of outstanding shares owned by each of our
director and officer and by our officers and directors as a group. Unless
otherwise indicated, each owner has sole voting and investment powers over his
shares of common stock.
Name and Address Shares of Common Stock Percent of Class
- ---------------- ---------------------- ----------------
Derek Wasson 1,000,000 79.8%
1675 Larch Street
Vancouver, BC V3K 3N7
All Officer and Directors as a Group 1,000,000 79.8%
(1 Individual)
PLAN OF DISTRIBUTION
We are offering up to 500,000 shares of our common stock at $0.25 per share. The
common stock will be sold through our sole officer and director, Derek Wasson to
investors located both inside and outside the United States. Our shares will be
sold on a "best efforts" basis with no minimum amount of common stock that we
must sell in order to accept purchasers. No commissions are being paid in
connection with the offering. Expenses related to the offering are estimated to
be $20,000 which will be paid by us from the proceeds of this offering.
20
In addition, the selling stockholders may, from time to time, sell up to 504,000
shares of common stock which they own. The selling stockholders may sell all or
a portion of the shares of common stock in privately negotiated transactions or
otherwise. Such sales will be offered at $0.25 per share. The shares of common
stock may be sold by the selling stockholders by one or more of the following
methods, without limitation:
(a) block trades in which the broker or dealer so engaged will attempt to sell
the shares of common stock as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
(b) ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
(c) privately negotiated transactions; and
(d) a combination of any aforementioned methods of sale.
Derek Wasson will be offering the shares of common stock being offered by
Stratabid. Mr. Wasson is not a registered broker-dealer but will be offering the
Stratabid shares pursuant to an exemption from such broker-dealer registration
pursuant to Rule 3 a 4-1 of the Securities Exchange Act of 1934 (the "Exchange
Act"). Mr. Wasson will receive no selling commissions or other renumeration in
conjunction with his offering of the shares on behalf of Stratabid. Mr. Wasson
has also registered 250,000 shares of his own to be sold pursuant to this
prospectus. Mr. Wasson will first attempt to sell the 500,000 shares being
offered by Stratabid. Only after at least 50% of the shares offered by Stratabid
have been sold, will he attempt to sell his own shares. The offering of shares
by the selling shareholders will run concurrently with the offering of shares on
behalf of Stratabid. In this regard, the selling shareholders, with the
exception of Derek Wasson, will be competing with Stratabid for the sale of
shares.
Brokers or dealers may receive commissions or discounts from the selling
stockholders or, if any of the broker-dealers act as an agent for the purchaser
of said shares, from the purchaser in amounts to be negotiated which are not
expected to exceed those customary in the types of transactions involved.
Broker-dealers may agree with the selling stockholders to sell a specified
number of the shares of common stock at a stipulated price per share. In
connection with such resales, the broker-dealer may pay to or receive from the
purchasers of the shares, commissions as described above. The selling
stockholders may also sell the shares of common stock in accordance with Rule
144 under the Securities Act, rather than pursuant to this prospectus.
The selling stockholders and any broker-dealers or agents that participate with
the selling stockholders in the sale of the shares of common stock may be deemed
to be "underwriters" within the meaning of the Securities Act in connection with
these sales. In that event, any commissions received by the broker-dealers or
agents and any profit on the resale of the shares of common stock purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act. Furthermore, selling stockholders are subject to Regulation M of
the Exchange Act. Regulation M prohibits any activities that could artificially
21
influence the market for Stratabid's common stock during the period when shares
are being sold pursuant to this prospectus. Consequently, selling stockholders,
particularly those who are officers and directors of Stratabid, must refrain
from directly or indirectly attempting to induce any person to bid for or
purchase the common stock being offered with any information not contained in
this prospectus. Regulation M also prohibits any bids or purchases made in order
to stabilize the price of Stratabid's common stock in connection with the stock
offered pursuant to this prospectus.
A selling stockholder may enter into hedging transactions with broker-dealers
and the broker-dealers may engage in short sales of our common stock in the
course of hedging the positions they assume with such selling stockholder,
including, without limitation, in connection with the distribution of our common
stock by such broker-dealers or pursuant to exemption from such registration. A
selling stockholder may also enter into option or other transactions with
broker-dealers that involve the delivery of the common stock to the
broker-dealers, who may then resell or otherwise transfer such common stock. A
selling stockholder may also loan or pledge the common stock to a broker-dealer
and the broker-dealer may sell the common stock so loaned or upon default may
sell or otherwise transfer the pledged common stock.
