10QSB 1 0001.txt FORM 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number 000-29929 COMMUNICATE.COM INC. (Exact name of small business as specified in its charter) Nevada 33-0786959 ----------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) #360-220 Cambie Street, Vancouver, B.C. V6B 2M9 ----------------------------------------------- (Address of principal executive offices) (604) 687-2142 -------------- (Issuer's telephone number) APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Common Stock 9,300,000 shares outstanding $.001 Par Value as of September 30, 2000 Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] COMMUNICATE.COM INC. REPORT ON FORM 10-QSB QUARTER ENDED SEPTEMBER 30, 2000 TABLE OF CONTENTS PART I. Financial Information Item 1. Financial Statements Balance sheets as of September 30, 2000 and December 31, 1999 Statements of Operations for the three months and nine months ended September 30, 2000 and September 30, 1999 Statements of Cash Flows for the nine months ended September 30, 2000 and September 30, 1999 Notes to the Financial Statements Item 2. Management's discussion and analysis of financial condition and results of operations PART II. OTHER INFORMATION Item 1. Legal Proceedings. Item 2. Changes in Securities. Item 3. Defaults Upon Senior Securities. Item 4. Submission of Matters to a Vote of Security Holders. Item 5. Other Information. Item 6. Exhibits and Reports on Form 8-K. Signatures 2 PART I ITEM 1: FINANCIAL STATEMENTS. The response to Item 1 has been submitted as a separate section of this Report beginning on page F-1. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Information contained in this Report contains forward-looking statements such as statements of the Company's plans, objectives, expectations and intentions, that can often be identified by the use of forward-looking terminology, such as "may," "will," "expect," "anticipate," "believe," "plan," "intend," "could," "estimates," "is being," "goal" or other variations of these terms or comparable terminology. All forward-looking statements involve risks and uncertainties, and actual results could differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to materially differ include known and unknown risks, including, without limitation, the early stage of the e-commerce market, the Company's ability to manage its growth, the ability of the Company to develop and successfully market new products, the Company's ability to acquire control of and successfully integrate the operations of Communicate.com Inc., an Alberta corporation ("Communicate Alberta"), the attraction and retention of key technical and other personnel, rapid technological change and intense competition. The cautionary statements made in this Report should be read as being applicable to all forward-looking statements wherever they appear in this Report. The Company's actual results could differ materially from those discussed herein. Plan of Operation The Company's plan of operation is to seek, investigate, and if such investigation warrants, acquire an interest in one or more business opportunities presented to it. Although the Company is not required to restrict its search to any specific business, industry, or geographical location, it has recently decided to focus its search on companies engaged in the electronic commerce ("e-commerce") industry. Management is currently in the process of identifying suitable candidates for acquisition and, as previously reported, entered into a share exchange agreement to acquire a controlling interest in Communicate.com Inc., an Alberta corporation ("Communicate Alberta"), and in anticipation of the acquisition the Company changed its name from "Troyden Corporation" to Communicate.com Inc. Subsequently, the parties to the share exchange agreement were unable to consummate the acquisition; however, since that time, the Company recommenced negotiations with Bryan Liew, the holder of a majority of the outstanding capital stock of Communicate Alberta, and on November 8, 2000, entered into an agreement to acquire the capital stock of Communicate Alberta held by Mr. Liew. See "Acquisition of Communicate Alberta," below. However, if management subsequently decides that any other companies under consideration are not suitable acquisition candidates, or if a suitable candidate in another industry is located, management may complete transactions with another company or companies including those in other industries. 3 Since its inception on October 10, 1995, the Company has engaged in no significant operations other than undertaking organizational activities, filing a registration statement for small business issuers on Form 10-SB with the SEC, complying with periodical SEC reporting requirements and attempting to identify suitable merger or acquisition candidates. During the period ended June 30, 2000, the Company entered into an agreement to acquire control of Communicate.com Inc., an Alberta corporation. However, that agreement was terminated and the Company subsequently entered into an agreement pursuant to which it acquired a majority interest in such company. See, "Acquisition of Communicate Alberta." Except for such agreements, the Company had not signed any letters of intent or entered into any agreements with suitable acquisition candidates. Except for an aggregate of $132,000 in management fees recognized more than two years ago, the Company has generated no revenue from operations since its inception. In the