As filed with the Securities and Exchange Commission on September 17, 1998
Registration No. 333-____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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JVWEB, INC.
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(Exact name of Registrant specified in charter)
Delaware 7389 76-0552098
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(State of (Primary Industrial (I.R.S. Employer
Incorporation) Classification) I.D.#)
5444 Westheimer, Suite 2080
Houston, Texas 77056
Tel: (713) 622-9287
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(Address, including zip code of principal place of business
and telephone number, including area code of
Registrant's principal executive offices.)
Greg J. Micek With a copy to:
President Randall W. Heinrich
5444 Westheimer, Suite 2080 Gillis & Slogar, L.L.P.
Houston, Texas 77056 1000 Louisiana, Suite 6905
Tel: (713) 622-9287 Houston, Texas 77002
(Name, address, including zip code (713) 951-9100
and telephone number, including
area code of agent for service.)
Approximate date of commencement date or 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].
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Title of each class Proposed maximum
of securities to be Amount to be maximum offering aggregate Amount of
registered registered price per share* offering price* registration fee
<S> <C> <C> <C> <C>
Common Stock 871,960 $.875 $762,965 $225.07
</TABLE>
- --------------------
* Estimated solely for purposes of calculating the registration fee based on the
average of the bid and asked prices of the Registrant's common stock as reported
on the OTC Bulletin Board on September 14, 1998, or $.875 per share.
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 said Section 8(a),
may determine.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, DATED SEPTEMBER 17, 1998
871,960 Shares
JVWEB INC.
Common Stock
--------------------------
This prospectus ("Prospectus") relates to up to 871,960 shares of Common
Stock, par value $.01 per share ("Common Stock"), of JVWeb, Inc., a Delaware
corporation (the "Company"), which have been issued to six persons in certain
private placements (the "Private Placements Shares"). The holders of the Private
Placement Shares are referred to herein collectively as the "Selling
Stockholders." The Company is a comparatively new company formed to pursue
electronic commerce opportunities, primarily through the provision of Internet
services and through the ownership (either directly or through joint ventures)
of sites on the World Wide Web (the "Web") that offer products, services,
content and advertising. See "BUSINESS."
The Private Placement Shares will be sold by the Selling Stockholders from
time to time at their discretion. See "PLAN OF DISTRIBUTION." The Company will
not receive any proceeds from the sale of the Private Placement Shares. The
Common Stock is traded on the OTC Bulletin Board under the symbol "JVWB."
Expenses are estimated to be approximately $8,225 and will be paid by the
Company. FOR A DISCUSSION OF CERTAIN RISKS RELATING TO THE ACQUISITION AND
OWNERSHIP OF THE COMMON STOCK, SEE "RISK FACTORS ON PAGE 3."
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PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO
PUBLIC COMMISSIONS STOCKHOLDERS
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Per share... $.875(1) $ -0- (2) $.875(3)
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Total... $762,965(1) $ -0- (2) $762,965(3)(4)
- --------------------------------------------------------------------------------
(1) The securities are expected to be offered by Selling Stockholders at
market prices over the OTC Bulletin Board. The price to public
indicated represents the average of the bid and asked prices of the
Registrant's common stock as reported on the OTC Bulletin Board on
September 14, 1998.
(2) The only selling commissions to be paid in connection with the sale of
the shares offered hereby will be any brokerage commissions paid by
Selling Stockholders. The amounts of these commissions will vary
depending on the terms obtained by each Selling Stockholder;
accordingly such amounts can not now be determined.
(3) The figure does not take into account any selling commissions to be paid by
the Selling Stockholder. (4) Other than selling commissions (which will be the
sole responsibility of the Selling Stockholders), the
Company will bear all expenses of the offering estimated at $8,225.
The date of this Prospectus is _________________ _____, 1998.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 and exhibits relating
thereto (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), of which this Prospectus is a part. This Prospectus does
not contain all the information set forth in the Registration Statement.
Reference is made to such Registration Statement for further information with
respect to the Company and the securities of the Company covered by this
Prospectus. Statements contained herein concerning the provisions of documents
are necessarily summaries of such documents, and each statement is qualified in
its entirety by reference to the copy of the related document filed with the
Commission. The Commission maintains a World Wide Web site that contains
reports, proxy statements and information statements and other information
(including the Registration Statement) regarding issuers that file
electronically with the Commission. The address of such site is
http://www.sec.gov. The Registration Statement and exhibits may also be
inspected, and copies thereof may be obtained at prescribed rates, at the
offices of the Commission, Judiciary Plaza Building, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
The Company has registered as a reporting company under the Securities
Exchange Act of 1934 (the "Exchange Act"). As a consequence, the Company will
file with the Commission Annual Reports on Form 10-KSB, which will contain
audited financial statements. After they are filed, these Annual Reports and
audited financial statements can be inspected at, and copies downloaded from,
the Commission's World Wide Web site at the Internet address stated in the
previous paragraph. These Annual Reports and audited financial statements can
also be inspected, and copies thereof may be obtained at prescribed rates, at
the offices of the Commission at the addresses also stated in the previous
paragraph.
No person is authorized to give any information or to make any
representation not contained in this Prospectus, and, if given or made, any
information or representation not contained herein must not be relied upon as
having been authorized. This Prospectus does not constitute an offer to sell, or
a solicitation of an offer to purchase, any of the securities covered by this
Prospectus in any jurisdiction to or from any person to or from whom it is
unlawful to make such offer or such solicitation of an offer in such
jurisdiction. Neither the delivery of this Prospectus nor the securities covered
by this Prospectus shall, under any circumstances, create an implication that
there has been no change in the information set forth herein since the date
hereof.
<PAGE>
RISK FACTORS
THE SECURITIES COVERED BY THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK AND,
THEREFORE, SHOULD BE CONSIDERED EXTREMELY SPECULATIVE. PROSPECTIVE INVESTORS
SHOULD READ THE ENTIRE PROSPECTUS AND CAREFULLY CONSIDER, AMONG THE OTHER
FACTORS AND FINANCIAL DATA DESCRIBED HEREIN, THE FOLLOWING RISK FACTORS:
1. Extremely Limited Operating History. The Company was incorporated in
October 1997 and at that time continued preliminary work commenced by the
founder of the Company several months earlier. Accordingly, there is no
meaningful operating history upon which to base an evaluation of the Company and
its business and prospects. The Company's business and prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly
companies in new and rapidly evolving markets such as electronic commerce. Such
risks for the Company include, but are not limited to, an evolving and
unpredictable business model and the management of growth. To address these
risks, the Company must, among other things, identify and pursue suitable
electronic commerce opportunities; identify and enter into binding agreements
with suitable joint venture partners; identify and consummate suitable
acquisitions; develop and increase the Company's customer bases; implement and
successfully execute the Company's business and marketing strategy; continue to
develop and upgrade the Company's technology and transaction-processing systems;
create and constantly improve the Company's Web sites; provide superior customer
service and order fulfillment; respond to competitive developments; and attract,
retain and motivate qualified personnel. There can be no assurance that the
Company will be successful in addressing such risks, and the failure to do so
could have a material adverse effect on the Company's business, prospects,
financial condition and results of operations.