Under the securities laws of certain states, the shares of common stock may be
sold in such states only through registered or licensed brokers or dealers or
persons exempt from such registration. The selling stockholders are advised to
ensure that any brokers, dealers or agents affecting transactions on behalf of
the stockholders are registered to sell securities in such states. In addition,
in certain states the shares of common stock may not be sold unless the shares
have been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
All expenses of the registration statement including but not limited to, legal,
accounting, printing and mailing fees are and will be paid by us. We have agreed
to pay the incremental costs of including the selling stockholders' shares in
this prospectus. However, any selling costs or brokerage commissions incurred by
each selling stockholder relating to the sale of his/her shares will be paid by
the selling stockholder.
SELLING STOCKHOLDERS
Set forth below is a list of all stockholders who may sell shares pursuant to
this prospectus. The number of shares column represents the number of shares
owned by the selling stockholder prior to the offering. The common shares
beneficially owned following the offering column assumes all shares registered
hereby are resold by the selling stockholder.
We will not receive any proceeds from the sale of the shares by the selling
stockholders.
22
Common Shares
Name Common Stock Number of Beneficially
of Owned Beneficially Common Shares Owned Following
Stockholder Prior to Offering Offered Hereby the Offering
- --------------------------------------------------------------------------------
No. of Shares % No. of Shares %
Owned Owned
- --------------------------------------------------------------------------------
Leanne Chan 50,000 4% 50,000 -- --
Dee Marchant 50,000 4% 50,000 -- --
Claudine Okulitz 50,000 4% 50,000 -- --
Annabel Mackay 1,000 --(1) 1,000 -- --
Brian Douglas Mackay 1,000 --(1) 1,000 -- --
Randy Vogel 20,000 1.6% 20,000 -- --
Pam Vogel 20,000 1.6% 20,000 -- --
Gwen McWhirter 10,000 --(1) 10,000 -- --
Kim Harnett 10,000 --(1) 10,000 -- --
Brad Marchant 20,000 1.6% 20,000 -- --
Simon Levin 10,000 --(1) 10,000 -- --
Vicki Gannon 10,000 --(1) 10,000 -- --
Brian Wasson 1,000 --(1) 1,000 -- --
Dale Wasson 1,000 --(1) 1,000 -- --
Derek Wasson 1,000,000 80% 250,000 750,000 43%(2)
Totals
- -----------------------------------
(1) Less than one percent.
(2) Assuming that all 500,000 shares of the common stock offered by Stratabid
are sold.
Brian and Dale Wasson are offering to sell 1,000 shares of common stock each
pursuant to this prospectus. Mr. and Mrs. Wasson are the parents of Derek
Wasson.
Derek Wasson is the Chairman and CEO of the Registrant.
DESCRIPTION OF SECURITIES8
Our authorized capital stock consists of 30,000,000 shares of common stock,
$.0001 par value, and 5,000,000 shares of preferred stock, $.0001 par value. As
of July 31, 2002, there were 1,254,000 shares of common stock outstanding and no
preferred stock outstanding.
Common Stock
Holders of common stock are each entitled to cast one vote for each share held
of record on all matters presented to our stockholders. Cumulative voting is not
allowed; therefore, the holders of a majority of the outstanding common stock
can elect all directors.
Holders of our common stock are entitled to receive such dividends as may be
declared by our board of directors out of funds legally available for dividends
and, in the event of liquidation, to share pro rata in any distribution of our
23
assets after payment of liabilities. Our board of directors is not obligated to
declare a dividend. It is not anticipated that dividends will be paid in the
foreseeable future.
Holders of our common stock do not have pre-emptive rights to subscribe to
additional shares if issued by us. There are no conversion, redemption, sinking
fund or similar provisions regarding the common stock.
Preferred Stock
Our Certificate of Incorporation provides that our board of directors has the
authority to divide the preferred stock into series and, within the limitations
provided by Delaware statute, to fix by resolution the voting power,
designations, preferences, and relative participation, special rights, and the
qualifications, limitations or restrictions of the shares of any series so
established. As our board of directors has authority to establish the terms of,
and to issue, the preferred stock without stockholder approval, the preferred
stock could be issued to defend against any attempted takeover of us. The
relative rights and privileges of holders of common stock may be adversely
affected by the rights of holders of any series of preferred stock which
Stratabid may designate and issue in the future.
