-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ti2gMADQwTmd/rf9xfyGb5WuL4IIDL54x017tgFnkrMa3FiOkkVom/6/uZHHHfsf QLhNwwqcfMIbHFehDN42Rg== 0000891554-02-003854.txt : 20020613 0000891554-02-003854.hdr.sgml : 20020613 20020612181017 ACCESSION NUMBER: 0000891554-02-003854 CONFORMED SUBMISSION TYPE: F-1/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20020613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUCK A DAY CO INC CENTRAL INDEX KEY: 0001166942 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 000000000 STATE OF INCORPORATION: A6 FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: F-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-83300 FILM NUMBER: 02677715 BUSINESS ADDRESS: STREET 1: 465 DAVIS DR STE 226 STREET 2: NEWMARKET CITY: ONTARIO CANADA STATE: A6 ZIP: L3Y 2P1 BUSINESS PHONE: 9058689485 MAIL ADDRESS: STREET 1: 465 DAVIS DR STE 226 STREET 2: NEWMARKET CITY: ONTRIO CANADA STATE: A6 ZIP: L3Y 2P1 F-1/A 1 d50855_f-1a.txt AMENDMENT NO. 2 DRAFT FOR DISCUSSION PURPOSES ONLY As Filed with the Securities and Exchange Commission on June 12, 2002 File No. 333-83300 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 2 to Form F-1/A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 THE BUCK A DAY COMPANY INC. (Name of small business issuer in its charter) Ontario, Canada 3571 Inapplicable (State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.) 465 Davis Drive, Suite 226 Newmarket, Ontario L3Y 2P1 (905) 868-9477 (Address and telephone number of principal executive offices and principal place of business) CSC Services of Nevada, Inc. 502 East John Street Carson City, Nevada 89706 (775) 882-3072 (Name, address and telephone number of agent for service) Copies to: M. James Spitzer, Jr., Esq. William S. Rosenstadt, Esq. Spitzer & Feldman P.C. 405 Park Avenue New York, New York 10022 Telephone No. (212) 888-6680 Facsimile No. (212) 838-7472 Approximate date of commencement of proposed sale to the public: As soon as practicable after the Registration Statement becomes effective. 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, 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 box and list the Securities Act 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 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, check the following box. |_| CALCULATION OF REGISTRATION FEE
=================================================================================================== Proposed Proposed Title of Each Class Maximum Maximum of Securities Amount to Offering Aggregate Amount of to be Registered be Registered Price Per Share Offering Price(1) Registration Fee - --------------------------------------------------------------------------------------------------- Common Stock, no par value(2) 3,000,000 $2.00 $ 6,000,000 $ 552 - --------------------------------------------------------------------------------------------------- Common Stock, no par value(3) 600,000 $1.00 $ 600,000 $ 55 - --------------------------------------------------------------------------------------------------- Common Stock, no par value (4) 3,000,000 $1.00 $ 3,000,000 $ 276 - --------------------------------------------------------------------------------------------------- Common Stock, no par value(5) 500,000 $1.00 $ 500,000 $ 46 - --------------------------------------------------------------------------------------------------- Common Stock, no par value(6) 22,522,974 $1.00 $22,522,974 $2,072 - --------------------------------------------------------------------------------------------------- Total 29,622,979 $3,001 - ---------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c). (2) 3,000,000 shares of Common Stock relate to the offering by The Buck A Day Company Inc. on a "self underwritten" basis, with no minimum. (3) Reserved for issuance upon exercise of all 600,000 Class D warrants. (4) Reserved for issuance upon exercise of all 3,000,000 Class E warrants. (5) Reserved for issuance upon exercise of all 500,000 Class F warrants. (6) Represents shares of Common Stock offered by the selling shareholders. ---------- Pursuant to Rule 416 of the Securities Act, this registration statement also covers such indeterminate additional shares of Common Stock as may become issuable as a result of stock splits, stock dividends or other similar events. ---------- We hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until we 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 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ---------- This prospectus relates to 29,622,974 shares of our Common Stock, of which 22,522,974 shares are owned, as of May 31, 2002, by the security holders named in this prospectus under the caption "Selling Shareholders". The 3,000,000 shares of Common Stock being offered by us may be offered or sold directly by ourselves or we may use the services of participating broker-dealers licensed by the National Association of Securities Dealers, Inc., each of which will receive a commission from the shares offered and sold by such participating broker-dealers and accepted by us. 22,522,974 shares may be offered from time to time by the selling shareholders through ordinary brokerage transactions on the OTC-Bulletin Board or on any securities exchange on which our Common Stock is or becomes listed or traded, in negotiated transactions or otherwise, at prices and at terms then prevailing or at prices related to the then current market price, or in negotiated private transactions, or in a combination of these methods. The shares of our Common Stock are being sold by us, on a self-underwritten basis, with no minimum. Our offering will commence on the date of this prospectus and will continue until the earlier of June 12, 2004, all of the shares offered are sold, or we otherwise terminate the offering. We will bear all the costs and expenses associated with the preparation and filing of this registration statement. The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities in any state where the offer of sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 12, 2002 PRELIMINARY PROSPECTUS 29,622,974 Shares THE BUCK A DAY COMPANY INC. Common Stock This prospectus relates to an offering of 29,622,974 shares of Common Stock of The Buck A Day Company Inc., an Ontario corporation. We are offering to sell 3,000,000 shares of our Common Stock, which as of the date of this prospectus have not been issued. Certain of our employees and/or shareholders, the selling shareholders, are offering to sell 22,522,974 shares of our Common Stock. We will not receive any of the proceeds from the sale of our shares of Common Stock by the selling shareholders. An additional 600,000 shares, 3,000,000 shares and 500,000 shares of Common Stock underlying our Class D, E and F warrants, respectively, are also being registered. The shares of our Common Stock which will be offered and sold by us on a self-underwritten basis will be sold by using our officers, directors, or, at our discretion, by participating broker-dealers licensed by the National Association of Securities Dealers, Inc. at a price per share of $2. At this time we have not identified any one entity to purchase our shares of Common Stock. It should be noted that the selling shareholders are registering almost seven times the number of shares as those being sold by the company and that each of the selling shareholders paid significantly less than $2 per share. As a result, there is considerable risk that some or all of the selling shareholders will attempt to sell their shares of Common Stock thereby causing the price to go below $2 per share. See "Risk Factors - Risks Related To This Offering" for a complete discussion of the risks associated with the proposed offering structure. There is no minimum investment requirement and funds received by us from this offering will not be placed into an escrow account. The shares of Common Stock offered by the selling shareholders have not been registered for sale under the securities laws of any state as of the date of this prospectus. Brokers or dealers effecting transactions in the shares of our Common Stock should confirm the registration thereof under the securities laws of the states in which transactions occur or the existence of any exemption from registration. Although we are not currently quoted or listed on any market, we anticipate a listing on the OTC Bulletin Board concurrent with the effectiveness of this Prospectus. Prior to such listing the selling shareholders may from time to time sell shares of Common Stock at a price of $2 per share. However, once we are listed on the OTC Bulletin Board, on any other national securities exchange or automated quotation system, the selling shareholders may sell their shares at prices then prevailing or related to the then current market price or at negotiated prices, any of which may be lower than $2 per share. ---------- Our principal executive offices are located at 465 Davis Drive, Suite 226, Newmarket, Ontario L3Y 2P1, Canada. Our telephone number is (905) 868-9477. ---------- The Common Stock being offered by this prospectus involves a high degree of risk. You should read the "Risk Factors" section beginning on page 4 before you decide to purchase any of the Common Stock. ---------- Neither the Securities and Exchange Commission nor any state commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Nor have they made, nor will they make, any determination as to whether anyone should buy these securities. Any representation to the contrary is a criminal offense. ---------- Until________________, [90 days after effectiveness] all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to any dealers' obligation to deliver a prospectus when acting as underwriters and with respect to any unsold allotments or subscriptions. The date of this prospectus is June 12, 2002 TABLE OF CONTENTS PROSPECTUS SUMMARY ...................................................... 1 RISK FACTORS ............................................................ 3 A NOTE CONCERNING FORWARD-LOOKING STATEMENTS ............................ 7 ENFORCEMENT OF CIVIL LIABILITIES ........................................ 7 CONVENTIONS WHICH APPLY TO THIS PROSPECTUS .............................. 8 CURRENCY OF PRESENTATION ................................................ 8 USE OF PROCEEDS ......................................................... 8 DIVIDEND POLICY ......................................................... 9 CAPITALIZATION .......................................................... 9 EXCHANGE RATES .......................................................... 9 SELECTED FINANCIAL DATA ................................................. 9 DILUTION ................................................................ 10 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ................ 11 IMPACT OF THE "PENNY STOCK" RULES ON BUYING OR SELLING OUR COMMON STOCK ............................................................ 11 PLAN OF DISTRIBUTION .................................................... 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ................................................... 13 DESCRIPTION OF BUSINESS ................................................. 16 MANAGEMENT .............................................................. 21 PRINCIPAL SHAREHOLDERS .................................................. 27 RELATED PARTY TRANSACTIONS .............................................. 27 SELLING SHAREHOLDERS .................................................... 29 DESCRIPTION OF SECURITIES ............................................... 45 INCOME TAX CONSEQUENCES ................................................. 48 DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES .............................................. 51 LEGAL MATTERS ........................................................... 51 EXPERTS ................................................................. 51 WHERE YOU CAN FIND MORE INFORMATION ..................................... 51 FINANCIAL STATEMENTS .................................................... F-1 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ...................... II-1 SIGNATURES .............................................................. II-5 PROSPECTUS SUMMARY This summary highlights certain information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information regarding The Buck A Day Company Inc. and our financial statements and the related notes appearing elsewhere in this prospectus. The Company Our Business: Our principal business address is 465 Davis Drive, Suite 226, Newmarket, Ontario L3Y 2P1, Canada. Our telephone number is (905) 868-9477. We are a marketing, tele-marketing and financing company incorporated on September 15, 1999 and commencing operations in January 2000. The "Buck A Day" branding is the basic premise of our business model. In April 2000, credit facilities with CitiFinancial Services of Canada Ltd. (formerly Associates Financial Group), a subsidiary of Citigroup, were established to finance our "Buck A Day" credit card program. CitiFinancial underwrites the "Buck A Day" credit card without recourse to us. Approved applicants are extended a pre-determined level of credit ranging from $650 to $6,500. As of May 31, 2002, CitiFinancial approved approximately 30-35% of all applications for "Buck A Day" credit cards. We take no credit risk. However, our ability to provide financing is dependent on the willingness of Citifinancial to approve applicants. As a result of CitiFinancial's ability and willingness to underwrite our credit card program, our customers may finance their purchases from us by making payments equal to less than a dollar ("buck") a day, with no down payment. For example, an approved customer of ours who purchases a computer may choose to finance the cost of that purchase over time. When reduced to daily amounts, a $27 monthly payment is less than a "buck" a day. We market and sell name brand electronic and consumer products from manufacturers such as Sony, JVC and IBM directly to consumers and small businesses. These products primarily consist of computers, television sets, high-end electronics and appliances. Sales generated from television advertising account for 80% of our gross sales. The remaining 20% is generated through our website. Business operations are segregated into separate departments. As of May 31, 2002, we had approximately eighty sales representatives and twenty management and administrative employees. We operate two sales shifts, providing sales coverage from 9:00 a.m. to 11:00 p.m. (Eastern time) seven days per week. On May 31, 2001, we entered into an exclusive three-year distribution agreement with IBM Canada Ltd. We market IBM products in all provinces across Canada. 1 In the second quarter of calendar 2002, a branch office is scheduled to open in Montreal to better service the Quebec market. During the third quarter of calendar 2002 the company intends to open an office in Ft. Lauderdale, Florida. Preliminary discussions with Citigroup U.S. lead us to conclude that we are confident that they will provide us with a similar financing structure to that of our Canadian operation. Province of Incorporation: We were incorporated in Ontario, Canada on September 15, 1999. The Offering: Number of Shares our Being Offered: We are offering 3,000,000 shares of Common Stock. The selling shareholders intend to register 22,522,974 shares of our Common Stock or 100% of their aggregate holdings. Issuance of these shares to the selling shareholders was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended. Number of Shares Outstanding After the Offering: As of May 31, 2002, we had 22,522,974 shares of our Common Stock issued and outstanding. In addition to the Common Stock, we have 600,000 shares of Class D Warrants, 3,000,000 shares of Class E Warrants, and 500,000 shares of Class F warrants issued and outstanding, respectively. If we sell all of the 3,000,000 shares we are registering, we will have 25,522,974 shares of our Common Stock issued and outstanding after the offering, exclusive of the shares reserved for issuance underlying our Class D, E and F Warrants. Estimated Use of Proceeds: We intend to use substantially all of the net proceeds from our sale of our Common Stock for general corporate purposes, including working capital, expansion of sales and marketing activities which include the planned expansion into the United States, in addition to potential acquisitions of complementary businesses. We will not receive any of the proceeds from the sale of those shares being offered by the selling shareholders. Risk Factors: For a discussion of the risks you should consider before investing in our Common Stock, read the "Risk Factors" section. 2 RISK FACTORS You should carefully consider the following risk factors and all other information contained in this prospectus before investing in our Common Stock. Investing in our Common Stock involves a high degree of risk. Any of the following risks could adversely affect our business, financial condition and results of operations. The risks and uncertainties described below are not the only ones we may face. Risks Related To Our Business Concentrated ownership of our common stock may allow certain security holders to exert significant influence in corporate matters. Our officers, directors and principal security holders own approximately 40% of our outstanding shares of Common Stock. Such concentrated control allows these security holders to exert significant influence in matters requiring approval of our stockholders. Edward P. LaBuick, our Chairman of the Board and Chief Executive Officer is the father of Dennis P. LaBuick, our President and a Director. Dennis P. LaBuick is married to Patricia LaBuick our Sales Manager. Edward P. LaBuick and his wife, Faye LaBuick collectively own 2,925,000 shares of Common Stock including options to purchase an additional 952,500 shares of Common Stock. Dennis P. LaBuick and his wife, Patricia LaBuick, collectively own 2,895,000 shares of Common Stock including options to purchase an additional 897,500 shares of Common Stock. As a result, assuming the registration of all 25,522,974 shares by us and the selling shareholders, the LaBuick family members' aggregate holdings of our Common Stock is 5,820,000 shares or 22.8% of the total issued and outstanding, exclusive of any options to purchase shares of Common Stock. Further, Edward P. and Dennis P. LaBuick represent two of our four Board members and are in a position to exert significant undue influence in matters requiring approval or authorization by our Board. Although the LaBuick family members do not hold a majority of the outstanding Common Stock, they are likely to be in a position to influence significantly the election of some or all of the members of our Board of Directors and the outcome of most corporate actions requiring stockholder approval. See "Management" and "Principal Shareholders". Need to raise additional capital in regards to our planned expansion into the United States without jeopardizing the financial well-being of our Canadian operation. Presently, we have approximately Cdn. $1,100,000 cash. In addition we are experiencing a positive cash flow and do not anticipate a significant change in that status. However, without additional capital we will be unable to expand into the United States market and thus, may not grow as quickly as anticipated. There can be no assurances that such funds can be raised or, if they can be raised, the terms upon which such funds may be made available to us. Our failure to raise additional capital will significantly limit such efforts and may have a material adverse effect on us. If our ability to buy media cheaply is hampered, our margins will suffer. To a significant extent, our business plan relies on our ability to purchase media placements at competitive rates. In the event that we are unable to achieve our cost goals regarding such media purchases, our profitability may be adversely affected our margins may suffer significant narrowing. No dividends. We do not anticipate paying cash dividends to the holders of our Common Stock in the foreseeable future. Accordingly, investors must rely on the sale of their shares of Common Stock after price appreciation, which may never occur, as the only way to realize on their investment. Investors seeking cash dividends should not purchase our shares of Common Stock. We have a limited operating history with which to evaluate our business. We commenced operation of our business in January 2000. Although every member of our management team has extensive experience, we have a very limited operating history with which to evaluate our business. You must consider the risks and difficulties frequently encountered by companies in the early stages of development. These risks and difficulties include our ability to: 3 o maintain and develop strategic relationships with business partners; o offer compelling services and products; and o promptly address the challenges faced by early stage, rapidly growing companies which do not have an experience or performance base to draw on. Our ability to provide financing to our customers is wholly dependent on CitiFinancial as our sole financing program, the "Buck A Day" credit card is wholly underwritten by CitiFinancial. An integral part of our business is the ability to sell products and services to individuals and small businesses. We rely solely on CitiFinancial to approve all applications and subsequently extend credit to the approved individuals. Thus, without CitiFinancial's assistance, we are unable to provide such service to our customers. Although we have a three year Revolving Charge Dealer Agreement with CitiFinancial which extends through 2004, that agreement allows either party to terminate same upon thirty (30) days notice. In the event CitiFinancial terminates its relationship with us, for any reason, and we cannot locate a suitable replacement within thirty (30) days, we will not be able to provide our credit card services to any new customers. Until such time that we are able to promptly replace CitiFinancial, our ability to grow will be severely restricted as the majority of our new customers purchase our products through our credit card program. Furthermore, if at any time CitiFinancial's approval rate of our applicants declines significantly, our business may suffer a significant loss of revenue as our new customer base would dwindle. SuperCom Canada Ltd. is our only supplier of IBM computer equipment which comprises the majority of our sales. IBM Canada Ltd. is unable to provide us with direct financing for the purchases of the IBM products. However, IBM Canada Ltd. has arranged for us to purchase such equipment through SuperCom Canada Ltd., the largest Canadian IBM wholesaler. SuperCom has extended a credit line to us on behalf of IBM in the amount of $487,500 in addition to warehousing in their facilities an additional $325,000 worth of IBM computer equipment on our behalf. We purchase all IBM computer equipment through SuperCom. We have not entered into a written agreement with SuperCom. Our oral understanding may be terminated by SuperCom at any time and without any notice. If SuperCom terminates such purchasing arrangement, we may be unable to promptly replace SuperCom, which would result in our business suffering a material adverse effect. Further, even if we were able to promptly replace SuperCom, we may not be in a position to negotiate similar preferential terms with the new entity. Our rapid growth may strain our resources and hinder our ability to implement our business strategy. We are currently experiencing a period of significant growth. As of May 31, 2002, we had approximately 100 employees, an increase of 420% from the 25 employees we had as of the same date last year. We currently anticipate hiring an additional 50 employees during the current fiscal year, most of them will be hired for our sales, marketing and customer support teams. This growth has placed, and the future growth we anticipate in our operations will continue to place, a significant strain on our managerial, operational, financial and information systems resources. As part of this growth, we may have to implement new operational and financial systems and procedures and controls, expand our office facilities, train and manage new employees. If we are unable to manage our growth effectively, we will be unable to implement our growth strategy, upon which the success of our business depends. We face competition from existing and new competitors. There exist a number of direct and indirect competitors that have significantly greater resources and experience than us. Our sales and marketing structure is not proprietary and many of our competitors sell similar items. Further, entry into the marketplace by new competitors is relatively easy. We consider our retailing competitors' businesses to be primarily price driven; whereas, we have found our industry to be relatively unaffected by pricing thresholds, which means that we are unable to substantially increase market share purely through price adjustments. In Canada some of our biggest competitors are IPC Canada, MDG Canada Ltd. and Dell Computer Corp. In the United States some of our biggest competitors will be direct marketing computer manufacturers such as Dell and Gateway Computer Corp. and nationwide electronic retailers such as Best Buy and Circuit City. Furthermore, there are many online electronics retailers, such as Amazon.com and 4 Buy.com, who would directly compete for our customers. All of the above are larger and better known and have more resources for financing, advertising and marketing. We intend to compete based on our ability to market and sell products to individuals who require credit with no down payment and payments as low as a dollar a day. Our business is highly dependent on marketing growth which may be difficult to attain. We primarily market our products and services directly to customers by means of television and print media and, to a lesser but increasing extent, through our internet website. We provide technical support and other customer services primarily by means of telephone. Accordingly, we are dependent on the growth of direct distribution channels in order to have a growing market in which to sell our products and services. There can be no assurance that worldwide direct marketing channels will grow or that we would be able to establish a more significant presence in indirect channels of distribution if it becomes necessary or desirable in the future. Lack of consistency in our operating results makes it difficult to predict future growth. Our operating results have varied and may continue to fluctuate from quarter to quarter and will depend on numerous factors, including, but not limited to, customer demand and market acceptance of our products, varying product mix and other factors. In addition, we have operated without a material backlog so that net sales in a given quarter are dependent on customer orders received in that quarter and operating expenditures are primarily based on customer demand. As a result, if demand does not meet our expectations in any given period, the sales shortfall may result in an increased impact on operating results due to our inability to adjust operating expenditures quickly enough to compensate for such shortfall. Our business is sensitive to the spending patterns of our customers, which in turn are subject to prevailing economic conditions and other factors beyond our control. Our results of operations could be materially adversely affected by changes in economic conditions or customer spending patterns for our products. Anticipated expansion into the United States may strain our resources. We intend to enter in a limited manner and in selected areas the United States marketplace within the next six (6) months. We further expect to expend significant resources related to such expansion and generate significant revenue through such expansion. This growth strategy could place a considerable demand on our management and our financial and operational resources. Our growth strategy is subject to various risks, including uncertainties regarding the ability to achieve similar application acceptance levels and our ability to effectively service our new customers. We can give no assurance that we will continue to control our growth at manageable levels or effectively, compete with much larger companies that sell similar products directly to the public. If we cannot successfully expand our business, we may not be able to sustain our recent earnings growth over an extended period of time. Although certain members of our management team have had significant experience marketing other products in the United States we have limited experience selling products of our type in such a marketplace and as a result, it may be difficult for us to successfully market our business and sell our products there. In order to expand internationally we may enter into relationships with foreign business partners. We may experience difficulty in managing international operations because of distance, as well as cultural differences, and there can be no assurance that we or our future United States business associates will be able to successfully market and operate our services there. We may encounter unanticipated regulatory risks in regards to CitiFinancial's lending practices. In the event that legislation having a negative impact on our business is adopted, it could have a material and adverse impact on our business operations. As is the case with most businesses, we are subject to various governmental regulations, including specifically in our case, regulations regarding consumer lending transactions. Although we do not directly provide financing for our customers any regulations restricting CitiFinancial's ability to extend credit to applicants for a "Buck-A-Day" credit card may have an adverse effect on our business. Federal and state consumer protection laws impose requirements on the making and enforcement of consumer loans. Congress and the states may enact new laws and amendments to existing laws to regulate further the credit card and consumer credit industry or to reduce finance charges or other fees or charges applicable to credit card accounts. Such laws, as well as any new laws or rulings which may be adopted, may adversely affect CitiFinancial's ability to do business with us. Although there is no 5 comprehensive federal legislation regulating our transactions, we cannot assure you that legislation will not be enacted in the future. From time to time, legislation has been introduced in Congress seeking to regulate our business. In addition, we cannot assure you that the various legislatures in the states where we anticipate doing business will not adopt new legislation or amend existing legislation that negatively affects us. We are dependent on the certain services of key individuals. We depend on the services of members of our executive staff, including Edward P. LaBuick, our Chairman and Chief Executive Officer; Dennis P. LaBuick our founder, President and Chief Operating Officer; Keith Kennedy our Vice President of Operations and Dan LaRoche our Director of Marketing. The key management members have three year exclusive employment contracts with the Company and may not be terminated by the respective employee. There are existing company-paid life insurance policies on Edward P. LaBuick and Dennis P. LaBuick each in the amount of $2,000,000, to which The Buck A Day Company Inc. is the beneficiary. There can be no assurances that we would be able to retain qualified executive staff if they were to leave for any reason. Therefore, the loss of the services of members of our executive staff, including Edward P. LaBuick, could have a material adverse effect upon us. Enforcement of certain civil liabilities may be difficult as our officers, directors and a significant portion of our assets are located in Canada. A substantial portion of our assets are located in Canada and a majority of our directors and officers and experts with respect to The Buck A Day Company Inc. named herein, are residents of Canada. As a result, it may be difficult to effect service within the United States of America upon The Buck A Day Company Inc. or upon such directors, officers and experts. Execution by United States courts of any judgment obtained against any of those parties in United States courts would be limited to the assets of The Buck A Day Company Inc. or such person located in the United States. Risks Related To This Offering We may not sell any or all of the shares being offered by us. The offering of our shares is self-underwritten. In the event that we are unable to sell all 3,000,000 shares of our Common Stock we will realize reduced proceeds and may not be able to expand our operations to the United States as quickly as anticipated or, in the alternative, to the extent desired by us. Selling shareholders may compete with us in selling Common Stock. Our ability to raise additional capital through the sale of our Common Stock may be harmed by competing re-sales of Common Stock by the selling shareholders. Sales by selling shareholders may make it more difficult for us to sell equity or equity-related securities in this offering or in the future at a time and price that we deem appropriate because the selling shareholders may offer to sell their shares of Common Stock to potential investors for less than we do. Moreover, potential investors may not be interested in purchasing shares of our Common Stock if the selling shareholders are selling (or even have the ability to sell) their shares of Common Stock. Considering that the number of shares being registered by the selling shareholders is almost seven times as great as the number shares being registered by the company and the selling shareholders purchased their shares at significantly lower prices than the price being offered by the company, sales of common stock by selling shareholders are likely and may be sufficient to depress the public market for our stock resulting in a loss to those purchasing shares directly from the company. This Registration Statement of which this Prospectus forms a part is registering 22,522,974 shares of Common Stock owned by the selling shareholders and 3,000,000 shares owned by us concurrently. The selling shareholders may sell some or all of their shares immediately after they are registered. Shares purchased from the company by the public may become progressively worth less as a result of sales of Common Stock into the market by some or all of the selling shareholders. Of the Selling Shareholders who are employees of the Buck A Day Company Inc., conflicts of interests may occur between their duties to us as employees and their interest in selling shares as they may find themselves having to decide whether to pursue long term growth at the cost of near term stock performance (ie. acquisitions or mergers). Furthermore, we have not taken any steps to incorporate 6 procedural safeguards protecting investors who purchase our shares of Common Stock through this offering from the sale of the shares of Common Stock held by the selling shareholders. See "Selling Shareholders". Lack of an underwriter's due diligence results in reduced protection to an investor. We are selling up to 3,000,000 shares of our Common Stock on a self-underwritten basis. As a result, purchasers of our Common Stock will not have the benefit of an underwriter's due diligence, whose task is, among others, to confirm the accuracy of the disclosures made in the prospectus. Lack of an underwriter's sales efforts may result in an illiquid investment. By selling our shares of Common Stock on a self-underwritten basis, we will not be able to utilize the services of an underwriter to offer or sell our securities for us in connection with this offering. We will undertake our own best efforts to market and sell the securities to the public. We have not set a minimum with respect to the amount of our securities that we intend to sell. We are less likely to sell the shares we are offering on a self-underwritten basis than if we were selling the shares through an underwriter. If we do not raise a sufficient amount of funds through this offering, we may not be able to adequately contribute proceeds to development of our business and we may not be able to successfully proceed with our expansion plan. This may cause significant losses and our stockholders may lose all or a substantial portion of their investment. See "Plan of Distribution". Fluctuation of Common Stock may have an adverse effect on the market price of our Common Stock. Future announcements concerning us or our competitors, including strategic relationships with our or other suppliers, may cause the market price of our Common Stock to fluctuate substantially for reasons which may be unrelated to operating results. These fluctuations, as well as general economic, political and market conditions, may have a material adverse effect on the market price of our Common Stock. Penny stock rules may have a restrictive effect on the trading of our Common Stock. Because we may be subject to the "penny stock" rules, the level of trading activity in our stock may be reduced. Broker-dealer practices in connection with transactions in "penny stocks" are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks, like shares of our Common Stock, generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on NASDAQ. 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 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, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, broker-dealers who sell these securities to persons other than established customers and "accredited investors" must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules, and investors in our Common Stock may find it difficult to sell their shares. A NOTE CONCERNING FORWARD-LOOKING STATEMENTS You should not rely on forward-looking statements in this prospectus. This prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as "anticipates", "believes", "plans", "expects", "future", "intends" and similar expressions to identify these forward-looking statements. Prospective investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this prospectus. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by The Buck A Day Company Inc. described in "Risk Factors" and elsewhere in this prospectus. 7 CONVENTIONS WHICH APPLY TO THIS PROSPECTUS All information in this prospectus reflects no exercise of employee stock options, or warrants. However, we are registering 600,000 shares of Common Stock, 3,000,000 shares of Common Stock and 500,000 shares of Common Stock for issuance in the event that our Class D, E and F warrant holders choose to exercise such warrants. ENFORCEMENT OF CIVIL LIABILITIES A substantial portion of our assets are located in Canada and a majority of our directors and officers and experts with respect to The Buck A Day Company Inc. named herein, are residents of Canada. As a result, it may be difficult to effect service within the United States of America upon The Buck A Day Company Inc. or upon such directors, officers and experts. Execution by United States courts of any judgment obtained against any of those parties in United States courts would be limited to the assets of The Buck A Day Company Inc. or such person located in the United States. CURRENCY OF PRESENTATION In this prospectus and unless otherwise stated, all references to "$" are to the legal currency of the United States of America. Our financial statements are prepared in United States of America dollars and presented in accordance with U.S. GAAP for the fiscal year ended July 31, 2001 and the interim six month period ended January 31, 2002. In this prospectus, any discrepancies in any table between totals and the sums of amounts listed are due to rounding. For historical information regarding rates of exchange between Canadian dollars and U.S. dollars, please see "Exchange Rates." USE OF PROCEEDS We may encounter difficulty selling the 3,000,000 shares being registered by us in this offering. The following table discloses the net proceeds we would realize from the sale of the related numbers of shares. % # Shares Net proceeds (est.) --- --------- ------------------- 100 3,000,000 $5,900,000 75 2,250,000 $4,400,000 50 1,500,000 $2,900,000 25 750,000 $1,400,000 We expect to use substantially all of the net proceeds for general corporate purposes, including working capital, expansion of sales and marketing activities in Canada and expenses associated with our planned expansion into the United States marketplace. The amounts we actually expend for working capital and other purposes may vary significantly and will depend on a number of factors including, but not limited to, the actual net proceeds received, the amount of our future revenues and other factors described under "Risk Factors." Accordingly, our management will retain broad discretion in the allocation of the net process. A portion of the net proceeds may also be used to acquire or invest in complimentary businesses, technologies, product lines or products. We have no current plans or agreements or commitments with respect to any of these transactions, and we are not currently engaged in any negotiations with respect to any of these transactions. 8 Regardless of whether we sell any of our shares of Common Stock, we have incurred approximately $100,000 in costs and expenses in regards to the preparation of the Registration Statement of which this Prospectus forms a part. DIVIDEND POLICY We have not declared or paid any cash dividends on our equity shares since inception and do not expect to pay any cash dividends for the foreseeable future. We currently intend to retain future earnings, if any, to finance the expansion of our business. Investors seeking cash dividends should not purchase our shares of Common Stock. Our Board of Directors may at any time by resolution declare a common stock dividend so long as such dividend does not impair the capital of the company or result in unequal treatment of any other holder of the same class of common stock. CAPITALIZATION The following table sets forth our capitalization as of January 31, 2002. This table should be read in conjunction with the financial statements and related notes included elsewhere in this prospectus.