2. Fluctuations in Operating Results. The Company's operating results are
expected to fluctuate in the future due to a number of factors, many of which
are outside the Company's control. These factors include the level of usage of
the Internet; demand for products, services and advertising offered on the
Company's Web sites; the Company's ability to pursue suitable electronic
commerce opportunities, enter into suitable joint ventures and consummate
suitable acquisitions at a steady rate; the Company's ability to attract new
customers at a steady rate; the addition or loss of advertisers; the
introduction of new products, services or Web sites by the Company or its
competitors; pricing changes for Web-based products, services and advertising;
technical difficulties with respect to the Company's Web sites; costs relating
to acquisitions; and general economic conditions and economic conditions
specific to the Internet and Web sites. As a strategic response to changes in
the competitive environment, the Company may from time to time make certain
service, marketing or supply decisions or acquisitions that, while beneficial in
the long run, could have a material adverse effect on the Company's quarterly
results of operations and financial condition. The Company also expects that it
like other retailers may experience seasonality in its businesses in the future.
Due to all of the foregoing factors, in some future quarter the Company's
operating results may fall below the expectations of investors and any
securities analysts who follow the Common Stock. In such event, the trading
price of the Common Stock would likely be materially adversely affected.
Further, the Company believes that period-to-period comparisons of its financial
results may not necessarily be meaningful and should not be relied upon as an
indication of future performance.
3. Future Capital Needs; Uncertainty of Additional Financing. The Company
currently has no constant and continual flow of revenues. The Company's future
liquidity and capital requirements will depend upon numerous factors, including
the success of the Company's Web sites. The Company may be required to raise
additional funds through public or private financing, strategic relationships or
other arrangements. There can be no assurance that such additional funding, if
needed, will be available on terms acceptable to the Company, or at all.
Furthermore, debt financing (if available) may involve restrictive covenants,
which may limit the Company's operating flexibility with respect to certain
business matters. If additional funds are raised through the issuance of equity
securities, the percentage ownership of the stockholders of the Company will be
reduced, stockholders may experience additional dilution in net book value per
share, and such equity securities may have rights, preferences or privileges
senior to those of the holders of the Company's Common Stock. While the
Company's need for additional capital can not now be precisely ascertained
because of the uncertainty of the actual growth of the Company, management
believes that the future capital needs of the Company, in order to pursue the
Company's business plan as desired, will exceed the Company's current financial
position. The Company expects to finance its operations for fiscal 1999 through
cash flow from operations, proceeds from the exercise of certain outstanding
warrants to purchase shares of Common Stock, and the possible private placement
of the Company's equity securities. The Company is looking for sources of
additional capital, but there can be no assurance that such sources can be found
or that, if found, the terms of such capital will be commercially acceptable to
the Company. If adequate funds are not available on acceptable terms, the
Company may be unable to take advantage of future opportunities or respond to
competitive pressures, any of which could have a material adverse effect on the
Company's business, results of operations and financial condition.
4. Dependence on the Internet. The Company's future success substantially
depends upon continued growth in the use of the Internet and the Web in order to
support the sale of the products, services and advertising offered by the
Company on its Web sites. Rapid growth in the use of and interest in the
Internet and the Web is a recent phenomenon. There can be no assurance that
communication or commerce over the Internet will become more widespread. In
addition, to the extent that the Internet continues to experience significant
growth in the number of users and level of use, there can be no assurance that
the Internet infrastructure will continue to be able to support the demands
placed upon it by such potential growth or that the performance or reliability
of the Web will not be adversely affected by this continued growth. In addition,
the Internet could lose its viability due to delays in the development or
adoption of new standards and protocols required to handle increased levels of
Internet activity or due to increased governmental regulation. Changes in or
insufficient availability of telecommunications services to support the Internet
also could result in slower response times and adversely affect usage of the Web
and the Company's Web sites. If use of the Internet does not continue to grow,
or if the Internet infrastructure does not effectively support growth that may
occur, the Company's business, operating results and financial condition would
be materially adversely affected.
5. Uncertain Acceptance of the Internet as a Medium for Commerce. The
success of the Company's business plan will depend upon the adoption of the
Internet as a medium for commerce by a broad base of consumers, vendors and
advertisers. The Company's target markets are expected to be comprised of
consumers, vendors and advertisers who have historically used traditional means
of commerce to conduct business. Most of the Company's customers, vendors and
advertisers will have only limited experience with the Web as a commercial
medium and may not find such a medium to be an effective way to transact
business. For the Company to be successful, these consumers, vendors and
advertisers must accept and utilize novel ways of conducting business. Moreover,
critical issues concerning the commercial use of the Internet, such as ease of
access, security, reliability, cost and quality of service, development of the
necessary infrastructure (such as a reliable network backbone) and timely
development and commercialization of performance improvements (including high
speed modems), remain unresolved and may affect the growth of Internet use or
the attractiveness of conducting commerce by means of Web sites. The Company's
ability to generate significant revenues will depend upon, among other things,
consumer, vendor and advertiser acceptance of the Web as an effective and
sustainable commercial medium. There can be no assurance that there will be
broad acceptance of the Internet as an effective medium for commerce by
consumers, vendors and advertisers will develop successfully or achieve
widespread acceptance.
6. Developing Market. The electronic market for products, services and
advertising has only recently begun to develop and is rapidly changing. As is
typical for a new and rapidly evolving market, demand for products, services and
advertising over the Internet is subject to a high level of uncertainty, and
there exist few proven services and products. Since the market for electronic
commerce on the Internet is new and evolving, predictions of the size of this
market or its future growth rate, if any, are difficult. Moreover, no standards
have yet been widely accepted for the measurement of the effectiveness of
Web-based advertising, and there can be no assurance that such standards will
develop sufficiently to support Web-based advertising as a significant
advertising medium. In addition, there can be no assurance that advertisers will
determine that banner advertising offered on Web sites is an effective or
attractive advertising medium, and there can be no assurance that the Company
will effectively transition to any other forms of Web-based advertising, should
they develop. Furthermore, certain advertising filter software programs are
available that limit or remove advertising from an Internet user's desktop. Such
software, if generally adopted by users, may have a materially adverse effect
upon the viability of advertising on the Internet. Moreover, there can be no
assurance that consumers and vendors will determine that the electronic medium
is an effective way to conduct commerce. If the markets for the Company's
electronic commerce fail to develop, develop more slowly than expected or become
saturated with competitors, or if the Company's electronic commerce does not
achieve market acceptance, the Company's business, results of operations and
financial condition will be materially adversely affected.
7. Opportunity Selection. Probably the most integral part of the Company's
business strategy is the identification and pursuit of potentially successful
electronic commerce opportunities. There can be no assurance that the Company
will be able to identify successful electronic commerce opportunities or that
the Company will be able to pursue these opportunities successfully even if
identified. There is no specific criterion for selecting electronic
opportunities. Accordingly, management will have significant flexibility in
selecting such opportunities. The failure of management to select good
electronic commerce opportunities would probably have a material adverse effect
on the Company's business, results of operations and financial condition.
8. Uncertain Acceptance of Brands. While the Company expects to offer the
brands of other persons, the Company also intends to develop its own brands. The
Company believes that, due to the growing number of Internet sites and the
relatively low barriers to entry, the importance of brand recognition will
increase as more companies engage in commerce over the Internet. Development and
awareness of the Company's brands will depend largely on the Company's success
in establishing and maintaining positions as leaders in Internet commerce and in
providing high quality products and services, which cannot be assured. In order
to attract and retain customers, vendors and advertisers and to promote and
maintain the Company's brands in response to competitive pressures, the Company
may find it necessary to increase its marketing and advertising budgets or
otherwise to increase substantially its financial commitment to creating and
maintaining brand loyalty among vendors and consumers. If the Company is unable
to provide high quality products, services and advertising or otherwise fail to
promote and maintain its brands, or if the Company is unable to (or incurs
significant expenses in an attempt to) achieve or maintain a leading position in
Internet commerce or to promote and maintain its brands, the Company's business,
results of operations and financial condition will be materially adversely
affected.
