As filed with the Securities and Exchange Commission on ___________________,
2000
Registration No. 333-_____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
STAMPEDE WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 2711 58-2235301
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Identification No.)
Classification
Code Number)
3910 Riga Boulevard, Tampa, Florida 33619 (813) 630-2762
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
Mr. John V. Whitman, Jr., President
3910 Riga Boulevard
Tampa, Florida 33619
Telephone: (813) 630-2762 Facsimile: (813) 630-0259
(Address, including zip code, and telephone number, including area code, of
registrant's agent for service)
COPIES OF COMMUNICATIONS TO:
Jackson L. Morris, Esq.
3116 West North A Street
Tampa, Florida 33609
Telephone: (813) 874-8854 Facsimile: (813) 873-9628
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this 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
of 1933, 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 number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed
class of securities Amount to be Maximum Maximum Amount of
to be registered registered offering price per aggregate fee
share offering
price
Common Stock, 41,366,653 $.10 $4,136,665 $1,092
$.001 par value
*Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933 (the "Securities
Act"). This estimate is based upon the average of the bid and asked
quotations for the Common Stock on the OTC Bulletin Board on the day prior
to filing this Registration Statement, $.___ and $.___, respectively, as
adjusted for a share combination effective on November 22, 2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SECTION 8(a), MAY DETERMINE.
CROSS REFERENCE SHEET
This table sets forth the location in the prospectus of the information
required to be included in the prospectus in response to the items in Form
SB-2.
Item of Form SB-2 Location in Prospectus
------------------ -----------------------
Item 1. Front of registration statement Outside front cover of
prospectus
Item 2. Inside front and outside back Inside front cover and
outside cover pages of
prospectus and
Additional Information.
Item 3. Summary information Not Applicable
Item 4. Use of proceeds Use of Proceeds
Item 5. Determination of offering price Distribution of Shares
Item 6. Dilution Not applicable
Item 7. Selling security holders Selling Stockholders
Item 8. Plan of distribution Distribution of Shares
Item 9. Legal proceedings The Business-
Legal Proceedings
Item 10. Directors, executive officers, The Company, Management and
promoters and control Principal Stockholders
persons
Item 11. Security ownership of certain Principal Stockholders
beneficial owners and
management
Item 12. Description of securities Description of Securities.
Item 13. Interest of named experts and Interest of Counsel and
counsel Experts.
Item 14. Disclosure of Commission Management
position on indemnification for
Securities Act liabilities
Item 15. Organization within last The Company
five years
Item 16. Description of business The Business
Item 17. Management's discussion and Management's Discussion
analysis or plan of operation And Analysis of Results of
Operations and Financial
Condition
Item 18. Description of property The Business-
Description of Property
Item 19. Certain relationships and Certain Transactions with
related transactions Management and Others
Item 20. Market for common equity Market Price of and
and related stockholder matters Dividends on Common Stock
and Related Stockholder
Matters
Item 21. Executive compensation. Management-
Management Compensation.
Item 22. Financial statements. Financial Statements.
Item 23. Changes in and disagreements Not applicable
with accountants on accounting and
financial disclosure.
SUBJECT TO COMPLETION. PRELIMINARY PROSPECTUS DATED December 5, 2000.
STAMPEDE WORLDWIDE, INC.
1,366,653 SHARES OF COMMON STOCK OFFERED BY SELLING STOCKHOLDERS
40,000,000 SHARES OF COMMON STOCK OFFERED BY THE COMPANY
41,366,653 shares of Common Stock of Stampede Worldwide, Inc. (the
"Company") offered hereby are being offered and sold by selling stockholders
named herein ("Selling Stockholders") for their own accounts in open market
or block transactions. See "Selling Stockholders". The Company will not
receive any proceeds from the Offering made by the Selling Stockholders.
Selling Stockholders may sell Shares to or through broker-dealers and the
broker-dealers' compensation may be in the form of discounts, concessions or
commissions from the Selling Stockholders and commissions from or mark ups
charged to purchasers. The Selling Stockholders and broker-dealers effecting
sales on behalf of Selling Stockholders may be deemed to be "underwriters" as
that term is defined in the Securities Act of 1933, as amended, (the
"Securities Act"), in which event any discounts, concessions or commissions
they receive, or any profit on resales of the Shares by them, may be deemed
to be underwriting compensation under the Securities Act. The Company
believes none of the Selling Stockholders have underwriting or selling
arrangements for their Shares. See "Distribution of Shares".
40,000,000 shares of Common Stock of the Company offered hereby are being
offered and sold by the Company. The Shares offered by the Company will be
offered by the Company's officers who will not be paid any compensation
for the sale thereof. The Shares offered by the Company are expected to be
sold in negotiated transactions to investors, used to pay liabilities, used
to pay for services rendered by third parties and used in acquisitions of
other businesses. In all cases, the price at which the Company will sell the
Shares is expected to be related to the then current bid and asked quotations
for the Common Stock on the OTC Bulletin Board. There is no assurance the
Company will be able to sell any of the Shares which it is offering. See
"Distribution of Shares".
The shares of Common Stock offered by both the Selling Stockholders and by
the Company are referred to herein as "Shares" and the offering thereof as
the "Offering". The Company's Common Stock is quoted on the OTC Bulletin
Board under the trading symbol of STPW. The Company is engaged in five
related business activities, internet business solutions, IT staffing, IT
training, computer hardware and software sales and commercial printing.
AN INVESTMENT IN THE SHARES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S.
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is ________________.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This Prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sales of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
such State.
REPORTS TO SECURITY HOLDERS
The Company intends to furnish to security holders annual reports containing
audited financial statements and unaudited financial statements for each of
the first three quarters of each fiscal year. In addition, the Company may
from time to time furnish to security holders additional information about
the Company and its business as deemed appropriate by Management. The
Company is registered pursuant to Section 12(g) of the Securities Exchange
Act of 1934 and files reports with the Securities and Exchange Commission
pursuant to Section 13 of the Exchange Act.
TABLE OF CONTENTS
Page
The Company
Risk Factors
Use of Proceeds
Capitalization
Selected Financial Data
Management's Discussion and Analysis of Financial
Condition and Results of Operations
The Business
Management
Management Compensation
Certain Transactions with Management and Others
Principal Stockholders
Description of Securities
Selling Stockholders
Distribution of Shares
Market Price of and Dividends on
Common Stock and Related Stockholder Matters
Shares Available for Future Sale
Interest of Counsel
Experts
Additional Information
Index to Financial Statements
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer contained herein, and, if given or
made, such information or representations must not be relied upon as having
been authorized by the Company. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, the Shares in a jurisdiction
to any person to whom it is not lawful to make any such offer or solicitation
in such jurisdiction or in which the person making such offer or solicitation
is not qualified so to do. Neither delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create an implication that
there has been no change in the affairs of the Company since the dates as of
which information is given in this Prospectus.
Until ___________________, (40 days after the date of this Prospectus), all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may by required to deliver a Prospectus.
This requirement is in addition to the obligation of dealers to deliver a
Prospectus when acting as underwriters.
THE COMPANY
Stampede Worldwide, Inc., (the "Company") was incorporated in Georgia on
April 5, 1996, under the name of JMAR Communications, Inc., and changed its
name to Chronicle Communications, Inc., effective July 30, 1997. The Georgia
company merged into its newly incorporated, wholly owned Florida subsidiary
on February 2, 2000 for the sole purpose of changing the Company's state of
incorporation to Florida from Georgia. On April 14, 2000, the Company
changed its name to Stampede Worldwide, Inc.
The Company's founder is John V. Whitman, Jr., the Company's president and
chairman. The Company was organized for the purpose of establishing and
operating a shopper style tabloid newspaper in the Crisp County, Georgia
market area which included several contiguous counties. The Company later
expanded operations to include a second shopper style tabloid newspaper,
including community news features, serving the Grady County, Georgia market
area which included several contiguous counties. Subsequently, the Company
added a two-edition broadsheet (full sized) Sunday newspaper serving those
markets, with a full membership in the Associated Press. In February 1998,
the Company terminated publication of the Sunday newspapers. In February
1999, the Company terminated publication of all shopper style tabloid
newspapers and became a holding company with its operations located entirely
in its subsidiary companies.
The Company entered the commercial printing business with the acquisition on
September 30, 1998 of Bright Now, Inc., doing business as United Printing and
Publishing in Tampa, Florida, a company which had been in business since
1992. In the same transaction, the Company acquired Southern Paper and
Converters, Inc. which principally recycled waste newsprint since 1994. In
November 1999, Bright Now, Inc. filed a voluntary petition under Chapter 11
of the Federal Bankruptcy Code. This proceeding was converted to a Chapter 7
liquidation in February 7, 2000.
In January 1999, the Company acquired Bartow Communications, Inc., a
publisher of new-home real estate guide that is distributed in the
metropolitan District of Columbia area, including Maryland and Virginia. In
July 2000, the Company returned Bartow Communications to its previous owner.
Also in January 1999, the Company acquired RKN Enterprises, Inc., a contract
publisher of magazines sponsored by trade associations in South Florida. In
October 1999, the Company discontinued activities related to RKN Enterprises,
Inc.
In August 1999, the Company acquired Americomp Computers, Inc., in Houston,
Texas, which was a distributor of personal computers and related services,
networking, web site development and web hosting and which had operated since
1994. Americomp Computers, Inc.'s business has been transferred to Stampede
Network.com, Inc. and Spiderscape.com, Inc., wholly owned Company
subsidiaries located to Tampa. In March 2000, Stampede Network.com, Inc.
acquired the business and assets of ETA Internet Solutions, Inc., which was
engaged in development of Internet and software solutions for business
customers. The Company relocated all of its operations to its current
facility in January 2000. Since the date of its relocation, the Company's
wholly owned subsidiary, Chronicle Commercial Printing, Inc., has installed a
web press and operates a commercial printing business, including the printing
of catalogues for Spiderscape.com, Inc. In other newly formed, wholly owned
subsidiaries, the Company has initiated an information technology training
center (I-academy, Inc.) and an information technology personnel placement
service (Stampede Quest). All references herein to the Company's business
include the business of its subsidiary companies.
The Company's executive and production offices are located at 3910 Riga
Boulevard, Tampa, Florida 33619, its telephone number at that address is
(813) 630-2762 and its telephone facsimile number is (813) 630-0259. The
Company's Web site its at www.stampedeinc.com.
RISK FACTORS
Investment in the Shares involves a high degree of risk. The following risk
factors should be considered carefully in evaluating the Company, its
business, condition and prospects (financial and otherwise) before purchasing
any of the Shares. These risk factors are not necessarily exhaustive and
additional risk factors, if any, may be material or have significance to an
individual investor. Many investment opportunities involve risk factors or a
risk of loss, including the existence of the normal and extraordinary risks.
The existence of these risk factors and possibly others should not
necessarily be the sole determining factor in whether or not to purchase
Shares. All of the information in this Prospectus should be carefully
considered in connection with the risk factors described below.
This Prospectus contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 and Section 27A of the
Securities Act of 1933 and is subject to the "safe harbors" created by those
sections. These forward-looking statements are subject to significant risks
and uncertainties which may cause actual results to differ materially from
those discussed in or suggested by such forward-looking statements. The
forward-looking statements within this Prospectus are identified by words
such as "believes", "anticipates", "expects", "intends", "may", "will" and
other similar expressions regarding the Company's intent, belief and current
expectations. However, these words are not the exclusive means of
identifying such statements. In addition, any statements which refer to
expectations, projections or other characterizations of future events or
circumstances and statements made in the future tense are forward-looking
statements. Readers are cautioned that actual results may differ materially
from those forecasted in or suggested by the forward looking statements as a
result of various factors, many of which are beyond the control of the
Company. The accompanying information contained in this Prospectus, including
without limitation the information set forth under the headings "Risk
Factors", "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business", identifies important factors which
could cause or contribute to such differences. The Company undertakes no
obligation to publicly release the results of any revisions to these forward-
looking statements which may be made to reflect events or circumstances
occurring subsequent to the filing of the registration statement, of which
this Prospectus is a part, with the Securities and Exchange Commission.
Readers are urged to carefully review and consider the various disclosures
made by the Company in this Prospectus.
Risks Related To Business And Operations:
Unprofitable operating history. Since the Company began operations in April
1996, the Company has not earned a profit in any period. The Company has
incurred a $4,037,443 loss from operations for the year ended September 30,
1999, a $1,983,803 loss from operations for the nine months ended June 30,
2000 and expects to incur a loss from operations for the year ended September
30, 2000. The Company has changed the focus of its business activities
several times since inception in an effort to establish profitable
operations. There is no assurance the Company will be able to generate
sufficient revenues to become profitable in future periods or to successfully
continue its business plans. Without sufficient revenues, the Company will
be unable to create value in its equity securities which include the Shares
and to pay dividends. The Company is subject to many risks. See
"Management's Discussion and Analysis" and "Description of Business."
Limited Liquidity and Capital Resources. The Company has financed its
operations to date principally with proceeds from sales of Common Stock for
cash, services and in payment of debts, contributions of property and money
from its founder, proceeds of a bank loan (which has been repaid) and
collections of accounts receivable. The Company expects limited liquidity to
continue until the Company's operations generate a positive cash flow, of
which there is no assurance. The Company plans to sell additional Shares of
its Common Stock pursuant to this Prospectus in order to provide capital
needed to continue and expand its operations; but, there is no assurance
additional Common Stock can be sold or that any other financing will be
available in the amount needed for these purposes or, if it is available,
that the terms thereof will be acceptable to the Company. The Company will
not receive any of the proceeds from the sale of the Shares by the Selling
Stockholders.
Dependence on key personnel. The Company is significantly dependent upon the
knowledge, efforts and abilities of John V. Whitman, Jr., its founder,
chairman and president, with respect to the conduct of its current operations
and implementation of the Company's plan to improve its sale performance and
to achieve profitability, of which there is no assurance. The Company is
dependent upon Mr. Whitman because of his extensive involvement with the
development of the Company's business. The Company's dependence on Mr.
Whitman is particularly important during the period prior to the Company
reaching a level of operations at which it has the financial ability to
attract and retain executive officers at market rates of compensation and
benefits who are not founders and major stockholders of the Company. The
termination of employment by Mr. Whitman for any reason while these
circumstances continue could be expected to have a materially adverse effect
on the Company because the Company may not be able to find a replacement for
Mr. Whitman who has his level of dedication to the Company, except for a
person who would require a salary and benefits package which at the present
time would exceed the Company's financial resources. Mr. Whitman does not
have an employment agreement with the Company, but is the Company's single
largest stockholder and the Company's board of directors has unanimously
approved a five year employment agreement for Mr. Whitman which is planned to
be prepared in writing in the near future. The Company is depending upon Mr.
Whitman as the Company's founder and major stockholder for his dedication,
commitment and financial interest in the Company as a basis for his
continuing employment with the Company, regardless of its financial condition
at any particular time and the existence of a written employment agreement.
Risks associated with information technology and Internet businesses. There
is no assurance the Company will be able to successfully establish and expand
its Internet solutions, computer and software sales over the Internet and by
catalog and information technology training and personnel placement
businesses. This risk is associated in part with availability of capital or
revenues to fund the costs of such expansion and to some extent with the
Company's ability to identify and employ sales personnel who are capable of
carrying out the Company's marketing plan under the direction of management.
The Company's computer and software sales over the Internet are dependent to
some degree upon the developing viability of the Internet as a sales channel.
Competition. All of the Company's commercial printing business, Internet
solutions business, computer and software sales business and information
technology training businesses compete against better established, larger and
more financially stable enterprises. There is no assurance the Company will
be able to compete successfully in its business segments.
Lack of dividends. The Company has not declared or paid dividends on its
Common Stock, which includes the Shares, and may elect to retain all or most
of its net profits, if any, in the foreseeable future to provide operating
capital and funding for reinvestment in the Company's business. The
Company cannot predict if or when it will have current and retained earnings
or surplus from which to declare and pay dividends. There is no
assurance as to if or when the Board of Directors will declare a dividend on
the Common Stock, which includes the Shares.
Voting control by management stockholders. Mr. Whitman, who is a director
and an executive officer of the Company, owns individually and jointly with
his wife an aggregate of 789,194 shares of the Company's Common Stock ( none
of which are included for sale pursuant to this Prospectus). In addition,
Mr. Whitman holds Common Stock Purchase Options for 3,549,844 shares of
Common Stock, this represents approximately 17 percent of the total issued
and outstanding shares at the date of the prospectus. The shares of stock
and options represent approximately 6 percent of the voting stock
outstanding, assuming the sale of all 40,000,000 being offer by the Company
under this Prospectus, and the conversion of preferred stock into 1,366,653
shares of common. In addition, Jackson L. Morris, a director, secretary and
general counsel of the Company owns Shares and Common Stock Purchase Options
for 5.0 percent before the offering made hereby and 1.7 percent, assuming the
Company sells all 40,000,000 shares offered hereby. See, "Management
Compensation-Common Stock Purchase Options" and "Principal Stockholders".