January 31, 2002 Actual Pro Forma (1) ----------- ---------------- Stockholders' Equity: Common Stock, no par value, unlimited number of shares authorized; 21,761,600 issued and outstanding (actual) and 22,522,974 shares issued and outstanding (pro forma)(1) $ 2,483,043 $ 2,839,730 Accumulated other comprehensive income 37,516 37,516 Retained Earnings (deficit) (1,641,675) (1,641,675) Total Stockholders' Equity 878,884 1,235,571 ----------- ----------- Total Capitalization 878,884 1,235,571 =========== ===========
(1) Give retroactive effect to the sale of 761,374 shares of common stock during the period from February 1, 2002 to February 15, 2002 for net proceeds of $356,687. EXCHANGE RATES For the fiscal year ended July 31, 2001 the average exchange rate concerning the number of Canadian dollars for which one U.S. dollar could be exchanged was 0.65. The aforementioned figures are based on the average of the noon buying rate in the City of New York on the last day of each month during the period for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York. SELECTED FINANCIAL DATA The following unaudited selected financial information concerning us, other than the as adjusted balance sheet, has been derived from the financial statements included elsewhere in this prospectus and 9 should be read in conjunction with and is qualified in its entirety by such financial statements and notes therein. See "Financial Statements". Statement of Operations Data:
Year Ended July 31, Six Months Ended January 31, -------------------------- ---------------------------- 2001 2000 2002 2001 ---- ---- ---- ---- Sales $ 5,381,008 $ 733,973 $ 7,938,428 $ 2,952,984 Cost of sales 3,795,962 519,307 4,809,483 1,999,744 Expenses 3,100,005 604,678 2,865,648 1,330,322 Net Income (loss) (1,514,959) (390,012) 263,297 (377,082) Income (Loss) per share $ (3,787.40) $ (975.03) $ 0.02 $ (942.71) Weighted average number of shares outstanding 400 400 17,458,367 400
Balance Sheet Data: January 31, 2002 Actual Pro Forma (1) Working Capital $ 617,105 $ 973,792 Total Assets 2,130,155 2,486,842 Stockholders' Equity 878,884 1,235,571 - ---------- (1) Gives effect to the sale of 761,374 shares of Common Stock during the period from February 1, 2002 to February 15, 2002 for net proceeds of $356,687. DILUTION The issuance of further shares and the eligibility of issued shares for resale will dilute our Common Stock and may lower the price of our Common Stock. If you invest in our Common Stock, your interest will be diluted to the extent of the difference between the price per share you pay for the Common Stock and the pro forma as adjusted net tangible book value per share of our Common Stock at the time of sale. We calculate net tangible book value per share by calculating the total assets less intangible assets and total liabilities, and dividing it by the number of outstanding shares of Common Stock. The net tangible book value of our Common Stock as of January 31, 2002, was $878,884, or approximately $.04 per share. After giving retroactive effect to the sale of 761,374 shares of Common Stock for net proceeds of $356,687 (the pro forma transaction), the Company's net tangible book value increased to $ 1,235,571 or $.06 per share. After giving effect to the sale of 3,000,000 shares of our Common Stock at a price of $2.00 per share (which is expected to yield net proceeds of $5,900,000), Pro Forma net tangible book value as adjusted was $7,135,571 or $0.28 per share. The result would be an immediate increase in net tangible book value per share of $0.22 to existing stockholders and an immediate dilution to new investors of $1.72 (86%) per share. "Dilution" is determined by subtracting net tangible book value per share after the offering from the offering price to investors. The following table illustrates the foregoing information with respect to dilution to new investors on a per share basis: Initial public offering price $2.00 Net tangible book value before offering (historical) $0.00 Increase attributable to Pro Forma transaction(1) $0.06 ----- Net tangible book value before giving effect to the offering 0.06 Increase attributable to new investors 0.22 ----- Pro Forma net tangible book value after the offering $0.28 ----- Dilution to new investors $1.72 ===== - ---------- (1) Gives effect to the sale of 761,374 shares of Common Stock during the period from February 1, 2002 to February 15, 2002 for net proceeds of $356,687. 10 In the future, we may issue additional shares, options and warrants, and we may grant additional stock options to our employees, officers, directors, and consultants under out stock option plan, all of which may further dilute our net tangible book value. 22,522,974 shares of our Common Stock are concurrently being offered by the selling shareholders, all of which may be sold in the open market, in privately negotiated transactions or otherwise. We will not receive any proceeds from the sale of such 22,522,974 shares of our Common Stock by the selling shareholders. Sales of such shares of Common Stock by the selling shareholders or the potential of such sales may have a material adverse effect on the market price of the Common Stock offered hereby. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our Common Stock is not quoted or traded on any public exchange. It is our intent to apply for our Common Stock to be listed on the OTC-Bulletin Board operated by the NASDAQ Stock Market, Inc. during the time that this prospectus is being reviewed by the Securities and Exchange Commission. Although there can be no assurances, it is our intention to have such listing concurrent with the effectiveness of this prospectus. IMPACT OF THE "PENNY STOCK" RULES ON BUYING OR SELLING OUR COMMON STOCK We anticipate that the initial trading in our Common Stock will be subject to the "penny stock" rules. The Securities and Exchange Commission has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share. These rules require that any broker-dealer who recommends our securities to persons other than prior customers and accredited investors, must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser's written agreement to execute the transaction. In addition, unless an exception is available, the broker-dealer must deliver a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market prior to any transaction. Further, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage them from transactions in our Common Stock, which could severely limit the market price and liquidity of our securities. PLAN OF DISTRIBUTION We are registering 3,000,000 shares of our Common Stock, which will be offered and sold on a self-underwritten basis by us, using our officers, directors, or, at our discretion, by participating broker/dealers licensed by the National Association of Securities Dealers, Inc. Although we anticipate being listed on the OTC-Bulletin Board concurrently with the effectiveness of this Prospectus we may not be. Regardless, we will offer the shares to the public at a price of $2 per share. There is no minimum investment requirement 11 and funds received by us from this offering will not be placed into an escrow account. The offering price of the shares was arbitrarily determined by us. The offering price of our Common Stock does not have any relationship to our assets, book value, or earnings. We reserve the right to reject any subscription in whole or in part, for any reason or for no reason. There can be no assurance that we will sell any or all of the offered shares. As our offering is "self-underwritten" in nature and at a fixed price of $2 per share, we are unsure whether we will sell any shares of common stock. As a result, we are unable at this time to determine what State, if any, offers or sales will be made. As a result of our recent growth, we believe that unsolicited offers to purchase our common stock will be made. However, we may also seek out broker-dealers to assist us in placing our stock. Regardless of whether we place our stock ourselves or through agents, we will comply with all applicable blue sky requirements of each jurisdiction in which we ultimately offer and sell our shares. The selling shareholders are registering an aggregate of 22,522,974 shares of our Common Stock. At any time after the effectiveness of this but prior to a listing on any exchange or similar entity, the selling shareholders may sell shares at a price of $2 per share. In the event that we are listed on the OTC-Bulletin Board or any national securities exchange or automated quotation system, the selling shareholders may sell our Common Stock thereon at prevailing market prices which may be lower than $2 per share or in negotiated private transactions, or in a combination of these methods. The shares will not be sold in an underwritten public offering. Broker-dealers engaged by the selling shareholders may arrange for other broker-dealers to participate. Broker-dealers may receive commissions or discounts from the selling shareholders (or, if any such broker-dealer acts as agent for the purchaser of such shares, from such purchaser) in amounts to be negotiated. Broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share, and, to the extent such broker-dealer is unable to do so acting as agent for the selling shareholders, to purchase as principal any unsold shares at the price required to fulfill the broker-dealer's commitment to the selling shareholders. Broker-dealers who acquire shares as principal may resell those shares from time to time in the over-the-counter market or otherwise at prices and on terms then prevailing or related to the then-current market price or in negotiated transactions and, in connection with such re-sales, may receive or pay commissions. The selling shareholders and any broker-dealers participating in the distributions of the shares may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act. Any profit on the sale of shares by the selling shareholders and any commissions or discounts given to any such broker-dealer may be deemed to be underwriting commissions or discounts. The shares may also be sold pursuant to Rule 144 under the Securities Act of 1933, as amended, beginning one (1) year after the shares were issued. Under the Securities Exchange Act of 1934 and the regulations thereunder, any person engaged in a distribution of the shares of our Common Stock offered by this prospectus may not simultaneously engage in market making activities with respect to our Common Stock during the applicable "cooling off" periods prior to the commencement of such distribution. Also, the selling shareholders are subject to applicable provisions that limit the timing of purchases and sales of our Common Stock by the selling shareholders. We have informed the selling shareholders that, during such time as they may be engaged in a distribution of any of the shares we are registering by this prospectus, they are required to comply with Regulation M. In general, Regulation M precludes the selling shareholders, any affiliated purchasers and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase, any security which is the subject of the distribution until the entire distribution is complete. Regulation M defines a "distribution" as an offering of securities that is distinguished from ordinary trading activities by the magnitude of the offering and the presence of special selling efforts and selling methods. Regulation M also defines a "distribution participant" as an 12 underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution. Regulation M prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security, except as specifically permitted by Rule 104 of Regulation M. These stabilizing transactions may cause the price of our Common Stock to be less volatile than it would otherwise be in the absence of these transactions. We have informed the selling shareholders that stabilizing transactions permitted by Regulation M allow bids to purchase our Common Stock if the stabilizing bids do not exceed a specified maximum. Regulation M specifically prohibits stabilizing that is the result of fraudulent, manipulative, or deceptive practices. The selling shareholders and distribution participants are required to consult with their own legal counsel to ensure compliance with Regulation M. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS We commenced operations in January 2000, marketing and selling brand name electronic and consumer products, primarily computers, television sets and high-end electronics and appliances, directly to consumers and small businesses employing a multimedia approach. The "Buck A Day" branding is the basic premise of our business model whereby a customer can purchase a product for as little as a dollar a day (See "Description of Business"). The following discussion should be read in conjunction with our financial statements and notes thereto contained elsewhere in this prospectus. This discussion may contain forward looking statements that could involve risks and uncertainties. For additional information see "Risk Factors". CRITICAL ACCOUNTING POLICIES: Our financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the reported amount of assets, liabilities at the date of the financial statements, the disclosure of contingent assets and liabilities, and the report amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The critical accounting policies that affect our more significant estimates and assumptions used in the preparation of our financial statements are reviewed and any required adjustments are recorded on a monthly basis. LOWER OF COST OR MARKET FOR INVENTORIES: Our inventories are recorded at the lower of cost and market. As with any retailer, economic conditions, cyclical demand and changes in purchasing can affect the carrying value of inventory. As circumstances warrant, we record lower of cost or market inventory adjustments. In some cases these adjustments can have a material effect on the financial results of an annual or interim period. In order to determine such adjustments, we evaluate the age of the inventory, inventory turns and their fair value of inventory. We quickly sell-off slower moving merchandise to lessen the effect of any adjustment. RETURNS PROCESS: Inventory sold is subject to a thirty (30) day money back guarantee. We continually evaluate the returns of inventory by customers to ensure that there are no problems with the inventory or that the customer can be sold a more appropriate product. Actual returns are processed in the month the product is returned. The historical percentage of returns to gross sales is 5.7%. The return policy allows the customer a thirty-day period to return the product; accordingly we are liable for returns based on sales in the preceding 30 days to the balance sheet date. We have not made a provision for returns after the balance sheet date because it believes it would be immaterial. Any adjustments necessary to the financial statements are recorded in the period the inventory is returned. 13 ACCOUNTS RECEIVABLE: CitiFinancial pays our accounts receivable. Our accounts receivable at any point of time normally approximates the last 2 to 4 days of sales to our customers. We only ship product to our customer once we have been provided with credit approval for the full invoice price pertaining to that customer's order. Once we have shipped the product to the customer we process our payment through CitiFinancial, which normally takes 2 to 4 business days. The monthly revenues for January 2002 were the highest monthly revenues ever recorded by our Company, which resulted in the higher accounts receivable level at the end of the current quarter. Below we have provided a table of revenues and accounts receivable: Days Sales Days Sales Mth_Yr [A] [B] [A]/[B] * No. Based On Accounts Gross Days in Mth. Actual Daily Receivable Revenues Sales Oct_01 $357,000 $1,496,000 7.4 4.3 Jan_02 $391,000 $1,924,000 6.3 3.8 RESULTS OF OPERATIONS: Year Ended July 31, 2001 vs. Period From Inception, January 1, 2000 through July 31, 2000: Sales for the year ended July 31, 2001 aggregated $5,381,008 as compared to $733,973 for the period ended July 31, 2000, an increase of $4,647,035 or 633%. The primary reasons for the increase was the consumer financing arrangement with CitiFinancial Services and a direct purchasing agreement with suppliers of IBM product in addition to a full year of operations for the period ended July 31, 2001 versus seven (7) months in our initial year of operations. The consumer financing arrangement with CitiFinancial allowed us to sell our products to a broader base of consumers because CitiFinancial would pre-approve the consumer credit and assume the risk of collection, thus enabling us to supply a greater amount of credit to a greater number of customers. The direct purchasing arrangement with suppliers of IBM allowed us to benefit from a continual and consistent supply of products. Prior to this supply arrangement our supply chain was inconsistent resulting in an inability to fulfill all orders placed with us. The gross margin on sales for the year ended July 31, 2001 was 29.5% as compared to 29.2% for the seven-month period ended July 31, 2000. While margins remained relatively stable between the periods, management believes that poor inventory supplies caused margins to be lower than expected. Operational costs increased from $604,678 to $3,100,005 when comparing the initial seven months of operations for the period ended July 31, 2000 to the year ended July 31, 2001. As a percentage of sales these costs decreased to 57.6% as compared to 82.4%. The primary reason for this decrease was the increased sales mentioned above and the resulting economies of scale. Salaries and commissions and media and printing costs represented 70.6% for the year ended July 31, 2001 and 66.9% for the period ended July 31, 2000 of the operational costs. For the year ended July 31, 2001 we reflected a net loss of $1,514,959, due to the lower than expected gross margin and significant operational costs required. For the initial seven month period ended July 31, 2000, we reflected a loss of $390,012 due to higher than anticipated initial start-up and inventory costs combined with lower than expected sales. 14 Six Months Ended January 31, 2002 vs. Six Months Ended January 31, 2001: Sales for the six months ended January 31, 2002 grew to $7,938,428 from $2,952,984 for the corresponding period of the previous year, an increase of 169%. Management believes that the primary reason for this increase was a stable low cost purchasing arrangement with IBM Corp. and additional credit facilities with these suppliers. A private placement of Common Stock for $900,000 facilitated a major television advertising campaign that resulted in significant leads and orders. Gross profit margins for the six-month period ended January 31, 2002 were 39.4% compared to 32.3% for the same period in the prior year. The 39.4% margin realized for the January 2002 period, which is higher than experienced during the prior periods, is more representative of management's expectations. Cost of operations increased when comparing the six months ended January 31, 2002 to the six months ended January 31, 2001 from $1,330,322 to $2,865,649. This increase was primarily due to our growth and the costs associated with the 169% increase in revenues. As a percentage of sales, operational costs decreased to 36.1% for the six months ended January 31, 2002 from 45.1% for the same period of the prior year due to the increased revenues described previously. For both periods, salaries and commissions and media and printing costs dominated operational cost and represented 66.5% for 2002 and 73.3% for 2001. For the six months ended January 31, 2002 we reflected net income of $263,297. For the six months ended January 31, 2001 we lost $377,082. This increase in earnings (a net loss to a net profit) for the comparable periods was primarily the result of the 169% increase in revenues. Liquidity and Capital Resources: At July 31, 2001, we had cash of $316,427 and negative working capital of $798,680. At January 31, 2002, we reflected cash of $947,072 and working capital of $617,105. This improvement in working capital was a result of the cash financing mentioned previously, increased revenues combined with improved gross profit margins and profitable operations for the period ended January 31, 2002. For the seven months ended July 31, 2000 we reflected positive cash of $25,164 primarily due to proceeds from capital stock issued net of a loss and additions to fixed assets. For the year ended July 31, 2001 the Company had an increase in cash and cash equivalents of $291,263. This increase was primarily due to advances and other loans received from shareholders net of a loss for the period (which caused negative cash from operations) and purchases of fixed assets. For the six months ended January 31, 2002, we experienced an increase in cash of $630,645 as compared to an increase of $11,547 for the six months ended January 31, 2002. During the period of February 1, 2002 through February 15, 2002, subsequent to the most current balance sheet date, we sold common stock in a private offering (which commenced in November 2001) and raised net proceeds of $356,687. In addition, the company is attempting to raise additional funds by selling up to 3,000,000 shares of common stock at a price of $2.00 per share in an offering to the public. It is anticipated that we will spend approximately $32,000 on larger warehouse facilities, $227,000 on an automated telephone system in our Toronto location and $32,000 in a Montreal location. Additional telemarketing and computer equipment will cost approximately $122,000 and we expect to incur $400,000 in capital expenditures to open an office in the United States. We presently have no bank debt and have primarily funded operations through the use of loans from shareholders and the initial capitalization from current shareholders. We hope to be able to fund operations without incurring bank debt but there are no assurances that we will be able to do so. We expect our current working capital position as well as the fact that when combined with our monthly positive cash flow to allow us to continue growing our business over the next 12 months. 15 However, if we are unable to sell our 3,000,000 shares of Common Stock our expansion into the United States will be delayed. Seasonality: Traditionally, our revenues are seasonally low in the months of November and December, as we face significant competition for media advertising placements during the lead up to the year end holidays. The consequent reduction in our advertising activity, results in a decline to our revenues. In addition, the year end holidays reduce the available days for deliveries to our customers, which also reduces our revenues. The month of January is our strongest revenue month and offsets to some extent the lower revenues of November and December during that quarter. DESCRIPTION OF BUSINESS History and Development We were incorporated pursuant to the Business Corporation Act (Ontario) on September 15, 1999 as 1375400 Ontario Limited. Our name was changed to The-Buck-A-Day-Company Inc. on February 2, 2000 and on November 13, 2001 our name was changed to The Buck A Day Company Inc. Our initial shareholders were members of the LaBuick family. In December 1999, A.R.T. International Inc., an Ontario corporation, acquired 160 shares of common stock from us for $286,000 (Cdn. $440,000). In August 2000, A.R.T. acquired 40 shares from us for $45,500 (Cdn. $70,000). On November 29, 2000 A.R.T. acquired the remaining 50% of the issued and outstanding shares of Buck from the LaBuick family for $325,000 (Cdn. $500,000) and 2,000,000 shares of A.R.T. At that time we concluded that our valuation exceeded Cdn. $1,000,000 based upon our current sales and the conservative forecasts of our business models. With the purchase of such shares we became a wholly-owned subsidiary of A.R.T. On December 4, 2000, Edward P. LaBuick and Dennis P. LaBuick were named CEO and Director, respectively, of A.R.T. On January 11, 2001, Nadia Faye LaBuick, wife of Edward P. LaBuick, our chairman, loaned $138,125 (Cdn. $212,500) to us. The terms of such loan required that interest at a rate of 7% per annum with principal were due on demand and were secured by all of our assets and registered pursuant to the applicable local laws. Also on January 11, 2001, Dennis and Patricia LaBuick advanced $331,500 (Cdn. $510,000) to us due payable on demand together with interest at the rate of 7% per annum. This loan was also secured by our assets and registered pursuant to the applicable local laws. On or about July 7, 2001, 1483516 Ontario Limited, loaned $450,000 to us. The terms of such loan required that interest at a rate of 7% per annum and principal were due on demand and were secured by a first lien on all of our assets. Nadia Faye LaBuick, Dennis LaBuick and Patricia LaBuick subordinated their security interests in our assets to the security interest of 1483516 Ontario Limited. The 1483516 Ontario Limited Security Agreement contained a provision that, subject to approval of A.R.T., the principal of the debt was convertible into 3,000,000 units consisting of one share of our common stock and one class B warrant to purchase one share of our common stock at a price of $0.15. On August 1, 2001, we issued to A.R.T. 800,000 class C warrants to purchase 800,000 shares of our common stock exercisable at $0.065 per share. Also on August 1, we authorized conversion of the LaBuick family members' loans with interest totaling $461,500 into 7,100,000 shares of our common stock and class A warrants for an additional 1,500,000 shares exercisable at $0.10 per share. Due to our severe liquidity problems, we requested that the LaBuicks and 148516 Ontario Limited convert their loans to us to equity. As a result of such request, on August 29, 2001, the LaBuick family members converted all of their loans to us into 7,100,000 shares of our common stock and class A warrants 16 for an additional 1,500,000 shares. Also on that day, 148516 Ontario Limited converted its loans to us into 3,000,000 shares of common stock and exercised all class B warrants for an additional 3,000,000 shares of common stock. On August 31, 2001, Edward P. LaBuick and Dennis P. LaBuick resigned from their positions as CEO and Director, respectively, of A.R.T. On October 1, 2001, the LaBuick family members exercised all class A warrants receiving 1,500,000 shares of our common stock and A.R.T. exercised all class C warrants receiving 800,000 shares of our common stock. Further, on that same date, we issued 3,000,000 class E Warrants to 37 investors. As a result of the aforementioned conversions no class A, B or C warrants, respectively, remain outstanding. On December 1, 2001, we issued 600,000 Class D Warrants to Jennifer Doering as compensation for services rendered by Ms. Doering in her capacity as a business consultant to the company. Specifically, Ms. Doering provided us with the following services: (i) investor and shareholder relations services; (ii) assisted in structuring and effecting the loan with 1483516 Ontario Limited. On February 1, 2002, we issued 500,000 Class F Warrants to Mary Boswell pursuant to an agreement under which Ms. Boswell provided marketing services in a consulting capacity to the Company without compensation. As of the date of this Prospectus, A.R.T. has no continuing relationship with us other than its current ownership position of 2,000,000 shares of Common Stock. Further, none of our officers, directors or employees hold a position as an officer or director of A.R.T. The current members of the board of A.R.T. are Roger Kirby, Simon Meredith, Michel Van Herreweghe and Stefan Gundmundsson. Business Model The "Buck-A-Day" branding is the basic premise of our business model; specifically that name brand products are packaged so that any customer can purchase them for as little as a dollar ("buck") a day, with no down payment. For the first sixteen (16) months of our operation, all IBM products and peripherals were purchased through Beamscope Canada Ltd., Ingram Micro and directly from IBM approved distributors. However, we were consistently plagued by shortages of inventories and as a result were often forced to acquire products through national retailers resulting in lower than anticipated profit margins. Continued inventory shortages led the company to seek new sources of supply. Negotiations with Compaq were concluded and new commercials were produced. Compaq offered the company an advance of $162,500 and an additional $487,500 line of credit for inventory purchases in exchange for an exclusive 2-year marketing agreement. IBM then negotiated a new agreement, which provided the company with a marketing allowance of $227,500, a creative budget of $195,000 payable semi-annually, credit facilities of $487,500, guaranteed inventory supply of an additional $325,000 and annual volume rebates of 1-3% on cumulative purchases. On May 31, 2001, we entered into an exclusive three-year distribution agreement with IBM Canada Ltd. and did not enter into the proposed agreement with Compaq. We market IBM products in all provinces across Canada. In the second quarter of calendar 2002, a branch office is scheduled to open in Montreal to better service the Quebec market. In fiscal 2002 our advertising budget of approximately $1,950,000 million will enable us to air over 39,000 sixty second television commercials on cable and local television stations across Canada promoting The Buck A Day Company and its products. 17 Typical Revenue Producing Transaction. A Customer's first experience with us is generally when they call our toll free number in response to one of our marketing campaigns. Potential customers who call while our sales staff is unavailable are routed to various third party call centers who forward to us all relevant contact information which is then down-loaded to our data-base. Our in-house sales staff uses its best efforts to return such calls within twelve to twenty-four hours. Our arrangement with the various call centers requires that we pay them a fee of $1.75 to $2.25 per lead generated from our advertising efforts. As a point of clarity, our telemarketing efforts are solely directed towards potential customers who initially contact us as a result of our marketing campaigns. Revenue Breakdown. As of January 31, 2002, our sales were generated in the following manner: a) 75% from computer and peripheral items directly from inquiries to our toll-free phone numbers; b) 20% from internet based orders; and c) follow-up catalogue sales are responsible for 5% of our business. We anticipate sales from our internet operations and catalogue sales to grow to approximately 25% and 15%, respectively, of our total revenue stream. Catalogue's of our most popular items are sent with every order and are also sent to all customers on a biannual basis. Our present marketplace is nationwide across Canada. The geographical breakdown of our sales by province are as follows: o Ontario 50% o Alberta 15% o British Columbia 15% o Manitoba 5% o Saskatchewan 5% o Quebec 5% o Atlantic Provinces 5% Rights of Return. We have a "no questions asked" right of return policy which allows any customer to return any item purchased for a period of 30 days from the receipt of any product. A customer returning an item in satisfaction of this policy has the right to either exchange that item or receive a refund based on his original method of payment. To date, we have found that approximately 1.25% of sales are returned. Marketing Approach Our management team has over 30 combined years of experience in purchasing media time on television as well as in commercial production and television marketing in both the United States and Canada. We market and sell name brand electronic and consumer products, primarily computers, television sets, high-end electronics and appliances, directly to consumers and small businesses, utilizing a multimedia approach, which at the present time, is principally through television advertising and web based marketing efforts. Our television campaign utilizes toll free phone numbers for direct consumer response while also promoting our website. We intend to continue expanding our direct response marketing in the calendar year 2002 and anticipate significant continued growth from Canadian operations. In the second quarter of calendar year 2002, we anticipate opening a branch office in Montreal, Quebec to service the burgeoning Quebec marketplace. However, we anticipate using a significant portion of the proceeds from this offering for expenses associated with our eventual expansion into the United States market in the calendar year 2002. 