9. Content and Graphic Development. Content and (to a lesser degree)
graphic development relating to the Company's Web sites are key elements to the
Company's success. If these sites fail to have solid content (which is modified
on a continual basis) and appealing graphics, the Company expects that it will
fail to develop successfully its brands, and consumers, vendors and advertisers
will not be attracted to, or will not continue to visit and utilize, the sites.
The Company has relied and will continue to rely substantially on content and
graphic development efforts of third parties. There can be no assurance that the
Company's current or future third-party providers will effectively implement
these properties, or that their efforts will result in significant revenue to
the Company. Any failure to develop and maintain high-quality and successful Web
sites could have a material adverse effect on the Company's business, results of
operations and financial condition.
10. Internet Commerce Security Risks. A significant barrier to electronic
commerce and communications is the secure transmission of confidential
information over public networks. The Company will rely on encryption and
authentication technology licensed from third parties to provide the security
and authentication necessary to effect secure transmission of confidential
information. There can be no assurance that advances in computer capabilities,
new discoveries in the field of cryptography or other events or developments
will not result in a compromise or breach of the algorithms used by the Company
to protect customer transaction data. If any such compromise of the Company's
security were to occur, it could have a material adverse effect on the Company's
business, results of operations and financial condition. A party who is able to
circumvent the Company's security measures could misappropriate proprietary
information or cause interruptions in the Company's operations. The Company may
be required to expend significant capital and other resources to protect against
the threat of such security breaches or to alleviate problems caused by such
breaches. Concerns over the security of Internet transactions and the privacy of
users may also inhibit the growth of the Internet generally, and the Web in
particular, especially as a means of conducting commercial transactions. To the
extent that activities of the Company or third party contractors involve the
storage and transmission of proprietary information, such as credit card
numbers, security breaches could expose the Company to a risk of loss or
litigation and possible liability. There can be no assurance that the Company's
security measures will prevent security breaches or that failure to prevent such
security breaches will not have a material adverse effect on the Company's
business, results of operations and financial condition.
11. Risks Associated with Technological Change. The Internet and electronic
markets are characterized by rapid technological change, changes in user and
customer requirements, frequent new service or product introductions embodying
new technologies and the emergence of new industry standards and practices that
could render the Company's existing Web sites and technology obsolete. The
Company's performance will depend, in part, on its ability to license leading
technologies, enhance its existing services, and respond to technological
advances and emerging industry standards and practices on a timely and
cost-effective basis. The development of Web sites entails significant technical
and business risks. There can be no assurance that the Company will be
successful in using new technologies effectively or adapting its Web sites to
consumer, vendor, advertising or emerging industry standards. If the Company is
unable, for technical, legal, financial or other reasons, to adapt in a timely
manner in response to changing market conditions or customer requirements, the
Company's business, results of operations and financial condition would be
materially adversely affected.
12. Risk of System Failure; Single Site. The Company's success largely
depends upon communications hardware and computer hardware made available by a
third party in a facility located in Arizona. Like all computer systems, this
system is vulnerable to damage from earthquake, fire, floods, power loss,
telecommunications failures, break-ins and similar events. Despite the security
measures of the Company, its servers are also vulnerable to computer viruses,
physical or electronic break-ins and similar disruptive problems, which could
lead to interruptions, delays, loss of data or cessation in service to users of
the Company's services and products. The Company does not presently have
redundant systems or a formal disaster recovery plan. The Company's does not now
and will not for the foreseeable future maintain business interruption
insurance. Any system failure that causes interruption or an increase in
response time of the Company's Web sites could result in less traffic to such
sites and, if sustained or repeated, could reduce the attractiveness to
consumers, vendors and advertisers of the products, services and advertising
offered by the Company. In addition, a key element of the Company's strategy is
to generate a high volume of visits to and activity with respect to the
Company's Web sites. An increase in the volume of visits to the Company's Web
sites could strain the capacity of the software or hardware deployed by the
Company, which could lead to slower response time or system failures, and
adversely affect sales of products, services and advertising and the number of
impressions received by advertising and thus the Company's advertising revenues.
13. Reliance on Merchandise Vendors and Third Party Manufacturers. The
Company expects that it will entirely depend upon vendors and third party
manufacturers to supply it with merchandise for sale through its Web sites, and
the availability of merchandise is and will continue to be unpredictable. The
Company expects that it will generally have no long-term contracts or
arrangements with its vendors and manufacturers that guarantee the availability
of merchandise for its businesses. There can be no assurance that the Company's
current and future vendors and manufacturers will continue to sell merchandise
to or manufacture merchandise for the Company or otherwise provide merchandise
for sale through the Company's Web sites or that the Company will be able to
establish new vendor or manufacturer relationships that ensure merchandise will
be available. The Company will also rely on many of its vendors, manufacturers
and its joint venture partners to process and ship merchandise to customers. The
Company will have limited control over the shipping procedures of its vendors,
manufacturers and its joint venture partners, and shipments by these vendors,
manufacturers and joint venture partners may be subject to delays. Although most
merchandise sold by the Company is expected to carry a warranty supplied either
by the manufacturer or the vendor and the Company will not be legally obligated
to accept merchandise returns, the Company may voluntarily be constrained to
accept returns from customers for which the Company may not receive
reimbursements from its vendors or manufacturers. If the Company is unable to
develop and maintain satisfactory relationships with vendors and manufacturers
on acceptable commercial terms, if the Company is unable to obtain sufficient
quantities of merchandise, if the quality of service provided by such vendors
and manufacturers falls below a satisfactory standard or if the Company's level
of returns exceeds its expectations, the Company's business, results of
operations and financial condition will be materially adversely affected.
14. Reliance on Other Third Parties. In addition to its merchandise vendors
and manufacturers, the Company's operations will depend on a number of third
parties. The Company will have limited control over these third parties and will
probably have no long-term relationships with any of them. The Company does not
own a gateway onto the Internet, but instead now and presumably always will rely
on an Internet service provider to connect the Company's Web sites to the
Internet. The Company also will rely on a variety of technology that it will
license from third parties. The loss of or inability of the Company to maintain
or obtain upgrades to any of these technology licenses could result in delays,
which would materially adversely affect the Company's business, results of
operations and financial condition, until equivalent technology could be
identified, licensed or developed and integrated. Furthermore, the Company will
depend on hardware suppliers for prompt delivery, installation and service of
servers and other equipment used to deliver the Company's products and services.
If the Company is unable to maintain satisfactory relationships with such third
parties on acceptable commercial terms, or the quality of products and services
provided by such third parties falls below a satisfactory standard, the
Company's business, results of operations and financial condition will be
materially adversely affected. In addition, the Company will also depend upon
Web browsers for access to the products, services and advertising offered by it.