Each issued and outstanding share of the Common Stock is entitled to one vote
on each nominee for a directorship. The Company's Articles of Incorporation
do not authorize cumulative voting for the election of directors. Any person
who controls or can obtain more than fifty percent of the votes cast for the
election of each director will control the election of all directors.
Accordingly, it is likely the stockholders who are also the directors and
management of the Company hold a sufficient number of votes to elect all of
the directors of the Company and other stockholders will not be able to elect
any directors, unless substantially all of the 40,000,000 shares offered
hereby are sold.
Risks Related To The Offering:
Uncertainty as to sales of Shares. There is no assurance as to the number of
Shares which the Company may sell, or the net proceeds available to the
Company to be applied to the Company's business.
Volatility of Stock Price. The public market price of the Company's Common
Stock has been volatile. Furthermore, the Company's Common Stock is quoted
on the OTC Bulletin Board, instead of the NASDAQ Small Cap Market or a
national securities exchange. That quotation medium is believed to have an
adverse impact on the interest of some securities brokerage firms and of
public investors for the securities quoted there.
Possible negative effect of Common Stock available for future sale.
1,313,775 shares of the Company's Common Stock owned by "affiliates", as
defined in Rule 144 under the Securities Act of 1933, are not registered for
sale by such affiliates under that Act and are subject to the restrictions
and limitations provided by that rule. 281,775 of these shares have been
owned for more than two years and 856,000 of these shares have been owned for
more than one year, but less than two years. An additional 176,000 shares
have been owned by the Company's affiliates for less than one year and the
affiliates have Common Stock Purchase Options covering an additional
4,268,250 shares. The 856,000 shares held for more than one year are
eligible for sale by each such holder pursuant to and subject to the
requirements of Rule 144. Under the rule, affiliates may sell a limited
number of shares during each three month period pursuant to the requirements
of Rule 144 or affiliates may sell larger numbers of shares if registered
under that Act. The offer of a significant number of such shares of Common
Stock by affiliates in the future in the public trading market at or about
the same time pursuant to Rule 144 or pursuant to a subsequent registration
statement under that Act could have a depressive effect on the public market
price of the Shares.
Trading limitations on stock at a market price of less than $5 per share.
The quotations for the Company's Common Stock on the OTC Bulletin Board have
been less than $5 per share at all time since the Common Stock first began
trading in August 1998. Management cannot predict the market price of the
Common Stock in the public securities market at any time in the future. At
any time the quoted bid price is less than $5 per Share, certain larger stock
brokerage firms may prohibit purchase or sale of the Company's Common Stock
in their customers' accounts. All securities brokerage firms effecting
purchase orders for new clients in the Shares at a time when the Shares have
a market bid price of less than $5 per share are required by federal law to
send a standardized notice to such new clients regarding the risks of
investing in "penny stocks", to provide additional bid, asked, broker
compensation and other information to the new customer, to make a written
determination that the Shares are a suitable investment for the new client
and to receive the new client's written agreement to the transaction, unless
the client is an established client of the firm, prior to effecting a
transaction for the client. Although the Company has enjoyed an active
public trading market for its Common Stock, these business practices may
inhibit that market for the Common Stock at some point in the future
during periods that the price is less than $5 by both limiting the number of
brokerage firms which may participate in the market and increasing the
difficulty in selling the Common Stock to new investors. Management cannot
predict if or when the Company will qualify to have its Common Stock traded
on NASDAQ or a national securities exchange, which would, if admitted to
trading in any such market, exempt transactions in the Common Stock,
regardless of the market price, from the procedures and safeguards mandated
by the "penny stock" regulations summarized above.
USE OF PROCEEDS
There is no assurance as to if or when the Company may receive net proceeds
from the sale of the 40,000,000 Shares offered by the Company by this
Prospectus. Furthermore, the price or prices at which the Company sells the
Shares, if any are sold, cannot be predicted; nor, can the Company predict
the specific uses and needs it may have for the net proceeds at the time of
such sale or sales. Accordingly, the Company cannot predict either the total
amount of the actual net proceeds, if or when they may be received or how
they may be used. In general, the Company anticipates using the net proceeds
for working capital and to expand its business through increased marketing
and advertising, to pay outstanding liabilities and to pay the fee for its
"Pewter Partnership" with the Tampa Bay Buccaneers professional football
team. The Company may use a portion of the Shares offered by the Company
pursuant to this Prospectus to pay liabilities and purchase services and
acquire other businesses.
CAPITALIZATION
The following table sets forth the capitalization of the Company at June
30, 2000. This table should be reviewed in conjunction with the financial
statements of the Company and the notes thereto included elsewhere in this
Prospectus. Effective November 22, 2000, the Company effected a share
combination in which each issued and outstanding share became one-fifth of
one share, without changing the par value or the total number of authorized
shares.
At June 30, 2000
Long term debt, net of current maturities: $ 2,563,094
Equity:
Common stock, $.001 par value, 100,000,000 shares authorized
14,265,162 shares issued* 14,265
Paid-in Capital 12,629,550
Accumulated earnings (deficit) (9,697,831)
Total stockholders' equity 2,945,984
Total capitalization 5,509,078
*Adjusted for share combination of one for five on November 22, 2000
Subsequent to June 30, 2000, through November 22, 2000, the Company has
issued an additional 5,734,653 shares, as adjusted for the share combination.
SELECTED FINANCIAL DATA
The following table presents selected financial data at the dates and for the
periods indicated. The table should be read in conjunction with the
financial
statements and notes thereto included elsewhere in this Prospectus.
Statement
of Operations Data:
For the Nine Months
ended June 30,
2000 1999
Sales $ 1,409,101 $ 1,427,138
Cost of sales 912,875 1,434,454
Gross profit 496,226 ( 7,316)
Operating expenses 3,777,969 2,207,940
Net loss $(1,983,803) $(2,215,256)
Loss per
common share*: $( 0.24) $( 1.27)
Weighted
average common
shares
outstanding*: 8,266,457 1,740,393
* Adjusted for share combination of one for five on November 22, 2000
Balance Sheet Data:
At June 30, At September 30,
2000 1999
Working capital $( 45,355) $(4,131,033)
Total assets 6,489,807 $ 2,773,355
Long-term obligations,
less current portion $ 2,563,094 $ 192,000
Total stockholders' equity $ 2,945,984 $(1,888,126)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
For the years ended September 30, 1999 and 1998:
The Company completed the acquisition of AmeriComp Computers, Inc. of
Houston, TX, on August 19, 1999. The acquisition of AmeriComp Computers,
Inc. has been treated as a "purchase" under generally accepted accounting
principles. The year ended September 30, 1999, on a consolidated basis
represented forty-two calendar days of the Company operating AmeriComp
Computers, Inc. as a subsidiary. The Company completed an acquisition of
Bright Now, Inc. and Southern Paper and Converters Inc. on September 30,
1998. This acquisition of the two related companies was treated as a
"pooling" under generally accepted accounting principles. As a result of the
pooling, the operations of the parent company only and the acquired
subsidiaries have been consolidated for the fiscal years ended September 30,
1999 and 1998. At September 30, 1999 and 1998, the Company, on both a parent
only and consolidated basis, and its subsidiaries, considered individually,
were technically insolvent. The Company operated a commercial web-offset
printing business located in Tampa, Florida and during part of the reported
periods was the publisher of two free weekly shopper-style tabloid
newspapers, and a two edition Sunday newspaper and a real estate publication
in the Maryland area and was a contract publisher of trade magazines. The
Company's revenues were generated through sales of commercial printing
services, sales of display advertising in its own publications, sales of
classified advertising and sales of recycled newsprint to the packaging and
shipping industry, and the sales of computer parts and accessories.
In November 1999, the Bright Now, Inc. subsidiary filed for protection under
Chapter 11 of the Federal Bankruptcy Code. This proceeding was converted to a
Chapter 7 Liquidation during the month of February, 2000.
The Company's operating activity for the year ended September 30, 1999
reflect seventeen weeks of The South Georgia Chronicle - Thomas County
Edition. The Company operated its commercial printing plant and its paper
recycling business for the entire 1999 fiscal year, Bartow Communications
New Homes Register for nine full months, Nicholson Enterprises for nine full
months and AmeriComp Computers for forty-two calendar days. The Company's
operating activity for the year ended September 30, 1998 reflects one full
year of operations with the South Georgia Chronicle, both the Grady and Crisp
County Editions, shopper style tabloid newspapers, and a full year of
operations from it's commercial printing plant and it's paper recycling
business.
The Company incurred operating losses of $3,967,079 and $1,813,577 for the
years ended September 30, 1999 and 1998, respectively. At September 30, 1999
current liabilities exceeded current assets by $4,131,033 and the Company was
in default on substantially all its debts. Additionally, major vendors had
placed the Company on a COD basis for purchases.
The Company had a slight growth in revenue for the 1999 fiscal year compared
to the 1998 fiscal year of approximately 10% or $186,474. Gross profit for
the same period rose to $229,923 for the 1999 fiscal year compared to 1998
fiscal year of $57,005 or a improvement of 9% when compared to revenues for
the reported periods.
The Company experienced an increase in general and administrative expenses
for the 1999 fiscal year compared to the 1998 fiscal year of $2,366,640. The
increase is largely related to stock compensation to officers of $1,049,492,
stock compensation to others of $308,798, consulting expenses of $599,275,
legal expenses of $166,416 and accounting expenses of $130,834.
Limited liquidity and financial resources:
During the 1999 and 1998 fiscal years, the Company funded much of its working
capital needs through the sale of its common stock. Approximately $2,190,000
in capital was raised in connection with these stock sales. The Company's
continued ability to operate is dependent on its ability to either refinance
its existing debt or raise additional capital.
The Company's working capital position declined by $1,306,385 at September
30, 1999. This condition is the result of an increase in total current
liabilities by $1,462,856 partially as a result of defaults on long-term
liabilities of its Bright Now, Inc. subsidiary. The Company experienced an
increase from period to period in current maturities of long-term debt by
$188,891. Accounts payable increased by $500,886. Accrued payroll liabilities
increased by $207,264 and other accrued liabilities by $520,834.
The Company had limited liquidity as a result of negative cash flows during
the reported periods and its liquidity was limited to the sale of common
stock, collections of accounts receivable and generation of additional
accounts receivable, primarily from sales of commercial display advertising
in its products and revenues generated from the commercial web printing
business. The Company's management believes the Company can improve its
gross margins by expanding operations and increasing revenues, thereby
spreading fixed costs over a broader revenue base.
The Company's operating activity for the twelve months ended September 30,
1999 reflect twenty-six editions of New Homes Register, eight editions of
Business Builder, eight editions of Bonded Builder News. The Company
operated its commercial printing plant and its paper recycling business for
the entire twelve months, and AmeriComp Computers, Inc. for forty-two
calender days. The Company's operating activity for the twelve months ended
September 30, 1998, reflect fifty-two weeks of the South Georgia Chronicle
Thomas County Edition, thirty-nine weeks of the South Georgia Chronicle Crisp
County Edition, and fifty-two weeks of its commercial printing plant and its
paper recycling business.
The losses for the twelve months ended September 30, 1999, were directly
related to commercial printing jobs dropped at the Company's printing
facility that did not meet the Company's minimum profit standards and
seasonal downturn in the commercial printing business. Additionally, the
Company suffered revenue losses as a result of no working capital, vendors
declining credit terms and requiring payment on delivery, and further
deterioration of printing equipment resulting in loss of customer base.
The Company showed a decrease in cost of good sold for the twelve months
ended September 30, 1999, over the same period in 1998. Cost of sales as a
percent of revenue was 88.1% for the twelve months ended September 30, 1999,
verses 96.7% for the same twelve months ended 1998, which represents an
almost 10.0% decline in cost of sales.
The Company's management believes if it had been better capitalized during
the period it could have offset the losses by making capital equipment
purchases and repairs that would be expected to have improved efficiency and
increased its commercial printing revenues.
For the nine months ended June 30, 2000 and 1999:
During the nine months ended June 30, 2000 and 1999, the Company's
activities were conducted primarily in its subsidiaries. During the
nine months ended June 30, 2000, the Company's subsidiaries and their
respective businesses were as follows:
Chronicle Commercial Printing, Inc. - commercial web offset printing
Stampede Network.com, Inc. - web design and hosting, and proprietary
database programming
Spiderscape.com, Inc. - Internet and catalog based computer hardware
and software retailing
Bartow Communications, Inc. - publisher of new homes real estate
guides in Metropolitan Washington, DC, which was returned to the
original owner in July 2000.
During the nine ended June 30, 1999, the Company's subsidiaries and
their respective businesses were as follows:
Bright Now, Inc. - commercial web offset printing
Bartow Communications, Inc. - publisher of new homes real estate
guides in Metropolitan Washington, DC
Additionally, the Company acted as a contract publisher of trade
association magazines in South Florida.
Financial results:
The Company greatly improved its financial position as of June 30, 2000 in
contrast to its financial position at September 30,1999. Current assets
increased by $596,926 and current liabilities decreased by $3,488,752 for
the report dates. The cash balance increased by $120,008 and the accounts
payable and accrued liabilities balances decreased by $2,245,443 as of the
aforementioned dates. Furthermore, bank overdrafts were eliminated.
Stockholders' equity has increased by $4,834,110 from a deficit of
$(1,888,126) at September 30, 1999 to a balance of $2,945,984 at June 30,
2000.
Overall, the balance sheet has increased by $3,716,452 from total assets of
$2,773,355 at September 30, 1999 to $6,489,807 at June 30, 2000.
For the nine months ended June 30, 2000 in contrast with the same period of
1999 revenues decreased by only $18,037 or 1.3%. The reduction in revenues
may be attributed to the downtime for the installation of the new press for
Chronicle Commercial Printing, and the elimination of the retail portion of
Americomp Computers. Management was able to decrease the cost of sales by
$521,579, for the nine months periods ended June 30, 2000 versus 1999.
Additionally, the gross profit margin improved to 35.2% for the nine months
periods ended June 30, 2000 in contrast to negative 0.5% for the same periods
in 1999.
Net loss per common share, basic decreased by $1.05* to $(0.24)* for the nine
months ended June 30, 2000 versus ($1.27)* for the same period of 1999.
On a quarter to quarter basis, revenues increased by $160,421 or 46.5% for the
quarter ended June 30, 2000 in comparison with the quarter ended March 31,
2000. Cost of sales decreased to 42.0% from 85.7% and gross profit increased
by $243,519 for the same quarter to quarter comparison. Additionally, to
consider the impact of the increase in weighted average shares outstanding at
June 30, 2000 on the net loss per share, the June 30, 1999 weighted average
shares outstanding is applied to the nine months loss at June 30, 2000. This
results in a net loss per share of $(1.15)* and a decrease in the net loss per
share of $0.10* for the nine months periods ended June 30, 2000.
During the current quarter the Company's management has vigorously been
eliminating and rectifying ongoing operational and administrative matters
to more effectively continue with its ongoing efforts to strengthen and
ultimately bring profitability to the Company and its shareholders. These
efforts have included significant reduction of payables, resolution of
litigation and employment contracts, and refocusing on core business
objectives. To this end, in January 2000 the Company moved into a 32,000
square foot facility that can comfortably house all operations. The new state
of the art FAST-300 press (cost - $709,000) was installed in February 2000.
In March the Company acquired the assets and talent of ETA Internet Solutions,
Inc. to establish Stampede Network.com, Inc. Also, in March 2000 the Company
redeployed the assets of Houston based Americomp Computers to Tampa to begin
the creation of Spiderscape.com, Inc. On April 5, 2000 the Company purchased
its new Tampa facility for $2,250,000 with better than market seller financing
and no mortgage payments required before the first quarter of next fiscal
year. Effective July 21, 2000, the Company discontinued activities
with Bartow Communications, Inc. In August 2000 the Company completed
construction of a three classroom-training center located within its corporate
facility to be used for instruction of proprietary software programs. The
name of the training center is "i-Academy". Additionally, Stampede
Network.com has begun offering staffing solutions of IT professionals to
clients on a temporary to permanent basis. September will bring the launch of
our Spiderscape subsidiary with its on-line and catalog sales of computer
hardware and software.
*Adjusted for share combination of one for five on November 22, 2000.
Liquidity and capital resources:
During the nine months ended June 30, 2000 and 1999, the Company funded much
of its working capital needs through the sale of its common stock.