18 Television commercials for all offers are aired on the following networks and stations including: TWN (Weather), CMT, Discovery, Bravo, Space, Showcase, OLN, Star, Much More Music, ATN, Comedy, APTN, CITV, ATV, CityTV, BCTV, CKVU. Strategic Relationships On May 31, 2001, we entered into a Business Partner Agreement with IBM Canada Ltd. which provides us with a steady and secure supply of products from IBM through its major distributor SuperCom Canada Ltd. with credit terms of $487,500 plus back-up inventory financing of an additional $325,000. The term of the IBM Agreement is for three (3) years with no renewal terms. Further, IBM provided a marketing allowance of $227,500 and a creative budget of $195,000 payable semi-annually. We are required to purchase a minimum of 10,000 units per year with direct volume rebates of 1-3% on cumulative purchases. However, there is no ceiling on the amount of computer equipment we may purchase from IBM in any given year. IBM and SuperCom retain a registered purchase security interest on our inventory and accounts receivable in the amount of $487,500. Pursuant to such agreement we are responsible for all aspects of selling, delivering the products to our customers. CitiFinancial Services of Canada Ltd. Although we accept cash and credit cards as payment for our products and services, most of our customers make their purchases using the Buck A Day credit card which is underwritten by CitiFinancial Services of Canada Ltd. Potential customers apply for a Buck A Day credit card, which is either approved or rejected solely by CitiFinancial. The approved applicants are extended a pre-determined level of credit ranging from a minimum of $650 to a maximum of $6,500. Lexmark Canada -- Printers Only. Commencing January 1, 2002, Lexmark, a leading manufacturer of computer peripheral products extended to us a $66,300 marketing assistance advance to sell their products exclusively to our customers. In addition to the advance, we receive competitive pricing and additional rebates on certain models. AOL Canada Inc. On February 28, 2002, we entered into a Marketing Agreement with AOL Canada Inc., whereby AOL shall provide each of our customers purchasing a computer a free AOLmembership for twelve months. Pursuant to the AOL Marketing Agreement, we agreed to purchase and distribute 1,000 packages containing a CD-ROM with AOL software in each calendar month during the term of the Marketing Agreement at a price of $70.00 per package. The AOL Marketing Agreement has a three year term. Expansion into the United States We intend to enter the United States marketplace in a limited manner and in select locations within the next six (6) months. We have tested our commercials in the United States (Buffalo, Spokane and Seattle) and although we have not converted any of our leads into sales, the consumer response is equivalent to what we are presently enjoying in Canada. As a result of our relationship with CitiFinancial Services a division of Citigroup, we are now in a position to provide financing to United States' customers via the Buck A Day credit card plan. We anticipate opening our media buying, telemarketing center and warehousing facilities in the State of New York during the second quarter of calendar 2002. We believe that our business model of providing alternative financing, speedy delivery, name brand products and a thirty (30) day satisfaction or money back guarantee makes the United States market an attractive one. A significant market for our services exists in the United States as there is a large population of individuals and small businesses unable to obtain sufficient credit from any source, with which to purchase a computer or other electronic devices. Through our partnership with CitiFinancial we have been able to successfully arrange for more than 30% of applicants for the Buck A Day credit card to be extended credit with which to make purchases from us. 19 Competition General. We believe that the direct response marketing and sales of consumer electronics and household convenience items is not as competitive as electronics retailing. Retailers have significantly greater resources than we have; however, their business seems to be more price-driven and less focused than ours. Our sales and marketing structure is not proprietary, but highly developed; therefore, although many of our competitors sell similar items from competitive suppliers, we believe that we are able to better manage our sales through careful formulation of our offers. In Canada some of our biggest competitors are IPC Canada, MDG Canada Ltd. and Dell Computer Corp. In the United States some of our biggest competitors will be direct marketing computer manufacturers such as Dell and Gateway Computer Corp. and nationwide electronic retailers such as Best Buy and Circuit City. Furthermore, there are many online electronics retailers, such as Amazon.com and Buy.com, who would directly compete for our customers. All of the above are larger and better known and have more resources for financing, advertising and marketing. We intend to compete based on our ability to market and sell products to individuals who require credit with no down payment and payments as low as a dollar ("buck") a day. Canadian Computer and Electronics Retailers. There are three companies in the marketplace who we consider competitors, Dell Computer Corp. and two Canadian "clone" or "private label" manufacturers, IPC Canada and MDG Canada Ltd. IPC Canada has a nationwide customer base. They market themselves as a discount computer manufacturer that sells direct to the consumer. IPC runs print ads in major markets, but consumers may only purchase their products with cash or third party credit cards. MDG Canada Ltd. is also a Canadian "clone" or "private label" manufacturer. In addition to their direct sales division, MDG maintains approximately twenty-five retail outlets in the Southern Ontario market and they do not market nationwide. MDG does offer "in-house" financing similar to our own using Household Finance. In addition to their "in-house" financing, customers of MDG may choose to purchase products through cash or third party credit card transactions. Although they are better financed than ourselves, we consider our name recognition to be superior. Trademarks and Patents On November 5, 2001, we filed a trademark application with the United States Patent and Trademark Office covering our name and logo. As a result of such filing we were granted a right of priority for any associated filings in foreign countries which occur prior to May 5, 2002. Although we have not filed any intellectual property applications in Canada, we expect to do so prior to May 5, 2002. Insurance We currently carry a business insurance policy underwritten by The Economical Insurance Group, which maintains $1,300,000 of property insurance for inventory and equipment and $1,300,000 each for personal injury liability and non-owned automotive liability. Employees We currently employ 80 sales representatives and 20 management and administration employees. None of the employees are represented by a labor union. We consider our relationship with our employees to be satisfactory. Properties On September 1, 2001, we signed four leases for a fifty-three (53) month period for a total of 16,500 square feet of office and warehouse space in Newmarket, Ontario at an aggregate rent of approximately 20 $262,937. Although, such office space is sufficient for our present needs and presently we believe that additional space is available, if our growth exceeds our projections we may have to procure additional office space elsewhere. Seasonality Although we have been operational for less than two (2) years, we have found our business to be seasonal in nature in that the first calendar quarter of each year tends to be our strongest sales period. We have found that the increased demand for media placements during the traditional Christmas holiday season results in a significant increase in the costs of such placements and thus prohibits us from procuring the quality and amount of placements we would desire during that period. As a result, we have focused our media purchasing efforts on the first quarter of the calendar year and have realized significant sales gains during those periods. Legal Proceedings In July 2001, Beamscope Canada Inc., a supplier of hardware and software commenced an action against us in the Superior Court of Justice claiming the sum of $162,500, plus interest and costs for unpaid accounts. On December 21, 2001 we settled the Beamscope lawsuit and paid them $45,500 pursuant to the terms of such settlement. MANAGEMENT The following table sets forth the name and, as of December 31, 2001, age and position of each director and executive officer of our company. Directors and Executive Officers NAME AGE POSITION ---- --- -------- Edward P. LaBuick 59 Chief Executive Officer; Chairman of the Board of Directors Dennis P. LaBuick 39 Director; President Keith Kennedy 38 Director; Vice President of Operations John Mole 47 Director Kelly Murphy 36 Controller Background of Executive Officers, Directors and Significant Employees Edward P. LaBuick has served as the Chief Executive Officer and Chairman of the Board of our company since September 1999. From 1998 to 1999, Mr. LaBuick was a vice-president of Koolatron, a Canadian National television marketing company. From 1992 through 1998, Mr. LaBuick was president of Quality Music and Video Specialty Products, an entertainment and television marketing company. Mr. LaBuick's primary responsibilities are in developing strategic relationships with major suppliers, financial institutions and media providers. Mr. LaBuick is the father of Mr. Dennis P. LaBuick, our President, and father-in-law to Patricia LaBuick, our sales manager. On June 16, 2000, Mr. LaBuick filed for bankruptcy protection pursuant to section 168.1 of the Bankruptcy and Insolvency Act of Ontario and 21 was granted a Certificate of Discharge on March 17, 2001. Mr. LaBuick's bankruptcy was a result of the failure of his present business, outstanding lawsuit stemming from that prior business, Denny Inc. (an Ontario corporation) and reassessment of prior years tax returns. Dennis P. LaBuick has served as the President and as a Director of our company since December 1999. From 1998 through 1999 Mr. LaBuick was a self employed freelance director of television commercials and production. From 1996 to 1998, Mr. LaBuick was a vice president of television media for DCNL Inc., in San Francisco, California, which was sold to Helen of Troy in 1998. Mr. LaBuick has over fifteen (15) years of experience in direct response television, radio and print advertising. Mr. LaBuick's primary responsibilities include media planning and buying of short form direct-response commercials and informercials as well as the writing and production for such matters. Mr. LaBuick is the son of Mr. Edward P. LaBuick, our Chairman and the husband to Patricia LaBuick, our sales manager. Keith Kennedy has served as the Vice President of Operations and a Director of our company since September 1999. From 1998 to 1999, Mr. Kennedy was the Operations Manager of Koolatron, Inc., a television marketing company. From 1992 to 1998, Mr. Kennedy was the Operations Manager at Quality Music, Video & Special Products, a national distribution company. Mr. Kennedy's primary responsibilities are in staff and inventory management and general day to day operational matters. John Mole has been the President of Province Electric Supply Limited, a wholesale distributor of electrical products serving the electrical contractor, industrial, OEM, institutional and utility markets, from 1991 through the date of this Prospectus. Mr. Mole has been a Director of our company since February 5, 2002. Dan LaRoche has served as the Marketing Manager of our company since December 1999. From 1997 through 1999, Mr. LaRoche was employed by Interwood Marketing, a national marketing company. Mr. LaRoche has twenty-five (25) years of experience in direct response television, retail radio and print design and advertising. Mr. LaRoche's primary responsibilities are in media planning and buying of retail television and radio spots as well as production of short form direct-response commercials and infomercials. Kelly Murphy has been our controller since January 2000. From 1997 through 1999, Ms. Murphy was a self employed accountant. Board of Directors and Committees Our Articles of Association set the minimum number of directors at 1 and the maximum at number of directors at 10. We currently have 4 directors. Currently, our Board of Directors consists of Messrs. Edward P. LaBuick, Dennis P. LaBuick, Keith Kennedy and John Mole. The Board of Directors has appointed Messrs. Kennedy and Mole as the members of the Omnibus Committee to administer the Stock Option Plan. However, our Board anticipates adding 1 member within the next ninety (90) days, who will be a non-participating member of any employee stock option plan and who shall be expected to serve as an additional member of the Omnibus Committee. Although the Board of Directors anticipates forming an audit committee, at present, it has not established any other committees. Compensation of Directors We do not pay our Directors any fee in connection with their role as members of our Board. Directors are reimbursed for travel and out-of-pocket expenses in connection with their attendance at Board meetings. 22 Employment Agreements On November 1, 2001, we entered into an Employment Agreement with Mr. Edward P. LaBuick, our Chief Executive Officer and Chairman of the Board, for a term of three (3) years commencing November 1, 2001, providing for an annual salary of $146,250 for the first year and, during each of the remaining years, an amount equal to 110% of the immediately preceding year. In addition to his annual salary, Mr. LaBuick has the right to participate in any share option plan, share purchase plan, retirement plan or similar plan offer by our company, to the extent authorized by our Board. Mr. LaBuick also has the right to have the company pay for a car of its choosing including all expenses associated therewith. On November 1, 2001, we entered into an Employment Agreement with Mr. Dennis P. LaBuick, our President and a Director, for a term of three (3) years commencing November 1, 2001, providing for an annual salary of $130,000 for the first year and, during each of the remaining years, an amount equal to 110% of the immediately preceding year. In addition to his annual salary, Mr. LaBuick has the right to participate in any share option plan, share purchase plan, retirement plan or similar plan offer by our company, to the extent authorized by our Board. Mr. LaBuick also has the right to have the company pay for a car of its choosing including all expenses associated therewith. On November 1, 2001, we entered into an Employment Agreement with Mr. Keith Kennedy, our Vice President of Operations and a Director, for a term of three (3) years commencing November 1, 2001, providing for an annual salary of $52,000 for the first year and, during each of the remaining years, an amount equal to 110% of the immediately preceding year. In addition to his annual salary, Mr. Kennedy has the right to participate in any share option plan, share purchase plan, retirement plan or similar plan offer by our company, to the extent authorized by our Board. Mr. Kennedy also has the right to have the company pay for a car of its choosing including all expenses associated therewith. On November 1, 2001, we entered into an Employment Agreement with Mr. George Slightham, our Manager of Business Affairs, for a term of three (3) years commencing November 1, 2001, providing for an annual salary of $81,250 for the first year and, during each of the remaining years, an amount equal to 110% of the immediately preceding year. Mr. Slightham also has the right to have the company pay for a car of its choosing including all expenses associated therewith. Executive Compensation For the fiscal year ended July 31, 2001, our aggregate cash compensation payments to our executive officers and directors for services rendered in these capacities was approximately $250,250. The following table sets forth all compensation we paid to each executive officer whose total salary and bonus exceeded $65,000 in the calendar years indicated. Summary Compensation Table
LONG-TERM ANNUAL COMPENSATION COMPENSATION ---------------------- SECURITIES UNDERLYING NAME AND PRINCIPAL POSITION CALENDAR OTHER ANNUAL OTHER OPTIONS YEAR SALARY ($) COMPENSATION GRANTED (#) --------- ---------- ------------ ------------- Edward P. LaBuick; 2000 71,500 -- -- Chief Executive Officer and 2001 130,000 -- -- Chairman of the Board of Directors Dennis P. LaBuick; 2000 71,500 -- -- Director and President 2001 120,250 -- -- Keith Kennedy; 2000 32,500 -- -- Director and Vice President of 2001 52,000 -- -- Operations
23 Option Grants During Last Fiscal Year The Company did not issue any options during the fiscal year ended July 31, 2001. However, on February 14, 2002, certain directors, officers, employees and consultants were issued options to purchase an aggregate amount equal to 3,500,000 shares of Common Stock pursuant to the Company's Stock Option Plan. The table below sets forth the executive officers that received options pursuant to the Stock Option Plan.
Market Value Common of Common Share % of Total Shares Under Options Underlying options Granted in Exercise Options on Granted Fiscal 2002 Price Date of Grant Name (#) (%) ($/share) (1) ($) Expiration Date - ---- -------- ----------- ---------- ------------- ----------------- Edward P. LaBuick 952,500 27.2% $0.25 $0.25 February 13, 2005 Dennis P. LaBuick 897,500 25.6% $0.25 $0.25 February 13, 2005 Keith Kennedy 250,000 7.1% $0.25 $0.25 February 13, 2005 John Mole 50,000 1.4% $0.25 $0.25 February 13, 2005
(1) There was no public market for our common shares as of February 14, 2002. Therefore, the amounts set forth in this column represent the fair market value of each of our common shares as of that date, as determined by our Board taking into consideration the present and future valuation of the company based on the growth projections at that time and with the primary goal of providing incentive to certain members of our senior management. Options Exercised In Last Fiscal Year No executive officers exercised any options during the fiscal year ended July 31, 2001. Summary of 2002 Stock Option Plan Qualified directors, officers, employees, consultants and advisors of ours and our subsidiaries are eligible to be granted (a) stock options ("Options"), which may be designated as nonqualified stock options ("NQSOs") or incentive stock options ("ISOs"), (b) stock appreciation rights ("SARs"), (c) restricted stock awards ("Restricted Stock"), (d) performance awards ("Performance Awards") or (e) other forms of stock-based incentive awards (collectively, the "Awards"). A director, officer, employee, consultant or advisor who has been granted an Option is referred to herein as an "Optionee" and a director, officer, employee, consultant or advisor who has been granted any other type of Award is referred to herein as a "Participant." The Omnibus Committee administers the Stock Option Plan and has full discretion and exclusive power to (a) select the directors, officers, employees, consultants and advisors who will participate in the Stock Option Plan and grant Awards to such directors, officers, employees, consultants and advisors, (b) determine the time at which such Awards shall be granted and any terms and conditions with respect to such Awards as shall not be inconsistent with the provisions of the Stock Option Plan, and (c) resolve all questions relating to the administration of the Stock Option Plan. Members of the Omnibus Committee receive no additional compensation for their services in connection with the administration of the Stock Option Plan. 24 The Omnibus Committee may grant NQSOs or ISOs that are evidenced by stock option agreements. A NQSO is a right to purchase a specific number of shares of Common Stock during such time as the Omnibus Committee may determine, not to exceed ten (10) years, at a price determined by the Omnibus Committee that, unless deemed otherwise by the Omnibus Committee, is not less than the fair market value of the Common Stock on the date the NQSO is granted. An ISO is an Option that meets the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). No ISOs may be granted under the Stock Option Plan to an employee who owns more than 10% of our outstanding voting stock ("Ten Percent Stockholder") unless the option price is at least 110% of the fair market value of the Common Stock at the date of grant and the ISO is not exercisable more than five (5) years after it is granted. In the case of an employee who is not a Ten Percent Stockholder, no ISO may be exercisable more than ten (10) years after the date the ISO is granted and the exercise price of the ISO shall not be less than the fair market value of the Common Stock on the date the ISO is granted. Further, no employee may be granted ISOs that first become exercisable during a calendar year for the purchase of Common Stock with an aggregate fair market value (determined as of the date of grant of each ISO) in excess of $100,000USD. An ISO (or any installment thereof) counts against the annual limitation only in the year it first becomes exercisable. The exercise price of the Common Stock subject to a NQSO or ISO may be paid in cash or, at the discretion of the Omnibus Committee, by a promissory note or by the tender of Common Stock owned by the Option holder or through a combination thereof. The Omnibus Committee may provide for the exercise of Options in installments and upon such terms, conditions and restrictions as it may determine. An SAR is a right granted to a Participant to receive, upon surrender of the right, but without payment, an amount payable in cash. The amount payable with respect to each SAR shall be based on the excess, if any, of the fair market value of a share of Common Stock on the exercise date over the exercise price of the SAR, which will not be less than the fair market value of the Common Stock on the date the SAR is granted. In the case of an SAR granted in tandem with an ISO to an employee who is a Ten Percent Stockholder, the exercise price shall not be less than 110% of the fair market value of a share of Common Stock on the date the SAR is granted. Restricted Stock is Common Stock that is issued to a Participant at a price determined by the Omnibus Committee, which price per share may not be less than the par value of the Common Stock, and is subject to restrictions on transfer and/or such other restrictions on incidents of ownership as the Omnibus Committee may determine. A Performance Award granted under the Stock Option Plan (a) may be denominated or payable to the Participant in cash, Common Stock (including, without limitation, Restricted Stock), other securities or other Awards and (b) shall confer on the Participant the right to receive payments, in whole or in part, upon the achievement of such performance goals during such performance periods as the Omnibus Committee shall establish. Subject to the terms of the Stock Option Plan and any applicable Award agreement, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted and the amount of any payment or transfer to be made pursuant to any Performance Award shall be determined by the Omnibus Committee. The Omnibus Committee may grant Awards under the Stock Option Plan that provide the Participants with the right to purchase Common Stock or that are valued by reference to the fair market value of the Common Stock (including, but not limited to, phantom securities or dividend equivalents). Such Awards shall be in a form determined by the Omnibus Committee (and may include terms contingent upon a change of control of the company); provided that such Awards shall not be inconsistent with the terms and purposes of the Stock Option Plan. The Omnibus Committee determines the price of any such Award and may accept any lawful consideration. 25 The Omnibus Committee may at any time amend, suspend or terminate the Stock Option Plan; provided, however, that (a) no change in any Awards previously granted may be made without the consent of the holder thereof and (b) no amendment (other than an amendment authorized to reflect any merger, consolidation, reorganization or the like to which we are a party or any reclassification, stock split, combination of shares or the like) may be made increasing the aggregate number of shares of the Common Stock with respect to which Awards may be granted or changing the class of persons eligible to receive Awards, without the approval of the holders of a majority of our outstanding voting shares. In the event a Change in Control (as defined in the Stock Option Plan) occurs, then, notwithstanding any provision of the Stock Option Plan or of any provisions of any Award agreements entered into between any Optionee or Participant and us to the contrary, all Awards that have not expired and which are then held by any Optionee or Participant (or the person or persons to whom any deceased Optionee's or Participant's rights have been transferred) shall, as of such Change of Control, become fully and immediately vested and exercisable and may be exercised for the remaining term of such Awards. If we are a party to any merger, consolidation, reorganization or the like, the Omnibus Committee has the power to substitute new Awards or have the Awards be assumed by another corporation. In the event of a reclassification, stock split, combination of shares or the like, the Omnibus Committee shall conclusively determine the appropriate adjustments. No Award granted under the Stock Option Plan may be sold, pledged, assigned or transferred other than by will or the laws of descent and distribution, and except in the case of the death or disability of an Optionee or a Participant, Awards shall be exercisable during the lifetime of the Optionee or Participant only by that individual. No Awards may be granted under the Stock Option Plan on or after February 4, 2012, but Awards granted prior to such date may be exercised in accordance with their terms. The Stock Option Plan and all Award agreements shall be construed and enforced in accordance with and governed by the laws of New York. As of May 31, 2002, of the 3,500,000 shares of Common Stock reserved for issuance under the Stock Option Plan, options to acquire 3,500,000 shares of Common Stock were granted under the Stock Option Plan. Directors' and Officers' Indemnification Under the Business Corporations Act, we are permitted to indemnify our directors and officers and former directors and officers against costs and expenses, including amounts paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which they are made parties because of their position as directors or officers, including an action against us. In order to be entitled to indemnification under this Act, the director or officer must act honestly and in good faith with a view to our best interests, and in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the director or officer must have reasonable grounds for believing that his or her conduct was lawful. Under our by-laws, we may indemnify our current and former directors, officers, employees and agents. Our by-laws also provide that, to the fullest extent permitted by the Act, we are authorized to purchase and maintain insurance on behalf of our and our subsidiaries' current and past directors, officers, employees and agents against any liability incurred by them in their duties. We believe that the provisions of our by-laws are necessary to attract and retain qualified persons as directors and officers. 26 We recently terminated an employee for cause and issued a statement of claim for more than Cdn. $1 million for the misappropriation of our property. The defendant has issued a counter-claim against us which we feel is without merit. Currently, there is no pending litigation or proceeding where a current or past director, officer or employee is seeking indemnification, nor are we aware of any threatened litigation that may result in claims for indemnification. Although we anticipate doing so within the next 120 days, presently we do not maintain any form of liability insurance covering our directors and officers. PRINCIPAL SHAREHOLDERS The following table sets forth information concerning the beneficial ownership of shares of our Common Stock with respect to stockholders who were known by us to be beneficial owners of more than 5% of our Common Stock as of February 14, 2002, and our officers and directors, individually and as a group. Unless otherwise indicated, the beneficial owner has sole voting and investment power with respect to such shares of Common Stock. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. In accordance with the Securities and Exchange Commission rules, shares of our Common Stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within sixty (60) days of the date of the table are deemed beneficially owned by the optionees. Subject to community property laws, where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of our Common Stock indicated as beneficially owned by them. Percentage ownership is based on 22,522,974 shares of Common Stock outstanding as of February 14, 2002 and 3,000,000 additional shares of Common Stock to be issued in this offering. Percentage Ownership does not reflect the shares of Common Stock underlying the Class D, E and F warrants, or the options granted pursuant to our Stock Option Plan.