15. Protection of Intellectual Property. The development of the Company's
brands depends to a significant degree on the protection of its trademarks and
trade names. The Company has registered the "JVWeb", "Dad & me", and
"familylifestyle" trademarks in the United States and claims common law trade
name rights in these and other names. Nonetheless, there can be no assurance
that the Company will be able to secure significant protection for these
trademarks. Current and future competitors of the Company or others may adopt
product or service names similar to the Company's trademarks, thereby impeding
the Company's ability to build brand identity and possibly leading to customer
confusion. The inability of the Company to protect its trademarks and trade
names might have a material adverse effect on the Company's business, results of
operations and financial condition. In addition, the Company may in the future
receive notices from third parties claiming infringement by aspects of the
Company's businesses. While the Company is not currently subject to any such
claim, any future claim, with or without merit, could result in significant
litigation costs and diversion of resources, including the attention of
management, and require the Company to enter into royalty and licensing
agreements, which could have a material adverse effect on the Company's
business, results of operations and financial condition. In the future, the
Company may also need to file lawsuits to enforce the Company's intellectual
property rights, to protect the Company's trade secrets, or to determine the
validity and scope of the proprietary rights of others. Such litigation, whether
successful or unsuccessful, could result in substantial costs and diversion of
resources, which could have a material adverse effect on the Company's business,
results of operations and financial condition.
16. Regulatory Concerns. The Company is not currently subject to direct
regulation by any government agency in the United States, other than regulations
applicable to businesses generally, and there are currently few laws or
regulations directly applicable to access to or commerce on the Internet. Due to
the increasing popularity and use of the Internet, a number of laws and
regulations may be adopted with respect to the Internet, covering issues such as
user privacy, pricing and characteristics and quality of products and services.
Such legislation could dampen the growth in use of the Web generally and
decrease the acceptance of the Web as a communications and commercial medium,
and could thereby have a material adverse effect on the Company's business,
results of operations and financial condition. In addition, several
telecommunications carriers are seeking to have telecommunications over the Web
regulated by the Federal Communications Commission (the "FCC") in the same
manner as other telecommunications services. For example, America's Carriers
Telecommunications Association has filed a petition with the FCC for this
purpose. In addition, because the growing popularity and use of the Web has
burdened the existing telecommunications infrastructure and many areas with high
Web use have begun to experience interruptions in phone service, local telephone
carriers, such as Pacific Bell, have petitioned the FCC to regulate Internet
service providers and online service providers in a manner similar to long
distance telephone carriers and to impose access fees on Internet service
providers and online service providers. If either of these petitions is granted,
or the relief sought therein is otherwise granted, the costs of communicating on
the Web could increase substantially, potentially slowing the growth in use of
the Web, which could in turn decrease the demand for the products, services and
advertising offered by the Company. Any new legislation or regulation or the
application of existing laws and regulations to the Internet could have a
material adverse effect on the Company's business, operating results and
financial condition. In addition, as the Company's products and services will be
available and sold over the Internet in multiple states and foreign countries,
and as the Company will sell to numerous consumers resident in such states and
foreign countries, such a jurisdiction may claim that the Company is required to
qualify to do business as a foreign entity in such jurisdiction. The Company is
qualified to do business in only two states, and failure by the Company to
qualify to do business as a foreign entity in a jurisdiction where it is
required to do so could subject the Company to taxes and penalties for the
failure to qualify. Any application of laws or regulations of a jurisdiction in
which the Company is not currently qualified could have a material adverse
effect on the Company's business, results of operations and financial condition.
17. Other Potential Liability. Because materials may be downloaded from the
Company's Web sites and may be subsequently distributed to others, there is a
possibility that claims could be asserted against the Company on a variety of
legal theories (including defamation, negligence and copyright and trademark
infringement) depending on the nature and content of such materials. For
example, the Company could be liable for libel for any defamatory information it
provided about a person, for any losses incurred by a person in reliance on
incorrect information negligently provided by the Company and for copyright and
trademark infringement resulting from information provided by the Company.
Moreover, the Company expects that it will enter into agreements with third
parties whereby the Company may provide links to such third parties' Web sites.
A claimant might successfully argue that by providing such links, the Company is
liable for wrongful actions by such third parties through such Web sites, such
as defamation, negligence and copyright and trademark infringement, as well as
losses resulting from the products and services sold by the third party. The
Company is in the process of procuring general liability insurance. Even if the
Company is successful in procuring this insurance, the insurance may not cover
all potential claims or may not be adequate to indemnify the Company for all
liability that may be imposed. Any imposition of liability or legal defense
expenses that are not covered by insurance or is in excess of insurance coverage
could have a material adverse effect on the Company's business, operating
results and financial condition.
18. Possible Forfeiture of Assets. On July 31, 1998, the Company entered
into an agreement to acquire all of the assets of an on-line daily financial
publication for a purchase price of $140,000. The Company made several payments
on the purchase price. The Company has a remaining balloon installment in the
amount of $85,000. The Company does not now have funds available to pay this
final installment. The Company is working to assure that it has cash available
to make timely this payment, but there can be no assurance that the Company will
be successful in this regard. The failure to make timely this final installment
could result in a forfeiture of the assets being acquired as well as all amounts
theretofore paid on the purchase price. The loss of these assets and amounts of
monies could have a material adverse effect on the Company. For more information
on this transaction and the related risk, see "BUSINESS - Current Projects -
Wall Street Whispers."
19. Indemnification of Officers and Directors for Securities Liabilities.
The Bylaws of the Company provide that the Company shall indemnify any director,
officer, agent and/or employee as to those liabilities and on those terms and
conditions as are specified in the General Corporation Law of Delaware. Further,
the Company may purchase and maintain insurance on behalf of any such persons
whether or not the Company would have the power to indemnify such person against
the liability insured against. The foregoing could result in substantial
expenditures by the Company and prevent any recovery from such officers,
directors, agents and employees for losses incurred by the Company as a result
of their actions. Further, the Commission takes the position that
indemnification is against the public policy as expressed in the Act, and is,
therefore, unenforceable.
20. Competition. The electronic commerce market, particularly on the
Internet, is new, rapidly evolving and intensely competitive, and the Company
expects competition to intensify in the future. Certain current competitors have
established, and certain other current competitors (as well as future
competitors) may in the future establish, cooperative relationships among
themselves or directly with vendors to obtain exclusive or semi-exclusive
sources of merchandise. Accordingly, new competitors or alliances among
competitors and vendors may emerge and rapidly acquire market share. Increased
competition may result in reduced operating margins, loss of market share and a
diminished brand franchise, any one of which could materially adversely affect
the Company's business, results of operations and financial condition. Most of
the Company's current and potential competitors have and will have significantly
greater financial, technical, marketing and other resources than the Company. As
a result, they may be able to secure merchandise from vendors on more favorable
terms than the Company, and they may be able to respond more quickly to changes
in customer preferences or to devote greater resources to the development,
promotion and sale of their merchandise than the Company can.
21. Management of Potential Growth. The Company expects to expand its
operations rapidly and significantly. This rapid growth is expected to place a
significant strain on the Company's management, operational and financial
resources. In order to manage the expected growth of its operations, the Company
will be required to expand existing operations (particularly with respect to
customer service and merchandising); to improve on a timely basis existing and
implement new operational, financial and inventory systems, procedures and
controls, including improvement of its financial and other internal management
systems; and to train, manage and expand its employee base. Further, the
Company's management will be required to maintain relationships with various
merchandise vendors, freight companies, warehouse operators, other Web sites and
services, Internet service providers and other third parties and to maintain
control over the strategic direction of the Company in a rapidly changing
environment. If the Company is unable to manage growth effectively, the
Company's business, results of operations and financial condition will be
materially adversely affected.
22. Potential Acquisitions. As part of its business strategy, the Company
expects to acquire complementary companies, products, services or technologies.