Options and Warrants
We have not yet issued any options, warrants or other rights to acquire our
securities.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Interwest Transfer
Company, Salt Lake City, Utah.
LEGAL PROCEEDINGS
We are not a party to any pending or threatened legal proceeding.
LEGAL MATTERS
The validity of the shares of common stock offered by us and the selling
stockholders will be passed upon by the law firm of Weintraub Genshlea Chediak
Sproul, Sacramento, California.
EXPERTS
Our consolidated balance sheets as of December 31, 2001 and December 31, 2000,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the year ended December 31, 2001, and for the period ended
December 31, 2000, have been included herein in reliance on the report of
Manning Elliott, Chartered Accountants, given on the authority of that firm as
experts in accounting and auditing.
24
AVAILABLE INFORMATION
We have filed a registration statement on Form SB-2, together with all
amendments and exhibits, with the Securities and Exchange Commission ("SEC").
This prospectus, which forms a part of that registration statement, does not
contain all information included in the registration statement. Certain
information is omitted and you should refer to the registration statement and
its exhibits. With respect to references made in this prospectus to any of our
contracts or other documents, the references are not necessarily complete and
you should refer to the exhibits attached to the registration statement for
copies of the actual contracts or documents. You may review a copy of the
registration statement at the SEC's public reference room at 450 Fifth Street,
N.W. in Washington, DC. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference room. Our filings and the
registration statement can also be reviewed by accessing the SEC's website at
http://www.sec.gov.
25
FINANCIAL STATEMENTS
Our financial statements are filed as follows:
Report of Independent Accountants F - 1
Consolidated Balance Sheets as of December 31, 2000, 2001 F - 2
(audited) and as at June 30, 2002 (unaudited)
Consolidated Statements of Operations for the year ended F - 3
December 31, 2001 (audited)and for the six month period
ended June 30, 2001 and 2002 (unaudited)
Consolidated Statements of Cash Flows for the year ended F - 4
December 31, 2001 (audited) and for the six month period
ended June 30, 2001 and 2002 (unaudited)
Consolidated Statements of Stockholders' Equity for the F - 5
years ended December 31, 2000 and 2001 (audited) and for
the six month period ended June 30, 2002 (unaudited)
26
[GRAPHIC OMITTED][GRAPHIC OMITTED]
MANNING ELLIOTT 11th floor,1050 West Pender Street, Vancouver,BC, Canada V6E 357
CHARTERED ACCOUNTANTS Phone:604.714.3600 Fax:604.714.3669 Web:manningelliott.com
Independent Auditor's Report
----------------------------
To the Board of Directors and Stockholders of
Stratabid.com, Inc.
(A Development Stage Company)
We have audited the accompanying consolidated balance sheets of Stratabid.com,
Inc. (A Development Stage Company) as of December 31, 2001 and 2000 and the
related consolidated statements of operations, cash flows and stockholders'
equity accumulated for the period from January 14, 2000 (Date of Inception) to
December 31, 2001 and the year ended December 31, 2001 and from January 14, 2000
(Date of Inception) to December 31, 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 audits.
We conducted our audits in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the aforementioned consolidated financial statements present
fairly, in all material respects, the financial position of Stratabid.com, Inc.