PERCENTAGE OF SHARES BENEFICIALLY OWNED -------------------- NUMBER OF SHARES BEFORE THE AFTER THE BENEFICIAL OWNER BENEFICIALLY OWNED OFFERING OFFERING - ---------------- ------------------ ----------------- --------- Edward P. LaBuick (1) 1,362,500 6.0% 5.3% Dennis P. LaBuick (2) 1,347,500 5.9% 5.2% A.R.T. International Inc. 2,000,000 8.8% 7.8% All Executive Officers and Directors as a Group (4 persons)(3) 2,710,000 12.0% 9.1%
- ---------- (1) This amount does not include 1,562,500 shares of Common Stock held by Nadia Faye LaBuick, wife of Edward P. LaBuick, and the options to purchase 952,500 shares of Common Stock issued on February 14, 2002 pursuant to our Stock Option Plan. (2) This amount does not include 1,547,500 shares of Common Stock held by Patricia LaBuick, wife of Dennis P. LaBuick, and the options to purchase 897,500 shares of Common Stock issued on February 14, 2002 pursuant to our Stock Option Plan. (3) This amount does not include Mr. Keith Kennedy's right to purchase 250,000 shares of Common Stock or Mr. John Mole's right to purchase 50,000 shares of Common Stock. RELATED PARTY TRANSACTIONS Our initial shareholders were members of the LaBuick family. In December 1999, A.R.T. International Inc., an Ontario corporation, acquired 160 shares of common stock us for $286,000 (Cdn. 27 $440,000). In August 2000, A.R.T. acquired 40 shares from us for $45,500 (Cdn. $70,000). On November 29, 2000 A.R.T. acquired the remaining 50% of the issued and outstanding shares of Buck from the LaBuick family for $325,000 (Cdn. $500,000) and 2,000,000 shares of A.R.T. At that time we concluded that our valuation exceeded Cdn. $1,000,000 based upon our current sales and the conservative forecasts of our business models. With the purchase of such shares we became a wholly-owned subsidiary of A.R.T. On January 11, 2001, Nadia Faye LaBuick, wife of Edward P. LaBuick, our chairman, loaned $138,125 to us. The terms of such loan required that interest at a rate of 7% per annum with principal were due on demand and were secured by all of our assets and registered pursuant to the applicable local laws. Also on January 11, 2001, Dennis and Patricia LaBuick advanced $331,500 to us due payable on demand together with interest at the rate of 7% per annum. This loan was also secured by our assets and registered pursuant to the applicable local laws. On or about July 7, 2001, 1483516 Ontario Limited, loaned $450,000 to us. The terms of such loan required that interest at a rate of 7% per annum and principal were due on demand and were secured by a first lien on all of our assets. Nadia Faye LaBuick, Dennis LaBuick and Patricia LaBuick subordinated their security interests in our assets to the security interest of 1483516 Ontario Limited. The 1483516 Ontario Limited Security Agreement contained a provision that, subject to approval of A.R.T., the principal of the debt was convertible into 3,000,000 units consisting of one share of our common stock and one class B warrant to purchase one share of our common stock at a price of $0.15. On August 1, 2001, we issued to A.R.T. 800,000 class C warrants to purchase 800,000 shares of our common stock exercisable at $0.065 per share. Also on August 1, we authorized conversion of the LaBuick family members' loans with interest totaling $461,500 into 7,100,000 shares of our common stock and class A warrants for an additional 1,500,000 shares exercisable at $0.10 per share. On August 29, 2001, the LaBuick family members converted all of their loans to us into 7,100,000 shares of our common stock and class A warrants for an additional 1,500,000 shares. Also on that day, 148516 Ontario Limited converted its loans to us into 3,000,000 shares of common stock and exercised all class B warrants for an additional 3,000,000 shares of common stock. On October 1, 2001, the LaBuick family members exercised all class A warrants receiving 1,500,000 shares of our common stock and A.R.T. exercised all class C warrants receiving 800,000 shares of our common stock. On February 15, 2002, certain members and employees of Spitzer & Feldman P.C., our U.S. counsel, purchased a total of 96,000 shares of our Common Stock for an aggregate of $24,000. 28 SELLING SHAREHOLDERS This prospectus will also be used for the offering of additional shares of our Common Stock owned by the shareholders found below, the selling shareholders. The selling shareholders may offer for sale up to 100% (22,522,974 shares) of their holdings in our Common Stock held in the aggregate by them. See "Business". The selling shareholders may offer for sale such shares of our Common Stock from time to time in the open market, in privately negotiated transactions or otherwise. We will not receive any proceeds from such sales. The resales of the securities by the selling shareholders are subject to the prospectus delivery and other requirements of the Securities Act. Assuming that the selling shareholders are able to sell all 22,522,974 shares of their Common Stock which are being offered by them, the selling shareholders will retain 0 shares of our Common Stock. LIST OF SHAREHOLDERS OF THE BUCK A DAY COMPANY INC. The selling shareholders acquired their shares from us as follows:
Subscriber Address Relationship Amount of Amount prior within the past shares held to offering three (3) years prior to if greater offering than 1% equals the amount of shares being offered ==================================================================================================================================== 1413251 Ontario Inc. 6 Buggey Lane, Ajax, Ontario L1S 4S7 50,000 (Mark Purdy) 1435031 Ontario Ltd. 248 Forest Hill Road, Toronto, ON M5P 2N5 250,000 (Barry Landen) 1469403 Ontario Ltd. 83 Maclaren Avenue, Barrie, Ontario L4N 7H3 60,000 (Peter Landers) 1504426 Ontario 181 University Ave., Suite 1410, Toronto, ON 200,000 Limited (Wayne Long) M5H 3M7 403266 Ontario Ltd c/o David & Carol Voyce, 663 Glen Crescent, 946,666 4.20% (David and Carol Voyce) Orillia, ON L3V 6R2 760761 Ontario Ltd. 8 Vine Cres., Barrie, Ontario L4N 2B3 20,000 (Jeremy Pollard) A.R.T. International Unit 5- 7100 Warden Avenue, Markham ON L3R 2,000,000 8.88% Inc. 8B8 (board of directors: Roger Kirby, Simon Meredith Michel Van Herreweghe and Stefan Gundmundsson) Ambeau Thomas 64 Royal Oak Drive, Barrie, On L4N 7S5 333,334 1.48%
29 Aravest Ltd. (Steve P.O. Box N-9645, Nassau, Bahamas 66,666 Koussaya) Beckley Mike 12 Chalmers Dr., Barrie, ON L4N 8A3 10,000 Belben Ted 303 Reading Place, Newmarket, Ontario L3Y 8,000 6H6 Bradley Stephen 46 Gibson Lake Drive, Palgrave, On L0N 1P0 200,000 Clark Linda 146 McCraney St. West, Oakville, ON L6H 1H6 1,000 Corvese Steve 5254 Forest Hill Drive, Mississauga, Ontario 66,666 Crosbie Robert RR 1, Stn Main, Port Hope, On L1A 3V7 300,000 1.33% Dale Kerry 426 Eagle Street, Newmarket, ON L3Y 1K6 Employee 10,000 Deluca Judy 1227 Riverbank Way, Oakville, Ontario L6H 6X4 20,000 Demarinis Enzo 2000 Peak Place, Oakville, ON L3H 5T2 66,666 Demarinis Frank 584 Vaughan Mills, Woodbride, ON L1H 4H1 66,666 Demarinis Joe 1615 Amberlea Road, Pickering, ON L1V 5P3 20,000 Desroches Paul 1311 Ludbrook Court, Mississauga, On L5J 3P2 200,000 Dodd Family Trust c/o Norman Dodd, 656 Sunset Beach Road, 133,333 (Norman Dodd) Richmond Hill, On L4E 3G2 Dodd Norman 656 Sunset Beach Road, Richmond Hill, On L4E 50,000 3G2 Doering Dennis 108 Marshall Street, Barrie, On L4N 4L5 33,333 Doering Jennifer 43 Fawn Crescent, Barrie, Ontario L4N 7Z6 250,000 1.11% Donaldson Peter Share High School, Royal Oak, MI 10,000 Donaldson Walt 1929 Ontario St., Windsor, ON N8Y 1N1 20,000 Durham Int'l P.O. Box 1132 Lauraston House, Lower 448,334 1.99% Investments (Wayne Collymore, Bridgetown St. Michael, Barbados, Grant) WI Garces Candy 44 Crew Avenue, Toronto, Ontario M4C 2V3 Employee 1,000,000 4.44% Gayford Tom RR # 4, Stouffville, 4093 Bloomington Road 100,000 Gilbert Eli 1227 Riverbank Way, Oakville, Ontario L6H 6X4 60,000 Gomes Heather 445 Maple Grove Ave., Bradford, ON L3Z 2V8 Employee 10,000 Gordon Colin 2373 Blackstone Cres., Ottawa, Ontrario K1B 7,000 4H3
30 Hendershot Walter 233 Inksetter Road, RR 1, Lynden, On L0R 1T0 50,000 Hochrein J.J. 5 Wells Street, Toronto, Ontario M5R 1N8 4,000 James Corinne 2027 Russett Road, Mississauga, ON L4Y 1B8 25,000 Voyce James Jacqueline 44 Barringham Drive, Oakville, ON L6J 4B2 200,000 Cadman Johnston Lyle RR#4 Coldwater, Ontario L0K 1E0 3,000 Kelln Larry 2554 Maid Marion Place, Mississauga, On L5K 100,000 2L9 Kennedy Keith 412 Queen Street, Apt. A, Newmarket, ON L3Y Employee 500,000 2.22% 2P2 Khonsari Homa 1 Garrett Cres., Barrie, Ontario L4M 4R7 266,666 1.18% Kisely Willy 539 Knowles Road, Kelowna, BC V1W 1H4 100,000 Korhonen Ed 2206 Pine Needle Row, Mississauga, Ontario 100,000 L5C 1V3 Koska Lynnette 8 Hester Court, Thornhill, ON L3T 3K5 Employee 885,000 3.93% Ku Jim c/o Mark Twerdun, 1215 Riverbank Way, 206,666 Oakville, ON L6H 6X4 LaBuick Dennis 1936 St. John's Road, Newmarket, ON Employee 1,347,500 5.98% LaBuick Ed P.O. Box 7, 24345 Highway 48, Baldwin, Ontario Employee 1,362,500 6.05% L0E 1A0 LaBuick Nadia P.O. Box 7, 24345 Highway 48, Baldwin, Ontario Employee 1,562,500 6.94% Faye L0E 1A0 LaBuick Patricia 1936 St. John's Road, Newmarket, ON Employee 1,547,500 6.87% LaBuik Tillie 11719-135-B-ST, Edmonton, Alberta T5M 1L8 500,000 2.22% Lachine Ken 107-190 Robert Speck Pkwy., Mississauga, ON 5,000 L4Z 3K3 Laroche Danny 151 Larkin Avenue, Markham, ON L3P 4Y4 Employee 12,500 Loeprich John 2070--10th Sideroad, Moffat, ON L0P 1J0 10,000
31 Long Wayne 207 Mapleview Drive E., Barrie, ON L4N 9H3 420,999 1.87% Mackenzie Phil 9 Amon Dr., R.R. 2, Sebright, ON L0K 1W0 40,000 Macmillan Isabel 80 InverlockyBlvd. Apt. 604, Thornhill, 2,000 ON L3T 4P3 Martin Marilyn 9643 Melville Dr., Windsor, ON N8R 1B4 30,000 Matheson Jeff 1130 Oakery Woods Place, Oakville, ON L6M 40,000 2C1 Matheson Nicole 1130 Oakery Woods Place, Oakville, ON L6M 100,000 2C1 McCoy Jeff 7394 County Road #1, Beeton, Ontairo L0G 1A0 10,000 Milne Eric 1200 Sheppard Avenue East, Suite 102, North 5,000 York, Ontario M2K 2S5 Minnaar Brenda 30 Brentwood Drive, Dundas, ON L9H 3N3 66,666 Mole John 1817 Will Scarlet Drive, Mississauga, On L4K Director 166,666 1L6 Murphy Kelly 44 Brown Street, Tottenham, ON L0G 1W0 Employee 12,500 Patterson Michael 2240 Halifax Dr., Suite 1009, Ottawa, ON K1G 50,000 2W8 Phillips Lisa 2362 Bankside Drive, Mississauga, ON L5M 6E3 33,333 Pollard Jeremy 8 Vine Crescent, Barrie, On L4N 2B3 250,000 1.11% Postance Michael 40,000 Powell Claire 13 Belmont Crescent, Midhurst, On L0L1X0 433,336 1.92% R.E. Walker Packaging 25 Willow Landing Road, Midhurst, On L0L 1X1 333,336 1.48% Ltd. (Rick Walker) Ramball Mary-Lee 4302 Vivian Road, Cedar Valley, ON L0G 1E0 Employee 5,000 Restorick Frank J. 1464 Jefferson Crescent,Oakville, ON L6H 3G6 20,333 Riddell Glenn 110 Garden Avenue, Ancaster, On L9G 2J7 150,000 Rose Glenda 3521 Town Line, Orillia, Ontario L3V 6H2 10,000 Rosenstadt William c/o Spitzer &Feldman, P.C., 405 Park Ave., NY Counsel 44,000 NY 10022 Rowe Andy 41 Marcus Street, Barrie, Ontario L4N 3L7 7,000
32 Rowe Dale 42 O'Neil Drive RR#4, Belleville, Ontario K8N 7,140 4Z4 Samuel Lewis RR 1 GB 96, Lansdowne, On K0E 1L0 290,000 1.29% Sanders Lesley 431 E. 20th St., NY NY 10010 Counsel 40,000 Savaran Financial Inc. 157 Adelaide West, Ste. 176, Toronto, ON M5H 1,000,000 4.44% (Irene Lightfoot) 4E7 Shamess John R.R. # 1, Bradford, ON L3Z 2A4 24,000 Schmitz Peter 550 Westside road South, Kelowna, B.C. V1Z 100,000 3S2 Silver Mike 8 Highland Woods Court, London, Ontario W6C 12,000 5W9 Simmons Scott 304 Sumner Avenue, Oakville, On L6J 1S5 100,000 Slightham Phyllis 48 Quail Valley Road, Thornhill, ON L3T 4R2 100,000 Smyth William c/o Great War Memorial Hospital, 33 Drummond 430,000 1.91% Street, Perth, On L7H 2K1 Smyth William 218 Deborah Way, Barrie, On L4N 4N7 50,000 Smyth Steven 99 Crimson Ridge, Barrie, Ontario L4N 0G8 10,000 Staring Jamie 20 Kelly Place, Barrie, On L4N 8N2 125,000 Stewart Steve 245 Pine Street, Belleville, Ontario K8N 2N3 4,000 Stone Perry 83-3rd Street Southeast, Medicine Hat, Alberta 2,500 T1A 0G3 Spitzer, Jr. M. James c/o Spitzer &Feldman, P.C., 405 Park Ave., NY Counsel 12,000 NY 10022 Straiton Ken c/o Mark Twerdun, TD Evergreen, 20 Milverton 333,335 1.48% Drive, Mississauga, ON L5R 3G2 Swiaty Dan 15 Huxley Avenue Souty, Hamilton, Ontario L8K 6,000 2P5 Swiaty Terry 278 Cumberland Avenue, Hamilton, On L8M 34,000 2A1 Symons William R.R #5, Orangeville, On L9W 2Z2, Orillia, On 20,000 L3V 6R2 Thorncliffe Industries 100 Roehampton Avenue, Toronto, ON M4P 1R3 815,000 3.62% Corp. (Joe Elahos) Twerdun Helen & 109-2240 Halifax Dr., Ottawa, Ontario 50,000 Walter
33 Twerdun Jill 1215 Riverbank Way, Oakville, ON L6H 6X4 250,000 1.11% Vallesi Julie 5345 Forest Ridge Dr., Mississauga, ON L5M 20,000 5B4 Via Trust The c/o Mark Twerdun, 1215 Riverbank Way, 250,000 1.11% (Frank Demarinis) Oakville, ON L6H 6X4 Voyce David & 663 Glen Crescent, Orillia, On L3V 6R2 358,334 1.59% Carol Walkey Bruce R.R. #3--6900 Concession road, Everett, Ontario L0M 1J0 4,000 ---------- Total 22,522,974 ==========
Assuming the sale of all shares offered by the selling shareholders, the selling shareholders will have no holdings. The selling shareholders acquired their shares of Common Stock pursuant to three private placements conducted by us. Following is a summary of each placement and a list of the participants. 34 Placement A On November 23, 2000 we raised $354,250 through the sale of 100 shares pursuant to a private placement as set forth in the chart below.
Amount of Subscription Date Shares were Acquired and Subscriber Address Shares Price exercise of Acquired or Strike Price Warrants or Options) (Warrants or Options) $ A.R.T. International Unit 5- 7100 Warden Avenue, 100 $354,250 Nov 23, 2000--200 shares Inc. Markham ON L3R 8B8 -------- TOTAL $354,250 --------
Placement B From August through October 2001 we issued 19,367,933 shares of common stock to the following investors of which certain investors exercised 4,366,666 warrants. In this private placement, we raised $1,562,259.50 as set forth in the chart below.
Amount of Shares Date Shares were Acquired and Subscriber Address Acquired U.S. $ exercise of Warrants or Options) 403266 Ontario c/o David & Carol 946,666 $101,820.00 Aug 29, 2001 666,666 shares Ltd Voyce, 663 Glen (exercise of Warrants); (David and Carol Voyce) Crescent, Orillia, ON L3V 6R2 Oct 1, 2001 50,000 shares; Dec. 1, 2001 230,000 shares Ambeau Thomas 64 Royal Oak 333,334 $50,000.00 Aug 29, 2001 125,000 shares Drive, Barrie, On (exercise of Warrants); L4N 7S5 Dec 1, 2001 208,334 shares (exercise of Warrants) Aravest Ltd. P.O. Box N-9645, 66,666 $10,000.00 Aug 29, 2001 (Steve Kaussaya) Nassau, Bahamas A.R.T. Unit 5- 7100 1,999,600 $1.00 Aug 2, 2001 International Inc. Warden Avenue, (directors: Roger Kirby Markham ON L3R Simon Meredith, 8B8 Michel Van Herreweghe and Stefan Gundmundsson) Bradley Stephen 46 Gibson Lake 200,000 $30,000.00 Aug 29, 2001 (exercise of Drive, Palgrave, Warrants) On L0N 1P0 Corvese Steve 5254 Forest Hill 66,666 $10,000.00 Aug 29, 2001 Drive, Mississauga, Ontario
35 Crosbie Robert RR 1, Stn Main, 300,000 $66,992.00 Aug 29, 2001 166,666 shares; Port Hope, On L1A 3V7 Oct 1, 2001 50,000 shares; Dec 27, 2001 83,334 shares Dale Kerry 426 Eagle Street, 10,000 $65.00 Oct 1, 2001 Newmarket, ON L3Y 1K6 Demarinis Enzo 2000 Peak Place, 66,666 $10,000.00 Aug 29, 2001 Oakville, ON L3H 5T2 Demarinis Frank 584 Vaughan Mills, 66,666 $10,000.00 Aug 29, 2001 Woodbride, ON L1H 4H1 Desroches Paul 1311 Ludbrook 200,000 $30,000.00 Aug 29, 2001 (exercise of Court, Warrants) Mississauga, On L5J 3P2 Dodd Family c/o Norman Dodd, 133,333 $20,000.00 Aug 29, 2001 Trust 656 Sunset Beach (Norman Dodd) Road, Richmond Hill, On L4E 3G2 Doering Dennis 108 Marshall 33,333 $5,000.00 Aug 29, 2001 Street, Barrie, On L4N 4L5 Durham Int'l P.O. Box 1132 133,333 $19,999.95 29-Aug-01 Investments Lauraston House, (Wayne Grant) Lower Collymore, Bridgetown St. Michael, Barbados, WI Garces Candy 44 Crew Avenue, 1,000,000 $65,000.00 Aug 29, 2001 Toronto, Ontario M4C 2V3 Gayford Tom RR # 4, 100,000 $6,500.00 Aug 29, 2001 Stouffville, 4093 Bloomington Road
36 Gomes Heather 445 Maple Grove 10,000 $65.00 Oct 1, 2001 Ave., Bradford, ON L3Z 2V8 Hendershot Walter 233 Inksetter 50,000 $7,500.00 Aug 29, 2001 Road, RR 1, Lynden, On L0R 1T0 James Corinne 2027 Russett Road, 25,000 $162.50 Dec 1, 2001 Voyce Mississauga, ON L4Y 1B8 James Jacqueline 44 Barringham 200,000 $30,000.00 Aug 29, 2001 Cadman Drive, Oakville, ON L6J 4B2 Kelln Larry 2554 Maid Marion 100,000 $15,000.00 Aug 29, 2001 Place, Mississauga, On L5K 2L9 Kennedy Keith 412 Queen Street, 500,000 $20,800.00 Aug 29, 2001 300,000 shares; Apt. A, Newmarket, ON L3Y 2P2 Oct 1, 2001 200,000 shares Khonsari Homa 1 Garrett Cres., 266,666 $74,999.90 Aug 29, 2001 166,666 shares; Dec Barrie, Ontario 27, 2001 100,000 shares L4M 4R7 Koska Lynnette 8 Hester Court, 885,000 $29,152.50 Aug 29, 2001 585,000 shares; Oct Thornhill, ON L3T 1, 2001 300,000 shares 3K5 (exercise of Warrants) Ku Jim c/o Mark Twerdun, 166,666 $25,000.00 Aug 29, 2001 1215 Riverbank Way, Oakville, ON L6H 6X4 LaBuick Dennis 1936 St. John's 1,347,500 $64,330.50 Aug 29, 2001 950,000 shares; Oct Road, Newmarket, 1, 2001 250,000 shares ON (exercise of Warrants); Oct 1, 2001 147,500 shares LaBuick Ed P.O. Box 7, 24345 1,362,500 $49,806.25 Aug 29, 2001 700,000 shares; Oct Highway 48, 1, 2001 250,000 shares Baldwin, Ontario L0E 1A0 (exercise of Warrants); Oct 1, 2001 412,500 shares LaBuick Nadia P.O. Box 7, 24345 1,562,500 $51,106.25 Aug 29, 2001 700,000 shares; Oct Faye Highway 48, 1, 2001 450,000 shares Baldwin, Ontario L0E 1A0 (exercise of Warrants; Oct 1, 2001 412,500 shares
37 LaBuick Patricia 1936 St. John's 1,547,500 $65,633.75 Aug 29, 2001 950,000 shares; Oct Road, Newmarket, 1, 2001 450,000 shares ON (exercise of Warrants); October 1, 2001 147,500 shares LaBuik Tillie 11719-135-B-ST, 500,000 $32,500 Aug 29, 2001 Edmonton, Alberta T5M 1L8 Laroche Danny 151 Larkin Avenue, 12,500 $81.25 1-Oct-01 Markham, ON L3P 4Y4 Long Wayne 207 Mapleview 420,999 $2,975.45 Oct 1, 2001 200,000 shares; Dec 1, Drive E., Barrie, 2001 220,999 shares ON L4N 9H3 Matheson Nicole 1130 Oakery Woods 100,000 $15,000.00 Aug 29, 2001 Place, Oakville, ON L6M 2C1 Minnaar Brenda 30 Brentwood 66,666 $10,000.00 Aug 29, 2001 (exercise of Drive, Dundas, ON Warrants) L9H 3N3 Mole John 1817 Will Scarlet 166,666 $25,000.00 Aug 29, 2001 (exercise of Drive, Warrants) Mississauga, On L4K 1L6 Murphy Kelly 44 Brown Street, 12,500 $81.25 Oct 1, 2001 Tottenham, ON L0G 1W0 Phillips Lisa 2362 Bankside 33,333 $4,999.95 Aug 29, 2001 Drive, Mississauga, ON L5M 6E3 Pollard Jeremy 8 Vine Crescent, 250,000 $37,500.00 Aug 29, 2001 (exercise of Barrie, On L4N 2B3 Warrants) Powell Claire 13 Belmont 433,336 $100,000.40 Aug 29, 2001 333,336 shares; Crescent, Midhurst, Dec 27, 2001 100,000 shares On L0L1X0
38 R.E. Walker 25 Willow Landing 333,336 $50,000.40 Aug 29, 2001 Packaging Ltd. Road, Midhurst, On (Rick Walker) L0L 1X1 Ramball Mary-Lee 4302 Vivian Road, 5,000 $32.50 Oct 1, 2001 Cedar Valley, ON L0G 1E0 Restorick Frank J. 1464 Jefferson 13,333 $1,999.95 29-Aug-01 Crescent, Oakville, ON L6H 3G6 Riddell Glenn 110 Garden Avenue, 100,000 $15,000.00 29-Aug-01 Ancaster, On L9G 2J7 Samuel Lewis RR 1 GB 96, 290,000 $57,500.00 Aug 29, 2001 250,000 shares Lansdowne, On (exercise of Warrants); K0E 1L0 Dec 27, 2001 40,000 shares Savaran 157 Adelaide West, 1,000,000 $65,000.00 Aug 29, 2001 Financial Inc. Ste. 176, Toronto, (Irene Lightfoot) ON M5H 4E7 Simmons Scott 304 Sumner 100,000 $15,000.00 Aug 29, 2001 (exercise of Avenue, Oakville, Warrants) On L6J 1S5 Slightham Phyllis 48 Quail Valley 100,000 $650.00 Oct 1, 2001 Road, Thornhill, ON L3T 4R2 Smyth William c/o Great War 330,000 $95,000.00 Aug 29, 2001 200,000 shares; Memorial Hospital, Dec 24, 2001 130,000 shares 33 Drummond Street, Perth, On L7H 2K1 Smyth William 218 Deborah Way, 50,000 $7,500.00 Aug 29, 2001 Barrie, On L4N 4N7 Staring Jamie 20 Kelly Place, 125,000 $18,750.00 Aug 29, 2001 100,000 shares Barrie, On L4N 8N2 (exercise of Warrants); Dec 1, 2001 25,000 shares Straiton Ken c/o Mark Twerdun, 333,335 $50,000.25 Aug 29, 2001 TD Evergreen, 20 Milverton Drive, Mississauga, ON L5R 3G2
39 Swiaty Terry 278 Cumberland 34,000 $3,091.00 Aug 29, 2001 20,000 shares; Dec Avenue, Hamilton, 1, 2001 14,000 shares On L8M 2A1 Symons William R.R #5, 20,000 $3,000.00 Aug 29, 2001 Orangeville, On L9W 2Z2, Orillia, On L3V 6R2 Thorncliffe 100 Roehampton 500,000 $32,500.00 Aug 29, 2001 Industries Corp. Avenue, Toronto, (Joe Elahos) ON M4P 1R3 Voyce David & 663 Glen Crescent, 358,334 $50,162.50 Aug 29, 2001 333,334 shares Carol Orillia, On L3V (exercise of Warrants); 6R2 Dec 1, 2001 25,000 shares TOTAL $1,562,259.50 =============
Placement C In January and February, 2002 we issued 3,154,641 shares of Common Stock to several investors pursuant to a private placement. Pursuant to such private placement, we raised $1,070,929.15 as set forth in the chart below.