The Company's working capital ratio was positive as of June 30, 2000 and
has continued to remain in that position through the date of this filing.
Working capital at June 30, 2000 increased by $4,085,678 from working capital
at September 30, 1999. The Company's current ratio at June 30, 2000 was a
positive 1.0:1.0 ratio in sharp contrast to the negative current ratio of
1.0:13.2 at September 30, 1999.
In December 1999, the Company acquired its current facility. In January 2000,
the Company acquired its web press. See "Business-Facilities and Personnel".
These acquisitions increased the Company's assets by $2,945,000. The combined
financing payments on this property and equipment are $17,089 per month.
THE BUSINESS
The Company, through its subsidiaries hosts a network of services including
e-business solutions, hardware and software productivity solutions, custom IT
training, premium technology staffing, and dynamic commercial printing
expertise. The Company focuses on client's information technology investment
and through new programming tools and Internet technology, provides rapid
program development for both traditional business information solutions such
as Human resource management and new Internet market driven electronic
commerce, corporate intranets and supplier/customer extranets. The Company's
value proposition is directed toward client's total costs associated with
planning and designing enterprise resources, providing the hardware,
software, staffing and training to maximize their return on information
technology investments. The Company, through its "Pewter Partnership" with
the Tampa Bay Buccaneers, a National Football League team, and has been named
the exclusive Web development firm for that organization. The Company has
two service centers for its subsidiaries. Stampede Worldwide, Inc. provides
and maintains Management Information Systems (MIS) and network administration
to its subsidiaries. The Company's MIS department also provides network-
consulting services through Stampede Network.com to its clients. Stampede
Worldwide, Inc. aggregates the clerical and administrative needs of its
subsidiaries and fulfils those needs from the parent company level.
Internet and software solutions:
The Company, through its Stampede Network.com subsidiary, provides a full
range of Internet solutions, including creation, planning and design of Web
sites, intranets, extranets and Web enabled application software for
customers. The Company's services enable its customers to more effectively
utilize the Internet in their communications, marketing and sales. The
Company is a Microsoft Certified Solution Provider. The Company account
representative sales staff identifies the client's total information
technology needs including staffing, training, hardware and packaged software
needs and custom application development. The Company's programming staff is
primarily involved with custom application development.
Computer equipment, software and peripheral equipment sales-
The Company through its subsidiary, Spiderscape.com is a vendor of a full
line of computer hardware, software, network products and peripheral
equipment. The Company operates an e-commerce Web site at Spiderscape.com at
which it offers approximately 150,000 different products. The Company also
publishes and distributes an eighty-four-page catalog which is mailed to
selected lists. Spiderscape.com went on line on October 18, 2000 and the
first mailing of the catalog began November 1, 2000. The first catalog has
been and will be mailed to over 122,000 addresses. Orders received over the
Internet or through the Company's telephone service center are automatically
directed to the Company's strategic partners, Tech Data Corp. and Ingram
Micro, Inc., for fulfillment. The Company's sales are paid almost
exclusively by credit card and are shipped with the Company's labeling and
packing list by the Company's strategic partners. Spiderscape provides the
hardware and packaged software products for the Company's direct sales
efforts. Essentially providing the Company's account representative with in-
house customer service representative for their client's hardware/software
order. The Company believes data base driven e-commerce web-sites, such as
Spiderscape.com and the Company's clients will benefit from automatic layout
technology for hardcopy catalog creation. Spiderscape.com is providing the
Company with the platform to test and perfect its method for automatic
layout.
Information technology training-
The Company offers technical computer and software training through its
Stampede I-Academy subsidiary. The Company operates a web site at www.i-
Academy.com. The Company's clients include individuals, school boards and
commercial businesses. The Company provides K-12 teacher training and
continuing education to information technology professionals. The Company's
classes are offered in five broad areas, including both Windows and MacIntosh
platforms. These areas are network management, technical support, digital
imaging, video and graphics and technology and educational training in
applications software. The Company's network management courses cover
Microsoft, Cisco, Apple, Citrix, Linux, Novell, Hewlett Packard, 3Com, Nortel
and Compaq. The Company's technical support courses cover CompTia's A+ and
Network+, Windows Operating Systems and PC assembly. The Company's digital
imaging courses cover Adobe programs, Quark Xpress, Macromedia Director,
FireWorks and Freehand, Java Script, Shock Wave, HyperStudio, Movie Works,
Corel Draw and Paint and Extension Suitcase. The Company's video and
graphics courses cover Final Cut Pro, Adobe products, Quark Xpress, HTML,
Macromedia Director Shockwave Studio, Fireworks and Flash, Java Script and
Shockwave. The Company's technology and education courses cover Microsoft
Office Suite, WebQuest, network administration, technology in the primary and
secondary classroom, trouble shooting, video editing and multimedia
production. Nearly all the Company's Stampede Network.com client's have
training needs, the Company's i-Academy students are potential purchasers of
Spiderscape.com's merchandise as well as potential staff placements for
Stampede Quest.
Information technology personnel placement-
The Company, through Stampede Quest, provides employment placement services
for information technology professionals. Services are provided for both
full time and contract employment opportunities. The Company confirms the
technical proficiencies claimed by its placement candidates before they are
referred to clients. Stampede Quest operates a web site at
www.stampedequest.com that lists open job positions. Stampede Quest provides
career placement functions for Stampede I-Academy students. Stampede
Network.com clients often require contract placements for major initiatives
as well as permanent network administrators and programmers whom all need
reoccurring training.
Commercial printing-
The Company provides complete commercial web press printing services through
Chronicle Commercial Printing, Inc. Chronicle Commercial Printing operates a
web-site at www.chronicleinc.com. While this line of business was originally
a result of the Company's commercial printing business through an acquired
subsidiary, the Company's commercial printing capabilities enhance its e-
commerce activities by enabling the Company to produce its printed catalogues
at minimum cost. The Company is able to offer catalog printing services to
its Web solutions clients, complimenting with traditional media the client's
e-commerce initiatives. The Company also prints tabloid newspapers, such as
La Gazetta, the nation's oldest trilingual newspaper, newspaper inserts and
other newsprint products.
COMPETITION-
Each of the Company's lines of business is in a highly competitive market,
characterized by many participants, both large and small. Some of these
competitors have regional and national presence. Price, quality of service
and timely delivery are features of this competition in all areas. Many of
the Company's competitors, regardless of business line, are better
established, much larger and more financially sound than the Company.
FACILITIES AND PERSONNEL-
The Company owns a 32,000 sq ft office and light industrial building located
on 5.25 acres in Tampa, Florida. All of the Company's operations are located
at this facility. The Company believes that the facility is adequate for
current operations and growth in the foreseeable future. The property is
subject to a seller-financed mortgage.
The Company has installed eight Compaq servers performing the following
functions for the Company: Primary and secondary domain control, email
service, development, test and live Internet platforms, sufficient switching
and routing equipment, supporting a Windows NT operating system. The Company
has a written disaster recovery plan, including ample uninterruptible power
supplies and tape backup. The Company has 50 Compaq Ipax work stations on a
10/100 Ethernet local area network. The Company has three T-1 data
connections for sufficient and redundant Internet connectivity.
The Company has a state-of-the-art training center including two classrooms
with fourteen Pentium III 600 mhz work stations and one classroom with nine
MacIntosh dual processor G-4 work stations.
The Company's new printing press is manufactured by the Raghbeer Company.
The press is a model FAST-300 and includes eight printing units, six roll
stands and a folder. Other improvements to the press room are a six pocket
stitcher/trimmer, several cutters, forklifts, ink pump systems and an online
counter/stacker. The press has the capability of printing a ninety-six page,
8.5X11 glued book with thirty-two pages of process color in a single pass.
The FAST-300 is very similar in configuration and operation to a Goss
Community printing press. The Company has a complete pre-press facility,
including disk to film capability.
The Company employees a total of 58 individuals across all operating
divisions of which all 58 are considered full-time employees.
LEGAL PROCEEDINGS-
Larry S. Hyman vs. Chronicle Communication, Inc., Case No. 98-5547 CI 7 in
the Pinellas County, Florida Circuit Court. This action is for breach of
contract in the acquisition of a printing plant and seeks $739,371.70 in
damages. Plaintiff's motion for summary judgment has been denied. The
Company believes it has substantial defenses to this claim and is vigorously
defending.
Patken Leasing Company, Inc. vs. Chronicle Communications, Inc., Case No.
99014163 in the Dade County, Florida Circuit Court. This action seeks
recovery of approximately $108,000 for sums advanced to Bright Now, Inc., a
former subsidiary of the Company that was liquidated in bankruptcy. The
Company believes it has substantial defenses to this claim and is vigorously
defending.
MANAGEMENT
The names, ages and terms of office of directors and executive officers of
the
Company are set forth in the following table:
Name Age All positions with Company Director
since
---------------------------------------------------------------------------
James W. Boggs 60 Director 2000
Winston D. Carlee, Jr. 38 Chief Financial Officer n/a
Donald D. Clark 41 Director 2000
Sally I. McFolling 47 Director 2000
Jackson L. Morris 56 Director, General Counsel
and Secretary 1996
David E. Salmon 37 Chief Operating Officer n/a
John V. Whitman, Jr. 42 Director and President 1996
Each director is elected by holders of a majority of the Common Stock to
serve for a term of one year and until his or her successor is elected and
qualified, which is generally at the next annual meeting of stockholders.
Non-management directors are paid a cash fee of $500 per meeting and $150 per
hour for time devoted to the Company's business outside of directors'
meetings, including committee meetings. Directors also are issued 20,000
shares of common stock per year as additional compensation for services,
which are subject to surrender pro rata for services of less than a year.
See "Common Stock Purchase Options". Officers serve at the will of the
board. The Company may indemnify directors and officers against damages
which qualify, in the opinion of the disinterested members of the board, for
indemnification under Florida law and the Company's Bylaws. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers or persons controlling the Company
pursuant to Florida law, the Company has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
James W. Boggs has been a director of the Company since September 2000. He
is a member of the Audit Committee. For the past fifteen years, Mr. Boggs
has owned and operated Swiss Chalet Travel Agency & Gift Shop and the Tampa
Bay Visitors Information Center, both in Tampa, Florida. Mr. Boggs has
served as president of several chambers of commerce and a director of the
Florida Jaycees.
Winston D. Carlee, Jr., has been the Company's Chief Financial Officer
beginning November 2000. Mr. Carlee is a certified public accountant with
experience in auditing. From June 2000 to the time of joining the Company,
Mr. Carlee was employed by Pender Newkirk & Company, Tampa, Florida as an
audit manager. From December 1998 to June 2000, he was employed by KGMP
Consulting in their New York City Office, as a financial systems consultant
in the state and local government sector. From November 1989 to December
1998, Mr. Carlee was employed in auditing at the Company's independent
auditor, Bella, Hermida, Gillman, Hancock & Mueller, certified public
accountants. Mr. Carlee earned a B.A. degree (1987) in accounting from the
University of West Florida.
Donald D. Clark, has been a director of the Company since September 2000. He
is a member of the Audit Committee. Mr. Clark has practiced law for more
than the past five years. He is presently employed by Brown Clark, attorneys
in Sarasota, Florida, of which he is a founding member. Brown Clark employs
10 attorneys. Mr. Clark practice includes construction, surety, lien,
commercial, condominium and condemnation law. Mr. Clark is a member of the
Florida Bar and is admitted to practice U.S. District Court for the Middle
District of Florida and the Eleventh Circuit Court of Appeals. Mr. Clark
earned a B.S. degree (1981) in finance from the University of Florida and a
Juris Doctor degree (1985) from Mercer University School of Law in Macon,
Georgia.
Sally I. McFolling has been a director of the Company since September 2000.
She is a member of the Audit Committee. Ms. McFolling is the Tampa Division
President of David Weekly Homes. She joined the David Weekly Homes
organization in 1994, serving as its Orlando Sales Consultant and later as
Sales Coach/Manager for Florida markets. She earned a B.S. degree (1975)in
biology from Wesleyan College in Macon, Georgia.
Jackson L. Morris, Esq., a director and general counsel of the Company since
inception and corporate secretary since August 23, 1998, is an attorney in
private practice since 1975. Mr. Morris' law practice is primarily in the
areas of general corporate, securities and contract law. Mr. Morris is a
member of The Florida Bar, The State Bar of Georgia (inactive) and The
District of Columbia Bar. He is admitted to practice before the United
States Tax Court and Supreme Court of the United States of America. Mr.
Morris earned a B.A. degree in economics (1966) and a Juris Doctor degree
(1969) from the Emory University in Atlanta, Georgia and a L.L.M. degree in
federal taxation (1974) from Georgetown University Law Center. The U.S.
Securities and Exchange Commission has brought a civil suit against Mr.
Morris and others alleging that he sold 50,000 shares common stock in
violation of the registration requirements of the Securities Act. Mr. Morris
received the shares as compensation for services rendered in connection with
a shell company reverse merger and pursuant to a legal opinion that the
shares were not restricted. The suit seeks an injunction and penalty against
Mr. Morris.
David E. Salmon, has been the Chief Operating Officer and Investor Relations
Officer of the Company since November 1, 1999. Mr. Salmon previously served
as Investor Relation Manager with the Company during 1998 and early 1999.
Mr. Salmon has served in various roles with public companies since 1992. Mr.
Salmon is a member of the National Investor Relations Institute.
John V. Whitman, Jr., is the founder, director and president of the Company
since inception. In February and March 1996, Mr. Whitman was planning for a
business which became the Company. From September 1, 1995 into February
1996, Mr. Whitman was the President of Southwest Georgia Shoppers, Inc., a
subsidiary of Gray Communications Systems, Inc., a New York Stock Exchange
listed company, (trading symbol GCS) which had purchased the assets of
Phillips Publishing, Inc. owner of the Tallahassee Advertiser, The Add Sheet,
The South Georgia News and Shopper and The Gadsden News and Shopper. During
his brief tenure with Southwest Georgia Shoppers, Inc., Mr. Whitman was
assigned the additional responsibilities of president of the Rockdale Citizen
Publishing Company, the owner of the Gwinnett Daily Post and The Rockdale
Citizen. Mr. Whitman was the vice president and publisher of Phillips
Publishing, Inc. from October 1992 to August 1995. Mr. Whitman founded The
South Georgia News and Shopper and The Gadsden News and Shopper for Phillips
Publishing, Inc. Mr. Whitman managed thirty-eight full time and forty-three
part time employees and exercised full management and financial
responsibility for Phillips Publishing, Inc.'s operations. He also served as
a consultant and motivational speaker to other Phillips publishing divisions.
For seven months in 1992, Mr. Whitman was employed by Southeast Publishing
Ventures in the capacity of District Manager, in which he launched a new
housing guide for the Treasure Coast of Florida and turned around a new
housing guide for the Orlando, Florida market. In 1991 and 1992, Mr. Whitman
was engaged in consulting in the publishing industry and efforts to acquire a
print media company for his own account. Mr. Whitman attended Hillsborough
Community College and the University of South Florida.
Management Compensation
The following table sets forth the compensation paid during the three fiscal
years ended September 30, 1999 to Mr. Whitman, as the Company's chief
executive officer. Mr. Salmon is included in the table because they are
executive officers paid more than $100,000 following the end of the last
fiscal period.
Fiscal Securities
Name Year Salary Bonus underlying options
--------------------- ------ -------- ----------- ------------------
John V. Whitman, Jr. 1997 $ 99,400 none 0* (2)
Chairman of the 1998 $125,000 none 18,912* (2)
Board and President 1999 $175,000(1) none 206,691* (2)
David E. Salmon 2000 $100,000 $225,000 (3)
Chief Operating
Officer
(1) Mr. Whitman's salary includes $105,000 in cash salary and a $70,000
reduction in Receivable due from Shareholder.
(2) The Company granted an evergreen option to Mr. Whitman in May 1998 which
enabled Mr. Whitman to maintain approximately 21.805 percent of the Company's
stock at all times, subject to exercise of the option from time to time. The
exercise price during the respective years following date of grant is a
percentage of the average bid and asked quotation (or closing price) on
the day prior to exercise, as follows: twelve months beginning May 1998 -
20%; second twelve months - 30%; third twelve months - 40%; and, thereafter -
50%. Mr. Whitman agreed to termination of this option on September 30, 2000
with respect to any shares to which it might entitle him after the
termination date. At September 30, 2000, the maximum number of shares Mr.
Whitman is entitled to purchase under the options is 709,969*. Mr. Whitman
has exercised the options during the twelve months beginning October 1, 1999
and during the interim period since that date to the date of this Prospectus,
as follows:
(a) 649,016* shares of common stock on January 28, 2000, at an exercise price
of $.60* per share and with a fair market value at the time of exercise of
$1.13.