There can be no assurance that the Company will be able to identify additional
suitable acquisition candidates or that the Company will be able to acquire such
candidates on acceptable terms. In addition, the successful implementation of
this strategy depends on the Company's ability to identify suitable acquisition
candidates, acquire such companies on acceptable terms and integrate their
operations successfully with those of the Company. Any such transactions would
be accompanied by the risks commonly encountered in such transactions. Such
risks include, among other things, the difficulty of assimilating the operations
and personnel of the acquired companies; the potential disruption of the
Company's ongoing business; the inability of management to maximize the
financial and strategic position of the Company through the successful
incorporation of acquired businesses and technologies; additional expenses
associated with amortization of acquired intangible assets; the maintenance of
uniform standards, controls, procedures and policies; the impairment of
relationships with employees, customers, vendors and advertisers as a result of
any integration of new management personnel; and the potential unknown
liabilities associated with acquired businesses. There can be no assurance that
the Company would be successful in overcoming these risks or any other problems
encountered in connection with such acquisitions. Due to all of the foregoing,
the Company's pursuit of an overall acquisition strategy or any future
acquisition may have a material adverse effect on the Company's business,
results of operations, financial condition and cash flows. Although the Company
does not expect to use cash for acquisition consideration, to the extent the
Company chooses to do so in the future, the Company may be required to obtain
additional financing, and there can be no assurance that such financing will be
available on favorable terms, if at all. In addition, if the Company issues
stock to complete any future acquisitions, existing stockholders will experience
further ownership dilution. Finally, Greg J. Micek, a director, the president
and the controlling stockholder of the Company owning approximately 73.1% of the
Common Stock considered on a fully diluted basis, has indicated that he intends
to maintain control of the Company, and that in this connection, he expects that
he will not cause the Company to enter into any acquisition that causes him to
lose such control. Consequently, the size of any acquisitions that the Company
may make in the foreseeable future can be expected to be limited by Mr. Micek's
expressed intentions.
23. Reliance Upon Directors and Officers and Limited Management Resources.
The Company substantially depends upon the efforts and skills of Greg J. Micek,
a director and the President of the Company. The loss of the services of Mr.
Micek, or his inability to devote sufficient attention to the operations of the
Company, would have a materially adverse effect on the Company's operations. The
Company does not maintain key man life insurance on Mr. Micek. In addition,
there can be no assurance that the current level of management is sufficient to
perform all responsibilities necessary or beneficial for management to perform.
The Company's success in attracting additional qualified personnel will depend
on many factors, including its ability to provide them with competitive
compensation arrangements, equity participation and other benefits. There is no
assurance that the Company will be successful in attracting highly qualified
individuals in key management positions.
24. Lack of Relevant Experience by Management. The Company expects that its
management will generally have little or no direct experience in the management
or operation of the types of businesses represented by the products and services
that the Company will offer by means of Web sites, either directly or through
joint ventures. In the case of joint ventures, the Company expects that its
joint venture partners will have a requisite level of experience, but there can
be no assurance that the Company's management will be familiar with the joint
venture's proposed business enough to ascertain this. Management's lack of
experience may make the Company more vulnerable than others to certain risks,
and it may also cause the Company to be more vulnerable to business risks
associated with errors in judgment that could have been prevented by more
experienced management. As a result, management's lack of previous experience
could have a material adverse effect on the future operations and prospects of
the Company.
25. Control, Cumulative Voting, and Preemptive Rights. Greg Micek, a
director and the President of the Company, owns approximately 86.5% of the
outstanding Common Stock (considered on an undiluted basis). Cumulative voting
in the election of Directors is not provided for. Accordingly, the holder or
holders of a majority of the shares of Common Stock (namely Mr. Micek) will be
able to elect all of the Company's Board of Directors after completion of the
offering. There are no preemptive rights in connection with the Common Stock.
Thus, stockholders may be diluted in their percentage ownership of the Company
in the event additional shares are issued by the Company in the future.
26. Preferred Stock. The Company's Certificate of Incorporation authorized
the issuance of up to 10,000,000 shares of Preferred Stock, par value $.01 per
share, of which none were issued as of September 3, 1998. The authorized
Preferred Stock constitutes what is commonly referred to as "blank check"
preferred stock. This type of preferred stock allows the Board of Directors from
time to time to divide the Preferred Stock into series, to designate each
series, to fix and determine separately for each series any one or more relative
rights and preferences and to issue shares of any series without further
stockholder approval. One of the effects of the existence of authorized but
unissued shares of preferred stock authorized in series may be to enable the
Company's Board of Directors to render it more difficult, or to discourage an
attempt, to gain control of the Company by means of a merger, tender offer at a
control premium price, proxy contest or otherwise and protect the continuity of
or entrench the Company's management, which concomitantly may have a potentially
adverse effect on the market price of the Common Stock.
27. Limited Trading Market; Limited Float. The Common Stock trades only in
the over-the-counter market on the OTC Electronic Bulletin Board. Public trading
of the shares of Common Stock in this market commenced only recently, and such
trading is still in the process of developing. The volume of trading in the
Common Stock has been extremely light. The Company is exerting efforts to
increase investor awareness and interest in the Company with a view to
increasing the volume of trading and perhaps even the prices at which the Common
Stock is traded. Thus far, the prices at which the Common Stock has traded have
fluctuated fairly widely on a percentage basis. See "PRICE RANGE OF COMMON
STOCK." There can be no assurance as to the prices at which the Common Stock
will trade in the future, although they may continue to fluctuate significantly.
Prices for the Common Stock will be determined in the marketplace and may be
influenced by many factors, including the depth and liquidity of the markets for
the Common Stock, investor perception of the Company and the industry in which
the Company participates, and general economic and market conditions. In
addition to the preceding, only approximately 9.6% of the shares of Common Stock
outstanding are held by persons not affiliated with the Company. The limited
float resulting from the foregoing facts may make the Common Stock less liquid
than it would be in a more active trading market, possibly causing holders of
the Common Stock to retain their shares longer than they may want. The resulting
limited liquidity may also have the effect of depressing the price of the Common
Stock. The Company believes that the initial limited float will be eased to some
extent over time as certain warrants to purchase the Company are exercised, as
shares of Common Stock subject to legal or contractual restrictions become
freely tradeable, as freely tradeable shares are issued in connection with
acquisitions, and if the Company elects to effect additional public offerings of
additional shares of Common Stock.
28. Potential Future Sales Pursuant to Rule 144. After taking into
consideration the issuance of certain of the shares being registered,
approximately 7.89 million shares of Common Stock will be issued and
outstanding, approximately 6.55 of which are believed to be "restricted
securities" as that term is defined in Rule 144 promulgated under the Act. Rule
144 provides in general that a person (or persons whose shares are aggregated)
who has satisfied a one-year holding period, may sell within any three month
period, an amount which does not exceed the greater of 1% of the then
outstanding shares of Common Stock or the average weekly trading volume during
the four calendar weeks prior to such sale. Most of the restricted shares will
have been outstanding for over one year near the end of October 1998 and thus
will then be eligible for sale under Rule 144. Rule 144 also permits the sale of
shares, under certain circumstances, without any quantity limitation, by persons
who are not affiliates of the Company and who have beneficially owned the shares
for a minimum period of two years. Hence, the possible sale of these restricted
shares may, in the future dilute an investor's percentage of freely tradeable
shares and may have a depressive effect on the price of the Company's securities
and such sales, if substantial, might also adversely effect the Company's
ability to raise additional equity capital. However, most of the approximately
6.55 shares believed to be "restricted securities" are held by affiliates of the
Company and must (by law) be sold subject to the volume limitations of Rule 144
described above, thus restraining the number of shares that can sold in any
period of time. See "DESCRIPTION OF CAPITAL STOCK - Shares Eligible for Future
Sale."