Amount of Shares Date Shares were Acquired and Subscriber Address Acquired U.S. $ exercise of Warrants or Options) 1413251 Ontario 6 Buggey Lane, 50,000 $25,000.00 Feb 15, 2002 Inc. (Mark Ajax, Ontario L1S Purdy) 4S7 1435031 Ontario 248 Forest Hill 250,000 $62,500.00 Feb 15, 2002 Ltd. (Barry Road, Toronto, ON Landen) M5P 2N5 1469403 Ontario 83 Maclaren 60,000 $30,000.00 Feb 15, 2002 Ltd. (Peter Avenue, Barrie, Landers) Ontario L4N 7H3 1504426 Ontario 181 University 200,000 $100,000.00 Feb 15, 2002 Limited (Wayne Ave., Suite 1410, Long) Toronto, ON M5H 3M7 760761 Ontario 8 Vine Cres., 20,000 $10,000.00 Feb 15, 2002 Ltd. (Jeremy Barrie, Ontario Pollard) L4N 2B3
40 Beckley Mike 12 Chalmers Dr., 10,000 $5,000.00 Feb 15, 2002 Barrie, ON L4N 8A3 Belben Ted 303 Reading Place, 8,000 $4,000.00 Feb 15, 2002 Newmarket, Ontario L3Y 6H6 Clark Linda 146 McCraney St. 1,000 $500.00 Feb 15, 2002 West, Oakville, ON L6H 1H6 Deluca Judy 1227 Riverbank 20,000 $10,000.00 Feb 15, 2002 Way, Oakville, Ontario L6H 6X4 Demarinis Joe 1615 Amberlea 20,000 $10,000.00 Feb 15, 2002 Road, Pickering, ON L1V 5P3 Dodd Norman 656 Sunset Beach 50,000 $25,000.00 Feb 15, 2002 Road, Richmond Hill, On L4E 3G2 Doering Jennifer 43 Fawn Crescent, 250,000 $6,025.45 Feb 4, 2002 Barrie, Ontario L4N 7Z6 Donaldson Peter Share High School, 10,000 $5,000.00 Feb 15, 2002 Royal Oak, MI Donaldson Walt 1929 Ontario St., 20,000 $10,000.00 Feb 15, 2002 Windsor, ON N8Y 1N1 Durham Int'l P.O. Box 1132 315,001 $80,500.15 February 5, 2002 220,001 shares; Investments Lauraston House, February 15, 2002 95,000 shares (Wayne Grant) Lower Collymore, Bridgetown St. Michael, Barbados, WI Gilbert Eli 1227 Riverbank 60,000 $30,000.00 Feb 15, 2002 Way, Oakville, Ontario L6H 6X4 Gordon Colin 2373 Blackstone 7,000 $3,500.00 Feb 15, 2002 Cres., Ottawa, Ontrario K1B 4H3 Hochrein J.J. 5 Wells Street, 4,000 $2,000.00 Feb 15, 2002 Toronto, Ontario M5R 1N8
41 Johnston Lyle RR#4 Coldwater, 3,000 $1,500.00 Feb 15, 2002 Ontario L0K 1E0 Kisely Willy 539 Knowles Road, 100,000 $50,000.00 Feb 15, 2002 Kelowna, BC V1W 1H4 Korhonen Ed 2206 Pine Needle 100,000 $50,000.00 Feb 15, 2002 Row, Mississauga, Ontario L5C 1V3 Ku Jim c/o Mark Twerdun, 40,000 $20,000.00 February 15, 2002 1215 Riverbank Way, Oakville, ON L6H 6X4 Lachine Ken 107-190 Robert 5,000 $2,500.00 Feb 15, 2002 Speck Pkwy., Mississauga, ON L4Z 3K3 Loeprich John 2070 -- 10th 10,000 $5,000.00 Feb 15, 2002 Sideroad, Moffat, ON L0P 1J0 Mackenzie Phil 9 Amon Dr., R.R. 40,000 $20,000.00 Feb 15, 2002 2, Sebright, ON L0K 1W0 Macmillan Isabel 80 InverlockyBlvd. 2,000 $1,000.00 Feb 15, 2002 Apt. 604, Thornhill, ON L3T 4P3 Martin Marilyn 9643 Melville Dr., 30,000 $15,000.00 Feb 15, 2002 Windsor, ON N8R 1B4 Matheson Jeff 1130 Oakery 40,000 $20,000.00 Feb 15, 2002 Woods Place, Oakville, ON L6M 2C1 McCoy Jeff 7394 County Road 10,000 $5,000.00 Feb 15, 2002 #1, Beeton, Ontairo L0G 1A0 Milne Eric 1200 Sheppard 5,000 $2,500.00 Feb 15, 2002 Avenue East, Suite 102, North York, Ontario M2K 2S5
42 Patterson Michael 2240 Halifax Dr., 50,000 $25,000.00 Feb 15, 2002 Suite 1009, Ottawa, ON K1G 2W8 Postance Michael 40,000 $20,000.00 Feb 15, 2002 Restorick Frank J. 1464 Jefferson 7,000 $3,500.00 15-Feb-02 Crescent,Oakville, ON L6H 3G6 Riddell Glenn 110 Garden 50,000 $25,000.00 15-Feb-02 Avenue, Ancaster, On L9G 2J7 Rose Glenda 3521 Town Line, 10,000 $5,000.00 Feb 15, 2002 Orillia, Ontario L3V 6H2 Rosenstadt William c/o Spitzer 44,000 $11,000.00 Feb 15, 2002 &Feldman, P.C., 405 Park Ave., NY NY 10022 Rowe Andy 41 Marcus Street, 7,000 $3,500.00 Feb 15, 2002 Barrie, Ontario L4N 3L7 Rowe Dale 42 O'Neil Drive 7,140 $3,570.00 Feb 15, 2002 RR#4, Belleville, Ontario K8N 4Z4 Sanders Lesley 431 E. 20th St., 40,000 $10,000.00 Feb 15, 2002 NY NY 10010 Shamess John R.R. # 1, 24,000 $12,000.00 Feb 15, 2002 Bradford, ON L3Z 2A4 Schmitz Peter 550 Westside road 100,000 $50,000.00 Feb 15, 2002 South, Kelowna, B.C. V1Z 3S2 Silver Mike 8 Highland Woods 12,000 $6,000.00 Feb 15, 2002 Court, London, Ontario W6C 5W9 Smyth Steven 99 Crimson Ridge, 10,000 $5,000.00 Feb 15, 2002 Barrie, Ontario L4N 0G8 Smyth William c/o Great War 100,000 $50,000.00 15-Feb-02 Memorial Hospital, 33 Drummond Street, Perth, On L7H 2K1
43 Stewart Steve 245 Pine Street, 4,000 $2,000.00 Feb 15, 2002 Belleville, Ontario K8N 2N3 Stone Perry 83-3rd Street 2,500 $1,250.00 Feb 15, 2002 Southeast, Medicine Hat, Alberta T1A 0G3 Spitzer, Jr. M. James c/o Spitzer 12,000 $3,000.00 Feb 15, 2002 &Feldman, P.C., 405 Park Ave., NY NY 10022 Swiaty Dan 15 Huxley Avenue 6,000 $3,000.00 Feb 15, 2002 Souty, Hamilton, Ontario L8K 2P5 Thorncliffe 100 Roehampton 315,000 $62,500.00 Jan 20, 2002 Industries Corp. Avenue, Toronto, (Joe Elahos) ON M4P 1R3 Twerdun Helen & 109-2240 Halifax 50,000 $7,500.00 Feb 5, 2002 Walter Dr., Ottawa, Ontario Twerdun Jill 1215 Riverbank 250,000 $13,583.34 Feb 5, 2002 Way, Oakville, ON L6H 6X4 Vallesi Julie 5345 Forest Ridge 20,000 $10,000.00 Feb 15, 2002 Dr., Mississauga, ON L5M 5B4 Via Trust The c/o Mark Twerdun, 250,000 $125,000.00 Feb 15, 2002 (Frank Demarinis) 1215 Riverbank Way, Oakville, ON L6H 6X4 Walkey Bruce R.R. # 3--6900 4,000 $2,000.00 Feb 15, 2002 Concession road, Everett, Ontario L0M 1J0 TOTAL $1,070,929.15 =============
44 DESCRIPTION OF SECURITIES General The following description of our capital stock does not purport to be complete and is subject to and qualified in its entirety by our Articles of Incorporation, as amended, and By-laws, which are included as exhibits to the registration statement of which this prospectus forms a part, and by the applicable provisions of Ontario law. We are authorized to issue an unlimited number of shares of Common Stock, no par value per share, of which 22,522,974 shares were issued and outstanding as of May 31, 2002. Common Stock Holders of shares of our Common Stock are entitled to share equally on a per share basis in such dividends as may be declared by our Board of Directors out of funds legally available therefor. There are presently no plans to pay dividends with respect to the shares of our Common Stock. Upon our liquidation, dissolution or winding up, after payment of creditors and the holders of any of our senior securities, if any, our assets will be divided pro rata on a per share basis among the holders of the shares of our Common Stock. The Common Stock is not subject to any liability for further assessments. There are no conversion or redemption privileges or any sinking fund provisions with respect to the Common Stock. The holders of Common Stock do not have any pre-emptive or other subscription rights. Holders of shares of Common Stock are entitled to cast one vote for each share held at all stockholders' meetings for all purposes, including the election of directors. The Common Stock does not have cumulative voting rights. All of the issued and outstanding shares of Common Stock are fully paid, validly issued and non-assessable. Dividend We have never declared or paid any cash dividends on our Common Stock. We anticipate that any earnings will be retained for development and expansion of our business and we do not anticipate paying any cash dividends in the near future. Our Board of Directors has sole discretion to pay cash dividends with respect to our Common Stock based on our financial condition, results of operations, capital requirements, contractual obligations and other relevant factors. Class D Warrants On December 1, 2001, we issued 600,000 Class D Warrants to Jennifer Doering as compensation for services rendered by Ms. Doering in her capacity as a business consultant to the company. The shares of Common Stock underlying the Class D Warrants are currently being registered in connection with this registration statement. The following is a summary of the provisions of such warrants. Each Class D Warrant entitles the holder to one share of Common Stock (subject to certain adjustments) through December 1, 2002, at a price of $0.25 per share. A Class D Warrantholder may exercise the warrant by surrendering the warrant certificate to us, together with a properly completed and signed subscription, the payment of the exercise price and any transfer tax. A Class D Warrantholder who exercise the warrant for less than all of the warrants evidenced by the warrant certificate will receive a new 45 warrant certificate for the remaining number of warrants. Any shares issued pursuant to the Class D Warrants will be restricted until such time that they are either registered pursuant to an effective registration statement filed with the Securities and Exchange Commission or are transferred in a transaction which is exempt from the registration requirements of the Securities Act. We have authorized and reserved for issuance a number of underlying shares of Common Stock sufficient to provide for the exercise of the Class D Warrants. When issued, each share of Common Stock will be fully paid and nonassessable. A Class D Warrantholder does not have voting or other rights as a shareholder of ours unless and until a Class D Warrant is properly exercised and exchanged for shares. Further, the Class D Warrants have no redemption rights. The exercise price and the number of shares of Common Stock issuable upon the exercise of each Class D Warrant are subject to adjustment in the event of a stock dividend, recapitalization, merger, consolidation or certain other events. Class E Warrants On October 1, 2001, we issued 3,000,000 Class E Warrants to several investors pursuant to a private placement being conducted by the Company. The shares of Common Stock underlying the Class E Warrants are currently being registered in connection with this registration statement. The following is a summary of the provisions of such warrants. Each Class E Warrant entitles the holder to one share of Common Stock (subject to certain adjustments) through August 29, 2003, at a price of $1.00 per share. Class E Warrantholders may exercise the warrants by surrendering a warrant certificate to us, together with a properly completed and signed subscription, the payment of the exercise price and any transfer tax. Class E Warrantholders who exercise the warrants for less than all of the warrants evidenced by a warrant certificate will receive a new warrant certificate for the remaining number of warrants. Any shares issued pursuant to the Class E Warrants will be restricted until such time that they are either registered pursuant to an effective registration statement filed with the Securities and Exchange Commission or are transferred in a transaction which is exempt from the registration requirements of the Securities Act. We have authorized and reserved for issuance a number of underlying shares of Common Stock sufficient to provide for the exercise of the Class E Warrants. When issued, each share of Common Stock will be fully paid and nonassessable. Class E Warrantholders do not have voting or other rights as shareholders of ours unless and until Class E Warrants are properly exercised and exchanged for shares. Further, Class E Warrants have no redemption rights. The exercise price and the number of shares of Common Stock issuable upon the exercise of the Class E Warrants are subject to adjustment in the event of a stock dividend, recapitalization, merger, consolidation or certain other events. Class F Warrants On February 1, 2002, we issued 500,000 Class F Warrants to Mary Boswell pursuant to an agreement under which Ms. Boswell provided services to the Company without compensation. The shares of Common Stock underlying the Class F warrants are currently being registered in connection with this Registration Statement. 46 The following is a summary of the provisions of such warrants. Each Class F Warrant entitles the holder to one share of Common Stock (subject to certain adjustments) through December 31, 2002, at a price of $0.50 per share. The Class F Warrantholder may exercise the warrants by surrendering a warrant certificate to us, together with a properly completed and signed subscription, the payment of the exercise price and any transfer tax. If the Class F Warrantholder exercises the warrants for less than all of the warrants evidenced by a warrant certificate, then the Class F Warrantholder will receive a new warrant certificate for the remaining number of warrants. Any shares issued pursuant to the Class F Warrants will be restricted until such time that they are either registered pursuant to an effective registration statement filed with the Securities and Exchange Commission or are transferred in a transaction which is exempt from the registration requirements of the Securities Act. We have authorized and reserved for issuance a number of underlying shares of Common Stock sufficient to provide for the exercise of the Class F Warrants. When issued, each share of Common Stock will be fully paid and nonassessable. The Class F Warrantholder does not have voting or other rights as a shareholder of ours unless and until Class F Warrants are properly exercised and exchanged for shares. Further, Class F Warrants have no redemption rights. The exercise price and the number of shares of Common Stock issuable upon the exercise of the Class F Warrants are subject to adjustment in the event of a stock dividend, recapitalization, merger, consolidation or certain other events. Transfer Agent and Registrar We do not yet have a transfer agent and registrar for our Common Stock. We anticipate retaining a transfer agent and registrar prior to the effectiveness of this registration statement. Shares Eligible for Future Resale Upon completion of the offering, based upon the number of common shares outstanding as of May 31, 2002, a total of 25,522,974 common shares will be outstanding. All of the common shares sold in this offering will be freely tradable without restriction under either the Securities Act, except for any such shares which may be acquired by an affiliate of ours or a control person, as those terms are defined in Rule 144 promulgated under the Securities Act of 1933, as amended or applicable Canadian securities laws. Resale Restrictions All of our shares of Common Stock issued prior to this offering are "restricted securities" as this term is defined under Rule 144, in that such shares were issued in private transactions not involving a public offering and may not be sold in the U.S. in the absence of registration other than in accordance with Rule 144 under the Securities Act of 1933, as amended or another exemption from registration. In general, under Rule 144 as currently in effect, any of our affiliates or any person (or persons whose shares are aggregated in accordance with Rule 144) who has beneficially owned our common shares which are treated as restricted securities for at least one (1) year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of 1% of our outstanding common shares (approximately 255,230 shares based upon the number of common shares expected to be outstanding after the offering) or the reported average weekly trading volume in our common shares during the four weeks preceding the date on which notice of such sale was filed under Rule 144. Sales under Rule 144 are also subject to manner of sale restrictions and notice requirements and to the availability of current public information concerning our company. In addition, affiliates of our company must comply with the restrictions and requirements of Rule 144 (other than the one (1) year holding period requirements) in order to sell common shares that are not restricted securities (such as common shares acquired by affiliates in market 47 transactions). Furthermore, if a period of at least two (2) years has elapsed from the date restricted securities were acquired from us or from one of our affiliates, a holder of these restricted securities who is not an affiliate at the time of the sale and who has not been an affiliate for at least three (3) months prior to such sale would be entitled to sell the shares immediately without regard to the volume, manner of sale, notice and public information requirements of Rule 144. Upon closing of this offering, we intend to file a registration statement for the resale of the common shares that are authorized for issuance under our existing and new stock option plans. We expect this registration statement to become effective immediately upon filing. Shares issued pursuant to our stock option plans to U.S. residents after the effective date of that registration statement (other than shares issued to our affiliates and the employees described below) generally will be freely tradable without restriction or further registration under the Securities Act of 1933. INCOME TAX CONSEQUENCES In this section we summarize certain of the U.S. and Canadian federal income tax considerations that may be relevant to purchasers of common shares in this offering who: o are U.S. persons within the meaning of the U.S. Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), including a purchaser who, or that, is a citizen or resident of the U.S., a corporation or partnership created or organized under the laws of the U.S. or any political subdivision thereof or therein, an estate, the income of which is subject to U.S. federal income tax regardless of the source, or a trust if a court within the U.S. is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust; o for purposes of the Income Tax Act (Canada) (the "Income Tax Act") and the Canada-U.S. Income Tax Convention (1980) (the "Convention"), are resident in the U.S. and are not nor are deemed to be resident in Canada; hold our common shares as capital assets for purposes of the Internal Revenue Code and capital property for purposes of the Income Tax Act; and o deal at arm's length with us for purposes of the Income Tax Act and the Internal Revenue Code. For purposes of this discussion, we will refer to beneficial owners of common shares who satisfy the above conditions as "Unconnected U.S. Shareholders." Such persons do not include, and this summary does not apply to, persons who are "financial institutions" as defined in Section 142.2 of the Income Tax Act and non-resident insurers that carry on business in Canada and elsewhere. We will assume, for purposes of this discussion, that you are an Unconnected U.S. Shareholder. The tax consequences to a purchaser of common shares who is not an Unconnected U.S. Shareholder may differ substantially from the tax consequences discussed in this section. This discussion does not purport to deal with all aspects of U.S. or Canadian federal income taxation that may be relevant to particular Unconnected U.S. Shareholders or to certain classes of Unconnected U.S. Shareholders who are subject to special treatment under the U.S. or Canadian federal income tax laws, including, but not limited to, Unconnected U.S. Shareholders who own, actually or constructively, 10% or more of the total combined voting power of all classes of our shares, financial institutions, dealers in securities, banks, insurance companies, tax-exempt organizations, broker-dealers, individual retirement and other tax-deferred accounts, U.S. persons whose functional currency (as defined in Section 985 of the Internal Revenue Code) is not the U.S. dollar, and Unconnected U.S. Shareholders holding common shares as part of a "straddle", "hedge" or "conversion transaction". This discussion is based upon: o the Income Tax Act and regulations under the Income Tax Act; 48 o the Internal Revenue Code and existing and proposed regulations under the Internal Revenue Code; o the Convention; o the current administrative policies and practices published by Revenue Canada; o all specific proposals to amend the Income Tax Act and the regulations under the Income Tax Act that have been publicly announced by the Minister of Finance (Canada) prior to the date of this prospectus; o the administrative rulings, practice and policies of the U.S. Internal Revenue Service (the "IRS"); and o applicable U.S. and Canadian judicial decisions, all as of the date hereof and all of which are subject to change (possibly on a retroactive basis) and differing interpretation. We do not discuss the potential effects of any proposed legislation in the U.S. and do not take into account the tax laws of the various provinces or territories of Canada or the tax laws of the various state and local jurisdictions of the U.S. or foreign jurisdictions. THIS DISCUSSION IS MERELY A GENERAL DESCRIPTION OF THE U.S. AND CANADIAN FEDERAL INCOME TAX CONSIDERATIONS MATERIAL TO A PURCHASE OF COMMON SHARES AND IT IS NOT INTENDED TO BE, NOR SHOULD IT BE CONSTRUED AS, LEGAL OR TAX ADVICE TO ANY PERSON PURCHASING COMMON SHARES. THIS DISCUSSION DOES NOT DEAL WITH ALL POSSIBLE TAX CONSEQUENCES RELATING TO AN INVESTMENT IN OUR COMMON SHARES. WE HAVE NOT TAKEN INTO ACCOUNT YOUR PARTICULAR CIRCUMSTANCES AND DO NOT ADDRESS ALL CONSEQUENCES TO YOU UNDER PROVISIONS OF U.S. OR CANADIAN INCOME TAX LAW. THEREFORE, YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING THE PARTICULAR TAX CONSEQUENCES TO YOU OF PURCHASING, OWNING AND DISPOSING OF COMMON SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND ANY CHANGES IN APPLICABLE LAWS. U.S. Federal Income Tax Considerations You generally will be required to include the U.S. dollar value of any dividend distribution which you receive on the common shares in ordinary income to the extent of our current and accumulated earnings and profits, as determined under U.S. federal income tax principles. The U.S. dollar value of any distribution received in Canadian dollars will be determined based on the spot exchange rate for the date of receipt. The amount of the distribution required to be included in gross income will be determined without reduction for Canadian withholding tax. Therefore, in the event that the distribution is subject to Canadian withholding tax, you generally will be required to report gross income in an amount greater than the cash received. To the extent any dividend distribution paid by us exceeds our current and accumulated earnings and profits, your pro rata share of the excess amount will be treated first as a return of capital up to your adjusted tax basis in our common shares (with a corresponding reduction in basis), and then as a gain from the sale or exchange of the common shares. Unconnected U.S. Shareholders should consult their tax advisors regarding the tax treatment of foreign currency gain or loss, if any, on Canadian dollars received. Dividends paid by us on our common shares generally will not be eligible for the "dividends received" deduction. Subject to certain conditions and limitations, you may be entitled to claim a credit for U.S. federal income tax purposes in an amount equal to the U.S. dollar value of any Canadian taxes withheld on any 49 distributions that we make. Alternatively, you may in some circumstances claim a deduction for the amount of Canadian tax withheld in a taxable year, but only if you do not elect to claim a foreign tax credit in respect of any foreign taxes paid by you in that year. In general, the amount of allowable foreign tax credits in any year cannot exceed your regular U.S. federal income tax liability for the year attributable to certain foreign source income. Because distributions in excess of our current and accumulated earnings and profits generally will not give rise to foreign source income, you may be unable to claim a foreign tax credit in respect of Canadian withholding tax imposed on the excess amount unless, subject to applicable limitations, you have other foreign source income. However, limitations on the use of foreign tax credits generally will not apply to an electing individual Unconnected U.S. Shareholder whose creditable foreign taxes during a tax year do not exceed $300 ($600 for joint filers) if such individual's gross income for the tax year from non-U.S. sources consists solely of certain items of "passive income" reported on a "payee statement" furnished to the Unconnected U.S. Shareholder. In addition, an Unconnected U.S. Shareholder will be denied a foreign tax credit with respect to taxes withheld from dividends received on the common shares to the extent such Unconnected U.S. Shareholder has not held the common shares for a minimum period or to the extent such Unconnected U.S. Shareholder is under an obligation to make certain related payments with respect to substantially similar or related property. The rules relating to foreign tax credits are extremely complex and the availability of a foreign tax credit depends on numerous factors. You should consult your own tax advisor concerning the application of the U.S. foreign tax credit rules to your particular situation. You generally will recognize gain or loss on the sale, exchange or other disposition of your common shares in an amount equal to the difference, if any, between the amount realized on the sale, exchange or disposition and your adjusted tax basis in the common shares. Any gain or loss you recognize upon the sale, exchange or disposition of common shares held as capital assets generally will be long-term or short-term capital gain or loss, depending on whether the shares have been held by you for more than one (1) year. Gain or loss resulting from a sale, exchange or disposition of the common shares generally will be U.S. source for U.S. foreign tax credit purposes unless it is attributable to an office or other fixed place of business outside the U.S. and other conditions are met. Dividend payments with respect to the common shares and proceeds from the sale, exchange or disposition of common shares may be subject to information reporting to the IRS and possible U.S. backup withholding tax at a rate of 31%. Backup withholding will not apply, however, to an Unconnected U.S. Shareholder who furnishes a correct taxpayer identification number and makes any other required certification or who is otherwise exempt from backup withholding. Generally, an Unconnected U.S. Shareholder will provide such certification on IRS Form W-9. Amounts withheld under the backup withholding rules may be credited against a holder's tax liability, and a holder may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate form for refund with the IRS. Canadian Federal Income Tax Considerations In this section, we summarize the material anticipated Canadian federal income tax considerations relevant to your purchase of common shares. This section will only apply if you do not use or hold and are not deemed to use or hold the common shares in, or in the course of, carrying on a business in Canada for the purposes of the Income Tax Act. Under the Income Tax Act, as an Unconnected U.S. Shareholder, you will generally be exempt from Canadian tax on a capital gain realized on an actual or deemed disposition of the common shares unless you, persons with whom you did not deal at arm's length for the purposes of the Income Tax Act, or you and such persons owned or had interests in or rights to acquire 25% or more of our issued common shares of any class of the capital stock of our company at any time during the five (5) year period immediately preceding the disposition or deemed disposition. Where a capital gain realized on a disposition or deemed disposition of our common shares is subject to tax under the Income Tax Act, the Convention will exempt the capital gain from Canadian tax if, on the disposition of our shares, the value of our common shares is 50 not derived principally from real property situated in Canada. This relief under the Convention may not be available if you had a permanent establishment or fixed base available in Canada during the twelve (12) months immediately preceding the disposition of the shares. Dividends paid, credited or deemed to have been paid or credited on the shares to Unconnected U.S. Shareholders will generally be subject to a Canadian withholding tax at a rate of 25% under the Income Tax Act. Under the Convention, the rate of withholding tax generally applicable to Unconnected U.S. Shareholders who beneficially own the dividends is reduced to 15%. In the case of Unconnected U.S. Shareholders that are companies that beneficially own at least 10% of our voting shares, the rate of withholding tax on dividends is reduced to 5%. The Canadian federal government does not currently impose any estate taxes or succession duties, however, if you die, there is generally a deemed disposition of the common shares held at that time for proceeds of disposition equal to the fair market value of the shares immediately before your death. Capital gains realized on the deemed disposition, if any, will generally have the income tax consequences described above. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Our Articles of Incorporation provide that we will indemnify our officers and directors for costs and expenses incurred in connection with the defense of actions, suits, or proceedings against them on account of their being or having been directors or officers of The Buck A Day Company Inc., absent a finding of negligence or misconduct in the performance of their duties. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers or persons controlling The Buck A Day Company Inc. pursuant to the foregoing provisions, we have been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended and is unenforceable. LEGAL MATTERS The validity of the Common Stock offered hereby will be passed upon for The Buck A Day Company Inc. by Bussin & Bussin, Toronto, Ontario. Spitzer & Feldman P.C., New York, is acting as our U.S. legal counsel with respect to the offering. EXPERTS Certain of the financial statements of The Buck A Day Company Inc. included in this prospectus and elsewhere in this registration statement, to the extent and for the periods indicated in their reports, have been audited by Stephen Diamond, Chartered Accountant, our independent certified public accountants, whose reports thereon appear elsewhere herein and in the registration statement. WHERE YOU CAN FIND MORE INFORMATION You should only rely upon the information included in or incorporated by reference into this prospectus, the exhibits to the prospectus or in any prospectus supplement that is delivered to you. We have not authorized anyone to provide you with additional or different information. You should not assume that the information included in or incorporated by reference into this prospectus or any prospectus supplement is accurate as of any date later than the date on the front of the prospectus or prospectus supplement. 51 We have not authorized any person to provide you with information different from that contained or incorporated by reference in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our Common Stock. You may review a copy of the registration statement, including exhibits and schedules filed with it, at the Commission's public reference facilities in Room 104, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C., 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. In addition, the SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy statements, and other information regarding issuers that file electronically with the SEC. 52 INDEX TO FINANCIAL STATEMENTS PAGE ---- Independent Auditor's Report F-2 Financial Statements: Balance Sheets as of July 31, 2001 and 2000 and January 31, 2002 (unaudited) F-3 Statements of Operations for the Year ended July 31, 2001 and from inception, January 1, 2000 to July 31, 2000 and the six months ended January 31, 2002 and 2001 (unaudited) F-4 Statement of Changes in Shareholders' Equity for the Year ended July 31, 2001 and from inception, January 1, 2000 to July 31, 2000 and the six months ended January 31, 2002 and 2001 (unaudited) F-5 Statement of Cash Flows F-6 Notes to Financial Statements F-7 F-1 INDEPENDENT AUDITOR'S REPORT To the Shareholders of The Buck A Day Company Inc. Newmarket, Ontario, Canada I have audited the balance sheets of THE BUCK A DAY COMPANY INC. as at July 31, 2001 and 2000 and the statements of operations, changes in shareholders' equity and cash flows for the year ended July 31, 2001 and from inception, January 1, 2000 through July 31, 2000. These statements are the responsibility of the company's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In my opinion, these financial statements present fairly, in all material respects, the financial position of the company as at July 31, 2001 and 2000 and the results of its operations and changes in its cash flows for the year ended July 31, 2001 and from inception, January 1, 2000 through July 31, 2000 in accordance with accounting principles generally accepted in the United States of America. North York, Ontario "Stephen Diamond" September 15, 2001 Chartered Accountant F-2 THE BUCK-A-DAY COMPANY INC. BALANCE SHEETS (IN UNITED STATES DOLLARS)