(A Development Stage Company), as of December 31, 2001 and 2000, and the results
of its operations and its cash flows accumulated for the period from January 14,
2000 (Date of Inception) to December 31, 2001 and the year ended December 31,
2001 and from January 14, 2000 (Date of Inception) to December 31, 2000, in
conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has not generated any revenues or profitable operations
since inception and will need equity financing to begin realizing upon its
business plan. These factors raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans in regard to these matters
are also discussed in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ "Manning Elliott"
CHARTERED ACCOUNTANTS
Vancouver, Canada
F-2
(The accompanying notes are an integral part of the financial statements)
April 2, 2002
Stratabid.com, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
(expressed in U.S. dollars) June 30, December 31, December 31,
2002 2001 2000
$ $ $
(unaudited) (audited) (audited)
Assets
Current Assets
Cash 31,978 70 46
Prepaid expense 1,418 - -
- --------------------------------------------------------------------------------
33,396 70 46
Website, in progress 1,760 - -
- --------------------------------------------------------------------------------
Total Assets 35,156 70 46
================================================================================
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable 935 - -
Accrued liabilities 1,000 1,000 -
Due to a related party (Note 3) 250 250 -
- --------------------------------------------------------------------------------
Total Liabilities 2,185 1,250 -
================================================================================
Stockholders' Equity
Common Stock, 30,000,000 common
shares authorized with a par
value of $0.0001; 1,000,000 common
shares issued and outstanding 100 100 100
Additional Paid in Capital 900 900 900
Common Stock Subscribed for 252,000
(Note 4) 50,400 - -
Donated Capital (Note 3) 18,000 15,000 -
- --------------------------------------------------------------------------------
69,400 16,000 1,000
Preferred Stock,5,000,000 preferred
shares authorized with a par value
of $0.0001; none issued - - -
Deficit Accumulated During the
Development Stage (36,429) (17,180) (954)
- --------------------------------------------------------------------------------
Total Stockholders' Equity (Deficit) 32,971 (1,180) 46
- --------------------------------------------------------------------------------
Total Liabilities and Stockholders'
Equity 35,156 70 46
================================================================================
Contingent Liability (Note 1)
F-3
(The accompanying notes are an integral part of the financial statements)
Stratabid.com, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(expressed in U.S. dollars)
From From
January 14, 2000 Six Months Six Months Year January 14, 2000
(Date of Inception) Ended Ended Ended (Date of Inception)
to June 30, to June 30, to June 30, December 31, to December 31,
2002 2002 2001 2001 2000
$ $ $ $ $
(unaudited) (unaudited) (unaudited) (audited) (audited
Revenue - - - - -
- -----------------------------------------------------------------------------------------------------------------
Expenses
Accounting and legal 5,542 4,393 - 1,149 -
Bank charges 474 233 - 77 164
Consulting 11,240 11,240 - - -
Donated services 14,000 2,000 6,000 12,000 -
Donated rent 4,000 1,000 1,500 3,000 -
Foreign exchange 1 1 - - -
Office, rent and miscellaneous 382 382 - - -
Organizational expenses 790 - - - 790
- -----------------------------------------------------------------------------------------------------------------
Net Loss for the Period (36,429) (19,249) (7,500) (16,226) (954)
=================================================================================================================
Net Loss Per Share (.02) (.01) (.02) -
=================================================================================================================
Weighted Average Shares Outstanding 1,014,000 1,000,000 1,000,000 1,000,000
=================================================================================================================
(Diluted loss per share has not been presented as the result is anti-dilutive)
F-4
(The accompanying notes are an integral part of the financial statements)
Stratabid.com, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(expressed in U.S. dollars)
From From
January 14, 2000 Six Months Six Months Year January 14, 2000
(Date of Inception) Ended Ended Ended (Date of Inception)
to June 30, to June 30, to June 30, December 31, to December 31,
2002 2002 2001 2001 2000
$ $ $ $ $
(unaudited) (unaudited) (unaudited) (audited) (audited)
Cash Flows to Operating Activities
Net loss for the period (36,429) (19,249) (6,250) (16,226) (954)
Adjustment to reconcile net loss to cash
Organizational expenses paid by a stockholder 790 - - - 790
Donated services and rent 18,000 3,000 6,250 15,000 -
Less non-cash working capital items
Accounts payable and accrued liabilities 1,935 935 - 1,000 -
Prepaid expense (1,418) (1,418) - - -
- -----------------------------------------------------------------------------------------------------------------------
Net Cash Used by Operating Activities (17,122) (16,732) - (226) (164)
- -----------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Proceeds from a related party 250 - - 250 -
Issuance of common stock 210 - - - 210
Common stock subscribed for 50,400 50,400 - - -
- -----------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 50,860 50,400 - 250 210
- -----------------------------------------------------------------------------------------------------------------------
Cash Flows Used In Investing Activities
Development of website (1,760) (1,760) - - -
- -----------------------------------------------------------------------------------------------------------------------
Net Cash Used In Investing Activities (1,760) (1,760) - - -
- -----------------------------------------------------------------------------------------------------------------------
Increase in cash 31,978 31,908 - 24 46
Cash - beginning of period - 70 - 46 -
- -----------------------------------------------------------------------------------------------------------------------
Cash - end of period 31,978 31,978 - 70 46