(b) 206,691* shares of common stock on October 15, 1999 at an exercise price
of $.57 per share and with a fair market value at the time of exercise of
$1.90.
(3) Mr. Salmon was granted a bonus of 200,000* shares of the Company's
common stock. The bonus is valued at fair market value at the date of grant.
*Adjusted for share combination of one for five on November 22, 2000.
CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company makes advances to and receives advances from Mr. Whitman its
President and Chief Executive Officer in the normal course of business. The
amount of these advances due to the Company approximates $1,035,153 and
$606,308 at June 30, 2000 and September 30, 1999, respectively.
On January 28, 2000, the Company issued 200,000* shares of its common stock
to David E. Salmon, the Company's Chief Operating Officer, as a bonus. The
Company expects to continue to award common stock bonuses to Mr. Salmon in
lieu of salary increases until such time as the Company is in a position to
pay a salary commensurate with the position responsibilities and
expectations.
Mr. Morris exercised his options for 113,683* shares of common stock on
January 28, 2000, at an exercise price of $.60* per share and with a fair
market value at the time of exercise of $1.20. On October 15, 1999, he
exercised his options for 74,582* shares of common stock at an exercise price
of $.95 and with a fair market value at the time of exercise of $1.90. Mr.
Morris was granted options in August 1998 which entitled him to maintain five
percent of the Company's issued and outstanding commons stock at any time.
The exercise price is one half of the average bid and asked quotations on the
date of exercise. Mr. Morris agreed to termination of this option on
September 30, 2000 with respect to any shares to which it might entitle him
after the termination date.
In September 2000 the Company issued 20,000 shares of its common stock, as
adjusted, to each of three new directors for future services during the year.
In the event any director does not complete a full year of service, the
director is required to surrender a pro rata number of shares for the balance
of the year.
The Company granted 50,000* common stock purchase options to Winston D.
Carlee, Jr. as an inducement for him to join the Company as its Chief
Financial Officer. These options are good for five years and are exercisable
at a price of $.25* per share.
*Adjusted for share combination of one for five on November 22, 2000.
PRINCIPAL STOCKHOLDERS
The names of directors and officers and the name of each person who owns
legally and beneficially more than five percent of the Company's issued and
outstanding Common Stock at the date of this Prospectus, the address of each
such person, the number of shares which each owns and the percentage of the
Common Stock represented by such shares (assuming in each case the exercise
of Common Stock Purchase Options held by all such persons), before and after
the Offering (assuming all Shares are sold) is set forth in the following
table.
All ownership is both legal and beneficial unless otherwise indicated and
includes shares subject to the exercise of common stock purchase options.
See "Selling Stockholders".
Name Number of Shares Number of Shares
Before sale of After sale of % %
Shares* Shares* Before After
------------------------ ---------------- ----------------- -----------
James Boggs (1) 20,000 20,000 (1) (1)
Winston D. Carlee, Jr. (1) 50,000 0 (1) (1)
Donald D. Clark (1) 20,000 20,000 (1) (1)
Sally McFolling (1) 20,000 20,000 (1) (1)
Jackson L. Morris (1) 1,008,581 1,008,581 4.16 1.54
David E. Salmon (1) 166,040 166,040 (1) (1)
John V. Whitman, Jr. (1)(2) 4,339,038 4,339,038 17.88 6.64
All directors and officers
as a group (7 persons) 5,623,659 5,573,659 23.19 8.53
(1)Less than one percent
(1) The address of all directors and officers is the address of
the Company.
(2) Mr. Whitman Shares legal ownership of 96,252 shares, as adjusted, with
his wife.
*Adjusted for share combination of one for five on November 22, 2000.
DESCRIPTION OF SECURITIES
Common Stock:
The authorized Common Stock of the Company consists of one hundred million
shares, with a par value per share of $.001. A total of 19,716,615 shares of
Common Stock were outstanding at September 30, 2000, as adjusted for the
share combination, dated November 22, 2000. The Company has issued forty-one
shares of Convertible Preferred Stock, which entitles the holders to convert
into an estimated 1,366,653 shares of common stock as if determined on the
day prior to the date of this Prospectus. Holders of the Common Stock, which
includes the Shares, (i) have equal and ratable rights with all holders of
issued and outstanding Common Stock to dividends from funds legally available
therefore, when, as and if declared by the Board of Directors of the Company;
(ii) are entitled to share ratably with holders of issued and outstanding
Common Stock in all of the assets of the Company available for distribution
to holders of Common Stock, after distribution of the liquidation preference
on the Preferred Stock, upon liquidation, dissolution or winding up of the
affairs of the Company; (iii) do not have preemptive, subscription or
conversion rights; (iv) have no redemption or sinking fund provisions
applicable thereto; and (v) have one vote on election of each director and
other matters submitted to a vote of stockholders. All shares of Common
Stock outstanding are, and those sold pursuant to this Prospectus when issued
and delivered against payment therefore, will be, duly authorized, legally
issued, fully paid and non-assessable.
Transfer Agent. The Company has engaged Atlas Stock Transfer Corporation,
Salt Lake City, Utah to act as its transfer agent and registrar for the
Common Stock.
SELLING STOCKHOLDERS
The following table sets forth the name of each Selling Stockholder who owns
less than one percent of the issued and outstanding Common Stock of the
Company and who has Shares included in this Offering. Assuming all such
Shares are sold, none of these selling stockholders will own any stock in the
Company. Part of the Shares offered by the Selling Stockholders will be
acquired by them upon conversion of the Company's Convertible Preferred Stock
which the Selling Stockholders now own. The Company will not receive any
proceeds from the sale of the Common Stock, by the following Selling
Stockholders.
Name of Selling Number of Shares to be
Stockholder sold in this Offering*
---------------- -------------------------
Warren & Suzanne Smith
Joseph & Kathleen Whitcraft
Thomas Overleaf
Thomas Overleaf & Dennis Andrews
Wayne & Alison Throckmorton
Jane Young Daniel
David Kane
Ronald Polichnowski
Michael Johnston
Evergreen Industries
Walter Hicks
Newton Wood, III & Karen Wood
Terrafirma Works, Inc.
Conrad Reid
Thomas & Laura Kilcoyne
STL Capital, Inc.
*Indicates Shares to be acquired upon conversion of Convertible Preferred
Stock, estimated as if converted on the day prior to the date of the
Prospectus at 50% of the market price. The actual number of shares may
increase or decrease depending upon fluctations in the market price of the
Shares on the day of conversion.
DISTRIBUTION OF SHARES
Distribution by the Company:
The Company is offering 40,000,000 shares of its authorized but unissued
Common Stock for sale by this Prospectus in a "self underwritten" public
offering. The Company's Chairman, Mr. Whitman, will offer the Shares on
behalf of the Company. See "Management". Mr. Whitman will not receive any
compensation for sales of the Shares which he may make. The Company will
rely on Rule 3(a)4-11 in that Mr. Whitman has never been either a registered
securities broker-dealer or an affiliate or associated person thereof. The
Company will receive the net proceeds from the sale of the 40,000,000 Shares.
There is no assurance the Company will be able sell all or any of these
Shares. The Shares offered by the Company are expected to be sold in
negotiated transactions to investors. The Company may also issue Shares in
payment of services and to creditors in payment of the Company's liabilities.
The Company does not have agreements with any of its creditors to accept
Shares in payment of amounts due to them. There is no assurance the Company
will be able to pay any of its debts with the Shares. The value at which the
Company sells shares or at which any creditor may accept Shares in payment of
amounts due is expected to be negotiated between the Company and the
individual creditor and is expected to be related to the bid and asked
quotations for the Common Stock on the OTC Bulletin Board at the date of such
acceptance. The Company may also acquire property, including the acquisition
of other businesses, in exchange for Shares.
Distribution by Selling Stockholders:
The Selling Stockholders are offering 1,366,653 Shares for their own
accounts. The Company has prepared the registration statement and is paying
the costs of the registration statement of which this Prospectus is a part.
The Company will not receive any proceeds from the sale of the Common Stock
by the Selling Stockholders. The Company is solely responsible for the
content of the registration statement and of this Prospectus. The Company
has not engaged an underwriter for the Offering made by the Selling
Stockholders. The Selling Stockholders have advised the Company that none of
them have engaged an underwriter for the Offering. Generally, the Company
expects the individual Selling Stockholders to place their respective Shares
in their individual accounts at their own securities brokers and request the
entry of sell orders against their stock positions.
The Selling Stockholder may sell the Shares in open market or block
transactions or otherwise in accordance with the rules of the OTC Bulletin
Board, or in private transactions, at prices related to the prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling Shares to or through broker-dealers, and such broker-
dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders for whom such broker-dealers may
act as agent or to whom they sell as principal or both. Upon any sale of
Shares offered hereby, the Selling Stockholders and participating broker-
dealers or selling agents may be deemed to be "underwriters" as that term is
defined in the Securities Act, in which event any discounts, concessions or
commissions they receive, which are not expected to exceed those customary in
the types of transactions involved, or any profit on resales of the Shares by
them, may be deemed to be underwriting commissions or discounts under the
Securities Act.
Any Selling Stockholder or any affiliate of a Selling Stockholder or any
Selling Stockholders who are acting in concert may violate Regulation M
promulgated by the U.S. Securities and Exchange Commission pursuant to the
Securities Exchange of Act of 1934, as amended, in the event any such person,
directly or indirectly, places a bid to purchase, purchases, or attempts to
induce another person to bid for or purchase shares of the Common Stock in
the public market before the time such Selling Stockholder or all the Selling
Stockholders who are acting in concert, as the case may be, have sold all of
their shares of Common Stock which are covered by this Prospectus.
Accordingly, no Selling Stockholder and no affiliate of a Selling Stockholder
and no Selling Stockholders who are acting in concert should place bids for
the purchase of, purchase or attempts to induce another person to bid for or
purchase shares of the Common Stock in the public market for the Common
Stock, in the event a public market develops, until such person has sold all
of his shares covered by this Prospectus. Any person who, directly or
indirectly, bids for or effects any purchase of the Common stock for the
purpose of pegging, fixing or maintaining the price of the Common Stock
(known as "stabilizing"), which bid or purchase does not comply with
Regulation M, will be in violation of the regulation. Furthermore, no
stabilizing is permitted at a price that the person stabilizing knows or has
reason to know does not comply with Regulation M or which is the result of
activity that is fraudulent, manipulative, or deceptive under the federal
securities laws and regulations.
Pursuant to the provisions under the Securities Exchange Act of 1934, as
amended, ("Exchange Act") and the rules and regulations there under, any
person engaged in a distribution of the Shares offered by this Prospectus may
not simultaneously engage in market making activities with respect to the
Shares during the applicable "cooling off" period prior to the commencement
of such distribution. In addition, and without limiting the foregoing, the
Selling Stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations there under including, without limitation,
Regulation M, which provisions may limit the timing of purchases and sales of
Shares by the Selling Stockholders.
MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Market quotations:
The National Association of Securities Dealers, Inc, quotes the Company's
Common Stock under the stock symbol "CRNC", through February 2000 and now
under "STWW" on the OTC Bulletin Board. The following table sets forth the
approximate high and low bid quotations for the
Company's Common Stock for each calendar quarter during the twelve months
ended September 30, 2000, as adjusted for a one for five share combination
effective on November 22, 2000. These quotations are inter-dealer quotations
without retail markup, markdown or commissions and may not represent actual
transactions.
Quarter ended High Bid Low Bid
September 1998 $0.19 $0.19
December 1998 0.50 0.50
March 1999 0.97 0.78
June 1999 0.29 0.29
September 1999 0.46 0.33
December 1999 0.65 0.60
March 2000 1.20 1.00
June 2000 0.45 0.40
September 2000 0.55 0.55
The high and low bid quotations for the Company's Common Stock on November
24, 2000 were $0.17 and $0.14 and the closing price on that date for the
Company's Common Stock on the OTC Bulletin Board was $0.16.
The Company had approximately 6,832 holders of its common stock at September
30, 2000.
The Company's transfer agent is Atlas Stock Transfer of Salt Lake City, Utah.
Dividends:
Dividends on the Common Stock can be paid lawfully only out of current and
retained earnings and surplus of the Company, when, as and if declared by the
Board of Directors. The Company has not declared or paid any dividends on the
Common Stock or the Preferred Stock and there is no assurance dividends will
be paid in the foreseeable future. The payment of dividends in the future
rests within the discretion of its Board of Directors and will depend, among
other things, upon the Company's earnings, its capital requirements and its
financial condition, as well as other factors which the board of directors
deems relevant. The Company does not expect to pay cash dividends within the
next five years based upon its plan to invest its profits, if any, in
expansion of the Company's shopper products and community news products.
SHARES AVAILABLE FOR FUTURE SALE
Sale of a substantial number of additional shares of Common Stock into the
public trading market following the Offering could adversely affect the
prevailing market prices for the Common Stock, as a result of an increased
supply in the number of shares available for trading.
Following completion of this Offering, assuming the sale of all the Shares
offered by the Company, the Company will have outstanding an aggregate of
61,366,468 shares of Common Stock. In addition, if all the outstanding
Common Stock Purchase Options were to be exercised, totaling 4,339,038 shares
of Common Stock, the Company would have a total of 65,705,506 shares issued
and outstanding.
Of the total shares which would be outstanding, assuming the sale of all the
Shares offered by the Company pursuant to this Prospectus and exercise of all
outstanding common stock purchase options, 6,170,819 of those shares are
subject to the requirements of Rule 144 by virtue of being owned by
"affiliates" of the Company and not being included in a registration
statement for resale by those affiliates. In general under Rule 144 as
currently in effect, a person who is an affiliate of the Company or has owned
a "restricted security" for more than twelve months is entitled to sell in
"broker's transactions" or to market makers, within any three month period, a
number of shares that does not exceed the greater of (i) one percent of the
then issued and outstanding shares of Common Stock or (ii) the average weekly
trading volume in the Common Stock during the four calendar weeks preceding
the filing of a Form 144 with the Commission with respect to the proposed
sale. Sales under Rule 144 and sales by affiliates are subject to the filing
of a Form 144 with respect to such sale and certain other limitations and
restrictions. The Company may, at any time, file a registration statement
covering shares held by the Company's affiliates and shares which are a
restricted security, in which event the holder thereof would be able to
immediately sell such shares into the public trading market upon the
effective date of such registration statement.
INTEREST OF COUNSEL
The Company will rely on an opinion given by Jackson L. Morris, Esq., Tampa,
Florida, as to the legality of the Shares. Mr. Morris is a director of the
Company and the holder of 290,175 shares of the Company's Common Stock, none
of which are offered for sale by this Prospectus, and Common Stock Purchase
Options to acquire 718,406 shares. See "Common Stock Purchase Options" and
"Principal Stockholders".
EXPERTS
The Company's financial statements at and for the period ended September 30,
1999 and 1998 included in this Prospectus and the related Registration
Statement have been audited by BELLA, HERMIDA, GILLMAN, HANCOCK & MUELLER,
independent certified public accountants, as stated in their report appearing
herein, and are included in reliance upon such reports given upon the
authority of said firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended, ("Exchange Act") and, in accordance
therewith, files reports and other information with the U.S. Securities and
Exchange Commission ("Commission") in Washington, D.C. pursuant to Section
15(d) of the Exchange Act. These reports and other information may be
inspected without charge at the principal office of the Commission, at
Judiciary Plaza, 450 Fifth Street N.W., Room 1024, Washington, D.C. 20549,
and at the Northeast Regional Office of the Commission at Seven World Trade
Center, Suite 1300, New York, New York 10049. Copies of such material may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street N.W., Room 1024, Washington, D.C. 20549, upon payment of prescribed
fees. The Commission maintains a web site that contains such material filed
electronically with the Commission at http://www.sec.gov.
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
Page
Independent Auditor's Report on Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Chronicle Communications, Inc.
We have audited the accompanying consolidated balance sheets of Stampede
Worldwide, Inc. (formerly Chronicle Communications, Inc., a Georgia
Corporation) and subsidiaries as of September 30, 1999 and 1998, and the
related consolidated statements of operations, changes in stockholders'
equity (deficit), and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits and the report of other auditors provide a reasonable basis
for our opinion.
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Stampede Worldwide, Inc.
(formerly Chronicle Communications, Inc.) and subsidiaries as of September
30, 1999 and 1998, and the results of their operations and their cash flows
for the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2, the Company's
significant operating losses, negative cash flows and debt position raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Respectfully submitted,
/s/ BELLA, HERMIDA, GILLMAN, HANCOCK & MUELLER
Certified Public Accountants
Plant City, Florida
December 20, 1999, except as to Note 13, which is as of December 4, 2000
STAMPEDE WORLDWIDE, INC.