July 31, July 31, January 31, As at 2001 2000 2002 - -------------------------------------------------------------------------------------------------------------------- (Unaudited) ASSETS CURRENT ASSETS Cash $ 316,427 $ 25,164 $ 947,072 Accounts receivable (Net of an allowance for doubtful accounts of $0 for 2001, 2000 and 2002) 126,621 39,628 391,033 Prepaid expenses 49,377 84,317 208,261 Inventory 122,037 12,117 264,217 Loan to shareholder -- -- 57,793 - -------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 614,462 161,226 1,868,376 FIXED ASSETS - NET (Note 2) 191,647 90,255 261,779 - -------------------------------------------------------------------------------------------------------------------- $ 806,109 $ 251,481 $ 2,130,155 ==================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES Accounts payable and accrued liabilities (Notes 4 and 7) $ 1,184,277 $ 286,093 $ 1,251,271 Deferred marketing revenue (Note 5) 228,865 -- -- - -------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 1,413,142 286,093 1,251,271 - -------------------------------------------------------------------------------------------------------------------- LONG TERM LIABILITIES Advances from shareholders' (Note 3) 834,976 33,825 -- Provincial sales tax payable (Note 4) 79,319 -- -- - -------------------------------------------------------------------------------------------------------------------- 914,295 33,825 -- - -------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 2,327,437 319,918 1,251,271 - -------------------------------------------------------------------------------------------------------------------- COMMITMENTS AND CONTINGENCIES (Notes 4, 8, 10 and 11) SHAREHOLDERS' DEFICIENCY: Capital stock - no par value, unlimited number of common shares authorized; July 31, 2001 - 400, July 31, 2000 - 360 and January 31, 2002 - 21,761,600 shares issued and outstanding (Note 6) 354,250 305,500 2,483,043 Accumulated other comprehensive income 29,393 16,075 37,516 Accumulated deficit (1,904,971) (390,012) (1,641,675) - -------------------------------------------------------------------------------------------------------------------- (1,521,328) (68,437) 878,884 - -------------------------------------------------------------------------------------------------------------------- $ 806,109 $ 251,481 $ 2,130,155 ====================================================================================================================
F-3 THE BUCK-A-DAY COMPANY INC. STATEMENTS OF OPERATIONS (IN UNITED STATES DOLLARS)
6 MONTHS 6 MONTHS INCEPTION, ENDED ENDED JANUARY 1, JANUARY 31, JANUARY 31, FOR THE YEAR ENDED 2000 TO 2002 2001 (UNAUDITED) JULY 31, 2001 JULY 31, 2000 (UNAUDITED) (UNAUDITED) - ------------------------------------------------------------------------------------------------------------- REVENUE Sale $ 5,381,008 $ 733,973 $ 7,938,428 $ 2,952,984 Cost of sales (3,795,962) (519,307) (4,809,483) (1,999,744) - ------------------------------------------------------------------------------------------------------------- Gross Profit 1,585,046 214,666 3,128,945 953,240 - ------------------------------------------------------------------------------------------------------------- EXPENSES Amortization 22,326 9,283 27,004 14,982 Automobile and travel 54,887 17,193 31,016 22,639 Bad debts 38,440 -- 836 -- Communication costs 77,776 37,763 92,644 31,704 Consulting fees 104,656 796 19,798 2,298 Interest and bank charges 11,937 2,438 8,455 3,492 Media and printing costs 1,114,561 186,847 719,287 435,742 Office expenses 32,870 31,270 90,275 42,733 Outside answering 184,218 2,550 425,342 93,427 Postage and courier 159,266 18,099 91,595 86,169 Professional fees 63,399 14,647 112,513 12,734 Rent and utilities 67,585 32,106 43,425 33,079 Repairs and maintenance 23,547 6,945 16,515 12,247 Salaries and commissions 1,075,467 217,738 1,154,037 499,451 Telemarketing salaries 69,070 27,003 32,907 39,625 - ------------------------------------------------------------------------------------------------------------- 3,100,005 604,678 2,865,649 1,330,322 - ------------------------------------------------------------------------------------------------------------- NET (LOSS) INCOME (Note 9) $(1,514,959) $ (390,012) $ 263,296 $ (377,082) ============================================================================================================= Basic and diluted earnings (loss) per share $ (3,787.40) $ (975.03) $ 0.01 $ (942.71) ============================================================================================================= Weighted average shares Outstanding 400 200 18,643,488 400 =============================================================================================================
F-4 THE BUCK-A-DAY COMPANY INC. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (IN UNITED STATES DOLLARS)
Accumulated Comprehensive Foreign Currency Number of Capital Translation Accumulated Shares Stock Adjustment Deficit Total - ------------------------------------------------------------------------------------------------------------------- Balance January 1, 2000 -- $ -- $ -- $ -- $ -- Issued for cash 360 305,500 -- -- 305,500 Net loss -- -- -- (390,012) (390,012) Foreign currency translation adjustment (Note 7) -- -- 16,075 -- 16,075 - ------------------------------------------------------------------------------------------------------------------- Balance July 31, 2000 360 305,500 16,075 (390,012) (68,437) Issued for cash 40 48,750 -- -- 48,750 Net loss -- -- -- (1,514,959) (1,514,959) Foreign currency translation adjustment (Note 7) -- -- 13,318 -- 13,318 - ------------------------------------------------------------------------------------------------------------------- Balance July 31, 2001 400 354,250 29,393 (1,904,971) (1,521,328) Settlement of secured creditor loans 9,099,600 450,140 -- -- 450,140 Exercise of warrants 4,366,666 450,000 -- -- 450,000 Private placement of common shares 5,694,934 1,202,653 -- -- 1,202,653 Compensatory shares 2,600,000 26,000 -- -- 26,000 Net income for the six months ended January 31, 2002 (Unaudited) -- -- -- 263,296 263,296 Foreign currency translation adjustment (Note 7) -- -- 8,123 -- 8,123 - ------------------------------------------------------------------------------------------------------------------- Balance, January 31, 2002 (Unaudited) 21,761,600 $2,483,043 $37,516 $(1,641,675) $ 878,884 ===================================================================================================================
F-5 THE BUCK-A-DAY COMPANY INC. STATEMENTS OF CASH FLOWS (IN UNITED STATES DOLLARS)
6 MONTHS 6 MONTHS INCEPTION, ENDED ENDED JANUARY 1, JANUARY 31, JANUARY 31, THE YEAR ENDED 2000 TO 2002 2001 FOR JULY 31, 2001 JULY 31, 2000 (UNAUDITED) (UNAUDITED) - ----------------------------------------------------------------------------------------------------------------- Cash Used in Operating Activities Net (income) $(1,514,959) $(390,012) $ 263,296 $(377,082) Amortization 22,326 9,283 27,004 14,982 Compensatory shares -- -- 26,000 -- Changes in assets and liabilities Accounts receivable (86,993) (39,628) (264,412) (157,216) Prepaid expenses 34,940 (84,317) (158,884) (70,325) Inventory (109,920) (12,117) (142,180) (37,070) Provincial sales tax payable 79,319 -- (79,318) -- Accounts payable and accrued liabilities 898,184 286,093 66,994 339,304 Deferred marketing revenue 228,865 -- (228,865) -- - ----------------------------------------------------------------------------------------------------------------- Cash used in operations (448,238) (230,698) (490,365) (287,407) - ----------------------------------------------------------------------------------------------------------------- Financing Activities Advances from shareholders and loans payable 801,151 33,825 (442,629) 253,312 Proceeds from capital stock issuance 48,750 305,500 1,652,653 48,750 - ----------------------------------------------------------------------------------------------------------------- Cash provided by financing activities 849,901 339,325 1,210,024 302,062 - ----------------------------------------------------------------------------------------------------------------- Investing Activity Additions to fixed assets (123,718) (99,538) (126,530) (27,536) - ----------------------------------------------------------------------------------------------------------------- Cash used in investing activities (123,718) (99,538) (126,530) (27,536) - ----------------------------------------------------------------------------------------------------------------- Effect of foreign exchange rate changes on cash 13,318 16,075 37,516 24,428 - ----------------------------------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents 291,263 25,164 630,645 11,547 Cash and cash equivalents Beginning of year (inception) 25,164 -- 316,427 25,164 - ----------------------------------------------------------------------------------------------------------------- End of year $ 316,427 $ 25,164 $ 947,072 $ 36,711 =================================================================================================================
F-6 1. Summary of Significant Accounting Policies These financial statements are prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP") applied on a consistent basis. There are no significant differences between Canadian GAAP and United States Accounting standards as applied to these financial statements. The company is in the business of selling computer hardware, software and peripherals produced by others, throughout Canada. (a) Reporting Currency and Foreign Currency translation The financial statements have been presented in U.S. dollars. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the rate of exchange in effect at the balance sheet date. Revenues and expenses are translated at the weighted average rate for the period. Translation adjustments are deferred in accumulated other comprehensive income (loss), a separate component of shareholders' equity. (b) Inventory Inventory is valued at the lower of cost and net realisable value and consists of goods purchased and held for resale. (c) Depreciation Fixed assets are recorded at cost. Depreciation has been provided for in the accounts at the following rates: Furniture, equipment and computers -20% declining balance (d) Revenue Recognition Revenues and expenses are recognised on the accrual basis. Revenue from sales of products is recognised when title passes to customers, which is at the time goods are shipped. Staff Accounting Bulletin ("SAB") No. 101 issued by the Securities and Exchange Commission ("SEC") requires the company to report any changes in revenue recognition as a cumulative change in accounting principle at the time of implementation. The adoption of SAB 101 did not have a material impact on the Company's financial position or results of operations. EITF 99-19 requires the company to determine how revenues are recognised, on a gross less cost basis or on a net revenue basis. The company has followed the guidance of EITF 99-19 and reports revenues on gross basis. The company purchases and takes title to inventory before it is sold and if it is returned. The company assumes general inventory risk in the transaction. Further the company establishes, within economic constraints, the price charged to the customer. The company maintains primary responsibility in fulfilling the needs of the customer. It is the company's responsibility to determine the nature, type, characteristics and specifications of inventory sold to the consumer. The company is responsible for collecting the sales price from the customer and has to pay the supplier regardless of whether the full sales price has been collected. Revenue from software sales (which is not modified or customized) is recognised when there is persuasive evidence of a sales arrangement, delivery has occurred, the fee is fixed or determinable and collectability of the sales price is probable. F-7 The company's policies for rights of return meet the criteria of SFAS # 48 since the selling price to the buyer is substantially fixed or determinable at the date of sale. The buyer is obligated to pay the company and that obligation is not contingent on resale of the product. The buyer's obligation is unchanged in the event of theft or destruction of the product. Upon the delivery of the product the buyer assumes the risks of ownership. The buyer acquiring the product has physical presence and substance beyond that of the company. The company does not have significant obligations for future performance to directly bring about the resale of the product by the buyer. To date, returns have been immaterial and accordingly no provision for returns has been made. (e) Unaudited Interim Financial Data The unaudited financial statements for the six-months ended January 31, 2002 and 2001 reflect all adjustments, all of which are of a normal recurring nature, which are in the opinion of management, necessary to a fair presentation of the results for the interim periods presented and are not necessarily indicative of full year results. (f) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The more subjective of such estimates are deferred expenses relating to media advertising, certain shipping costs and telemarketing costs affecting future periods. The recorded amounts for such items are based on management's best information and judgement, and accordingly, actual results could differ from those estimates. (g) Income Taxes The Company follows the liability method of accounting for income taxes in accordance with the Canadian Institute of Chartered Accountants new income tax standard and SFAS #109 -- Accounting for income taxes. Under this method, income tax liabilities and assets are recognised for the estimated tax consequences attributable to differences between the amounts reported in the financial statements and their respective tax bases, using enacted income tax rates. The effect of a change in income tax rates on future income tax liabilities and assets is recognised in income in the period that the change occurs. (h) Cash Flows For purposes of the statements of cash flows, the company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. (i) Earnings (Loss) Per Share Basic and diluted earnings (loss) per share have been computed in accordance with SFAS No. 128. Basic earnings (loss) per share has been computed on the basis of the weighted average number of common shares outstanding. Separate diluted earnings (loss) per share has not been presented, as the effect of any common stock equivalents, on such calculation, would be antidilutive. F-8 2. Fixed Assets Fixed assets consist of the following: July 31, July 31, January 31, 2001 2000 2002 (Unaudited) - -------------------------------------------------------------------------------- Furniture, equipment and computers $ 223,256 $ 99,538 $ 349,786 Less: accumulated depreciation (31,609) (9,283) (58,613) - -------------------------------------------------------------------------------- $ 191,647 $ 90,255 $ 261,779 ================================================================================ 3. Shareholder Advances and Loans payable Shareholder advances and loans payable are non-interest bearing and repayable upon demand. The shareholders have indicated that no demand for repayment will be made in the current year. Shareholder loans are secured by a debenture over the assets of the company. Subsequent to July 31, 2001, the shareholder advances and loans payable were converted to common shares of the company's stock. 4. Provincial Sales Tax Due to poor cash flow during the first year of operations, the company was delinquent in remitting its Provincial Sales Tax payments. The company entered into a structured repayment plan with the Provincial Sales Tax authority. The company is committed to 24 equal payments of principal and interest in the amount of $8,269 per month. At July 31, 2001 the current portion due was $89,175 and is included in accounts payable and accrued liabilities. The company is currently not in default with the terms of the payment plan. 5. Deferred Marketing Revenue During the year the company entered into a three year agreement with IBM Canada Ltd. ("IBM") to promote and sell IBM products exclusively. In addition to the agreement IBM provided co-marketing funds in the amount of $227,500 with an additional $32,500 of co-marketing funds to be provided semi-annually. The co-marketing funds are being charged against media and marketing costs as incurred to properly match revenues and expenses. Management utilized the entire amount received by January 31, 2002. IBM advanced these funds to secure the company's exclusivity for the sale of IBM products. The funds are non-refundable and can be utilized at the discretion of management. 6. Capital Stock From inception (January 1, 2000) through May 31, 2000, the Company issued 360 shares of its common stock for net proceeds of $305,500. In August 2000, the Company issued 40 shares of it common stock for net proceeds of $48,750. Subsequent to July 31, 2001, the loans payable to shareholders were converted into 12,099,600 Common Shares of the Company for aggregate proceeds of $833,188. In August 2001, the Company issued Series A warrants for 1,500,000 Common Shares at $0.065 per common share. F-9 On July 7, 2001, the Company issued Series B warrants for 3,000,000 common shares at $0.15 which were exercised subsequent to year end. In August 2001, the Company issued Series C warrants for 800,000 common shares at $0.065. In August 2001, the company issued 9,099,600 shares of its common stock in settlement of secured creditor loans amounting to $450,140. The Company also issued 3,000,000 shares of its common stock and received $450,000 upon the exercise of Series B warrants. In September 2001, the company issued 5,300,000 shares of its common stock for net proceeds of $321,853. In October 2001, the company issued 2,600,000 shares of its common stock in lieu of payment of consulting fees aggregating $26,000. In December 2001 and January 2002, pursuant to a private placement of its common shares, the company issued an aggregate of 1,761,600 shares of its common stock for net proceeds of $880,800. In December 2001, the Company issued 600,000 Class D Warrants as compensation for services rendered by a business consultant. Class D Warrants are exercisable at $0.25 per share, expire on December 1, 2002 and entitles the holder to one share of Company common stock. The Series A and B warrants are exercisable up to 30 days from the issuance of the common shares. The series C warrants are exercisable up to 120 days from the issuance of the common shares. The Series B warrants were exercised for cash consideration and services rendered. 7. Foreign Currency Translation Adjustment The balance in the foreign currency translation adjustment account includes historic amounts related to the Corporation's long term assets and liabilities. 8. Lawsuit A supplier of computer hardware and software commenced an action against the company in July 2001 claiming the sum of $150,875, plus interest and costs for unpaid accounts. This amount was reflected in accounts payable as of July 31, 2001. The Company settled this action in December 2001 for $45,875 and effected payment at that time. 9. Income Tax Losses At July 31, 2001 the company has net operating loss carry forwards ("NOLs") of approximately $1,934,000 for income tax purposes that expire in the years through 2008 and accordingly has deferred tax assets of $380,000. In accordance with SFAS No. 109, the company has not recorded a deferred tax asset since utilisation of such is dependant on future taxable profits and it is unknown at the present time when future taxable profits will be realised. All of the Company's operations are in Canada. July 31, January 31, The components are as follows: 2001 2000 2002 Net operating (income) loss carry forwards $ 380,000 $ 75,000 $ (58,000) Less: valuation allowance (380,000) (75,000) 58,000 - -------------------------------------------------------------------------------- $ -- $ -- $ -- - -------------------------------------------------------------------------------- F-10 The reconciliation of income taxes computed at the Federal and Provincial rates are based upon an effective tax rate of 22%. The income tax expense (benefit) is comprised of the following: Year Ended July 31, January 31, 2001 2000 2002 2001 - -------------------------------------------------------------------------------- Current $ -- $ -- $ 57,926 $ -- (a) Deferred -- -- (57,926) -- $ -- $ -- $ -- $ -- ================================================================================ 10. Economic Dependence In excess of 95% of the company's inventory purchases are from IBM Corporation or its authorized business partners. The company has revolving credit lines totalling $950,000 with these suppliers. Terms are net 30 days. CITI Financial has agreed to make its Revolving Charge Plan available to customers to facilitate credit purchases of consumer goods offered by the Company. In excess of 90% of all sales of goods are placed through CITI using the Revolving Charge Plan. The following are details of the significant transaction with CITI: -------------------------------------------------------------------------- # of transactions $ value of transactions -------------------------------------------------------------------------- January 2000 - July 31, 2000 519 $ 505,000 -------------------------------------------------------------------------- August 2000 - July 31, 2001 3473 $5,100,000 -------------------------------------------------------------------------- August 2001 - January 31, 2002 5929 $7,450,000 -------------------------------------------------------------------------- 11. Commitments (a) In September 2001 the company leased approximately 16,500 square feet. The lease term is from September 1, 2001 to January 31, 2006. Aggregate minimum rental commitments under non-cancellable operating leases are as follows: Fiscal 2002 $ 91,028 2003 99,511 2004 98,012 2005 98,012 2006 17,955 -------- $404,518 ======== (b) Subsequent to the year end, the company entered into employment contracts with the Chief Executive Officer, the President, the Vice President of operations and the Manager of Business Affairs. These contracts are 3 years in length and provide for an aggregate annual salary of $630,000 with annual increases equal to 10% of the of preceding year's salary, the right to participate in any share option plan, share purchase plan, retirement plan or similar plan. During the year ended July 31, 2001 management wages were $447,000. The new contracts will result in an annual increase in management wages of $183,000. F-11 ================================================================================ 29,622,974 Shares THE BUCK A DAY COMPANY INC. ---------- PROSPECTUS ---------- June 12, 2002 No dealer, salesman or other person has been authorized to give any information or to make representations other than those contained in this prospectus, and if given or made, such information or representations must not be relied upon as having been authorized by us or the selling shareholders. Neither the delivery of this prospectus nor any sale hereunder will, under any circumstances, create an implication that the information herein is correct as of any time subsequent to its date. This Shares prospectus does not constitute an offer to or solicitation of offers by anyone in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such an offer is not qualified to do so or to anyone to whom it is unlawful to make such an offer or solicitation. Until________________, [90 days after effectiveness] all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to any dealers' obligation to deliver a prospectus when acting as underwriters and with respect to any unsold allotments or subscriptions. TABLE OF CONTENTS Prospectus Summary 1 Risk Factors 3 A Note Concerning Forward-Looking Statements 7 Enforcement of Civil Liabilities 7 Conventions Which Apply to this Prospectus 8 Currency of Presentation 8 Use of Proceeds 8 Dividend Policy 9 Capitalization 9 Exchange Rates 9 Selected Financial Data 9 Dilution 10 Market for Common Equity and Related Stockholders Matters 11 Impact of the "Penny Stock" Rules on Buying or Selling Our Common Stock 11 Plan of Distribution 11 Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Description of Business 16 Management 21 Principal Shareholders 27 Related Party Transactions 27 Selling shareholders 29 Description of Securities 45 Income Tax Consequences 48 Disclosure of Commission Position on Indemnification for Securities Act Liabilities 51 Legal Matters 51 Experts 51 Where You Can Find More Information 51 The Buck A Day Company, Inc. Consolidated Financial Statements F-1 PART II Information Not Required in the Prospectus II-1 Signatures II-5 ================================================================================ PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS Item 13. Other Expenses of Issuance and Distribution The following table sets forth the costs and expenses payable by The Buck A Day Company Inc. in connection with the sale of the securities being registered. All amounts are estimates except the Securities and Exchange Commission registration fee: Registration Fee ..................................... $ 2,500 Printing and Engraving Expenses ...................... $ 5,000 Accounting Fees and Expenses ......................... $ 15,000 Legal Fees and Expenses .............................. $ 70,000 Transfer Agent's Fees and Expenses Miscellaneous ........................................ $ 7,500 Total ........ $100,000 Item 14. Indemnification of Directors and Officers Under the Business Corporations Act, we are permitted to indemnify our directors and officers and former directors and officers against costs and expenses, including amounts paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which they are made parties because of their position as directors or officers, including an action against us. In order to be entitled to indemnification under this Act, the director or officer must act honestly and in good faith with a view to our best interests, and in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the director or officer must have reasonable grounds for believing that his or her conduct was lawful. Under our by-laws, we may indemnify our current and former directors, officers, employees and agents. Our by-laws also provide that, to the fullest extent permitted by the Act, we are authorized to purchase and maintain insurance on behalf of our and our subsidiaries' current and past directors, officers, employees and agents against any liability incurred by them in their duties. We believe that the provisions of our by-laws are necessary to attract and retain qualified persons as directors and officers. We recently terminated an employee for cause and issued a statement of claim for more than Cdn.$1 million for the misappropriation of our property. The defendant has issued a counter-claim against us which we feel is without merit. Currently, there is no pending litigation or proceeding where a current or past director, officer or employee is seeking indemnification, nor are we aware of any threatened litigation that may result in claims for indemnification. We do not maintain any liability insurance covering our directors and officers. Item 15. Recent Sales of Unregistered Securities Set forth below is information regarding the issuance and sales of The Buck A Day Company Inc.'s Common Stock without registration during the last three (3) years. No such sales involved the use of an underwriter and no commissions were paid in connection with the sale of any securities. 1. On September 15, 1999, we were incorporated pursuant to the Business Corporation Act (Ontario). Upon our incorporation 200 shares were issued to our founding shareholders. This transaction by us did not involve any public offering and was exempt from the registration requirements under the Securities Act pursuant to Section 4(2) thereof. II-1 2. In December 1999 we issued 160 shares of common stock to A.R.T. International Inc. for consideration of $286,000. In August 2000 we issued 40 shares of common stock to A.R.T. for 45,500. These transactions by us did not involve any public offering and was exempt from the registration requirements under the Securities Act pursuant to Section 4(2) thereof. 3. On January 11, 2001, Nadia Faye LaBuick loaned $138,250 to us payable on demand together with interest at the rate of 7% per annum. The loan was secured by all of our assets and registered pursuant to the applicable local laws. Also on January 11, 2001, Dennis and Patricia LaBuick advanced $331,500 to us payable on demand together with interest at the rate of 7% per annum. This loan was also secured by our assets and registered pursuant to the applicable local laws. These transactions by us did not involve any public offering and were exempt from the registration requirements under the Securities Act pursuant to Section 4(2) thereof. 4. On or about July 7, 2001, 1483516 Ontario Limited, loaned $450,000 to us. The terms of such loan required that interest at a rate of 7% per annum and principal were due on demand and were secured by a first lien on all of our assets. Nadia Faye LaBuick, Dennis LaBuick and Patricia LaBuick subordinated their security interests in our assets to the security interest of 1483516 Ontario Limited. The 1483516 Ontario Limited Security Agreement contained a provision that, subject to approval of A.R.T., the principal of the debt was convertible into 3,000,000 units consisting of one share of our common stock and one class B warrant to purchase one share of our common stock at a price of $0.15. This transaction by us did not involve any public offering and was exempt from the registration requirements under the Securities Act pursuant to Section 4(2) thereof. 5. On August 1, 2001, we issued to A.R.T. 800,000 class C warrants to purchase 800,000 shares of Common Stock exercisable at $0.065 per share. Also on August 1, we authorized conversion of the LaBuick family members' loans with interest totaling $461,500 into 7,100,000 shares of Common Stock and class A warrants for an additional 1,500,000 shares exercisable at $0.10 per share. These transactions by us did not involve any public offering and were exempt from the registration requirements under the Securities Act pursuant to Section 4(2) thereof. 6. On August 29, 2001, the LaBuick family members converted all of their loans to us into 7,100,000 shares of our Common Stock and Class A Warrants which granted them the right to purchase an additional 1,500,000 shares. Also on that day, 148516 Ontario Limited converted its loans to us into 3,000,000 shares of Common Stock and exercised all series B warrants for an additional 3,000,000 shares of Common Stock. These transactions by us did not involve any public offering and were exempt from the registration requirements under the Securities Act pursuant to Section 4(2) thereof. 7. In August 2001, we issued 19,367,933 shares of Common Stock to 53 investors for $1,186,475. Each of the investors in this placement were accredited. Further, these transactions did not involve any public offering and were exempt from the registration requirements under the Securities Act pursuant to Section 4(2) thereof. 8. On October 1, 2001, the LaBuick family members exercised all class A warrants receiving 1,500,000 shares of our Common Stock and A.R.T. International, Inc. exercised all class C warrants receiving 800,000 shares of our Common Stock. These transactions by us did not involve any public offering and were exempt from the registration requirements under the Securities Act pursuant to Section 4(2) thereof. 9. On October 1, 2001, we issued 3,000,000 class E warrants to 37 investors. These transactions by us did not involve any public offering and were exempt from the registration requirements under the Securities Act pursuant to Section 4(2) thereof. 10. On December 1, 2001, we issued 600,000 class D Warrants to Jennifer Doering as compensation for services rendered by Ms. Doering in her capacity as a business consultant to the company. This transaction by us did not involve any public offering and was exempt from the registration requirements under the Securities Act pursuant to Section 4(2) thereof. II-2 11. In February 2002, we issued 3,154,641 shares of Common Stock to 54 investors for $1,070,929.15. Each of these investors in this placement were accredited. Further, these transactions did not involve any public offering and were exempt from the registration requirements under the Securities Act pursuant to Section 4(2) thereof. 