coming quarters, the Company intends to continue its efforts to identify suitable acquisition candidates, and, when a suitable candidate is found, to complete a business acquisition. The Company anticipates incurring a loss for the fiscal year as a result of expenses associated with (1) locating and evaluating acquisition candidates; (2) completing one or more business acquisitions; (3) complying with the reporting requirements of the Securities Exchange Act of 1934; and (4) attending to general and administrative matters. Other than through the operations of Communicate Alberta, the Company does not expect to generate revenues until additional business acquisitions have been completed. Further, the Company may continue to operate at a loss after completing any acquisitions, depending on the performance of the acquired businesses. In order to cover the costs described above, the Company believes that it will require substantial additional capital. This additional capital will be required whether or not the Company is able to complete any additional business acquisition during the current fiscal year. Further, once additional acquisitions are completed, the Company's need for additional financing is likely to increase substantially. The Company expects to raise additional capital through the sale or issuance of additional securities. To the extent that additional funds are required to cover Company expenses, the Company may seek additional funds in the form of loans from financial institutions and other sources. However, there can be no assurance that any additional funds, whether generated through the issuance of securities or through borrowings, will be available to the Company to allow it to cover its expenses. Since inception, the Company has financed its operations almost exclusively from the original sale of shares, from shareholder loans, and from a loan in the amount of $150,000 from Pacific Capital Markets Inc. to the Company in September 2000. Acquisition of Communicate Alberta Acquisition. Pursuant to a Purchase Agreement entered into on November 8, 2000 (the "Purchase Agreement"), the Company acquired 11,714,080 shares of the capital stock of Communicate Alberta, from Bryan Liew. In consideration for the Communicate Alberta 4 shares, the Company (i) issued an aggregate of 1,000,000 shares of its Common Stock to the Mr. Liew, (ii) made a cash payment of $400,000 to Mr. Liew, and (iii) agreed to either (a) make additional cash payments totaling an aggregate of $1,100,000 to Mr. Liew, or (b) if the Company is unable or fails to make such payments, to issue up to an additional 2,200,000 shares of Common Stock to Mr. Liew. The Company financed the acquisition through a loan provided by Pacific Capital Markets Inc. providing for up to $1,500,000 to be used solely for the acquisition of the shares from Mr. Liew. Business. Communicate Alberta owns and operates a network of websites and uniform resource locators ("URLs") that share a common technology platform and infrastructure. Communicate Alberta is assembling its roster of more than 30 intuitive, generic domains in such categories as Health & Beauty (such as Makeup.com and Perfume.com) and Sports & Recreation (such as Wrestling.com and Boxing.com) into a network of online businesses built with the Internet's best technologies from providers such as Oracle, Sun, BEA and Interwoven. The operating businesses in the Communicate Alberta network share a common platform and infrastructure, creating a highly scalable, adaptable and efficient way for Communicate Alberta's partners to add branding and e-commerce channels to their online strategy, while also capitalizing on the generic domain names' ability to intuitively attract customers. Through the network's economies of scale, Communicate Alberta can enable its strategic partners to quickly and easily participate in e-commerce much faster and more cost effectively. Communicate Alberta's business model for these operating businesses include multiple revenue streams via e-commerce, data mining, infrastructure/shared services, and sponsorships/advertising. Communicate Alberta is also creating a ventures group designed to maximize value within its portfolio of 400 other domain names by strategically participating and investing these assets into other companies' business plans and operations. Communicate Alberta had revenues generated during its last two fiscal years from its previous business operations as an Internet consulting firm, prior to selling its Internet consulting contracts in January of 2000. Communicate Alberta is now in the early stages of operating a network of related online businesses. Key targets for Communicate Alberta's products are established non-Internet businesses that are leaders in their respective industries, where Communicate Alberta will offer a long-term, strategic partnership in exchange for commitments which could include cash, marketing exposure, access to limited products, and business development activities. Another related target for Communicate Alberta's products are end-consumers who will purchase the diversified products and services that are represented by Communicate Alberta's various operating online businesses. Distribution Methods. Communicate Alberta will distribute its products and services over the Internet, and through distribution partners. The main product, the technology platform and infrastructure, is centrally available to strategic partners and is accessed by end-consumers through web sites which are housed and monitored in a secure data center in Vancouver, Canada. The end-consumer products sold through Communicate Alberta's operating businesses will be distributed and fulfilled either directly by the operating business itself or through distribution partners around the world. As a result of the acquisition of Communicate Alberta, the Company currently has three full-time employees. 