29. Risk of Potential to Dilution Future Share Issuances; Outstanding
Warrants. The Company has registered an aggregate of 5,000,000 shares of Common
Stock to be offered by the Company on a continuous or delayed basis in the
future in connection with anticipated business combination transactions. Nearly
all of these shares are still available for issuance in the future. Moreover,
the Company has registered an aggregate of 1,000,000 shares of Common Stock,
which the Company may issue to outside consultants to compensate them for
services provided to the Company. Again, nearly all of these shares are still
available for issuance in the future. The issuance of shares in connection with
acquisitions and to consultants and the consideration or services to be received
therefor will be entirely within the discretion of the Company's Board of
Directors. Although the Board of Directors intends to utilize its reasonable
business judgment to fulfill its fiduciary obligations to the Company's then
existing stockholders in connection with any such issuance, future issuance of
additional shares could cause immediate and substantial dilution to the net
tangible book value of those shares of Common Stock that are issued and
outstanding immediately prior to such transaction. Any future decrease in the
net tangible book value of such issued and outstanding shares could have a
material effect on the market value of the shares. In addition, the Company has
outstanding certain warrants to purchase shares of Common Stock. The Company
also has the obligation to issue additional such warrants in the future. These
warrants confer on the holder the ability to purchase shares of Common Stock at
specified prices, which may be less than the then current market price of the
Common Stock. A total of 7.5 million additional shares of Common Stock would be
issued if all of the warrants that are currently outstanding, and that the
Company is obligated to issue, were to be exercised. Any shares of Common Stock
issued pursuant to these warrants would further dilute the percentage ownership
in the Company held by existing stockholders. The terms on which the Company
could obtain additional capital during the life of these warrants may be
adversely affected because of such potential dilution and because the holders
thereof might be expected to convert or exercise them if the market price of the
Common Stock exceeds their conversion or exercise price, a time when the Company
would, in all likelihood, be able to obtain equity capital on terms more
favorable than those provided for by the warrants. For more information on these
warrants, see "DESCRIPTION OF CAPITAL STOCK."
30. Risks Relating to Low-Priced Securities. The trading prices of the
Common Stock has been below $5.00 per share. As a result of this price level,
trading in the Common Stock is subject to the requirements of certain rules
promulgated under the Exchange Act which require additional disclosure by
broker-dealers in connection with any trades generally involving any non-NASDAQ
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions. Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith, and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors (generally institutions). For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchaser and have received the purchaser's written consent to the
transaction prior to sale. The additional burdens imposed upon broker-dealers by
such requirements may discourage broker-dealers from effecting transactions in
the Common Stock affected, which could severely limit the market liquidity of
the Common Stock.
31. No Dividends. The holders of the Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out of funds
legally available therefore. To date, the Company has not paid any cash
dividends. The Board of Directors does not intend to declare any dividends in
the foreseeable future, but instead intends to retain all earnings, if any, for
use in the Company's business operations. If the Company obtains additional
financing, restrictions are likely to be placed on the Company's ability to
declare any dividends. See "DIVIDEND POLICY" and "DESCRIPTION OF CAPITAL STOCK."
32. Potential Year 2000 Problems. The Company believes that it has no
potential internal Year 2000 problems. Nonetheless, the Company recognizes that
the computer systems of financial institutions and other vendors with which the
Company will do business could have Year 2000 problems that could affect the
Company. However, the Company has no greater exposure to these types of problems
than other businesses in general. Nonetheless, the Company could be materially
adversely affected by these problems in ways that can not now be quantified.
However, to avoid being adversely affected by the Year 2000 problems of other
persons, the Company has instituted a program of carefully screening persons and
companies with which it will do a material amount of business and monitoring
their efforts to avoid their own Year 2000 problems.
FOR ALL OF THE AFORESAID REASONS AND OTHERS SET FORTH HEREIN, THE SHARES COVERED
BY THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. STOCKHOLDERS SHOULD BE AWARE
OF THESE AND OTHER FACTORS SET FORTH IN THIS PROSPECTUS.
USE OF PROCEEDS
The Private Placement Shares offered hereby will be sold by the Selling
Stockholders from time to time at their discretion, and the Company will not
receive any proceeds from the sale of the Private Placement Shares.
DIVIDEND POLICY
The Company has paid no cash dividends on its Common Stock, and the Company
presently intents to retain earnings to finance the expansion of its business.
Payment of future dividends, if any, will be at the discretion of the Board of
Directors after taking into account various factors, including the Company's
financial condition, results of operations, current and anticipated cash needs
and plans for expansion. See "MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - LIQUIDITY AND CAPITAL RESOURCES."
PRICE RANGE OF COMMON STOCK
The Common Stock is traded on the OTC Bulletin Board under the symbol
"JVWB". As of June 30, 1998, the Company had 216 holders of record. Trading in
the Common Stock commenced on June 30, 1998. Since trading commenced in the
Common Stock, the sales prices of the Common Stock have ranged from a low of
$.75 to a high of $1.25. Presented below are the high and low closing bid prices
of the Common Stock for the periods indicated:
High(1) Low(1)
Fiscal year ended June 30, 1998:
Fourth Quarter $.75 $.75
- ---------------
(1) Reflects sole trade to occur during fiscal 1998 on June 30, 1998, th
date trading in the Common Stock commenced.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Summary
Significant progress has been made in the initial developments of JVWeb,
Inc., since its inception on November 11, 1997. Our focus centered upon
exploiting a potentially exploding segment of business commerce, on-line
commerce. We fully believe that, over the next few years, "e-commerce" will
mature into a broad and deep channel through which significant worldwide
commerce will flow. JVWeb's premise is that businesses will migrate to the web
as this channel of distribution is exploited. Small to medium sized companies
can participate on the same-leveled playing field as larger organizations. As
this migration occurs, the average business owner is confronted with an array of
alternatives in developing a business strategy for exploiting commerce on the
Internet. That business owner's knowledge of technology is simply inadequate to
support the financial and human investment required to be successful.
Compounding the challenge, the typical web developer lacks the business
sophistication to assist the owner in making those critical decisions, which can
make the difference between success and failure. Therefore, JVWeb as a strategic
Internet services provider becomes the "partner" in developing and implementing
electronic commerce strategy. To that end, we are building an organization that
takes advantage of this emerging commerce channel. We have identified where we
want to deploy our capabilities, and we will be pursuing this in two main areas:
Through expanding our ability to deliver on our promise, and through the
e-commerce projects we select.
We have also concentrated on building our capacity to simultaneously
implement a business structure that will absorb rapid growth. Our filing with
the Securities and Exchange Commission to become a public company as a spin-off
of an existing public company, LS Capital Corporation became effective on May
12, 1998. The distribution of the shares occurred on May 20, 1998 and trading
commenced in June, 1998.
As our financial statement shows, we invested our initial capital on the
development of our first operating website, dadandme.com, which became
operational in April, 1998. We also acquired domain names for jvweb.com and a
third web site address, www.familylifestyle.com as we anticipate expanding our
web presence in 1998.
We have also continued to absorb the costs of filing to become a public
company, which is reflected in the expenditures for this year ending June 30,
1998..