(FORMERLY CHRONICLE COMMUNICATIONS, INC.)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, September 30,
2000 1999 1998
(Unaudited)
CURRENT ASSETS:
Cash $ 80,357 $ 7,707 $ 14,457
Accounts Receivable 253,975 197,218 123,055
Inventory 51,577 32,110 85,297
Other Current Assets 549,465 101,413 22,144
Advances to Stockholders,
Current Portion 115,000
--------- --------- --------
Total Current Assets 935,374 338,448 222,809
--------- --------- --------
PROPERTY AND EQUIPMENT,
Net of Accumulated
Depreciation of $745,659
(1999), $504,453 (1998)
and 3,663,856 1,334,850 1,496,990
ADVANCES TO STOCKHOLDERS 1,035,153 491,308 160,021
OTHER ASSETS 855,424 608,749 6,417
--------- --------- ---------
TOTAL ASSETS $6,489,807 $2,773,355 $1,886,237
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Bank Overdraft $ $ 31,944 $ 5,014
Short-Term Notes 121,346 322,321 304,270
Current Maturities
of Long-Term Debt 168,000 1,178,390 1,030,331
Accounts Payable 236,181 1,585,523 1,084,637
Accrued Payroll Liabilities 347,224 532,231 324,967
Other Accrued Liabilities 107,978 819,072 298,238
--------- --------- ---------
Total Current Liabilities 980,729 4,469,481 3,047,457
LONG-TERM LIABILITIES 2,563,094 192,000
--------- --------- ---------
Total Liabilities 3,543,823 4,661,481 3,047,457
--------- --------- ---------
STOCKHOLDERS' EQUITY:
Common Stock, No Par
Value, 20,000,000
Shares Authorized,
14,265,162 and 3,074,840
Shares Issued and
Outstanding at September
30, 1999 and 1998, as
restated, respectively 12,643,815 5,825,903 2,515,366
Accumulated Deficit (9,697,831) (7,714,029) (3,676,586)
----------- ----------- -----------
Total Stockholders'
Equity (Deficit) 2,945,984 (1,888,126) (1,161,220)
----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS'
EQUITY (DEFICIT) $6,489,807 $2,773,355 $1,886,237
========== ========== ==========
The Accompanying Notes are an Integral Part of These Consolidated Financial
Statements
STAMPEDE WORLDWIDE, INC.
(FORMERLY CHRONICLE COMMUNICATIONS, INC.)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months For the Years
Ended June 30, Ended September 30,
2000 1999 1999 1998
(Unaudited)
SALES $1,409,101 $1,427,138 $1,934,500 $1,748,026
COST OF SALES 912,875 1,434,454 1,704,577 1,691,021
---------- ----------- ----------- ----------
GROSS PROFIT 496,226 (7,316) 229,923 57,005
---------- ----------- ----------- ----------
OPERATING EXPENSES:
General and Administrative 3,663,336 2,040,532 3,934,388 1,567,748
Interest 114,633 167,408 262,614 302,834
---------- ----------- ----------- ----------
Total Operating Expenses 3,777,969 2,207,940 4,197,002 1,870,582
---------- ----------- ----------- ----------
LOSS FROM OPERATIONS (3,281,743) (2,215,256) (3,967,079) (1,813,577)
OTHER INCOME (EXPENSE) ( 70,364)
----------- ----------- ----------- -----------
NET LOSS FROM CONTINUING
OPERATIONS (3,281,743) (2,215,256) (4,037,443) (1,813,577)
Loss on disposal of assets ( 90,717)
Gain on disposal of
Discontinued operations 1,388,657
----------- ----------- ----------- -----------
NET LOSS $(1,983,803) $(2,215,256) $(4,037,443)$(1,813,577)
=========== =========== =========== ===========
NET LOSS PER COMMON
SHARE, BASIC (AS
RESTATED) $(0.24) $(1.27) $(2.58) $(3.50)
====== ====== ====== ======
WEIGHTED-AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
(AS RESTATED) 8,266,457 1,740,393 1,559,978 517,926
========= ========= ========= =======
The Accompanying Notes are an Integral Part of These Consolidated Financial
Statements
STAMPEDE WORLDWIDE, INC.
(FORMERLY CHRONICLE COMMUNICATIONS, INC.)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998
Common Stock Accumulated
Shares Amount Deficit
Amount
Balance,
September 30, 1997 2,388,708 $1,920,449 $(1,863,009)
Common Stock Issued:
For Cash, Net of
Offering Costs 360,241 283,620
For Consulting Services 577,500 255,000
For Commissions Payable 7,720 22,398
For Interest on Loans 10,760 16,299
For Employee Compensation 3,000 6,600
For Debt Repayment 19,856 11,000
Net Loss for the Year (1,813,577)
--------- --------- -----------
Balance,
September 30, 1998 3,367,785 $2,515,366 $(3,676,586)
Common Stock Issued:
For Cash, Net of
Offering Costs 2,826,378 667,871
For Consulting Services 2,518,468 575,025
For Employee Compensation 2,263,580 1,012,160
For Debt Repayment 1,070,738 326,203
For Operating Expenses 394,389 133,241
For Acquisitions 2,500,000 407,812
For Shareholder Advances 432,861 188,225
Net Loss for the Year (4,037,443)
--------- --------- -----------
Balance,
September 30, 1999 15,374,199 $5,825,903 $(7,714,029)
Common Stock Issued:
For Cash(Unaudited) 30,613,391 3,052,747
For Operating Expenses
(Unaudited) 11,025,318 1,723,838
For Liabilities
(Unaudited) 3,773,912 727,120
For Receivables
(Unaudited) 6,102,509 641,000
For Debt Repayment
(Unaudited) 780,110 85,097
For Acquisitions
(Unaudited) 111,111 36,667
For Shareholder Advances
(Unaudited) 3,545,260 551,443
Net Loss for the Year
(Unaudited) (1,983,802)
---------- ---------- -----------
Balance,
June 30, 2000 (Unaudited) 71,325,810 12,643,815 (9,697,831)
Retroactive Restatement
For Share Combination
Of One for Five Dated
November 22, 2000
(Unaudited) (57,060,648)
----------- ---------- ----------
Restated Balance,
June 30, 2000
(Unaudited) 14,265,162 12,643,815 (9,697,831)
========== ========== ===========
The Accompanying Notes are an Integral Part of These Consolidated Financial
Statements
STAMPEDE WORLDWIDE, INC.
(FORMERLY CHRONICLE COMMUNICATIONS, INC.)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months For the Years
Ended June 30, Ended September 30,
2000 1999 1999 1998
(Unaudited)
OPERATING ACTIVITIES:
Net Loss $(1,983,803) $(2,215,256) $(4,037,443) $(1,813,577)
Adjustments to Reconcile
Net Loss to Net Cash Used
in Operating Activities:
Depreciation & Amortization 163,081 127,035 170,354 172,456
Contribution of Services 106,750
Loss (Gain) on the
Sale of Assets 19,319 14,462
Loss on Investments 71,398 55,902
Gain on disposal of
discontinued operations (1,388,657)
Common stock issued for
operations 1,723,838 1,658,112 2,147,778 300,297
Expenses Paid with Debt 396,236
Increase or Decrease in:
Accounts Receivable ( 116,147) 2,950 116,295 189,751
Inventory ( 24,834) 40,017 63,730 16,087
Other current Assets 192,535
Other Assets ( 109,839) ( 261,113) ( 33,134) 22,144
Accounts Payable ( 111,564) ( 322,542) 312,913 232,487
Accrued Liabilities ( 136,682) 227,346 615,895 345,670
----------- ---------- ---------- ----------
Net Cash Used in
Operating Activities(1,701,355) ( 636,701) ( 177,012) ( 534,685)
----------- ---------- ---------- ----------
INVESTING ACTIVITIES:
Cash from Acquisitions 46,929
Purchase of Property and
Equipment ( 666,725) ( 14,549) ( 586)
Increase in Investments ( 199,471) ( 50,000)
Liquidation of a segment( 6,303)
----------- ---------- ---------- ----------
Net Cash Provided by
(Used in) Investing
Activities ( 872,499) ( 50,000) 32,380 ( 586)
----------- ---------- ---------- ----------
FINANCING ACTIVITIES:
Bank Overdraft ( 31,944) 190,866 20,135 ( 23,599)
Proceeds from Issuance
of Debt 164,263 68,500 174,004
Principal Payments of Debt( 381,897) ( 2,649) ( 33,448) ( 40,805)
Advances to Stockholders 7,598 ( 228,935) ( 129,343) 155,053
Proceeds from Issuance
of Stock 3,052,747 555,371 212,038 283,620
----------- ---------- ---------- ----------
Net Cash Provided by
Financing Activities 2,646,504 678,916 137,882 548,273
----------- ---------- ---------- ----------
NET INCREASE (DECREASE)
IN CASH 72,650 ( 7,785) ( 6,750) 13,002
CASH AT BEGINNING OF YEAR 7,707 14,457 14,457 1,455
----------- ---------- ---------- ----------
CASH AT END OF YEAR $ 80,357 $ 6,672 $ 7,707 $ 14,457
=========== ========== ========== ==========
STAMPEDE WORLDWIDE, INC. (FORMERLY CHRONICLE COMMUNICATIONS, INC.) AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the Nine Months For the Years
Ended June 30, Ended September 30,
2000 1999 1999 1998
(Unaudited)
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash Paid during the Year
for
Interest $ 0 $ 0 $ 29,455 $ 29,172
SUPPLEMENTAL SCHEDULE OF
NONCASH INVESTING AND
FINANCING ACTIVITIES:
Stock Issued for Payment
of Expenses $ 1,723,838 $ 1,658,112 $ 2,147,778 $ 0
Stock Issued for Debt
Repayment $ 85,097 $ 50,582 $ 43,640 $ 11,000
Stock Issued for Acquisitions
and Investments $ 36,667 $ 39,063 $ 512,049 $ 0
Stock Issued for Stockholder
Advances $ 551,443 $ 173,324 $ 397,234 $ 0
Proceeds from Sale of
Investments for Stockholders
Advances $ 641,000 $ 0 $ 8,297 $ 0
Property Surrendered for
Debt Repayment $ 0 $ 0 $ 14,000 $ 0
Stock issued for Payment
of Liabilities $ 727,120 $ 0 $ 0 $ 0
Property and Equipment
Purchased with Notes $ 2,834,094 $ 0 $ 0 $ 0
The Accompanying Notes are an Integral Part of These Consolidated Financial
Statements
STAMPEDE WORLDWIDE, INC.
(FORMERLY CHRONICLE COMMUNICATIONS, INC.)
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Chronicle Communications, Inc., a Georgia Corporation, was originally
organized as a publisher of several newspaper and shopper editions in several
Georgia counties. During 1998, these publications were discontinued and the
Company began a series of acquisitions in the publishing and computer
communications field. Chronicle Communications, Inc. now serves as the
parent company to the acquired businesses.
On September 30, 1998, the Company acquired Bright Now, Inc. and Subsidiaries
in a business combination accounted for as a pooling of interests. The
accompanying financial statements for 1998 are based on the assumption that
the companies were combined for a full year and the financial statements of
the prior year have been restated to give effect to the combination. Bright
Now, Inc. operates a commercial printing plant in Tampa, Florida.
On January 3, 1999, the Company acquired Bartow Communications, Inc. in a
combination accounted for as a purchase. The financial statements include the
results of operations of Bartow Communications, Inc. from the date of
acquisition through September 30, 1999. Bartow Communications, Inc. publishes
real estate editions in the Washington, D.C. area.
On August 19, 1999, the Company acquired Americomp Computers, Inc., a
computer equipment retailer, located in Houston, Texas. The combination was
accounted for as a purchase and the financial statements include the results
of operations for Americomp Computers, Inc. from the acquisition date through
September 30, 1999.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Reclassification of Financial Statement Presentation
Certain reclassifications have been made to the 1999 and 1997 financial
statements to conform to the 2000 financial statement presentation. Such
reclassifications had no effect on net income as previously reported.
Cash Equivalents
For purposes of financial statement presentation, the Company considers all
highly liquid instruments with maturity of three months or less to be cash
equivalents. The Company holds no such instruments at September 30, 1999,
1998 and 1997.
Accounts Receivable
The Company grants unsecured credit to its customers for terms of 10 to 60
days. The Company considers all accounts receivable to be collectible;
therefore, no allowance for uncollectible accounts has been recorded.
Inventory
Inventories are recorded at the lower of cost (first-in, first-out) or
market. Inventories consist principally of paper, printing supplies and
computer parts.
STAMPEDE WORLDWIDE, INC. (FORMERLY CHRONICLE COMMUNICATIONS, INC.) AND
SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Property and Equipment
Property and equipment is stated at cost and depreciated using the straight-
line method over estimated useful lives ranging from 5 to 40 years.
Expenditures for maintenance and repairs are charged to expense as incurred.
Major improvements are capitalized.
Deferred Financing Costs
Costs connected with obtaining and executing debt agreements are capitalized
and amortized on the straight-line basis over the term of the related debt.
Amortization expense charged to operations for the years ended September 30,
1999 and 1998 amounted to $11,415 and $6,347, respectively.
Deferred Tax Assets and Liabilities
Deferred income taxes are the result of the expected future tax consequences
of
temporary differences between the financial statement and tax bases of assets
and liabilities. A valuation allowance is provided against deferred income
tax
assets in circumstances where management believes recoverability of a portion
of the asset is not reasonably assured.
Earnings (Loss) per Share
Basic net earnings (loss) per common share is computed by dividing the net
earnings (loss) by the weighted-average number of common shares outstanding.
Common stock equivalents have not been included in the computation for these
periods because their inclusion would be antidilutive. Diluted earnings per
share are computed to include potential dilution from the exercise or
conversion of securities, such as stock options or warrants, into common
stock.Because the effect of including these securities is antidilutive, they
have been excluded from the computation and the diluted loss per share is
equal to the basic loss per share.
Stock-Based Compensation
The Company accounts for stock issued to employees as provided in Accounting
Principles Board Opinion No. 25, whereby compensation expense is recorded on
the date the options are granted equal to the excess of the market price of
the underlying stock over the exercise price and provides pro forma
disclosure of the application of Statement of Financial Accounting Standards
No. 123.
Principles of Consolidation
The consolidated financial statements include the accounts of Chronicle
Communications, Inc. and all wholly owned subsidiaries. All material
intercompany transactions have been eliminated.
NOTE 2: GOING CONCERN
The Company incurred operating losses of $3,967,079 and $1,813,577 for the
years ended September 30, 1999 and 1998, respectively. At September 30,
1999, current liabilities exceeded current assets by $4,131,033, and the
Company is in default on substantially all of its debt. Major vendors have
placed the Company on a COD basis for future purchases. Bright Now, Inc. has
filed for reorganization under Chapter 11 of the United States Bankruptcy
Code.
STAMPEDE WORLDWIDE, INC.
(FORMERLY CHRONICLE COMMUNICATIONS, INC.)
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2: GOING CONCERN (CONTINUED)
These factors raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets or the amounts and classifications of liabilities that might be
necessary in the event the Company cannot continue in existence.
During 2000, 1999 and 1998, the Company funded much of its working capital
needs through the sale of its common stock. Approximately $2,190,000 in
capital was raised in connection with these stock sales. The Company's
continued ability to operate is dependent on its ability to refinance its
existing debt, raise additional capital, collect stockholder advances and
reverse negative operating trends.
NOTE 3: ACQUISITIONS
On January 3, 1999, the Company acquired Bartow Communications, Inc. for
125,000 shares of the Company's common stock, in a business combination
accounted for as a purchase. Bartow Communications, Inc. is primarily
engaged in real estate publishing in the Washington, D.C. area. The results
of operations of Bartow Communications, Inc. are included since the date of
acquisition. The total cost of the acquisition was $14,062, which exceeded
the fair value of the net assets of Bartow Communications, Inc. by $214,824.
The excess was allocated to goodwill and is being amortized on a straight
line basis over a period of twenty years.
On August 19, 1999, the Company acquired Americomp Computers, Inc. for
2,250,000 shares of the Company's common stock, in a combination accounted
for as a purchase. Americomp Computers, Inc. is primarily engaged in retail
sales of personal computer equipment. The total cost of the acquisition was
$373,500, which exceeded the fair value of the net assets of Americomp
Computers by $401,791. The excess was allocated to goodwill and is being
amortized on a straight line basis over a period of twenty years. The
results of operations of Americomp Computers are included since the date of
acquisition. The following presents pro forma information as if the
acquisition had occurred on January 1, 1998.
1999 1998
Net Sales $3,204,178 $5,478,613
Net Income $(4,127,078) $(1,687,920)
Earnings per Share:
Basic* $( 2.55 ) $( 2.85)
Fully Diluted* $( 2.55 ) $( 2.85)
*Adjusted for share combination of one for five on November 22, 2000.