12. In February 2002, we issued 500,000 class F warrants to Mary Boswell as compensation for services rendered by Ms. Boswell in her capacity as a marketing consultant to the company. This transaction did not involve any public offering and was exempt from the registration requirements under the Securities Act pursuant to Section 4(2) thereof. Additionally, since the inception of our 2002 Stock Option Plan in February 2002, we have granted a total of 3,500,000 directors, officers, advisers or consultants options, pursuant to the Stock Option Plan, to purchase an aggregate of 3,500,000 shares of the company's Common Stock. Each of these transactions by us did not involve any public offering and was exempt from the registration requirements under the Securities Act pursuant to Section 4(2) thereof. Item 16. Exhibits Exhibit No. Description ----------- ----------- 3.1 Articles of Incorporation of the Registrant** 3.2 By-laws of the Registrant** 4.1 Specimen Common Stock Certificate* 5.1 Opinion of Bussin & Bussin with respect to the validity of the shares 10.1 IBM Canada Ltd. Business Partner Agreement, dated July 23, 2001** 10.2 CitiFinancial Services of Canada Ltd. Agreement, dated April April 24, 2000** 10.3 Lexmark Canada Marketing Assistance Rebate Program, dated January 18, 2002** 10.4 AOL Canada Inc. Marketing Agreement, Dated February 25, 2002** 10.5 Tannery Mall Lease Agreement, dated September 1, 2000** 10.6 2002 Omnibus Stock Purchase Agreement, dated February 14, 2002** 10.7 Employment Agreement, dated November 1, 2001 between the Registrant and Ed LaBuick** 10.8 Employment Agreement, dated November 1, 2001 between the Registrant and Dennis LaBuick** 10.9 Employment Agreement, dated November 1, 2001 between the Registrant and Keith Kennedy** 10.10 Employment Agreement, dated November 1, 2001 between the Registrant and George Slightham** 10.11 Class D Warrant 10.12 Class E Warrant 10.13 Class F Warrant 10.14 Form of Subscription Agreement* 23.1 Consent of Bussin & Bussin (contained in Exhibit 5.1) 23.2 Consent of Spitzer & Feldman P.C** 23.3 Consent of Stephen A. Diamond, CA 24.1 Powers of Attorney (included on the signature pages)** * To be filed by amendment. ** Previously filed II-3 Item 17. Undertakings The undersigned Registrant hereby undertakes to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (a) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933. (b) 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; provided, however, that paragraphs (a) and (b) shall not apply if such information is contained in periodic reports filed by the Registrant under Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference into this Registration Statement. (c) 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. (d) undersigned Registrant hereby undertakes that, for the purpose of determining any liability under the Securities Act of 1933, 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. (e) The undersigned Registrant hereby undertakes 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. (f) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report under Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report under Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference into this registration statement 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. (g) The undersigned Registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished under and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the undersigned Registrant according the foregoing provisions, or otherwise, the undersigned Registrant has been advised that in the opinion of the SEC 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 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. II-4 SIGNATURES In accordance with the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York, State of New York, on June 12, 2002. THE BUCK A DAY COMPANY, INC. By: /s/ Edward P. LaBuick ------------------------------------ Edward P. LaBuick Chairman and Chief Executive Officer In accordance with the requirements of the Securities Act of 1933, as amended, this registration statement was signed by the following persons in the capacities indicated on June 12, 2002. * ________________________ Edward P. LaBuick Chairman of the Board, Chief Executive Officer * ________________________ Dennis P. LaBuick President, Director * ________________________ Keith Kennedy Director * ________________________ John Mole Director * ________________________ Kelly Murphy Controller/Principal Financial Officer /s/ Edward P. LaBuick - ------------------------ Edward P. LaBuick ATTORNEY IN FACT II-5 EX-10.11 3 d50855_ex10-11.txt SERIES D WARRANT Exhibit 10.11 THE BUCK-A-DAY COMPANY INC. WARRANT CERTIFICATE SERIES "D" WARRANT FOR PURCHASE OF SHARES This is to certify that FOR VALUE RECEIVED, subject to the Articles of THE BUCK-A-DAY COMPANY INC. (the "Company"), <> is the registered owner (the "Warrant Holder") of <> Series "D" Warrants ("Warrants") represented hereby and is entitled, at any time up to 3:00 o'clock in the afternoon (Toronto Time) (December 1, 2002), to acquire One (1) Common Share of the Company for each Warrant, at the price (the "Exercise Price") of Twenty-five cents ($0.25) U.S. Funds per share. The Company agrees that the shares so purchased shall be and be deemed to be issued to the Warrant Holder as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares as aforesaid. Nothing contained herein shall confer any right upon the Warrant Holder to subscribe for or purchase any shares of the Company at any time after the Expiry Time, and from and after the Expiry Time this Warrant and all rights hereunder shall be void and of no value. The above provisions are subject to the following: 1. In the event the Warrant Holder desires to exercise the right to purchase shares in the capital of the Company conferred hereby, the Warrant Holder shall within the times hereinbefore set out: (a) duly complete in the manner indicated and execute a subscription in the form attached to this Warrant; (b) surrender this Warrant to the Company; and (c) pay the amount payable on the exercise of this Warrant in respect of the shares of the capital of Company subscribed for either in cash or by certified cheque payable to the Company. Upon such surrender and payment as aforesaid, the Warrant Holder shall: (i) be deemed for all purposes to be a shareholder of record of the number of shares in the capital of the Company to be so issued hereunder, (the "Purchased Shares") and the Warrant Holder shall be entitled to delivery of a certificate or certificates evidencing such Purchased shares and the Company shall cause such certificate or certificates to be delivered to the Warrant Holder at the address specified in the said subscription form 2 within fifteen (15) days of said surrender and payment as aforesaid. No fractional Common Shares will be issuable upon any exercise of the Warrant and the Warrant Holder will not be entitled to any cash payment or compensation in lieu of fractional Common Shares; and 2. The Warrant Holder may subscribe for and purchase any lesser number of full shares than the number of shares expressed in this Warrant. In the event that the Warrant Holder subscribes for and purchases any such lesser number of shares prior to the Expiry Time, it shall be entitled to receive a replacement Warrant with respect to the unexercised balance. 3. The holding of this Warrant shall not constitute the Warrant Holder a shareholder of the Company nor entitle it to any right or interest in respect thereof except as herein expressly provided. 4. The Company covenants and agrees that it is duly authorised to create and issue this Warrant and that it is a valid and enforceable obligation of the Company in accordance with the terms hereof and that it will cause the shares from time to time subscribed for and purchased in the manner herein provided and the certificate evidencing such shares to be duly issued and that, at all times prior to the Expiry Time, it shall reserve and there shall remain unissued out of its authorised capital a sufficient number of shares to satisfy the right of purchase herein provided for. All shares which shall be issued upon the exercise of the right of purchase herein provided for, upon payment therefore of the amount at which such shares may be purchased pursuant to the provisions hereof, shall be and be deemed to be fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof. 5. The Company covenants and agrees that so long as this Warrant is outstanding, in whole or in part, it will not: (a) pay any dividends payable in shares of the capital of the Company on the shares of the same class as those in respect of which the right to purchase herein is then given, or (b) give rateably to holders of shares in the capital of the company of the same class as those in respect of which the right to purchase herein is then given rights or warrants to subscribe for additional shares in the capital of the Company, or (c) make any repayment of capital on any of the shares of the capital of the Company of the same class as those in respect of which the right to purchase herein is then given, or (d) consolidate, amalgamate or merge with any company or corporation, or sell or lease the whole or substantially the whole of its assets or undertaking or terminate its corporate existence, or (e) subdivide, consolidate, change or reclassify any shares in the capital of the Company, or 3 (f) distribute to holders of shares in the capital of the Company, any class of shares or rights, options or warrants (other than those referred to above or granted by the Company as of the date hereof) or evidence of indebtedness or property (excluding cash dividends paid in the ordinary course), unless and until it shall have given at least (fifteen) 15 days' prior written notice to the Warrant Holder of its intention so to do and of the particulars (including, in each case, the record date therefor) of any such dividend and/or the right to subscribe for additional shares and/or of the repayment of capital on its shares, as the case may be, and/or the general terms (including the record date for determining the persons entitled to attend any meeting of shareholders held for the purpose of approving or confirming the same) of any such consolidation, amalgamation or merger with any other company or corporation or the sale or lease of the whole or substantially the whole of its assets or undertaking, and/or of such subdivision, consolidation, change or reclassification, as the case may be and/or of such distribution. The Company further covenants and agrees that it will not within the said (fifteen) 15 day period take any corporate action which might deprive the Warrant Holder of the opportunity of exercising the right to purchase shares of the capital of the Company during such (fifteen) 15 day period and thereby to participate as a shareholder in or with respect to any of the aforementioned matters. 6. If at any time after the date hereof and prior to the Expiry Time there shall be a reclassification of the Common Shares outstanding at any time or change of the Common Shares into other shares or securities, or any other capital reorganisation except as described in Section 8, or a consolidation, amalgamation or merger of the Company with or into any other corporation (other than a consolidation, amalgamation or merger which does not result in any reclassification of outstanding Common Shares or a change of the Common Shares into other shares or securities), or a transfer of the undertaking or assets of the Company as an entirety or substantially as a entirety to another corporation or other entity (any of such events being called a "Capital Reorganisation"), the Warrant Holder shall thereafter be entitled to receive upon exercise of this Warrant, and shall accept for the same aggregate consideration, in lieu of the number of Common Shares to which it was theretofore entitled upon such exercise, the kind and amount of shares or other securities or property which it would have been entitled to receive as a result of such Capital Reorganisation if, on the effective date thereof, it had been the registered holder of the number of Common Shares to which it was theretofore entitled upon such exercise. 7. If at any time after the date hereof and prior to the Expiry Time any adjustment in the Exercise Price shall occur as a result of an event referred to in section 8, then the number of Common Shares purchasable upon the subsequent exercise of this Warrant shall be simultaneously adjusted by multiplying the number of Common Shares purchasable upon the exercise of this Warrant immediately prior to such adjustment by a fraction which shall be the reciprocal of the fraction employed in the adjustment of the Exercise Price. To the extent that any adjustment in subscription rights occurs pursuant to this Section 7 as a result of a distribution of exchangeable or convertible securities referred to in section 8, the number of Common Shares purchasable upon exercise of this Warrant shall be readjusted immediately after the expiration of any 4 relevant exchange, conversion or exercise right to the number of Common Shares which would be purchasable based upon the number of Common Shares actually issued and remaining issuable immediately after such expiration, and shall be further readjusted in such manner upon expiration of any further such right. For the purposes of Sections 7 and 8 hereof, "dividend in the ordinary course" means a dividend paid on the Common Shares in any financial year of the Company, whether in (1) cash, (2) securities of the Company, including rights, options or warrants to purchase any securities of the Company or property or other assets of the Company, or (3) property or other assets of the Company, to the extent that the amount or value of such dividend together with the amount or value of all other dividends theretofore paid during such financial year on all of the outstanding Common Shares (any such securities, property or other assets so distributed to be valued at the fair market value of such securities, property or other assets, as the case may be, as determined by the directors acting reasonably which determination shall be conclusive) does not exceed 100% of the consolidated net income of the Company before extraordinary items as certified by the Company to the Warrant Holder (but after dividends payable on all shares ranking prior to or on a parity with respect to the payment of dividends with the Common Shares) for the period of twelve (12) consecutive months ended immediately prior to the first day of such financial year (such consolidated net income, extraordinary items and dividends to be as shown in the audited consolidated financial statements of the Company for such period of twelve (12) consecutive months or, if there are no audited financial statements for such period, computed in accordance with generally accepted accounting principles, consistent with those applied in the preparation of the most recent audited financial statements of the Company). 8. The Exercise Price in effect at any date shall be subject to adjustment from time to time as follows: If and whenever at any time after the date hereof and prior to the Expiry Time, the Company shall: (a) subdivide the outstanding Common Shares into a greater number of Common Shares; (b) consolidate the outstanding Common Shares into a lesser number of Common Shares; or (c) make any distribution, other than by way of a dividend in the ordinary course, to the holders of all or substantially all of the outstanding Common Shares payable in Common Shares or securities exchangeable for or convertible into Common Shares (any of such events being called a "Common Share Reorganisation"), the Exercise Price shall be adjusted effective immediately after the effective date or record date, as the case may be, on which the holders of Common Shares are determined for the purpose of the Common Share Reorganisation by multiplying the Exercise Price in effect immediately prior to such effective date or record date by a fraction, the numerator of which shall be the number of 5 Common Shares outstanding on such effective date or record date before giving effect to such Common Share Reorganisation and the denominator of which shall be the number of Common Shares outstanding immediately after giving effect to such Common Share Reorganisation including, in the case where securities exchangeable for or convertible into Common Shares are distributed, the number of Common Shares that would have been outstanding had such securities been exchanged for or converted into Common Shares on such record date. 9. (a) In any case in which Sections 6 to 8, inclusive, shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Company may defer, until the occurrence of such event: (i) issuing to the Warrant Holder in respect of any exercise of this Warrant after such record date and before the occurrence of such event the additional Common Shares issuable upon such exercise by reason of the adjustment required by such event; and (ii) delivering to the Warrant Holder any distributions declared with respect to such additional Common Shares after such exercise date and before such event, provided, however, that the Company shall deliver to the Warrant Holder an appropriate instrument evidencing the Warrant Holder's rights upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price or the number of Common Shares purchasable upon exercise of this Warrant and to such distributions declared with respect to any such additional Common Shares issuable on the exercise of this Warrant. (b) The adjustments provided for herein are cumulative; shall, in the case of adjustments to the Exercise Price, be computed to the nearest one-tenth of one cent; and shall apply (without duplication) to successive subdivisions, consolidations, distributions, issuances or other events resulting in any adjustment under the provisions hereof; provided that, notwithstanding any other provision hereof, provided that notwithstanding any other provision hereof, no adjustment of the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price then in effect and no adjustment shall be made in the number of Common Shares purchasable on the exercise of a Warrant unless it would result in a change of at least one share (provided, however, that any adjustments which by reason of this Subsection 9(2) are not required to be made shall be carried forward and taken into account in any subsequent adjustment). (c) In the event of any question arising with respect to the adjustments provided herein such question shall be conclusively determined by a firm of chartered accountants appointed by the Company and acceptable to Warrant Holder (who may be the Company's auditors); such accountants shall have access to all necessary records of the Company and such determination shall be binding upon the Company and the Warrant Holder. In the event that any such determination is made, the Company shall deliver a certificate to the Warrant Holder describing such determination. 6 (d) No adjustment in the Exercise Price or in the number of Common Shares purchasable upon exercise of this Warrant shall be made in respect of any event described herein, other than the events referred to in clauses (i) and (ii) of section 8, if the Warrant Holder is entitled to participate in such event on the same terms mutatis mutandis as if it had exercised this Warrant prior to or on the effective date or recorded date of such event. (e) In case the Company after the date of this Warrant shall take any action affecting the Common Shares, other than action described herein, which in the opinion of the directors of the Company would materially affect the rights of the Warrant Holder hereunder, the Exercise Price or the number of Common Shares purchasable upon exercise of this Warrant shall be adjusted in such manner, if any, and at such time, by such action by the directors, as they, in their sole discretion, may determine to be equitable in the circumstances. Failure of the directors to make an adjustment in accordance with this Subsection 9(5) shall be conclusive evidence that the directors have determined that it is equitable to make no adjustment in the circumstances. In the event that any such adjustment is made, the Company shall deliver a certificate to the Warrant Holder describing such adjustment. (f) If the Company shall set a record date to determine the holders of the Common Shares for the purpose of entitling them to receive any issue or distribution or for the issue of any rights, options or warrants and shall thereafter and before such distribution or issue to such shareholders legally abandon its plan to make such distribution or issue, then no adjustment in the Exercise Price of the number of Common Shares purchasable upon exercise of this Warrant shall be required by reason of the setting of such record date. (g) As a condition precedent to the taking of any action which would require an adjustment pursuant to Sections 6, 7 or 8, the Company shall take any action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue as fully paid and non-assessable all the Common Shares which the Warrant Holder is entitled to receive on the full exercise thereof in accordance with the provisions hereof. (h) (i) At least fifteen (15) days prior to the effective date or record date, as the case may be, of any event which, if implemented, will require an adjustment in any of the subscription rights pursuant to this Warrant, including the Exercise Price and the number of Common Shares which are purchasable upon the exercise thereof, the Company shall give notice to the Warrant Holder of the particulars of such event and, if determinable, the required adjustment. (ii) In case any adjustment for which a notice in Subsection (i) has been given is not then determinable, the Company shall promptly after such adjustment is determinable give notice to the Warrant Holder of the adjustment. 7 (iii) Where a notice in Subsection 9(b) (i) or (ii) has been given, the Warrant Holder shall be entitled to rely absolutely on any adjustment calculation of the Company or the Company's auditor. 10. In the event that the Warrant Holder exercises less than all of the rights to purchase shares of the Company conferred hereby, the Company shall, upon surrender of this Warrant and payment (as provided in section 1 hereof), issue to the Warrant Holder a replacement Warrant evidencing the rights remaining unexercised. 11. The Company covenants and agrees that it will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, all and every such other acts, deeds and assurances as the Warrant Holder shall reasonably require for the better accomplishing and effectuating of the intentions and provisions of this Warrant. 12. Time shall be of the essence hereof. 13. This Warrant shall be construed in accordance with the laws of the Province of Ontario and shall be treated in all respects as an Ontario contract. 14. Any notice required or permitted to be given hereunder shall be in writing and may be given by mailing the same postage prepaid or delivering the same addressed to the Company at: 1410 - 181 University Avenue Toronto ON M5H 3M7 and to the Warrant Holder at: <> <
> Any notice aforesaid if delivered shall be deemed to have been given or make on the date on which it was delivered or if mailed, shall be deemed to have been given on the third business day following the day on which it was mailed. Either of the parties hereto may change its address for service from time to time by notice given in accordance with the foregoing. 15. This Warrant shall enure to the benefit of the Warrant Holder and be binding upon the Company and their respective successors and permitted assigns. 16. This Warrant is not transferable by the Warrant Holder without the prior express consent of the Board of Directors of the Company. 8 IN WITNESS WHEREOF The Buck-A-Day Company Inc. (the "Company") has caused this Warrant to be signed by its duly authorised officer as of the 1st day of December 2001. THE BUCK-A-DAY COMPANY INC. Per: "ED LABUICK" ------------------------------ ED LABUICK A.S.O. EX-10.12 4 d50855_ex10-12.txt SERIES E WARRANT Exhibit 10.12 THE BUCK-A-DAY COMPANY INC. WARRANT CERTIFICATE SERIES "E" WARRANT FOR PURCHASE OF SHARES This is to certify that FOR VALUE RECEIVED, subject to the Articles of THE BUCK-A-DAY COMPANY INC. (the "Company"), <> is the registered owner (the "Warrant Holder") of <> Series "E" Warrants ("Warrants") represented hereby and is entitled, at any time up to 3:00 o'clock in the afternoon (Toronto Time) (August 29, 2003), to acquire One (1) Common Share of the Company for each Warrant, at the price (the "Exercise Price") of $1.00 (U.S. Funds) per share. The Company agrees that the shares so purchased shall be and be deemed to be issued to the Warrant Holder as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares as aforesaid. Nothing contained herein shall confer any right upon the Warrant Holder to subscribe for or purchase any shares of the Company at any time after the Expiry Time, and from and after the Expiry Time this Warrant and all rights hereunder shall be void and of no value. The above provisions are subject to the following: 1. In the event the Warrant Holder desires to exercise the right to purchase shares in the capital of the Company conferred hereby, the Warrant Holder shall within the times hereinbefore set out: (a) duly complete in the manner indicated and execute a subscription in the form attached to this Warrant; (b) surrender this Warrant to the Company; and (c) pay the amount payable on the exercise of this Warrant in respect of the shares of the capital of Company subscribed for either in cash or by certified cheque payable to the Company. Upon such surrender and payment as aforesaid, the Warrant Holder shall: (i) be deemed for all purposes to be a shareholder of record of the number of shares in the capital of the Company to be so issued hereunder, (the "Purchased Shares") and the Warrant Holder shall be entitled to delivery of a certificate or certificates evidencing such Purchased shares and the Company shall cause such certificate or certificates to be delivered to the Warrant Holder at the address specified in the said subscription form within fifteen (15) days of said surrender and payment as aforesaid. No fractional Common Shares will be issuable upon any exercise of the Warrant and the Warrant Holder will not be entitled to any cash payment or compensation in lieu of fractional Common Shares; and 2. The Warrant Holder may subscribe for and purchase any lesser number of full shares than the number of shares expressed in this Warrant. In the event that the Warrant Holder subscribes for and purchases any such lesser number of shares prior to the Expiry Time, it shall be entitled to receive a replacement Warrant with respect to the unexercised balance. 3. The holding of this Warrant shall not constitute the Warrant Holder a shareholder of the Company nor entitle it to any right or interest in respect thereof except as herein expressly provided. 4. The Company covenants and agrees that it is duly authorised to create and issue this Warrant and that it is a valid and enforceable obligation of the Company in accordance with the terms hereof and that it will cause the shares from time to time subscribed for and purchased in the manner herein provided and the certificate evidencing such shares to be duly issued and that, at all times prior to the Expiry Time, it shall reserve and there shall remain unissued out of its authorised capital a sufficient number of shares to satisfy the right of purchase herein provided for. All shares which shall be issued upon the exercise of the right of purchase herein provided for, upon payment therefore of the amount at which such shares may be purchased pursuant to the provisions hereof, shall be and be deemed to be fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof. 5. The Company covenants and agrees that so long as this Warrant is outstanding, in whole or in part, it will not: (a) pay any dividends payable in shares of the capital of the Company on the shares of the same class as those in respect of which the right to purchase herein is then given, or (b) give rateably to holders of shares in the capital of the company of the same class as those in respect of which the right to purchase herein is then given rights or warrants to subscribe for additional shares in the capital of the Company, or (c) make any repayment of capital on any of the shares of the capital of the Company of the same class as those in respect of which the right to purchase herein is then given, or (d) consolidate, amalgamate or merge with any company or corporation, or sell or lease the whole or substantially the whole of its assets or undertaking or terminate its corporate existence, or (e) subdivide, consolidate, change or reclassify any shares in the capital of the Company, or (f) distribute to holders of shares in the capital of the Company, any class of shares or rights, options or warrants (other than those referred to above or granted by the Company as of the date hereof) or evidence of indebtedness or property (excluding cash dividends paid in the ordinary course), unless and until it shall have given at least (fifteen) 15 days' prior written notice to the Warrant Holder of its intention so to do and of the particulars (including, in each case, the record date therefor) of any such dividend and/or the right to subscribe for additional shares and/or of the repayment of capital on its shares, as the case may be, and/or the general terms (including the record date for determining the persons entitled to attend any meeting of shareholders held for the purpose of approving or confirming the same) of any such consolidation, amalgamation or merger with any other company or corporation or the sale or lease of the whole or substantially the whole of its assets or undertaking, and/or of such subdivision, consolidation, change or reclassification, as the case may be and/or of such distribution. The Company further covenants and agrees that it will not within the said (fifteen) 15 day period take any corporate action which might deprive the Warrant Holder of the opportunity of exercising the right to purchase shares of the capital of the Company during such (fifteen) 15 day period and thereby to participate as a shareholder in or with respect to any of the aforementioned matters. 6. If at any time after the date hereof and prior to the Expiry Time there shall be a reclassification of the Common Shares outstanding at any time or change of the Common Shares into other shares or securities, or any other capital reorganisation except as described in Section 8, or a consolidation, amalgamation or merger of the Company with or into any other corporation (other than a consolidation, amalgamation or merger which does not result in any reclassification of outstanding Common Shares or a change of the Common Shares into other shares or securities), or a transfer of the undertaking or assets of the Company as an entirety or substantially as a entirety to another corporation or other entity (any of such events being called a "Capital Reorganisation"), the Warrant Holder shall thereafter be entitled to receive upon exercise of this Warrant, and shall accept for the same aggregate consideration, in lieu of the number of Common Shares to which it was theretofore entitled upon such exercise, the kind and amount of shares or other securities or property which it would have been entitled to receive as a result of such Capital Reorganisation if, on the effective date thereof, it had been the registered holder of the number of Common Shares to which it was theretofore entitled upon such exercise. 7. If at any time after the date hereof and prior to the Expiry Time any adjustment in the Exercise Price shall occur as a result of an event referred to in section 8, then the number of Common Shares purchasable upon the subsequent exercise of this Warrant shall be simultaneously adjusted by multiplying the number of Common Shares purchasable upon the exercise of this Warrant immediately prior to such adjustment by a fraction which shall be the reciprocal of the fraction employed in the adjustment of the Exercise Price. To the extent that any adjustment in subscription rights occurs pursuant to this Section 7 as a result of a distribution of exchangeable or convertible securities referred to in section 8, the number of Common Shares purchasable upon exercise of this Warrant shall be readjusted immediately after the expiration of any relevant exchange, conversion or exercise right to the number of Common Shares which would be purchasable based upon the number of Common Shares actually issued and remaining issuable immediately after such expiration, and shall be further readjusted in such manner upon expiration of any further such right. For the purposes of Sections 7 and 8 hereof, "dividend in the ordinary course" means a dividend paid on the Common Shares in any financial year of the Company, whether in (1) cash, (2) securities of the Company, including rights, options or warrants to purchase any securities of the Company or property or other assets of the Company, or (3) property or other assets of the Company, to the extent that the amount or value of such dividend together with the amount or value of all other dividends theretofore paid during such financial year on all of the outstanding Common Shares (any such securities, property or other assets so distributed to be valued at the fair market value of such securities, property or other assets, as the case may be, as determined by the directors acting reasonably which determination shall be conclusive) does not exceed 100% of the consolidated net income of the Company before extraordinary items as certified by the Company to the Warrant Holder (but after dividends payable on all shares ranking prior to or on a parity with respect to the payment of dividends with the Common Shares) for the period of twelve (12) consecutive months ended immediately prior to the first day of such financial year (such consolidated net income, extraordinary items and dividends to be as shown in the audited consolidated financial statements of the Company for such period of twelve (12) consecutive months or, if there are no audited financial statements for such period, computed in accordance with generally accepted accounting principles, consistent with those applied in the preparation of the most recent audited financial statements of the Company). 