=======================================================================================================================
Non-Cash Financing Activities - - - -
========================================================================================================================
Supplemental Disclosures
Interest paid - - - - -
Income tax paid - - - - -
F-5
(The accompanying notes are an integral part of the financial statements)
Stratabid.com, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
From January 14, 2000 (Date of Inception) to June 30, 2002
(expressed in U.S. dollars)
Deficit
Accumulated
Additional During the
Paid-in Development
Shares Amount Capital Total Stage
# $ $ $ $
Balance - January 14, 2000
(Date of Inception) - - - - -
Stock issued for cash and
organizational expenses (Note 3) 1,000,000 100 900 1,000 -
Net loss for the period - - - - (954)
- ------------------------------------------------------------------------------
Balance - December 31, 2000
(audited) 1,000,000 100 900 1,000 (954)
Net loss for the year - - - - (16,226)
- ------------------------------------------------------------------------------
Balance - December 31, 2001
(audited) 1,000,000 100 900 1,000 (17,180)
Net loss for the period - - - - (19,249)
- ------------------------------------------------------------------------------
Balance - June 30, 2002
(unaudited) 1,000,000 100 900 1,000 (36,429)
==============================================================================
(See Note 4 for 254,000 shares issued on July 5, 2002 for $50,800 cash)
F-6
(The accompanying notes are an integral part of the financial statements)
Stratabid.com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Period From January 14, 2000 (Date of Inception) to June 30, 2002
(expressed in U.S. dollars)
(unaudited)
1. Development Stage Company
Stratabid.com, Inc. herein (the "Company") was incorporated in the State of
Delaware, U.S.A. on January 14, 2000. The Company is a start-up stage
Internet based commercial mortgage origination business based in Vancouver,
BC, Canada. The Company offers an online alternative for arranging
commercial term mortgages. The Company gives borrowers the opportunity to
apply directly to a qualified market of lenders interested in financing
their asset. Borrowers will be able to log on to a website where they will
find a home page featuring lenders logos and links to three separate areas
to work on their financing needs. In one area they will find a set of
software tools to do technical analysis such as compare interest rates,
loan payments, amortizations, financing scenario comparisons and payout
calculations. Another area will be a showcase of the lending partners and
their products. In the last area borrowers will complete an online
application form and return it to the website. An experienced underwriter
for the Company will review and forward it to the lending partners to
provide quotes on the deal. The lender that is successful in arranging the
financing will pay the Company a referral fee for the business. For lending
partners the Company provides two benefits. Firstly it provides a targeted
forum to promote their products and build their brand, which is
increasingly important in today's constantly changing mortgage market.
Secondly it generates financing opportunities at no cost. The lenders only
pay referral fees when successful in arranging a loan.
The Company is in the early development stage. In a development stage
company, management devotes most of its activities in developing a market
for its products and services. Planned principal activities have not yet
begun. The ability of the Company to emerge from the development stage with
respect to any planned principal business activity is dependent upon its
successful efforts to raise additional equity financing and/or attain
profitable operations. There is no guarantee that the Company will be able
to raise any equity financing or sell any of its products and services at a
profit. There is substantial doubt regarding the Company's ability to
continue as a going concern.
The Company plans to raise equity funds through a Registration Statement to
be filed with the United States Securities and Exchange Commission.
Pursuant to a private placement Offering Memorandum, the Company issued, on
July 5, 2002, 254,000 common shares at $0.20 per share for total cash
consideration of $50,800.
2. Summary of Significant Accounting Policies
(a) Consolidated Financial Statements
F-7
Stratabid.com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Period From January 14, 2000 (Date of Inception) to June 30, 2002
(expressed in U.S. dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
These financial statements include the accounts of Stratabid.com, Inc.
and its wholly-owned Canadian subsidiary Stratabid.com Online (B.C.)
Ltd. All inter-company balances have been eliminated.
(b) Year End
The Company's fiscal year end is December 31.
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of
three months or less at the time of issuance to be cash equivalents.
(d) Revenue Recognition
The Company will receive from lenders a referral fee when the Company
is successful in arranging a loan. The referral fee revenue will be
recognized in the period the fee is earned. This policy is prospective
in nature, as the Company has not yet generated any revenues.
(e) 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 amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the periods. Actual results could differ from those
estimates.
(f) Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with
SFAS No. 128, "Earnings per Share" (SFAS 128). SFAS 128 requires
presentation of both basic and diluted earnings per share (EPS) on the
face of the income statement. Basic EPS is computed by dividing net
income (loss) available to common stockholders (numerator) by the
weighted average number of shares outstanding (denominator) during the
period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period including stock options, using the
treasury stock method, and convertible preferred stock, using the
if-converted method. In computing Diluted EPS, the average stock price
for the period is used in determining the number of shares assumed to
be purchased from the exercise of stock options or warrants. Diluted
EPS excludes all dilutive potential shares if their effect is anti
dilutive.