We anticipate further development efforts to continue in the upcoming first
quarter of fiscal 1999. We are also projecting our first revenues from
operations to initiate in this same quarter.
Period Ending June 30, 1998
The Company currently has cash on hand only sufficient to operate
throughout fiscal 1999 on a fairly minimal scale. In order for the Company to
pursue its business plan in the manner it prefers, the Company expects that it
will need to raise additional funds in amounts that can not now be precisely
ascertained due to the uncertainty of the actual growth of the Company. There
can be no assurance that the Company will be successful in raising the funds
that it needs. See "Future Capital Needs; Uncertainty of Additional Financing."
The Company does not anticipate performing any research and development in
the next twelve months, other than that which is performed in the normal course
of business as it develops its electronic commerce capabilities, such as the
testing of new, widely-available software for use in the Company's electronic
commerce pursuits. There are no expected purchases or sales of any plant or
significant equipment. The Company does not anticipate any significant changes
in its number of employees, other than through any possible acquisitions.
In November, 1997, the Company sold 500,000 shares of common stock and
1,500,000 Class A warrants to LS Capital Corporation at a purchase price of
$5,000 pursuant to the related spin-off agreement.
In March, 1998, the Company issued 200,000 shares of common stock to a
private investor at a purchase price of $.25 per share.
Subsequent to the year end, but prior to this filing, the Company reported
the receipt of $50,000 from a shareholder, in the form of a loan convertible to
common stock, on August 13, 1998. An additional $50,000, in the same manner and
from the same source, is expected around the middle of September.
Business Operations
As the Company initiates its business operations in the upcoming first
quarter ending September 30, 1998, business operations are developing in the
following areas.
The first area involves the development of an e-commerce presence through
company-owned Brands. In this regard, the Company is engaged in rolling out two
brands under its control. The first brand, as announced on July 31, 1998,
involves the Company's contract to acquire an on-line financial newsletter, Wall
Street Whispers. The Company is presently making a concentrated effort to absorb
this publication and is actively and aggressively marketing to increase its
subscriber base. The second brand, as announced on July 30, 1998, involves the
Company's having acquired the on-line rights to distribute the line of frogletz
childrens clothes from Chameleon Casuals. This is part of a substantial effort
by the Company to roll-out its "community-to-commerce" web commerce strategy
with dadandme.com. The Company expects to make significant progress over the
next fiscal year to establish this brand as a material contributor to its
business.
The second operational area, which involves its relationship in two key
areas with Heitmann S.A.C, announced on June 30, 1998, is involved in building a
fee-for-service division. The Company has just recently, on September 2, 1998,
completed hosting a visit from Heitmann, in which significant business
opportunities were discussed. The Company is putting a primary emphasis on
building a fee-for service division, with Heitmann S.A.C as a key supplier of
web creation services to prospective clients of the Company. The Company is
exploiting an opportunity to serve significant customers that are requesting
access to the customized web-related services that are being built for the
on-line marketing of the Company's own brands. These services include
web-hosting, web-site development and maintenance, and an array of strategic
internet services (SIS) that the Company has assembled for its own use. The
Company believes that this fee-for service division will be a significant
contributor to its business over the next year. For example, a typical
customized package of services for a particular client could involve
web-hosting, web development and maintenance, and other SIS resources could
involve annual per client revenue of up to $300,000. The company is presently
actively pursuing this type of fee-for-service business, although it cannot
provide any assurances that it will, in fact, acquire any of the projects at
this time.
The second key contribution that Heitmann S.A.C is providing in this
emerging fee-for-service division, involves the Company's commitment to building
web-hosting capabilities, as an identified core competency of a strategic
internet services company. The Company has been informed by Heitmann that, for
various technical and business reasons, Heitmann would like to work through the
Company to provide U.S. based web-hosting services for Heitmann's European
client base. Heitmann presently works through a number of European vendors to
provide this service, and finds the rates in Europe to be significantly greater
than can be obtained in the U.S. As a result, as well as through the Company's
own independent determination of the need to expand its capabilities to provide
this service, the Company has engaged a consultant to assist in locating a
web-hosting service to align with to provide this service for U.S. and European
clients. Heitmann has provided the Company with a 12 month proforma of projected
revenue to be derived from its client base. Although the Company declines to
disclose the projection, it will state that a typical customer is presently
paying between $1,000 and $8,000(US) monthly for web-hosting services in Europe.
The Company, and Heitmann, believe such services can be provided by the Company,
in the U.S.
at a significant less rate.
As a third operational thrust for the Company, the above operational
developments will provide the focus required for the Company's pursuit of
selected acquisitions to build its service capabilities. The Company is actively
engaged in discussions with targeted companies to acquire both "back-end"
support in, for example, web-hosting and other technical services, as well as
"front-end" support of brand marketing capabilities with selected advertising
and public relations firms.
BUSINESS
Introduction
JVWeb, Inc. (the "Company") was incorporated on October 28, 1997 under the
laws of the State of Delaware. The Company was formed for purposes of pursuing
electronic commerce opportunities. On May 20, 1998, the Company became
publicly-held through the distribution by LS Capital Corporation ("LS Capital")
of certain of its shares of the Company's common stock to LS Capital's
stockholders.
Electronic commerce opportunities are expected to arise in several
different ways. First, the Company expects to offer products, services, content
and advertising by means of sites on the World Wide Web (the "Web") of the
Internet. The Company is currently developing a Web site to offer already
identified products, and is in the processing of acquiring an on-line financial
publication to offer content. The Company expects to develop additional Web
sites in the future to offer products and services yet to be identified and to
provide content (also yet to be identified) and advertising in connection
therewith. (For a description of the Company's current projects, see "BUSINESS -
Current Projects.") Although the Company may offer products, services, content
and advertising directly (such as in the case of the initial Web site now being
developed and the on-line publication being acquired), the Company believes that
it is much more likely to offer products, services, content and advertising
through joint ventures with established businesses. In the case of joint
ventures, the Company expects to contribute technical expertise and (in certain
instances) financial assistance in developing the joint ventures' Web sites,
while the joint venture partners will be responsible for furnishing the joint
ventures' products or services, the content for the joint ventures' Web sites,
and the related business expertise. In addition, the Company expects to acquire
other companies to be identified in the future. Acquisition candidates are
expected to include emerging electronic commerce companies, traditional
companies with good prospects for significant electronic commerce, and Internet
service companies capable of enhancing the Company's Internet resources. The
Company also intends to develop a fee for service division to sell the
technological, marketing and other abilities that the Company now has or in the
future may acquire.
The address of the Company is 5444 Westheimer, Suite 2080, Houston, Texas
77056, and its telephone number is 713/622-9287. The Company's own Web site is
located at http://www.jvweb.com. Information contained in the Company's Web site
shall not be deemed to be a part of this Prospectus. Unless the context
indicates otherwise, the term "Company" shall include JVWeb, Inc., the joint
ventures in which it becomes a venturer, and its future subsidiaries.
Industry Background
The Internet is an increasingly significant global medium for
communications, content and online commerce. Growth in Internet usage has been
fueled by a number of factors, including the large and growing installed base of
personal computers in the workplace and home, advances in the performance and
speed of personal computers and modems, improvements in network infrastructure,
easier and cheaper access to the Internet and increased awareness of the
Internet among businesses and consumers.