8. The Exercise Price in effect at any date shall be subject to adjustment from time to time as follows: If and whenever at any time after the date hereof and prior to the Expiry Time, the Company shall: (a) subdivide the outstanding Common Shares into a greater number of Common Shares; (b) consolidate the outstanding Common Shares into a lesser number of Common Shares; or (c) make any distribution, other than by way of a dividend in the ordinary course, to the holders of all or substantially all of the outstanding Common Shares payable in Common Shares or securities exchangeable for or convertible into Common Shares (any of such events being called a "Common Share Reorganisation"), the Exercise Price shall be adjusted effective immediately after the effective date or record date, as the case may be, on which the holders of Common Shares are determined for the purpose of the Common Share Reorganisation by multiplying the Exercise Price in effect immediately prior to such effective date or record date by a fraction, the numerator of which shall be the number of Common Shares outstanding on such effective date or record date before giving effect to such Common Share Reorganisation and the denominator of which shall be the number of Common Shares outstanding immediately after giving effect to such Common Share Reorganisation including, in the case where securities exchangeable for or convertible into Common Shares are distributed, the number of Common Shares that would have been outstanding had such securities been exchanged for or converted into Common Shares on such record date. 9. (a) In any case in which Sections 6 to 8, inclusive, shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Company may defer, until the occurrence of such event: (i) issuing to the Warrant Holder in respect of any exercise of this Warrant after such record date and before the occurrence of such event the additional Common Shares issuable upon such exercise by reason of the adjustment required by such event; and (ii) delivering to the Warrant Holder any distributions declared with respect to such additional Common Shares after such exercise date and before such event, provided, however, that the Company shall deliver to the Warrant Holder an appropriate instrument evidencing the Warrant Holder's rights upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price or the number of Common Shares purchasable upon exercise of this Warrant and to such distributions declared with respect to any such additional Common Shares issuable on the exercise of this Warrant. (b) The adjustments provided for herein are cumulative; shall, in the case of adjustments to the Exercise Price, be computed to the nearest one-tenth of one cent; and shall apply (without duplication) to successive subdivisions, consolidations, distributions, issuances or other events resulting in any adjustment under the provisions hereof; provided that, notwithstanding any other provision hereof, provided that notwithstanding any other provision hereof, no adjustment of the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price then in effect and no adjustment shall be made in the number of Common Shares purchasable on the exercise of a Warrant unless it would result in a change of at least one share (provided, however, that any adjustments which by reason of this Subsection 9(2) are not required to be made shall be carried forward and taken into account in any subsequent adjustment). (c) In the event of any question arising with respect to the adjustments provided herein such question shall be conclusively determined by a firm of chartered accountants appointed by the Company and acceptable to Warrant Holder (who may be the Company's auditors); such accountants shall have access to all necessary records of the Company and such determination shall be binding upon the Company and the Warrant Holder. In the event that any such determination is made, the Company shall deliver a certificate to the Warrant Holder describing such determination. (d) No adjustment in the Exercise Price or in the number of Common Shares purchasable upon exercise of this Warrant shall be made in respect of any event described herein, other than the events referred to in clauses (i) and (ii) of section 8, if the Warrant Holder is entitled to participate in such event on the same terms mutatis mutandis as if it had exercised this Warrant prior to or on the effective date or recorded date of such event. (e) In case the Company after the date of this Warrant shall take any action affecting the Common Shares, other than action described herein, which in the opinion of the directors of the Company would materially affect the rights of the Warrant Holder hereunder, the Exercise Price or the number of Common Shares purchasable upon exercise of this Warrant shall be adjusted in such manner, if any, and at such time, by such action by the directors, as they, in their sole discretion, may determine to be equitable in the circumstances. Failure of the directors to make an adjustment in accordance with this Subsection 9(5) shall be conclusive evidence that the directors have determined that it is equitable to make no adjustment in the circumstances. In the event that any such adjustment is made, the Company shall deliver a certificate to the Warrant Holder describing such adjustment. (f) If the Company shall set a record date to determine the holders of the Common Shares for the purpose of entitling them to receive any issue or distribution or for the issue of any rights, options or warrants and shall thereafter and before such distribution or issue to such shareholders legally abandon its plan to make such distribution or issue, then no adjustment in the Exercise Price of the number of Common Shares purchasable upon exercise of this Warrant shall be required by reason of the setting of such record date. (g) As a condition precedent to the taking of any action which would require an adjustment pursuant to Sections 6, 7 or 8, the Company shall take any action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue as fully paid and non-assessable all the Common Shares which the Warrant Holder is entitled to receive on the full exercise thereof in accordance with the provisions hereof. (h) (i) At least fifteen (15) days prior to the effective date or record date, as the case may be, of any event which, if implemented, will require an adjustment in any of the subscription rights pursuant to this Warrant, including the Exercise Price and the number of Common Shares which are purchasable upon the exercise thereof, the Company shall give notice to the Warrant Holder of the particulars of such event and, if determinable, the required adjustment. (ii) In case any adjustment for which a notice in Subsection (i) has been given is not then determinable, the Company shall promptly after such adjustment is determinable give notice to the Warrant Holder of the adjustment. (iii) Where a notice in Subsection 9(b) (i) or (ii) has been given, the Warrant Holder shall be entitled to rely absolutely on any adjustment calculation of the Company or the Company's auditor. 10. In the event that the Warrant Holder exercises less than all of the rights to purchase shares of the Company conferred hereby, the Company shall, upon surrender of this Warrant and payment (as provided in section 1 hereof), issue to the Warrant Holder a replacement Warrant evidencing the rights remaining unexercised. 11. The Company covenants and agrees that it will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, all and every such other acts, deeds and assurances as the Warrant Holder shall reasonably require for the better accomplishing and effectuating of the intentions and provisions of this Warrant. 12. Time shall be of the essence hereof. 13. This Warrant shall be construed in accordance with the laws of the Province of Ontario and shall be treated in all respects as an Ontario contract. 14. Any notice required or permitted to be given hereunder shall be in writing and may be given by mailing the same postage prepaid or delivering the same addressed to the Company at: 1410 - 181 University Avenue Toronto ON M5H 3M7 and to the Warrant Holder at: <> <
> Any notice aforesaid if delivered shall be deemed to have been given or make on the date on which it was delivered or if mailed, shall be deemed to have been given on the third business day following the day on which it was mailed. Either of the parties hereto may change its address for service from time to time by notice given in accordance with the foregoing. 15. This Warrant shall enure to the benefit of the Warrant Holder and be binding upon the Company and their respective successors and permitted assigns. 16. This Warrant is not transferable by the Warrant Holder without the prior express consent of the Board of Directors of the Company. IN WITNESS WHEREOF The Buck-A-Day Company Inc. (the "Company") has caused this Warrant to be signed by its duly authorised officer as of the 1st day of October, 2001. THE BUCK-A-DAY COMPANY INC. Per: "ED LABUICK" ------------------------------- ED LABUICK A.S.O. EX-10.13 5 d50855_ex10-13.txt SERIES F WARRANT Exhibit 10.13 THE BUCK-A-DAY COMPANY INC. WARRANT CERTIFICATE SERIES "F" WARRANT FOR PURCHASE OF SHARES This is to certify that FOR VALUE RECEIVED, subject to the Articles of THE BUCK-A-DAY COMPANY INC. (the "Company"), <> Series "F" Warrants ("Warrants") represented hereby and is entitled, at any time up to 3:00 o'clock in the afternoon (Toronto Time) (December 31, 2002), to acquire One (1) Common Share of the Company for each Warrant, at the price (the "Exercise Price") of Fifty Cents $0.50 (U.S. Funds) per share. The Company agrees that the shares so purchased shall be and be deemed to be issued to the Warrant Holder as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares as aforesaid. Nothing contained herein shall confer any right upon the Warrant Holder to subscribe for or purchase any shares of the Company at any time after the Expiry Time, and from and after the Expiry Time this Warrant and all rights hereunder shall be void and of no value. The above provisions are subject to the following: 1. In the event the Warrant Holder desires to exercise the right to purchase shares in the capital of the Company conferred hereby, the Warrant Holder shall within the times hereinbefore set out: (a) duly complete in the manner indicated and execute a subscription in the form attached to this Warrant; (b) surrender this Warrant to the Company; and (c) pay the amount payable on the exercise of this Warrant in respect of the shares of the capital of Company subscribed for either in cash or by certified cheque payable to the Company. Upon such surrender and payment as aforesaid, the Warrant Holder shall: (i) be deemed for all purposes to be a shareholder of record of the number of shares in the capital of the Company to be so issued hereunder, (the "Purchased Shares") and the Warrant Holder shall be entitled to delivery of a certificate or certificates evidencing such Purchased shares and the Company shall cause such certificate or certificates to be delivered to the Warrant Holder at the address specified in the said subscription form within fifteen (15) days of said surrender and payment as aforesaid. No fractional Common Shares will be issuable upon any exercise of the Warrant and the Warrant Holder will not be entitled to any cash payment or compensation in lieu of fractional Common Shares; and 2. The Warrant Holder may subscribe for and purchase any lesser number of full shares than the number of shares expressed in this Warrant. In the event that the Warrant Holder subscribes for and purchases any such lesser number of shares prior to the Expiry Time, it shall be entitled to receive a replacement Warrant with respect to the unexercised balance. 3. The holding of this Warrant shall not constitute the Warrant Holder a shareholder of the Company nor entitle it to any right or interest in respect thereof except as herein expressly provided. 4. The Company covenants and agrees that it is duly authorised to create and issue this Warrant and that it is a valid and enforceable obligation of the Company in accordance with the terms hereof and that it will cause the shares from time to time subscribed for and purchased in the manner herein provided and the certificate evidencing such shares to be duly issued and that, at all times prior to the Expiry Time, it shall reserve and there shall remain unissued out of its authorised capital a sufficient number of shares to satisfy the right of purchase herein provided for. All shares which shall be issued upon the exercise of the right of purchase herein provided for, upon payment therefore of the amount at which such shares may be purchased pursuant to the provisions hereof, shall be and be deemed to be fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof. 5. The Company covenants and agrees that so long as this Warrant is outstanding, in whole or in part, it will not: (a) pay any dividends payable in shares of the capital of the Company on the shares of the same class as those in respect of which the right to purchase herein is then given, or (b) give rateably to holders of shares in the capital of the company of the same class as those in respect of which the right to purchase herein is then given rights or warrants to subscribe for additional shares in the capital of the Company, or (c) make any repayment of capital on any of the shares of the capital of the Company of the same class as those in respect of which the right to purchase herein is then given, or (d) consolidate, amalgamate or merge with any company or corporation, or sell or lease the whole or substantially the whole of its assets or undertaking or terminate its corporate existence, or (e) subdivide, consolidate, change or reclassify any shares in the capital of the Company, or (f) distribute to holders of shares in the capital of the Company, any class of shares or rights, options or warrants (other than those referred to above or granted by the Company as of the date hereof) or evidence of indebtedness or property (excluding cash dividends paid in the ordinary course), unless and until it shall have given at least (fifteen) 15 days' prior written notice to the Warrant Holder of its intention so to do and of the particulars (including, in each case, the record date therefor) of any such dividend and/or the right to subscribe for additional shares and/or of the repayment of capital on its shares, as the case may be, and/or the general terms (including the record date for determining the persons entitled to attend any meeting of shareholders held for the purpose of approving or confirming the same) of any such consolidation, amalgamation or merger with any other company or corporation or the sale or lease of the whole or substantially the whole of its assets or undertaking, and/or of such subdivision, consolidation, change or reclassification, as the case may be and/or of such distribution. The Company further covenants and agrees that it will not within the said (fifteen) 15 day period take any corporate action which might deprive the Warrant Holder of the opportunity of exercising the right to purchase shares of the capital of the Company during such (fifteen) 15 day period and thereby to participate as a shareholder in or with respect to any of the aforementioned matters. 6. If at any time after the date hereof and prior to the Expiry Time there shall be a reclassification of the Common Shares outstanding at any time or change of the Common Shares into other shares or securities, or any other capital reorganisation except as described in Section 8, or a consolidation, amalgamation or merger of the Company with or into any other corporation (other than a consolidation, amalgamation or merger which does not result in any reclassification of outstanding Common Shares or a change of the Common Shares into other shares or securities), or a transfer of the undertaking or assets of the Company as an entirety or substantially as a entirety to another corporation or other entity (any of such events being called a "Capital Reorganisation"), the Warrant Holder shall thereafter be entitled to receive upon exercise of this Warrant, and shall accept for the same aggregate consideration, in lieu of the number of Common Shares to which it was theretofore entitled upon such exercise, the kind and amount of shares or other securities or property which it would have been entitled to receive as a result of such Capital Reorganisation if, on the effective date thereof, it had been the registered holder of the number of Common Shares to which it was theretofore entitled upon such exercise. 7. If at any time after the date hereof and prior to the Expiry Time any adjustment in the Exercise Price shall occur as a result of an event referred to in section 8, then the number of Common Shares purchasable upon the subsequent exercise of this Warrant shall be simultaneously adjusted by multiplying the number of Common Shares purchasable upon the exercise of this Warrant immediately prior to such adjustment by a fraction which shall be the reciprocal of the fraction employed in the adjustment of the Exercise Price. To the extent that any adjustment in subscription rights occurs pursuant to this Section 7 as a result of a distribution of exchangeable or convertible securities referred to in section 8, the number of Common Shares purchasable upon exercise of this Warrant shall be readjusted immediately after the expiration of any relevant exchange, conversion or exercise right to the number of Common Shares which would be purchasable based upon the number of Common Shares actually issued and remaining issuable immediately after such expiration, and shall be further readjusted in such manner upon expiration of any further such right. For the purposes of Sections 7 and 8 hereof, "dividend in the ordinary course" means a dividend paid on the Common Shares in any financial year of the Company, whether in (1) cash, (2) securities of the Company, including rights, options or warrants to purchase any securities of the Company or property or other assets of the Company, or (3) property or other assets of the Company, to the extent that the amount or value of such dividend together with the amount or value of all other dividends theretofore paid during such financial year on all of the outstanding Common Shares (any such securities, property or other assets so distributed to be valued at the fair market value of such securities, property or other assets, as the case may be, as determined by the directors acting reasonably which determination shall be conclusive) does not exceed 100% of the consolidated net income of the Company before extraordinary items as certified by the Company to the Warrant Holder (but after dividends payable on all shares ranking prior to or on a parity with respect to the payment of dividends with the Common Shares) for the period of twelve (12) consecutive months ended immediately prior to the first day of such financial year (such consolidated net income, extraordinary items and dividends to be as shown in the audited consolidated financial statements of the Company for such period of twelve (12) consecutive months or, if there are no audited financial statements for such period, computed in accordance with generally accepted accounting principles, consistent with those applied in the preparation of the most recent audited financial statements of the Company). 8. The Exercise Price in effect at any date shall be subject to adjustment from time to time as follows: If and whenever at any time after the date hereof and prior to the Expiry Time, the Company shall: (a) subdivide the outstanding Common Shares into a greater number of Common Shares; (b) consolidate the outstanding Common Shares into a lesser number of Common Shares; or (c) make any distribution, other than by way of a dividend in the ordinary course, to the holders of all or substantially all of the outstanding Common Shares payable in Common Shares or securities exchangeable for or convertible into Common Shares (any of such events being called a "Common Share Reorganisation"), the Exercise Price shall be adjusted effective immediately after the effective date or record date, as the case may be, on which the holders of Common Shares are determined for the purpose of the Common Share Reorganisation by multiplying the Exercise Price in effect immediately prior to such effective date or record date by a fraction, the numerator of which shall be the number of Common Shares outstanding on such effective date or record date before giving effect to such Common Share Reorganisation and the denominator of which shall be the number of Common Shares outstanding immediately after giving effect to such Common Share Reorganisation including, in the case where securities exchangeable for or convertible into Common Shares are distributed, the number of Common Shares that would have been outstanding had such securities been exchanged for or converted into Common Shares on such record date. 9. (a) In any case in which Sections 6 to 8, inclusive, shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Company may defer, until the occurrence of such event: (i) issuing to the Warrant Holder in respect of any exercise of this Warrant after such record date and before the occurrence of such event the additional Common Shares issuable upon such exercise by reason of the adjustment required by such event; and (ii) delivering to the Warrant Holder any distributions declared with respect to such additional Common Shares after such exercise date and before such event, provided, however, that the Company shall deliver to the Warrant Holder an appropriate instrument evidencing the Warrant Holder's rights upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price or the number of Common Shares purchasable upon exercise of this Warrant and to such distributions declared with respect to any such additional Common Shares issuable on the exercise of this Warrant. (b) The adjustments provided for herein are cumulative; shall, in the case of adjustments to the Exercise Price, be computed to the nearest one-tenth of one cent; and shall apply (without duplication) to successive subdivisions, consolidations, distributions, issuances or other events resulting in any adjustment under the provisions hereof; provided that, notwithstanding any other provision hereof, provided that notwithstanding any other provision hereof, no adjustment of the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price then in effect and no adjustment shall be made in the number of Common Shares purchasable on the exercise of a Warrant unless it would result in a change of at least one share (provided, however, that any adjustments which by reason of this Subsection 9(2) are not required to be made shall be carried forward and taken into account in any subsequent adjustment). (c) In the event of any question arising with respect to the adjustments provided herein such question shall be conclusively determined by a firm of chartered accountants appointed by the Company and acceptable to Warrant Holder (who may be the Company's auditors); such accountants shall have access to all necessary records of the Company and such determination shall be binding upon the Company and the Warrant Holder. In the event that any such determination is made, the Company shall deliver a certificate to the Warrant Holder describing such determination. (d) No adjustment in the Exercise Price or in the number of Common Shares purchasable upon exercise of this Warrant shall be made in respect of any event described herein, other than the events referred to in clauses (i) and (ii) of section 8, if the Warrant Holder is entitled to participate in such event on the same terms mutatis mutandis as if it had exercised this Warrant prior to or on the effective date or recorded date of such event. (e) In case the Company after the date of this Warrant shall take any action affecting the Common Shares, other than action described herein, which in the opinion of the directors of the Company would materially affect the rights of the Warrant Holder hereunder, the Exercise Price or the number of Common Shares purchasable upon exercise of this Warrant shall be adjusted in such manner, if any, and at such time, by such action by the directors, as they, in their sole discretion, may determine to be equitable in the circumstances. Failure of the directors to make an adjustment in accordance with this Subsection 9(5) shall be conclusive evidence that the directors have determined that it is equitable to make no adjustment in the circumstances. In the event that any such adjustment is made, the Company shall deliver a certificate to the Warrant Holder describing such adjustment. (f) If the Company shall set a record date to determine the holders of the Common Shares for the purpose of entitling them to receive any issue or distribution or for the issue of any rights, options or warrants and shall thereafter and before such distribution or issue to such shareholders legally abandon its plan to make such distribution or issue, then no adjustment in the Exercise Price of the number of Common Shares purchasable upon exercise of this Warrant shall be required by reason of the setting of such record date. (g) As a condition precedent to the taking of any action which would require an adjustment pursuant to Sections 6, 7 or 8, the Company shall take any action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue as fully paid and non-assessable all the Common Shares which the Warrant Holder is entitled to receive on the full exercise thereof in accordance with the provisions hereof. (h) (i) At least fifteen (15) days prior to the effective date or record date, as the case may be, of any event which, if implemented, will require an adjustment in any of the subscription rights pursuant to this Warrant, including the Exercise Price and the number of Common Shares which are purchasable upon the exercise thereof, the Company shall give notice to the Warrant Holder of the particulars of such event and, if determinable, the required adjustment. (ii) In case any adjustment for which a notice in Subsection (i) has been given is not then determinable, the Company shall promptly after such adjustment is determinable give notice to the Warrant Holder of the adjustment. (iii) Where a notice in Subsection 9(b) (i) or (ii) has been given, the Warrant Holder shall be entitled to rely absolutely on any adjustment calculation of the Company or the Company's auditor. 10. In the event that the Warrant Holder exercises less than all of the rights to purchase shares of the Company conferred hereby, the Company shall, upon surrender of this Warrant and payment (as provided in section 1 hereof), issue to the Warrant Holder a replacement Warrant evidencing the rights remaining unexercised. 11. The Company covenants and agrees that it will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, all and every such other acts, deeds and assurances as the Warrant Holder shall reasonably require for the better accomplishing and effectuating of the intentions and provisions of this Warrant. 12. Time shall be of the essence hereof. 13. This Warrant shall be construed in accordance with the laws of the Province of Ontario and shall be treated in all respects as an Ontario contract. 14. Any notice required or permitted to be given hereunder shall be in writing and may be given by mailing the same postage prepaid or delivering the same addressed to the Company at: 1410 - 181 University Avenue Toronto ON M5H 3M7 and to the Warrant Holder at: <> <
> Any notice aforesaid if delivered shall be deemed to have been given or make on the date on which it was delivered or if mailed, shall be deemed to have been given on the third business day following the day on which it was mailed. Either of the parties hereto may change its address for service from time to time by notice given in accordance with the foregoing. 15. This Warrant shall enure to the benefit of the Warrant Holder and be binding upon the Company and their respective successors and permitted assigns. 16. This Warrant is not transferable by the Warrant Holder without the prior express consent of the Board of Directors of the Company. IN WITNESS WHEREOF The Buck-A-Day Company Inc. (the "Company") has caused this Warrant to be signed by its duly authorised officer as of the February, 2002. THE BUCK-A-DAY COMPANY INC. Per: "ED LABUICK" ------------------------------- ED LABUICK A.S.O. EX-23.1 6 d50855_ex23-1.txt CONSENT OF BUSSIN & BUSSIN Exhibit 23.1 June 12, 2002 BY COURIER The Buck A Day Company Inc. 465 Davis Drive - Suite 226 Newmarket, Ontario L3Y 2P1 Dear Sirs: At your request, we have examined Amendment No. 2 to the registration statement on Form F-1 filed pursuant to the United States Securities Act of 1933, as amended (the "Securities Act"), by The Buck A Day Company Inc., a corporation incorporated under the laws of the Province of Ontario (the "Company"), with the United States Securities and Exchange Commission (the "SEC") on June 12, 2002 (the "Registration Statement") relating to the registration under the Securities Act of up to 29,622,974 common shares of the Company without par value (collectively, the "Shares"), including authorized but unissued Shares being offered by the Company. The Shares are to be sold to the public as follows: (i) 3,000,000 by the Company on a self-underwritten basis; (ii) 22,522,974 by the selling shareholders; and (iii) 3,900,000 underlying warrants of the Company. EXAMINATIONS In connection with this opinion letter, we have examined the following: (i) Resolutions of the directors of the Company as set out in Schedule "A" attached hereto (collectively, the "Resolutions") and the Articles and Articles of Amendment of the Corporation dated September 15, 1999 and February 1, 2002, respectively, authorizing the issuance of the Shares; and (ii) the Company's registration statement on Form F-1 (the "Initial Registration Statement") filed on February 22, 2002, together with all amendments thereto and the Registration Statement. We have also examined such other records and documents provided to us and such statutes, regulations and other public and corporate records of the Company and considered such questions of law that are relevant and necessary for the purposes of the opinions expressed below. 2 RELIANCE AND ASSUMPTIONS For the purposes of the opinion expressed below, we have relied upon the Resolutions and have assumed: (i) the genuineness of all signatures on each document that we have examined; (ii) the authenticity of all documents submitted to us as originals, the conformity with the originals of all documents submitted to us as copies, whether photostatic, telecopied or otherwise; (iii) the legal power, capacity and authority of all natural persons signing in their individual capacity; and (iv) that the Resolutions continue to be in full force and effect and unamended on the date hereof. (v) We have assumed the genuineness of all signatures on all documents, the authenticity of all documents submitted to us as originals and the conformity to authentic or original documents of all documents submitted to us as certified or photostatic copies or facsimiles; (vi) We have assumed the statements made by government officials in certificates provided by them are true and correct as at the time at which they were made and continue to be true and correct from such time to time of delivery of this opinion; (vii) Where opinions are expressed herein based on state of our knowledge, or upon matters of fact, such opinions are based solely upon an inquiry of our active files for the Company as applicable and upon the Company officers certifications to us, as applicable, in respect of which we have made no independent inquiry or verification. OPINION Based and relying on the foregoing assumptions and subject to the following qualification and limitation, we are of the opinion that, upon 3 completion of the proceedings proposed by the Company, including the adoption of appropriate resolutions by the board of directors: 1. The Shares to be offered and sold by the Company pursuant to the Registration Statement have been duly allotted for issuance and, upon the receipt of the consideration therefor, as applicable, will be validly issued and outstanding as fully paid and non-assessable. QUALIFICATION The foregoing opinion is subject to the qualification that we are solicitors qualified to practice law solely in the Province of Ontario and we express no opinion as to any laws or any matters governed by any laws other than the laws of the Province of Ontario and the federal laws of Canada applicable therein. We consent to the use of this opinion as an exhibit to the Registration Statement and any amendments thereto and further consent to the reference to our firm set forth under the caption "Legal Matters" in the prospectus included in the Registration Statement. Yours truly, BUSSIN & BUSSIN /s/ Mitchell A. Bussin Mitchell A. Bussin MAB/lbl encl. EX-23.3 7 d50855_ex23-3.txt CONSENT OF STEPHEN A. DIAMOND, CA Exhibit 23.3 The Board of Directors The Buck A Day Company Inc. We consent to the use of our reports included herein and to the references to our firm under the heading "Experts" in the prospectus. /s/ Stephen A. Diamond ------------------------------ Chartered Accountants [Toronto, Canada] June 12, 2002 -----END PRIVACY-ENHANCED MESSAGE-----