F-8
Stratabid.com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Period From January 14, 2000 (Date of Inception) to June 30, 2002
(expressed in U.S. dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
(g) Foreign Currency Translation
Revenue, expenses and non-monetary balance sheet items are translated
into US dollars at the rate of exchange prevailing on the transaction
dates. Monetary balance sheet items are translated at the rate
prevailing at the balance sheet date. The resulting exchange gain or
loss is charged to operations.
(h) Website Development costs
The Company's website is currently being developed. Costs associated
with the website will consist primarily of software purchased from a
third party. The Company is capitalizing costs of computer software
obtained for internal use in web design and network operations. These
capitalized costs will be amortized based on their estimated useful
life over three years. Payroll and related costs will not be
capitalized, as the amounts principally relate to maintenance. Internal
costs related to the development of website content will be expensed as
incurred.
(i) Financial Instruments
The fair value of the Company's current assets and current liabilities
were estimated to approximate their carrying values due to the
immediate or short-term maturity of these financial instruments. The
Company operates in Canada and virtually all of its assets and
liabilities are giving rise to significant exposure to market risks
from changes in foreign currency rates. The financial risk is the risk
to the Company's operations that arise from fluctuations in foreign
exchange rates and the degree of volatility of these rates. Currently,
the Company does not use derivative instruments to reduce its exposure
to foreign currency risk.
2. Summary of Significant Accounting Policies (continued)
(j) Long-Lived Assets
In accordance with Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards ("SFAS") No. 121,
Accounting for the Impairment of Long Lived Assets and for Long-Lived
Assets to be Disposed Of, the carrying value of intangible assets and
other long-lived assets is reviewed on a regular basis for the
existence of facts or circumstances that may suggest impairment. The
Company recognizes an impairment when the sum of the expected
undiscounted future cash flows is less than the carrying amount of the
asset. Impairment losses, if any, are measured as the excess of the
carrying amount of the asset over its estimated fair value.
F-9
Stratabid.com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Period From January 14, 2000 (Date of Inception) to June 30, 2002
(expressed in U.S. dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
(k) Interim Financial Statements
These interim unaudited financial statements have been prepared on the
same basis as the annual financial statements and in the opinion of
management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company's
financial position, results of operations and cash flows for the
periods shown. The results of operations for such periods are not
necessarily indicative of the results expected for a full year or for
any future period.
3. Related Party Transactions/Balances
The business plan the Company currently intends to exploit was developed by
the President and sole stockholder of the Company on behalf of the Company
during the period ended and fiscal 2001. There was no charge to the Company
for these services valued at $1,000 per month. Rent and office costs valued
at $250 per month were paid for by this related party at no cost to the
Company. These services and costs, valued at $18,000, are treated as
donated capital and charged to operations.
The President of the Company was paid $4,806 (Cnd $7,500) for consulting
services during the four months ended June 30, 2002.
A loan of $250 is due to the President of the Company and sole stockholder
of the Company on an unsecured, non-interest bearing, demand basis.
During the period, a note payable of $7,500 was due to the President of the
Company and sole stockholder of the Company on an unsecured, non-interest
bearing, demand basis. This note was repaid on June 12, 2002 out of
proceeds from a private placement.
In fiscal 2000 a total of 1,000,000 common shares were issued for $210 cash
and $790 of organizational expenses paid on behalf of the Company.
4. Subsequent Event
On July 5, 2002 the Company accepted and executed subscription agreements
and issued 254,000 shares at $0.20 per share for cash proceeds of $50,800.
These shares were issued to fourteen friends and business associates of the
original stockholder and President of the Company. In accordance with SEC
staff policy on valuing shares in the first year prior to an Initial Public
Offering these shares are deemed to be issued at $0.25 per share resulting
in a $0.05 per share discount. This amount, totalling $12,700, will be
charged to operations in July, 2002 as compensation expense.
F-10
[OUTSIDE BACK COVER PAGE]
PROSPECTUS
----------
1,004,000 shares of common stock
STRATABID.COM, INC.
___________________, 2002
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO PROVIDE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS ABOUT STRATABID.COM, INC. EXCEPT THE
INFORMATION OR REPRESENTATIONS CONTAINED IN THIS PROSPECTUS. YOU SHOULD NOT RELY
ON ANY ADDITIONAL INFORMATION OR REPRESENTATIONS IF MADE.
This prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy any securities.
- - except the common stock
- - in any jurisdiction where the dealer or other salesperson is not
qualified to make the offer or solicitation
- - to any person to whom it is unlawful to make the offer or solicitation;
or
- - to any person who is not a United States resident or who is outside the
jurisdiction of the United States
Until ______________, 2002, all person affecting transactions in the registered
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the obligations of dealer or
deliver a prospectus when acting as underwriters.
A-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Officers and Directors
The Delaware General Corporation Law and our Certificate of Incorporation and
Bylaws provide that we may indemnify any and all of our officers, directors,
employees or agents or former officers, directors, employees or agents, against
expenses actually and necessarily incurred by them, in connection with the
defense of any legal proceeding or threatened legal proceeding, except as to
matters in which such persons shall be determined to not have (i) breached the
duty of loyalty to the corporation or its stockholders; (ii) failed to act in
good faith or committed intentional misconduct or a knowing violation of the
law; (iii) acted in violation of Delaware Corporation Law; or (iv) entered into
a transaction from which he/she derived an improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers, or persons controlling us pursuant
to the foregoing provisions, we have been informed that, in the opinion of the
U.S. Securities and Exchange Commission, that type of indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable by us in
connection with the issuance and distribution of the securities being registered
hereunder. No expenses shall be borne by the selling stockholder. All of the
amounts shown are estimates, except for the SEC Registration Fees.
SEC Filing Fee $ 24
Blue Sky Fees and Expenses 100
Printing and Engraving Expenses 500
Legal Fees and Expenses 15,000
Accounting Fees and Expenses 3,000
Miscellaneous Expenses 1,000
-----
TOTAL $ 19,624
========
Item 26. Recent Sales of Unregistered Securities.
The following information sets forth all securities which have been sold during
the last three years by us and which securities were not registered under the
Securities Act of 1933, as amended. Unless otherwise indicated, the
consideration paid for the shares was cash.
In January 2000, we sold 1,000,0000 shares of our common stock to Steven Bruk,
our initial founder, for $1,000. The sale of these shares was made in
conjunction with the initial formation of Stratabid to the founder in a private
transaction which was deemed exempt from registration pursuant to Section 4(2)
of the 1933 Act.
On July 5, 2002 we sold 254,0000 shares of our common stock to 14 investors, all
of whom reside in British Columbia, Canada and are not deemed to be "U.S.
A-2
persons" as that term is defined under Regulation S. The investors represented
that they were purchasing such shares for their own account. Both the offer and
the sale of the shares were made outside the United States and are deemed to be
"offshore transactions" as that term is defined under Regulation S. The share
certificates contain a legend indicating that such shares can only be
transferred in compliance with the provisions of Regulation S. In light of the
foregoing, such sales were deemed exempt from registration pursuant to
Regulation S of the 1933 Act.
Item 27. Exhibits
Exhibits Description of Document
-------- -----------------------
3.1* Certificate of Incorporation
3.2* By-Laws
5.1* Opinion of Counsel
10.1* Consulting Agreement with Big Sky Management Ltd.
21* Subsidiaries of Stratabid.com, Inc.
23.1* Consent of Weintraub Genshlea Chediak Sproul contained in
Exhibit 5.1
23.2* Consent of Manning Elliott
23.2.1 Updated consent of Manning Elliott
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*Exhibits previously filed SB-2 Registration Statement
Item 28. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement.
(i) To include any prospectus required by Section l0(a)(3) of the
Securities Act of l933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually
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or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iv) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement, including (but not limited to) any
addition or deletion of a managing underwriter.
(2) That, for the purpose of determining any liability under the Securities
Act of l933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) Insofar as indemnification for liabilities arising under the Securities
Act of l933 may be permitted to directors, officers and controlling
persons of the Registrant, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
In accordance with the requirements of the Securities Act of l933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this Registration Statement on Form SB-2 and
authorized this Registration Statement to be signed on our behalf by the
undersigned, thereunto duly authorized, in Vancouver, British Columbia, on the
22nd of October 2002.
STRATABID.COM, INC.
By: /s/ Derek Wasson
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Derek Wasson, President and
Chief Financial and Accounting Officer
In accordance with requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
/s/ Derek Wasson Title Date
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Derek Wasson Director October 22, 2002
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