5 PART II OTHER INFORMATION Item 1. Legal Proceedings. The Company is not a party to any material pending legal proceedings and, to the best of its knowledge, no such action by or against the Company has been threatened. Item 2. Changes in Securities. There were no changes in securities during the period ended September 30, 2000. Following the end of such period, on November 8, 2000, the Company issued an aggregate of 1,000,000 shares of its Common Stock to Bryan Liew in partial compensation for the acquisition of 11,714,080 shares of Communicate Alberta. The issuance of the shares was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933. See, "Managements Discussion and Analysis of Financial Condition and Results of Operations - Acquisition of Communicate Alberta." Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. On July 17, 2000, the shareholders of the Company, by written consent, amended the charter of the Company to change the name of the Company from "Troyden Corporation" to "Communicate.com Inc." The change in name became effective August 24, 2000. The vote in favor was 5,860,480, constituting approximately 63% of the outstanding shares. The change in name became effective August 24, 2000. Item 5. Other Information. Changes in Directors. On October 17, 2000, Bryan Liew resigned as a director and officer of the Company and the Company accepted such resignation. On October 18, 2000, Graham Heal was appointed as a director of the Company. Acquisition of Communicate.com Alberta. On November 8, 2000, under a Purchase Agreement dated November 8, 2000, the Company acquired a majority of the capital stock of Communicate Alberta. For more information regarding this transaction, see "Management's Discussion and Analysis of Results of Operations and Financial Condition - Acquisition of Communicate Alberta." 6 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 10.1 Promissory Note, dated September 14, 2000, by Communicate.com Inc. in favor of Pacific Capital Markets Inc. (incorporated by reference from the Company's report on Form 10-QSB for the period ended June 30, 2000). 10.2 Purchase Agreement, dated November 8, 2000, between Communicate.com Inc. and Bryan Liew. (incorporated by reference from the Company's report on Form 10-QSB for the period ended June 30, 2000). 10.3 Loan and Security Agreement between Pacific Capital Markets Inc. and Communicate.com (incorporated by reference from the Company's report on Form 10-QSB for the period ended June 30, 2000). (b) Reports on Form 8-K. (1) Form 8-K dated July 25, 2000 reporting under Item 8 a change in the Company's fiscal year. (2) Form 8-K dated November 8, 2000 reporting under Item 4 a change in the Company's certifying accountants and a revision to the Company's fiscal year under Item 8. 7 PART II - SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TROYDEN CORPORATION Date: November 14, 2000 By: /s/ Graham Heal ------------------ ------------------ 8 Exhibits Financial Statements.........................................................F-1 COMMUNICATE.COM INC. (FORMERLY TROYDEN CORPORATION) [A DEVELOPMENT STAGE COMPANY] BALANCE SHEETS
September 30, December 31, 2000 1999 ------------- ------------ ASSETS (Unaudited) CURRENT ASSETS $ -- $ -- OTHER ASSETS Organization Costs -- 75 -------- -------- TOTAL ASSETS $ -- $ 75 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable $ 6,902 -- Stockholder Advance (Note 2) 5,475 -- Accrued Income Tax 18,459 16,460 -------- -------- Total Liabilities 30,836 16,460 -------- -------- STOCKHOLDERS' EQUITY Common Stock, $0.001 par value, 310 310 50,000,000 shares authorized, 9,300,000 issued and outstanding at September 30, 2000 and December 31, 1999. (Note 3) Additional Paid-In Capital 3,690 3,690 Deficit accumulated during development stage (34,836) (20,385) -------- -------- Total Stockholders' Deficit (30,836) (16,385) -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ -- $ 75 ======== ========
F-1 COMMUNICATE.COM INC (FORMERLY TROYDEN CORPORATION) [A DEVELOPMENT STAGE COMPANY] STATEMENTS OF OPERATIONS (UNAUDITED)
Cumulative Amounts Three Months Ended Nine Months Ended October 1995 ------------------------------ ----------------------------- (Inception) to September 30, September 30, September 30, September 30, September 2000 2000 1999 2000 1999 ----------------- ------------- ------------ ------------ ------------- REVENUE Management Fees $ 132,000 $ -- $ -- $ -- $ -- ----------- ----------- ----------- ----------- ----------- OPERATING EXPENSES Advertising 2,262 -- -- -- -- Amortization and Depreciation 4,501 25 25 75 149 Automobile 33,768 -- -- -- -- Bank Charges 2,057 -- -- -- -- Compensation Expense 1,000 -- -- -- -- Education 900 -- -- -- -- Meals and Entertainment 13,151 -- -- -- -- Office 2,021 -- -- -- -- Penalties and Interest 2,286 450 13 1,189 585 Professional Services 20,260 5,412 -- 12,387 -- Rent 2,500 -- -- -- -- Telephone 11,412 -- -- -- -- Travel 44,337 -- -- -- -- ----------- ----------- ----------- ----------- ----------- 140,455 5,887 38 13,651 734 ----------- ----------- ----------- ----------- ----------- LOSS BEFORE INCOME TAX EXPENSE (8,455) (5,887) (38) (13,651) (734) INCOME TAX EXPENSE 18,260 -- -- 800 -- ----------- ----------- ----------- ----------- ----------- NET LOSS FOR THE PERIOD $ (26,715) $ (5,887) $ (38) $ (14,451) $ (734) =========== =========== =========== =========== =========== WEIGHTED AVERAGE SHARES OUTSTANDING Basic and Diluted 9,300,000 9,000,000 9,300,000 9,000,000 ----------- ----------- ----------- ----------- NET LOSS PER SHARE (NOTE 3) Basic and Diluted $ (0.0006) $ (0.0001) $ (0.0016) $ (0.0001) ----------- ----------- ----------- -----------