The above amounts reflect adjustments for amortization of goodwill acquired
in the purchase. The amounts included for Americomp Computers, Inc. are
based on a December 31 year end, and therefore reflect only nine months
activity for the year ended September 30, 1999.
On September 30, 1998, the Company acquired Bright Now, Inc. and Subsidiaries
in a business combination accounted for as a pooling of interests. Bright
Now, Inc., which operates a commercial printing press plant, became a wholly
owned subsidiary through the exchange of 640,000 shares of the Company's
common stock for all of the outstanding stock of Bright Now, Inc. and
subsidiaries. In accordance with generally accepted accounting principles,
the financial statements for 1998 are presented as if the companies were
combined for the entire year, and the prior year's financial statements have
been restated for the effects of the combination.
STAMPEDE WORLDWIDE, INC.
(FORMERLY CHRONICLE COMMUNICATIONS, INC.)
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3: ACQUISITIONS (CONTINUED)
Summarized results of operations of the separate companies for the period
from October 1, 1997 through September 30, 1998, the date of acquisition, are
as follows:
Chronicle
Communications, Inc. Bright Now, Inc.
Net Sales $ 456,246 $1,291,780
Net Loss $ 1,363,223 $ 450,354
The summarized assets and liabilities of the separate companies on the date
of acquisition were as follows:
Chronicle
Communications, Inc. Bright Now, Inc.
Current Assets $ 19,676 $ 203,133
Property and Equipment 325,855 1,171,135
Other Assets 160,946 5,492
Total Assets $ 506,477 $ 1,379,760
Liabilities $ 970,680 $2,076,777
NOTE 4: PROPERTY AND EQUIPMENT
The following is a summary of property and equipment at cost, less
accumulated depreciation:
June 30, September 30,
2000 1999 1998
(Unaudited)
Land $ 0 $ 30,875 $ 30,875
Building and Improvements 2,444,631 691,471 721,471
Machinery and Equipment 1,503,670 1,358,163 1,248,510
Total 3,948,301 2,080,509 2,000,856
Less, Accumulated Depreciation 284,445 745,659 338,344
---------- ---------- ----------
Net Property and Equipment $3,663,856 $1,334,850 $1,662,512
========== ========== ==========
Depreciation expense for the nine months ended June 30, 2000 was $43,745 and
for the years ended September 30, 1999 and 1998 was $158,939 and $166,109,
respectively.
STAMPEDE WORLDWIDE, INC.
(FORMERLY CHRONICLE COMMUNICATIONS, INC.)
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5: SHORT-TERM DEBT
Short-Term Debt consists of the following:
June 30, September 30,
2000 1999 1998
(Unaudited)
Line of credit payable to bank; unsecured;
bearing interest at bank prime plus 2.5%;
in default, entire principal plus interest,
costs and fees due immediately $ 0 $30,931 $ 25,000
Note payable to individual; secured by
mortgage on real estate; bearing interest
at 10%; in default, entire principal plus
interest due immediately 0 46,245 46,245
Note payable to individual; unsecured;
bearing interest at 11%; in
default, entire principal plus
interest due immediately 0 12,500 12,500
Loans payable to individuals; unsecured;
bearing interest at various rates with
various repayment terms $ 121,346 232,645 220,525
--------- -------- --------
Total Short-Term Debt $ 121,346 $322,321 $304,270
========= ======== ========
STAMPEDE WORLDWIDE, INC.
(FORMERLY CHRONICLE COMMUNICATIONS, INC.)
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6: LONG-TERM DEBT
Long-Term Debt consists of the following:
June 30, September 30,
2000 1999 1998
(Unaudited)
Mortgage note payable; bearing
interest at 8%; monthly
payments of principal and
interest of $1,142; in
default, entire principal
plus interest and fees due
immediately; secured by
mortgage on real estate;
guaranteed by the Company's
president and majority
stockholder $ 0 $ 110,567 $ 115,965
Note payable to bank; bearing
interest at 11%; in default,
entire unpaid balance of
principal and interest due
immediately; secured by
equipment, trade accounts
receivable, and 42,500
shares of the Company's
common stock; co-signed
by four stockholders 0 40,832 56,927
Note payable to stockholder;
bearing interest at 11%;
in default, entire unpaid
balance of principal and
interest due immediately;
secured by all of the
property of the Company 0 25,000 25,000
Note payable to individual;
bearing interest at 10.5%;
monthly payments of interest
only through December 1,
1998; secured by mortgage
deed to real estate 14,000
Note payable to bank; bearing
interest at 10.95%; monthly
payments of $4,231; in default
with entire principal, plus
interest, costs and fees
due immediately; secured by
mortgage on real estate 0 521,350 404,280
Note payable to bank; bearing
interest at bank prime plus
2.5%; monthly payments of
$5,609; in default with
entire principal, plus
interest, costs and fees
due immediately; secured
by blanket lien on all
business assets 0 297,641 237,355
Note payable to financial
institution; bearing interest
at 18%; monthly payments
of $3,849;in default with
entire principal, interest,
costs and fees due immediately;
secured by lien on equipment
and judgment entered
March 19, 1998 0 171,000 171,000
Note payable to vendor;
payable at a minimum of
$1,500 monthly by
applying a portion of
purchases over 36 months;
secured by equipment 0 5,804
STAMPEDE WORLDWIDE, INC.
(FORMERLY CHRONICLE COMMUNICATIONS, INC.)
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6: LONG-TERM DEBT (CONTINUED)
June 30, September 30,
2000 1999 1998
(Unaudited)
Loans payable to individuals; unsecured;
bearing interest at various rates with
various repayment terms 135,000 204,000
Mortgage note payable; bearing
interest at 6.51%; various
payments of principal and
interest; secured by mortgage
on real estate; guaranteed by the
Company's president and majority
stockholder 2,125,000
Note payable to vendor;
bearing interest at 11%;
monthly payments of $12,089
over 60 months;
secured by equipment 471,094
--------- --------- ---------
Total 2,731,094 1,370,390 1,030,331
Less, Current Maturities 168,000 1,178,390 1,030,331
----------- ----------- ----------
Net Long-Term Debt $ 2,563,094 $ 192,000 $ 0
=========== =========== ==========
Based on current borrowing rates, the fair value of notes payable
approximates their carrying amount.
NOTE 7: INCOME TAXES
The Company has tax loss carryforwards of approximately $9,440,173 that may
be applied against future taxable income. These losses create a deferred tax
asset at June 30, 2000 and September 30, 1999 and 1998. Due to the
uncertainty of the Company's realization of this benefit, management has
established a valuation
allowance equal to the total amount of the deferred tax assets.
June 30, September 30,
2000 1999 1998
(Unaudited)
Loss Carry forward $ 1,983,803 $1,112,296 $612,208
Less, Valuation Allowance 1,983,803 1,112,296 612,208
--------- --------- -------
Net Deferred Tax Assets $ 0 $ 0 $ 0
========= ========= =======
The loss carry forwards expire as follows:
Year of Expiration Amount
2011 $ 68,400
2012 1,385,735
2013 1,923,731
2014 4,078,504
2015 1,983,803
---------
$9,440,173
=========
NOTE 8: RELATED PARTY TRANSACTIONS
The Company has made advances to its president and majority stockholder.
These advances have no specific terms, are non-interest bearing, and are
unsecured. The balances of these advances, less the amounts repaid, are as
follows:
June 30, September 30,
2000 1999 1998
(Unaudited)
Advances to Stockholders $1,023,162 $751,730 $444,021
Less, Amount Repaid 44,009 260,422 284,000
--------- ------- -------
Net Advances to Stockholders $1,035,153 $491,308 $160,021
========= ======= =======
STAMPEDE WORLDWIDE, INC.
(FORMERLY CHRONICLE COMMUNICATIONS, INC.)
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9: STOCK OPTIONS
The Company issues stock options to its officers and directors as
compensation for their services. The Company has elected to account for
these stock options using Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees". Compensation expense is
measured as the excess of the quoted market price of the stock over the
option price on the measurement date and charged to the period in which the
related services are performed. Compensation charged to operations amounted
to $382,668 and $36,579 for the years ended September 30, 1999 and 1998,
respectively.
FASB Statement No. 123 requires pro forma disclosure of information
regarding net income and earnings per share determined as if the Company has
accounted for these stock options using the fair value method of that
Statement. The pro forma information for September 30, 1999 and 1998 are as
Follows (AS RESTATED):
1999 1998
Pro Forma Net Loss $4,379,774 $1,823,473
Pro Forma Net Loss
per Common Share $ 2.80 $ 3.50
The estimated fair value of these stock options was calculated using the
Black-Scholes option pricing model. The weighted-average fair value of the
options at their grant date and the assumptions used in the models are as
follows (AS RESTATED):
1999 1998
Weighted-Average Fair Value $ 2.10 $ .60
Risk-Free Interest Rate 5.01% 5.00%
Dividend Yield 0 0
Volatility Factor of Expected
Market Price 4.19 3.22
Weighted-Average Expected Life 1 1
A summary of the Company's stock option activity and related information is
as follows (AS RESTATED):
1999 1998
Weighted Weighted
Average Average
Exercise Price Exercise Price
Options Per Share Options Per Share
Outstanding,
October 1 78,019 $ .03 1,000 $.03
Granted 660,611 $ .12 78,019 .03
Exercised (457,357) $ .12
Canceled/Expired ( 1,000) .03
Outstanding,
September 30 281,273 $ .12 78,019 $.03
All shares outstanding at September 30, 1999 are exercisable at prices
ranging from $.02 to $.05 with estimated remaining lives of less than one
year.
STAMPEDE WORLDWIDE, INC.
(FORMERLY CHRONICLE COMMUNICATIONS, INC.)
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10: EQUITY
On November 15, 1997, the Company approved a one-to-two reverse common stock
split. On July 1, 1998, the Company approved a one-to-four reverse common
stock split. All references to number of shares of common stock in the
accompanying financial statements have been restated to reflect these
transactions.
On July 8, 1999, the Company issued warrants to Generation Capital
Associates exercisable for up to 600,000 shares of common stock at $150,000.
Unexercised warrants will expire December 31, 2000.
Subsequent to September 30, 1999, the Company issued an additional 6,838,421
shares of common stock, including approximately 2,211,363 restricted shares
and 4,627,058 free-trading shares, for general corporate purposes in the
amount of $1,479,915.
NOTE 11: COMMITMENTS AND CONTINGENCIES
The Company has been involved in litigation resulting from its default on a
bank loan secured by a mortgage on the property on which its plant is
currently operating. As a result of an order resulting from the plaintiff's
motion for final judgment, the court has scheduled foreclosure sale of the
property. The Company has been successful in postponing the foreclosure
while it seeks financing from other sources. The Company is also a
defendant in litigation with numerous other creditors resulting from the
Company's default on debt obligations. Some of these obligations are
secured by the Company's assets. To the extent the Company is unable to
cure these defaults, it may be obligated to surrender operating assets to
satisfy creditors. No estimate of the amount of resulting loss can be made.
The Company leased part of its operating facilities and various office
equipment under operating leases with terms of less than one year. Rent
expense for these leases amounted to $2,823 and $38,679 for the years ended
September 30, 1999 and 1998, respectively.
NOTE 12: CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to concentration
of credit risk consist principally of cash equivalents and unsecured trade
receivables. The Company's cash equivalents are maintained with financial
institutions located in Florida and Georgia. The Company holds no cash
equivalent in excess of federally insured limits. The Company grants credit
to customers, substantially all of whom are located in Florida and Georgia.
The Company's ability to collect these receivables is dependent upon
economic conditions in Florida and Georgia and the financial condition of
its customers.
NOTE 13: SUBSEQUENT EVENTS
Subsequent to September 30, 1999, Bright Now, Inc. filed for reorganization
under Chapter 11 of the United States Bankruptcy Code. On February 7, 2000,
the case was converted to Chapter 7. At June 30, 2000, a final discharge in
bankruptcy had not yet been granted.
On November 22, 2000, the Board of Directors authorized an 1 for 5 reverse
stock combination to shareholders of record on that date. Per-share amounts
in the accompanying financial statements have been adjusted for the reverse
combination.
II--INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
The Registrant may indemnify a director and must indemnify an officer who is
made party to a proceeding because he is or was a director or officer against
liability incurred in the proceeding if he acted in a manner he believed in
good faith to in or not opposed to the best interests of the Registrant and,
in the case of any criminal proceeding, he had no reasonable cause to believe
his conduct was unlawful. A director or officer's conduct with respect to an
employee benefit plan for a purpose he believed in good faith to be in the
interests of the participants in and beneficiaries of the plan is conduct
that satisfies the requirements of Florida law regarding indemnification.
The Registrant may not indemnify a director or an officer in connection with
a proceeding by or in the right of the Registrant in which the director or
officer was adjudged liable to the Registrant or in connection with any other
proceeding in which the director or officer was adjudged liable on the basis
that personal benefit was improperly received by him. Indemnification in a
proceeding by or in the right of the Registrant is limited to reasonable
expenses incurred in connection with the proceeding. To the extent a
director or officer is successful on the merits or otherwise in the defense
of any proceeding to which was a party, or in defense of any claim, issue or
matter therein, because he is or was a director of the Registrant, the
Registrant must indemnify the director or officer against reasonable expenses
incurred by him in connection with the proceeding. The Registrant may pay or
reimburse the reasonable expenses incurred by a director or officer in
advance of final disposition of a proceeding, provided the director furnishes
the Registrant with written affirmation of his good faith and a written
undertaking to repay any advances if it is ultimately determined that he is
not entitled to indemnification. The Board or special legal counsel must
make a determination in each case of indemnification of a director, but not
of an officer, that indemnification is permissible in the circumstances
because the director has met the required standard of conduct. Article XI of
the Registrant's Bylaws lso contain provisions for indemnification of
directors and officers. See, Exhibit 3.2.
Item 25. Other Expenses of Issuance and Distribution.
Registration fees:
Federal $ 2,500
Printing $ 300
Accounting $ 3,000
--------
Total: $ 5,800
========
Legal counsel is a director and secretary of the Registrant and is not being
paid any cash fee for preparation of this Registration Statement, prior
registration statements or reports filed under the Securities Exchange Act of
1934, as amended, for other legal services or for services as director and
secretary. In recognition of such services, however, the Registrant has
granted to its legal counsel certain common stock purchase options which
legal counsel exercises from time to time to offset the amount of his fees in
general. See, "Management Compensation-Common Stock Purchase Options" in the
Prospectus included elsewhere in this Registration Statement. The Registrant
is not paying any engraving costs or transfer agent's fees specifically for
the offering covered by this Registration Statement.
Item 26. Recent Sales of Unregistered Securities.
The following information covers the Registrant's unregistered sales of
securities within the three year period ending on September 30, 2000 and the
interim period subsequent thereto.
First Offering:
(a) Dates of offering-June 1, 1997 to September 23, 1998 Securities sold-
Common Stock Amount sold- 556,168
(b) Issued as a bonus to three employee and to two new directors for joining
board, sold to thirty-one new investors (seventeen accredited and fourteen
non-accredited) who had a personal relationship with the founder or with a
directors or with a consultant to the Registrant or with an existing
stockholder of the Registrant, sold to twenty-two existing stockholders and
issued to two consultants, one of whom was already a stockholder.
(c) $6,450 value of employee bonuses, $7,000 value to new directors,
$533,111 sold for cash and $271,250 sold for consulting services in
connection with the sale of Common Stock and public relations.
(d) The Registrant relies upon Section 3(b) of the Securities Act of 1933
and Rule 505 promulgated there under in that the Registrant realized in May
1997 that its funding requirements could exceed the $1,000,000 limitation of
Rule 504 and it terminated the Rule 504 offering at May 31, 1997 and
commenced an offering under Rule 505 in which it has sold stock to not more
than thirty-five non accredited investors (actual number of non-accredited
investors is fourteen).
Second Offering:
(a) Dates of the offering-September 24, 1998 to November 8, 1999 Securities
sold-Common Stock Amount sold-12,812,758 shares (includes 432,861 shares to
be canceled which were issued in error in exercise of executive options)
(b) Issued as compensation for services and as bonuses to five employees of
the Registrant, sold for cash to nine investors (seven accredited and two non
accredited), issued in payments of accounts payable by the Registrant and a
subsidiary to eight creditors, issued upon exercise of options by three
directors and executive officers, issued as payment for consulting services
to eighteen firms and individuals, issued in payment of miscellaneous
expenses to two persons, including one director and executive officer and
issued in acquisitions of five companies to twelve persons.