F-2 COMMUNICATE.COM INC. (FORMERLY TROYDEN CORPORATION) [A DEVELOPMENT STAGE COMPANY] STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2000 and 1999 And cumulative amounts for the period October 10, 1995 (Inception) to September 30, 2000
Cumulative Amounts October 1995 (Inception )to September 2000 2000 1999 --------------- ----------- ----------- (Unaudited) (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $(26,715) $(14,451) $ (734) -------- -------- -------- ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Depreciation and Amortization 4,427 75 75 Mon-cash Compensation 1,000 -- -- Loss on Disposal of Assets 74 -- 74 Increase in Intangible Asset (500) -- -- Increase in Accounts Payable 6,902 6,902 -- Increase in Accrued Taxes 18,449 1,999 585 -------- -------- -------- 30,352 8,976 734 -------- -------- -------- Net cash provided by (used in) operating activities 3,637 (5,475) -- -------- -------- -------- CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES Purchase of property and equipment (4,001) -- -- -------- -------- -------- Net cash used in investing activities (4,001) -- -- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Issuance of Common Stock 3,010 -- -- Advances Received from Stockholder 5,475 5,475 8,121 Payment of Dividend (8,121) -- (8,121) -------- -------- -------- Net cash from financing activities 364 5,475 -- -------- -------- -------- NET INCREASE / (DECREASE) IN CASH FOR THE PERIOD -- -- -- CASH, BEGINNING OF PERIOD -- -- -- -------- -------- -------- CASH, END OF PERIOD $ -- $ -- $ -- ======== ======== ========
F-3 SUPPLEMENTAL DISCLOSURES No interest or income tax payments were made to date. A stockholder advance of $8121 was converted to a dividend payment on June 30, 1999 Property purchased during 1996 and 1997 of $4,001 was written off at the book value of $74 and recorded as a loss on June 30, 1999. On December 8, 1999, 10,000 shares of stock were issued at fair market value of $1,000 to a director as compensation for board services. F-4 COMMUNICATE.COM INC. (FORMERLY TROYDEN CORPORATION) [A DEVELOPMENT STAGE COMPANY] NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) NOTE 1 - GENERAL MATTERS THE COMPANY On August 24, 2000, the Company changed its name from Troyden Corporation to Communicate.com, Inc. Troyden Corporation has existed as a development stage company which is seeking business acquisition opportunities. GOING CONCERN The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not purport to present realizable or settlement values. The Company incurred net losses of $14,451 and $734 during the nine month periods ended September 30, 2000 and 1999 respectively, and the Company's total liabilities exceeded its total assets by $30,836 at September 30, 2000. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of those uncertainties. INTERIM FINANCIAL STATEMENTS The accompanying interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, adjustments (consisting of normal recurring accruals) considered necessary for a fair representation have been included. Operating results for the nine month period ending September 30, 2000, are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. For further information, refer to the financial statements and footnotes included in the Company's report on Form 10-SB. NOTE 2 - STOCKHOLDER ADVANCE The Stockholder Advance represents amounts lent by the former President of the Company. This advance is non-interest bearing and is due on demand. F-5 COMMUNICATE.COM INC. (FORMERLY TROYDEN CORPORATION) [A DEVELOPMENT STAGE COMPANY] NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) NOTE 3 - COMMON STOCK On December 8, 1999, 10,000 shares of common stock were issued as compensation to a director for services provided as a board member and was recorded at the fair market value on that date of $1,000. The Company has no stock option plans, warrants, or convertible debt, therefore, the basic net loss per share is equal to the diluted net loss per share. Effective June 27, 2000 the Company forward split its issued and outstanding shares of common stock from 310,000 shares to 9,300,000 shares. NOTE 4 - SUBSEQUENT EVENT Subsequent to the period end, the Company entered into an agreement to acquire 52% of the capital stock of Communicate.com Inc. ("Communicate Alberta"), in consideration for 1,000,000 shares of the Company's common stock, and cash payments totaling an aggregate of $1,500,000. If the Company fails to make these cash payments it has agreed to issue up to an additional 2,200,000 shares of its common stock to the vendor. The Company will finance the acquisition through a loan provided by Pacific Capital Markets Inc., providing for up to $1,500,000 to be used soley for the acquisition of the Communicate Alberta shares. Communicate Alberta owns more than 400 websites and is in the early stages of operating a network of related online businesses. F-6