(c) $271,000 valued at market for employee compensation and bonuses,
$294,786.73 sold for cash, $512,650.86 in amount of accounts payable
liquidated, $1,281,064.98 valued at market for options exercised by directors
and executive officers (net of shares to be canceled), $569,954.50 negotiated
value of consulting fees paid, $10,948 in amount of miscellaneous expenses
liquidated, $1,833,752.50 valued at market in consideration of acquisitions
(d) The registrant relies upon Section 4(2) of the Securities Act of 1933,
as amended, in that the offering did not involve a public offering.
Third Offering:
(a) Date of the offering-September 1999 Securities sold-Series A Zero Coupon
Preferred Stock and Common Stock Amount-169,904 shares of preferred stock and
306,000 shares of Common Stock
(b) Issued for cash to a private investment partnership which is an
accredited investor
(c) $50,000 sold for cash and approximately $3,500 valued at market as a
contractual penalty for late filing of this registration statement
(d) The registrant relies upon Section 4(2) of the Securities Act of 1933,
as amended, in that the offering did not involve a public offering.
Fourth Offering:
(a) Date of the offering- January 28 to February 8, 2000
Securities sold- Common Stock
Amount- 12,511,074 shares
(b) Sold for cash to twenty-six accredited investors; issued in payment to
two trade creditors; issued in settlement of claims by three former
employees; and; issued upon exercise of options by two directors for (i)
offset against accrued salary and (ii) offset against accrued professional
fees pay.
(c) $405,050 sold for cash; $51,000 in payment of creditors; $87,377 in
settlement of claims by former employees; and, $351,547 in offset against
accrued salary and professional fees, with a market value at time of exercise
of $0.20.
(d) The registrant relies upon Section 4(2) of the Securities Act of 1933,
as amended, in that the offering did not involve a public offering
THE NUMBER OF SHARES INFORMATION IN OFFERINGS ONE THROUGH FOUR HAS NOT BEEN
ADJUSTED FOR THE SHARE COMBINATION OF ONE SHARE FOR FIVE SHARES EFFECTIVE ON
NOVEMBER 20, 2000
Fifth Offering:
(a) Date of the offering- September 2000
Securities sold- common stock
Amount- 60,000 shares
(b) Issued to new directors as compensation for future services
(c) No cash consideration
(d) The registrant relies upon Section 4(2) of the Securities Act of 1933,
as amended, in that the offering did not involve a public offering
Sixth Offering:
(a) Date of the offering- October and November 2000
Securities sold- Convertible Preferred Stock
Amount- 41 shares
(b) Sold for cash to 16 accredited investors
(c) Sold for cash in the aggregate amount of $410,000.
(d) The registrant relies upon Section 4(2) of the Securities Act of 1933,
as amended, in that the offering did not involve a public offering.
Item 27. Exhibits. Sequential Page Number
3.1a Articles of Incorporation, as amended through April 2000
3.2 By-Laws*
5 Opinion re: legality
23.1 Consent of counsel (included in Exhibit 5)
23.2 Consent of independent public accountant
*Filed as Exhibits to previous Registration Statement on Form SB-2,
Commission File No. 333-34283
Item 28. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) (230.424(b) of this chapter) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.(iii) 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;(2) 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.(3) To remove
from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question 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. The undersigned registrant hereby undertakes
that:(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.(2) For the
purpose of determining any liability under the Securities Act of 1933, each
post-effective amendment that contains a form of prospectus 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.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of Tampa, State of Florida on December 5, 2000.
Stampede Worldwide, Inc.
By: /s/ John V. Whitman, Jr.
President and Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
and on the dates stated.
Signature Capacity in which signed: Date signed:
Director, Chief Operating Officer December 5, 2000
James W. Boggs
/s/ Winston D. Carlee, Jr. Chief Financial Officer December 5, 2000
Winston D. Carlee, Jr.
Director December 5, 2000
Donald D. Clark
/s/ Sally I. McFolling Director December 5, 2000
Sally I. McFolling
/s/ Jackson L. Morris Director and Secretary December 5, 2000
Jackson L. Morris
/s/ John V. Whitman, Jr. Director, President December 5, 2000
John V. Whitman, Jr. Principal Executive Officer
EXHIBIT 3.1
ARTICLES OF INCORPORATION OF
CHRONICLE COMMUNICATIONS, INC.
The undersigned, for the purpose of forming a corporation under the
provisions of Chapter 607, Fla. Stat., the Florida Business Corporation Act,
hereby states the following:
ARTICLE I - NAME AND ADDRESS
Section 1. The name of the Corporation shall be Chronicle Communications,
Inc.
Section 2. The principal office and the initial mailing address of the
Corporation shall be 3910 Riga Boulevard, Tampa, Florida 33619-1344.
ARTICLE II - DURATION
The Corporation shall have perpetual existence.
ARTICLE III - PURPOSE AND POWERS
Section 1. The Corporation is formed for the purpose of engaging in any
lawful activity or business for which corporations may be incorporated under
the laws of the State of Florida.
Section 2. The Corporation may exercise all powers, rights and privileges
conferred on corporations pursuant to the laws of the State of Florida.
ARTICLE IV - CAPITAL STOCK
The Corporation shall be authorized to issue capital stock, as follows:
(a) One hundred million (100,000,000) shares of common stock, all of one
class, having a par value of $.001 per share; and
(b) One hundred sixty-nine thousand nine hundred four (169,904) shares of
Series A Zero Coupon Preferred Stock the Corporation, each share having a par
value of $.10 and a redemption value of $.175233661 per share, being
convertible into one share of the Corporation's common stock at the election
of the holder and not being entitled to payment of a dividend; provided,
that, the conditions to demand for redemption and election of conversion
being subject to negotiation and agreement between the Corporation and the
purchaser of the such preferred stock.
ARTICLE V - BOARD OF DIRECTORS
Section 1. The business and affairs of the Corporation shall be managed by a
Board of Directors, the members of which shall be hereinafter referred to as
Directors.
Section 2. The number of Directors shall be as provided in the Bylaws of the
Corporation, but shall not be less than three (3).
Section 3. Directors shall be elected and hold office as provided in the
Bylaws.
ARTICLE VI - BYLAWS
Section 1. The Board of Directors shall adopt Bylaws for the Corporation at
a meeting of the Board of Directors following the filing of these Articles of
Incorporation.
Section 2. The power to adopt, alter, amend or repeal the Bylaws of the
Corporation may be exercised by the Board of Directors or the stockholders in
accordance with the provisions of the Bylaws.
Section 3. Any Bylaws adopted by the Board of Directors or the stockholders
may be altered, amended or repealed by the other group; provided, however,
that any Bylaw adopted by the stockholders may provide that it shall be
altered, amended, or repealed only by the stockholders.
ARTICLE VII - REGISTERED OFFICE AND AGENT
Section 1. The street address of the initial registered office of the
Corporation shall be 3910 Riga Boulevard, Tampa, Florida 33619-1344.
Section 2. The name of the initial registered agent of the Corporation
located at said address shall be John V. Whitman, Jr.
ARTICLE VIII - INCORPORATOR
The name and address of the incorporator is John V. Whitman, Jr., 3910 Riga
Boulevard, Tampa, Florida 33619-1344.
IN WITNESS WHEREOF, for the purpose of forming a corporation under the laws
of the State of Florida, the undersigned executed these Articles of
Incorporation on January 28, 2000.
/s/ John V. Whitman, Jr.
John V. Whitman, Jr.
ACCEPTANCE BY REGISTERED AGENT
I hereby accept to act as initial Registered Agent for Chronicle
Communications, Inc., as stated in these Articles of Incorporation.
/s/ John V. Whitman, Jr.
John V. Whitman, Jr.
EXHIBIT 3.2: Articles of Amendment
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
CHRONICLE COMMUNICATIONS, INC.
Pursuant to the provisions of 607.1003, Fla. Stat., the Florida
Business Corporation Act, Chronicle Communications, Inc. does hereby amend
its Articles of Incorporation as follows:
1. The name of the corporation is Chronicle Communications, Inc.
2. This Amendment to the Articles of Incorporation was duly approved
and adopted on February 7, 2000 by written consent of a majority of the
stockholders as a whole, there being no class of stockholders entitled to
vote hereon as a separate voting group, pursuant to 607.0726, Fla. Stat., by
written consent without a meeting, pursuant to 607.0704, Fla. Stat., upon
the recommendation of the board of directors on February 4, 2000 by written
consent of all directors pursuant to 607.0821, Fla. Stat.
3. The total number of shares of common stock issued and outstanding
at the date of approval hereof was 31,372,522 shares and the vote of such
shares in favor hereof was 16,300,340 shares, being sufficient in all
respects for approval hereof.
4. Article I, Section 1, of the Articles of Incorporation shall be,
and it hereby is amended to change the name of the Corporation to Stampede
Worldwide, Inc.
5. 4. Article IV of the Articles of Incorporation, as amended,
shall be and hereby is amended to add a clause "(c)", as follows:
(c) The authorized preferred stock of the Corporation shall be Ten
Million (10,000,000) Shares, having, as determined by the board of
directors, a par value, stated value, liquidation preferences and other
preferences, dividend preference, voting rights (including super
majority voting rights), right to convert into other authorized
securities of the Corporation, limitations and other features and
relative rights and being issueable, as determined by the board of
directors, in one or more classes or series within classes, each of
which may be, as determined by the board of directors, to different
from all others as to the features provided herein to be determined by
the board of directors.
IN WITNESS WHEREOF, the undersigned, President of Chronicle
Communications, Inc., has executed the within Articles of Amendment this 13th
day of April, 2000 and caused said Articles to be filed in the office of the
Secretary of State for the State of Florida, effective upon the filing
thereof.
(CORPORATE SEAL) Chronicle Communications, Inc.
ATTEST:
By: __________________________
_________________________ John V. Whitman, Jr.,
President
Jackson L. Morris, Secretary
ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION
OF
STAMPEDE WORLDWIDE, INC.
Pursuant to the provisions of 607.1002(9), Fla. Stat., the Florida
Business Corporation Act, Stampede Worldwide, Inc. does hereby amend its
Articles of Incorporation, as amended, as follows:
1. The name of the corporation is Stampede Worldwide, Inc.
2. This Amendment to the Articles of Incorporation was duly approved
and adopted on October 27, 2000 by all the directors of the Corporation,
pursuant to 607.0602, Fla. Stat., by written consent without a meeting,
pursuant to 607.0704, Fla. Stat. and approval by the stockholders is not
required under 607.1002(9), Fla. Stat.
3. Article IV of the Articles of Incorporation, as amended, shall be
and hereby is amended to add a sub clause "(i)" to clause (c), as follows:
(i) Three hundred fifty (350) shares of the authorized preferred stock
of the Corporation is hereby designated as Convertible Preferred Stock,
Series A, each share of which shall have a stated value and liquidation
preference of $10,000, a right to receive dividends on a parity with
the Corporation's common stock, when, as and if declared by the board
of directors and no right to vote (except as provided below) on any
matter submitted to the holders of the Corporation's common stock, and
each share of which shall be redeemable by the Corporation, beginning
one year from date of issue after thirty days prior written notice
providing opportunity for the holder to convert (until notice of
conversion as provided below) at a redemption price equal to stated
value plus premium of 10% per annum from the date of issue to the date
of redemption and convertible at the election of the holder beginning
one year from date of issue into such number of shares of the
Corporation's common stock as is determined by dividing the stated
value by one-half of average closing bid on the conversion date on the
best market therefor or the closing price, as the case may be, but not
more than $.75 in the case of either the closing bid or closing price;
provided, that conversion shall be conditioned upon amendment to the
Corporation's Articles of Incorporation or other action making
available to the Corporation a sufficient number of authorized by
unissued shares of common stock necessary to effect the conversion;
provided, further, that upon timely receipt of notice of conversion
which do to an insufficient number of shares of common stock to effect
the conversion (A) the Convertible Preferred Stock shall cease to be
redeemable and (B) shall have a right to vote in pari passu with the
common stock, the number of votes per share being determined on an "as
converted" basis.
IN WITNESS WHEREOF, the undersigned, President of Stampede Worldwide,
Inc., has executed the within Articles of Amendment this 27th day of October,
2000 and caused said Articles to be filed in the office of the Secretary of
State for the State of Florida, effective upon the filing hereof.
(CORPORATE SEAL) Stampede Worldwide, Inc.
ATTEST:
By: _______________________________
_________________________ John V. Whitman, Jr.,
President
Jackson L. Morris, Secretary
ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION
OF
STAMPEDE WORLDWIDE, INC.
Pursuant to the provisions of 607.1002(9), Fla. Stat., the Florida
Business Corporation Act, Stampede Worldwide, Inc. does hereby amend its
Articles of Incorporation, as amended, as follows:
1. The name of the corporation is Stampede Worldwide, Inc.
2. This Amendment to the Articles of Incorporation was duly approved
and adopted on November 30, 2000 by all the directors of the Corporation,
pursuant to 607.0602, Fla. Stat., by written consent without a meeting,
pursuant to 607.0704, Fla. Stat. and approval by the stockholders is not
required under 607.1002(9), Fla. Stat.
3. Article IV of the Articles of Incorporation, as amended, shall be
and hereby is amended to add a sub clause "(ii)" to clause (c), as follows:
(ii) One hundred fifty (150) shares of the authorized preferred stock of the
Corporation is hereby designated as Convertible Preferred Stock, Series B
(the "Series B Stock"), having the voting powers, preference, limitations,
qualifications, restrictions and relative, participating, optional and other
special rights, as follows:
I. Dividends and Distributions.
A. The holders of Series B Stock shall be entitled to receive, out of the
assets of the Corporation legally available for distribution to holders of
the Series B Stock, whether such assets are capital, surplus, or earnings, as
and when received by holders of the common stock of the Corporation or any
other class of stock of the Corporation ranking the same or junior to the
Series B Stock, dividends in an amount equal to the amount of any dividends
payable to holders of the common stock of the Corporation or any other class
of the Corporation ranking junior to Series B Stock (excluding dividends
payable in securities of the Corporation which shall be governed by the
provisions appearing below), based on the largest number of full shares of
common stock into which a holder's shares of Series B Stock could be
converted immediately prior to the record date for the payment of such
dividend.
B. Notwithstanding anything to the contrary contained in this Article
IV(c)(ii), so long as any shares of Series B Stock shall be outstanding, the
Corporation shall not, without the prior approval of the holders of at least
sixty-seven (67%) of the outstanding shares of Series B Stock, (i) declare or
pay a dividend on, (ii) make any distribution to the holders of, or (iii)
repurchase, redeem or make provisions for the purchase or redemption (whether
directly or through a subsidiary) of any class or series of stock of the
Corporation ranking junior to the Series B Stock (other than the payment of
dividends payable in securities of the Corporation which shall be governed by
the provisions appearing below).
II. Voting Rights
Except as otherwise required by law, holders of Series B Stock shall have no
voting rights; provided, however
A. If any representation or warranty made by the Corporation to the holders
of the Series B Stock in any agreement, certificate or other writing is shown
to be false, incomplete, inaccurate or misleading in light of the
circumstances under which such representation or warranty was made or if the
Corporation fails to timely perform any covenant with or timely discharge any
obligation owed to the holders of the Series B Stock, then, and in any such
event,
(1) the number of directors then constituting the entire Board of Directors
of the Corporation shall automatically be increased by one director and the
holders of shares of the Series B Stock, voting together as a single class,
shall be entitled to fill such newly created directorship. The Corporation
may, and upon the written request of the holders of record of not less than
20% of the total number of shares of the Series B Stock then outstanding
shall, call a special meeting of the holders of such shares to fill such
newly created directorship for the election of directors. In the case of
such a written request, such special meeting shall be held within 90 days
after the delivery of such request and, in either case, at the place and upon
the notice provided by law and in the bylaws of the Corporation, provided
that the Corporation shall not be required to call such a special meeting if
such request is received less than 120 days before the date fixed for the
next ensuing annual meeting of shareholders of the Corporation, at which
meeting such newly created directorship shall be filled by the holders of the
Series B Stock; and,
(2) the shares of Series B Stock shall become immediately entitled to cast
that number of votes equal to the largest number of whole shares of common
stock into which each respective holder's Series B Stock could be converted
pursuant to the provisions of this Article IV(c)(ii), at the record date for
the determination of shareholders entitled to vote on such matter or, if no
such record date is established, at the date such vote is taken or any
written consent of shareholders is solicited. Each holder of Series B Stock
shall be entitled, notwithstanding any provision hereof, to notice of any
shareholders' meeting in accordance with the bylaws of this Corporation, and
shall be entitled to vote, together with holders of common stock as a single
class, with respect to any questions upon which holders of common stock have
the right to vote.
B. Without the affirmative vote of the holders of at least sixty percent
(67%) of the outstanding shares of Series B Stock, voting as a single class,
the Corporation shall not:
(1) amend the Corporation's Articles of Incorporation or Bylaws so as to
adversely affect the rights or preferences of the Series B Stock; or
(2) effect the merger or consolidation of the Corporation with or into
another corporation or the sale, exchange or transfer of all or substantially
all of the Corporation's assets, except that no vote shall be required
hereunder if the rights, preferences and privileges of the Series B Stock are
not adversely affected or the holders of Series B Stock receive a security
with substantially similar rights, preferences and privileges as the Series B
Stock.
III. Liquidation, Dissolution or Winding-Up.
A. In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation ("Liquidation"), the holders of the shares of
Series B Stock shall be entitled to receive, out of the assets of the
Corporation available for distribution to the holders of equity securities of
the Corporation, an amount equal to Ten Thousand Dollars ($10,000) (the
"Liquidation Preference') for each share of Series B Stock held by them, and
no more, before any payment shall be made or any assets distributed to the
holders of any shares of capital stock ranking junior to the Series B Stock
or to the holders of the shares of common stock of the Corporation. If upon
such Liquidation the assets available for distribution to the holders of the
Series B Stock shall be insufficient to permit the payment to those persons
of the full Liquidation Preference for all shares of Series B Stock held by
them, then the entire remaining assets of the Corporation available for such
distribution shall be distributed ratably among the holders of the shares of
Series B Stock.
B. Upon any Liquidation of the Corporation, after payment or distribution of
the aggregate Liquidation Preference for all then-outstanding shares of
Series B Stock, as provided herein, all remaining assets of the Corporation
shall be distributed ratably among the holders of the common stock of the
Corporation, and the holders of shares of the Series B Stock shall have no
right to participate therein.
IV. Redemption
A. Outstanding shares of Series B Stock shall be redeemable, at the option
of the Corporation, in whole or in part, at the time or at any time after the
close of business on the 365th calendar day following the date of the first
issuance of shares of Series B Stock (the "Issuance Date") for redemption
price equal to $11,000 per share.
B. Not less than 30 nor more than 60 days prior to the date fixed for any
redemption of shares of Series B Stock, a notice specifying the time and
place of such redemption and the number of shares to be redeemed shall be
given by first class mail, postage prepaid, to the holders of record of the
shares of Series B Stock to be redeemed at their respective addresses as the
same shall appear on the books of the Corporation.
C. If a notice of redemption has been given pursuant hereto and if, on or
before the date fixed for redemption, the funds necessary for such redemption
shall have been set aside by the Corporation, separate and apart from its
other funds, in trust for the pro rata benefit of the holders of the shares
so called for redemption, then on and after the redemption date,
notwithstanding that any certificates for such shares have not been
surrendered for cancellation, dividends shall cease to accrue on the shares
of Series B Stock to be redeemed and the holders of such shares shall cease
to be shareholders with respect to such shares and shall have no interest in
or claims against the Corporation by virtue thereof and shall have no voting
or other rights with respect to such shares, except the right to receive the
moneys payable upon such redemption, without interest thereon, upon surrender
(and endorsement, if required by the Corporation) of their certificates, and
the shares evidenced thereby shall no longer be outstanding. Subject to
applicable escheat laws, any moneys so set aside by the Corporation and
unclaimed at the end of six years from the redemption date shall revert to
the general funds of the Corporation, after which reversion the holders of
such shares so called for redemption shall look only to the general funds of
the Corporation for the payment of the redemption price. Any interest
accrued on funds so deposited shall be paid to the Corporation from time to
time.
D. If after a notice of redemption has been given, any holder of shares of
Series B Stock shall, prior to the close of business on the last business day
preceding the date fixed for redemption, give written notice to the
Corporation pursuant hereto of the conversion of any or all of the shares to
be redeemed held by such holder (accompanied by a certificate or certificates
for such shares, duly endorsed or assigned to the Corporation, as required
hereby), then such redemption shall not become effective as to such shares to
be converted and such conversion shall become effective as provided herein
above.
E. In every case of redemption of less than all of the outstanding shares of
Series B Stock, the shares to be redeemed shall be selected by lot or by such
other manner as may be prescribed by resolution of the Board of Directors,
provided that only whole shares shall be selected for redemption.
V. Conversion
A. From and after the Issuance Date, each share of Series B Stock shall be
convertible at the option of the holder, in the manner hereinafter set forth,
into fully paid and nonassessable shares of the Corporation's common stock,
$0.001 par value per share, at a conversion price per share (the "Conversion
Price") equal to the lesser of (i) 50% of the average Market Price (as
hereinafter defined) of one share of common stock for the trading day
immediately prior to the Conversion Date (as hereinafter defined), or (ii)
$0.75 per share. The Conversion Price shall be adjusted in certain instances
as provided below. As used herein, the term "Market Price" shall mean with
respect to a particular date the highest closing bid price for shares of
Common Stock on such date, as reported by the principal securities exchange
or market on which the common stock is traded.
B. In order to convert Series B Stock into shares of Common Stock, a holder
of Series B Stock shall surrender to Douglas J. Bates, escrow agent under an
Escrow Agreement date as of December 1, 2000 between Douglas J. Bates (the
"Escrow Agent"), the Corporation and the holders of the Series B Stock (the
"Escrow Agreement"), the certificate or certificates representing the Series
B Stock being converted (the "Converted Certificate"), duly endorsed for
conversion on the reverse side thereof. The conversion shall be effective
and in full force and effect for a particular date (the "Conversion Date") if
delivered to the Escrow Agent on that particular date prior to 5:00 o'clock
p.m., Eastern time.
C. The person or persons entitled to receive the shares of common stock to
be issuable upon conversion shall be treated for all purposes as the record
holder or holders of such shares of common stock as of the Conversion Date.
D. In the event that any Converted Certificate submitted represents a number
of shares of Series B Stock that is greater than the number of such shares
that is being converted pursuant to the Conversion Certificate delivered in
connection therewith, the Escrow Agent shall advise the Corporation to
deliver a certificate representing the remaining number of shares of Series B
Stock not converted.
E. Upon receipt of a Conversion Certificate, the Corporation shall
absolutely and unconditionally be obligated to cause a certificate or
certificates representing the number of shares of common stock to which a
converting holder of Series B Stock shall be entitled as provided herein,
which shares shall constitute fully paid and nonassessable shares of common
stock. Certificates representing the common stock to which a converting
holder of Series B Stock shall be entitled be issued to, delivered by
overnight courier to, and received by such holder by the fifth (5th) business
day following the Conversion Date. Such delivery shall be made at such
address as such holder may designate therefor in its Conversion Certificate
or in its written instructions submitted together therewith.
F. Adjustments to Conversion Price
(i) If the Corporation shall pay or make a dividend or other distribution on
any class of capital stock of the Corporation in shares of common stock, the
Conversion Price in effect at the opening of business on the day following
the date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of common stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph, the number of shares of
common stock at any time outstanding shall not include shares held in the
treasury of the Corporation but shall include shares issuable in respect of
scrip certificates issued in lieu of fractional shares of common stock.
(ii) If the Corporation shall issue rights or warrants to all holders of its
common stock entitling them to subscribe for or purchase shares of common
stock at a price per share less than the current Market Price of the common
stock on the date fixed for the determination of shareholders entitled to
receive such rights or warrants, the Conversion Price in effect at the
opening of business on the day following the date fixed for such
determination shall be reduced by multiplying such Conversion Price by a
fraction of which the numerator shall be the number of shares of common stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of common stock which the aggregate of the offering
price of the total number of shares of common stock so offered for
subscription or purchase would purchase at such current Market Price and the
denominator shall be the number of shares of common stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of common stock so offered for subscription or purchase, such
reduction to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purposes of
this paragraph, the number of shares of common stock at any time outstanding
shall not include shares held in the treasury of the Corporation but shall
include shares issuable in respect of scrip certificates issued in lieu of
fractional shares of common stock.
(iii) If the outstanding shares of common stock shall be subdivided into a
greater number of shares of common stock, the price set forth in clause (ii)
of Section V.A. in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be proportionately
reduced, and, conversely, in case the outstanding shares of common stock
shall each be combined into a smaller number of shares of common stock, such
price in effect at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(iv) If the Corporation shall, by dividend or otherwise, distribute to all
holders of its common stock evidences of its indebtedness or assets
(including securities, but excluding any rights or warrants referred to
above, any dividend or distribution paid in cash out of the retained earnings
of the Corporation, and any dividend or distribution referred to above), the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the close of business on the date fixed for the determination of shareholders
entitled to receive such distribution by a fraction of which the numerator
shall be the current Market Price per share of the common stock on the date
fixed for such determination less the then fair market value (as determined
by the Board of Directors, whose determination shall be conclusive) of the
portion of the assets or evidences of indebtedness so distributed applicable
to one share of common stock and the denominator shall be such current Market
Price per share of common stock, such adjustment to become effective
immediately prior to the opening of business on the business day following
the date fixed for the determination of shareholders entitled to receive such
distribution.
(v) If the common stock to be issued on conversion of the Series B Stock
shall be changed into the same or a different number of shares of any other
class or classes of stock, whether by capital reorganization,
reclassification, reverse stock split or forward stock split or stock
dividend or otherwise (other than a subdivision or combination of shares
provided for above), the holders of the Series B Stock shall, upon its
conversion be entitled to receive, in lieu of the common stock which the
holders would have become entitled to receive but for such change, a number
of shares of such other class or classes of stock that would have been
subject to receipt by the holders if they had exercised their rights of
conversion of the Series B Stock immediately before that change.
(vi) If at any time there shall be a capital reorganization of the
Corporation's common stock (other than a subdivision, combination,
reclassification or exchange of shares provided for elsewhere herein) or
merger of the Corporation into another corporation, or the sale of the
Corporation's properties and assets as, or substantially as, an entirety to
any other person, then, as a part of such reorganization, merger or sale,
lawful provision shall be made so that the holders of the Series B Stock
receive the number of shares of stock or other securities or property of the
Corporation, or of the successor corporation resulting from such merger, to
which holders of the common stock deliverable upon conversion of the Series B
Stock would have been entitled on such capital reorganization, merger or sale
if the Series B Stock had been converted immediately before that capital
reorganization, merger or sale to the end that the provisions of this
paragraph (including adjustment of the Conversion Price then in effect and
the number of shares purchasable upon conversion of the Series B Stock) shall
be applicable after that event as nearly equivalently as may be practicable.
(vii) In the event that (a) a registration statement in respect of the
common stock issuable upon the conversion of the Series B Stock has not been
filed with the Securities and Exchange Commission on or before the 15th day
after the Issuance Date, or (b) the Company fails to make amendments to the
registration statement and submit to the staff of the Securities and Exchange
Commission supplemental information and explanatory statements designed to
address and satisfy the commentary of the staff within 15 days after the
Company's receipt of the staff's comments with respect to the registration
statement, or (c) the Company fails to request acceleration of the
effectiveness of the registration statement within 24 hours after becoming
aware that the staff of the Securities and Exchange Commission will have no
further comments to the registration statement, the Conversion Price shall be
adjusted to the lesser of (i) 25% of the average Market Price of one share of
common stock for the ten trading days immediately prior to the Conversion
Date), or (ii) $0.50 per share, as further adjusted in accordance with the
foregoing provisions.
G. The Corporation will not, by amendment of its Articles of Incorporation
or through any reorganization, recapitalization, transfer of assets, merger,
dissolution, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in
the carrying out of all the provisions of this Article IV(c)(ii) and in the
taking of all such action as may be necessary or appropriate in order to
protect the conversion privileges of the holders of the Series B Stock
against impairment.
H. Upon the occurrence of each adjustment or readjustment of the Conversion
Price for any shares of Series B Stock in accordance herewith, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Series B Stock effected thereby a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon the
written request at any time of any holder of Series B Stock, furnish or cause
to be furnished to such holder a like certificate setting forth: (i) such
adjustments and readjustments; (ii) the Conversion Price at the time in
effect; and (iii) the number of shares of common stock and the amount, if
any, of other property which at the time would be received upon the
conversion of such holder's shares of Series B Stock.
I. No fractional shares of common stock shall be issued upon conversion of
Series B Stock, and in lieu thereof the number of shares of common stock to
be issued for each share of Series B Stock converted shall be rounded down to
the nearest whole number of shares of common stock. Such number of whole
shares of common stock to be issued upon the conversion of one share of
Series B Stock shall be multiplied by the number of shares of Series B Stock
submitted for conversion pursuant to the Conversion Certificate to determine
the total number of shares of common stock to be issued in connection with
any one particular conversion.
J. The Corporation shall at all times keep and maintain on deposit under the
Escrow Agreement not less than 125% of the largest number of shares of common
stock into which the Series B Stock could be converted solely for the purpose
of effecting the conversion of the shares of the Series B Stock. If at any
time the number of authorized but unissued shares of common stock shall not
be sufficient to effect the conversion of all then outstanding shares of the
Series B Stock, then, in addition to all rights, claims and damages to which
the holders of the Series B Stock shall be entitled to receive at law or in
equity as a result of such failure by the Corporation to fulfill its
obligations to the holders hereunder, the Corporation will take any and all
corporate or other action as may, in the opinion of its counsel, be helpful,
appropriate or necessary to increase its authorized but unissued shares of
common stock to such number of shares as shall be sufficient for such
purpose.
VI. Notices
A. In the event of the establishment by the Corporation of a record of the
holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any distribution, the Corporation shall
mail to each holder of Series B Stock at least twenty (20) days prior to the
date specified therein a notice specifying the date on which any such record
is to be taken for the purpose of such distribution and the amount and
character of such distribution.
B. Any notices required by the provisions hereof to be given to the holders
of shares of Series B Stock shall be deemed given if deposited in the United
States mail, postage prepaid and return receipt requested, and addressed to
each holder of record at its address appearing on the books of the
Corporation or to such other address of such holder or its representative as
such holder may direct.
IN WITNESS WHEREOF, the undersigned, President of Stampede Worldwide,
Inc., has executed the within Articles of Amendment this 1st day of December,
2000 and caused said Articles to be filed in the office of the Secretary of
State for the State of Florida, effective upon the filing hereof.
(CORPORATE SEAL) Stampede Worldwide, Inc.
ATTEST:
___________________________________ By: _______________________________
Jackson L. Morris, Secretary John V. Whitman, Jr.,
President
EXHIBIT 5: OPINION RE: LEGALITY
JACKSON L. MORRIS
ATTORNEY AT LAW
3116 West North A Street
Tampa, Florida 33609-1544
December 5, 2000
By Telephone Facsimile
Board of Directors
Stampede Worldwide, Inc.
Tampa, Florida
Re: Registration Statement on Form SB-2
Gentlemen:
I am general counsel for and a director and corporate secretary of Stampede
Worldwide, Inc. (formerly Chronicle Communications, Inc.) and Subsidiaries, a
Georgia corporation, (the "Company"). I have been asked to provide an
opinion letter in connection with the registration under the Securities Act
of 1933, as amended, (the "Act") on Form SB-2 ("Registration Statement") for
the offer and sale of no shares of the Company's common stock, $.001 par
value per share which are currently issued, outstanding and owned by
stockholders of the Company ("Stockholders'Shares") and 41,366,653 shares of
the Company's common stock, no par value per share which are to be offered
and sold by the Company ("Company Shares"). Based upon my review of the
Company's Restated and Amended Articles of Incorporation, appropriate records
of proceedings of the Company's board of directors, subscription documents
and the Company's audited balance sheet for the year ended September 30,
1999, unaudited balance sheet for the nine months ended June 30, 2000 and
such additional records as I deem appropriate, it is my opinion that: The
Stockholders' Shares included in the Registration Statement are legally
authorized, duly and validly issued, fully paid and non-assessable; and, The
Company Shares included in the Registration Statement are legally authorized
and, upon issuance and delivery against payment or receipt of consideration
therefore, will be duly and validly issued, fully paid and non-assessable.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and the reference to me therein under the caption "Interest of
Counsel."
Very truly yours
/s/ Jackson L. Morris
Jackson L. Morris
EXHIBIT 23.1: CONSENT OF COUNSEL
Included in Exhibit 5
EXHIBIT 23.2 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form SB-2 of
our report dated December 20,1999, except as to Note 13 which is as to
December 4, 2000, relating to the September 30, 1998 and 1999 consolidated
financial statements of Stampede Worldwide, Inc. (formerly Chronicle
Communications, Inc.) and Subsidiaries and to the reference to our firm under
the caption "Experts" in the Prospectus.
/s/ W. Andrew Mueller
W. Andrew Mueller, C.P.A.
Bella, Hermida, Gillman, Hancock & Mueller
Plant City, Florida
December 4, 2000