The increasing functionality, accessibility and overall usage of the
Internet and online services have made them an attractive commercial medium. The
Internet and other online services are evolving into a unique sales and
marketing channel, just as retail stores, mail-order catalogs and television
shopping have done. In theory, electronic retailers have virtually unlimited
electronic shelf space and can offer customers a vast selection through
efficient searches and retrieval interfaces. Moreover, electronic retailers can
interact directly with customers by frequently adjusting their featured
selections, editorial insights, shopping interfaces, pricing and visual
presentations. Beyond the benefits of selection, purchasing is more convenient
than shopping in a physical retail store because electronic shopping can be done
24 hours a day and does not require a trip to a store. Web sites can present
advertising and marketing materials in new and compelling fashions, display
products and services in electronic catalogs, offer products and services for
sale electronically, process transactions and fulfill orders, provide customers
with rapid and accurate responses to their questions, and gather customer
feedback efficiently. The minimal cost to develop and maintain a Web site, the
ability to reach and serve a large and global group of customers electronically
from a central location, and the potential for personalized low-cost customer
interaction, provide additional economic benefits for electronic retailers.
Unlike traditional retail channels, electronic retailers do not have the
burdensome costs of managing and maintaining expensive retail real estate and a
significant retail store infrastructure or the continuous printing and mailing
costs of catalog marketing. Furthermore, electronic retailers are generally able
to conduct their businesses with fewer employee than traditional retailers.
Because of these advantages over traditional retailers, electronic retailers
have the potential to build large, global customer bases quickly and to achieve
superior economic returns over the long term. An increasingly broad base of
products and services is successfully being sold electronically, including
computers, travel services, brokerage services, automobiles, music and books. If
this trend continues, the migration from traditional shopping to electronic
shopping will effect dramatic changes in retailing as it has heretofore been
conducted.
In addition to the offering of products and services through electronic
commerce, the Internet has created a new medium for disseminating content, such
as the content historically delivered by newspapers, magazines and journals.
Electronic dissemination of content offers numerous advantages over historical
mediums of content dissemination. First, the content can be provided to
consumers more quickly, as the delays required by printing and delivery are
avoided. For example, a magazine that ordinarily is mailed for delivery on a
particular day can be made available electronically as soon as the magazine is
otherwise ready for print, at least one day before anticipated delivery. In
addition, content can be updated on a real time basis so that only current (and
no outdated) content appears. Moreover, the electronic content can be linked
instantaneously to related content of interest. While newspapers, magazines and
journals can offer only still-shot photography, electronic commerce can offer
moving and even live pictures much akin to television. Equally (if not most)
important, electronic content can be distributed at a much lower cost compared
to historical mediums because electronic dissemination does not involve printing
and delivery costs. The new medium of content dissemination provided by the
Internet has in turn lead to new forms of advertising, especially banner
advertisements that appear as Web sites are displayed. As the presence on the
Web of suppliers of content and advertising increases, the new forms of
advertising such as the banner advertisements should increase in prominence as
well, thus creating additional revenue opportunities.
Although businesses are pursuing electronic commerce rapidly and at
increasing rates, the basic differences of electronic commerce from historical
commerce require companies to take fundamentally new approaches. A number of
Internet professional services firms have emerged to assist businesses with the
development and implementation of their electronic commerce strategies. However,
these firms tend to be small and focused on a particular aspect of electronic
commerce, apparently lacking the necessary depth and integration of strategic,
technical and creative skills to meet all the electronic commerce needs of a
business. After analyzing the very fragmented Internet service industry,
management has concluded that:
1. Most traditional advertising and marketing agencies have
neither a proven track record of success in the area of
electronic commerce and lack the extensive technical skills
(such as application development, and legacy system and
database integration) required to solve increasingly complex
electronic commerce problems.
2. Most vendors of computer and technology products and services
lack the creative and marketing skills required to build
audiences and deliver unique and compelling content, and are
further constrained by their need to recommend their
proprietary brands.
3. Internet access service providers, whose core strength is in
providing Internet access and site hosting, typically lack
both the necessary creative and application development
skills.
Management believes that to provide fully competent Internet services, a
service provider must possesses a full range and integration of strategic,
technical and creative skills required for electronic commerce.
Businesses seeking to realize the benefits provided by electronic commerce
face a formidable series of challenges presented by the need to link business
and marketing strategies, new and rapidly changing technologies and continuously
updated content. The establishment and maintenance of a Web site to pursue
electronic commerce requires significant technical expertise in a number of
areas, such as electronic commerce systems, security and privacy technologies,
application and database programming, mainframe and legacy integration
technologies and advanced user interface and multimedia production. Marketing
expertise in a number of areas (including the development of audiences, greater
search engine presence, and broader ranges of links to the site) is also
required. Few businesses (especially small, emerging and mid-sized businesses)
appear to have the time, money, and strategic, technical and creative skills to
implement an electronic commerce strategy on their own. In addition, management
believes that the novelty, complexity and rapid development of electronic
commerce has left many businesses (especially small, emerging and mid-sized
businesses) bewildered and reluctant to act, despite a strongly felt need to
become involved in electronic commerce.
Furthermore, the Company believes that most firms providing services to
develop and implement electronic commerce strategies charge on a flat-fee or
time and materials basis. Under these pricing approaches, the service firm
profits from providing the services regardless of whether or not the client
business profits from the services provided. Accordingly, the interests of the
client and the service provider are not aligned because the client bears the
entire loss of a failed electronic commerce strategy while the service provider
bears none of this risk. Management believes that these pricing approaches
engender a suspicion that the service provider may not be candidly assessing a
client's electronic commerce potential, lest the service provider dissuade the
prospective client and miss an opportunity for a fee. While a business
contemplating an electronic commerce strategy may be concerned about missing a
business opportunity that may be necessary to bolster or preserve the business'
competitive posture, the business is equally concerned about avoiding a
worthless investment in money, time and business readjustment. Management
believes that flat-fee and time and materials pricing approaches further inhibit
businesses' willingness to undertake electronic commerce strategies.
Overall the Company believes that electronic commerce presents excellent
business opportunities for the foreseeable future. Because of the relative
novelty of electronic commerce, the Company believes that the market for
electronic commerce is fairly wide-open, although market leadership has already
been established in a number of respects. Nonetheless, plenty of opportunities
still exist, especially with regard to small, emerging and mid-sized businesses.
The Company believes that customer unfamiliarity and the fragmented state of the
electronic commerce market creates an opportunity for a company with fully
integrated strategic, technical and creative Internet skills that can assist
businesses while sharing the risk imposed by electronic commerce strategies.
Prior to the present, the number of consumers with Internet access was probably
too small for small, emerging and mid-sized businesses (the Company's target
prospects) to participate successfully in electronic commerce. The Company
believes that the present represents an excellent time to enter into new markets
created by electronic commerce at a time when entry is easier and market
position can be better established than it may be if entry were attempted
further into the future.
Despite the Company's optimism about the future of electronic commerce, the
pursuit of a plan of a business plan based on electronic commerce is not without
considerable risks. For more information about these risks, see "RISK FACTORS -
Dependence on the Internet, - Uncertain Acceptance of the Internet as a Medium
for Commerce, Developing Market, - Internet Commerce Security Risks, - - Risks
Associated with Technological Change, - Risk of System Failure; Single Site, -
Regulatory Concerns, and - Other Potential Liability."
The JVWeb Solution
The Company was founded to seek out and capitalize on business
opportunities presented by electronic commerce. The Company believes that the
anticipated migration from traditional shopping to electronic shopping, and the
anticipated increase in the electronic dissemination of content, will present
for the foreseeable future excellent business opportunities to sell products and
services that are now either not available at all or are available only to a
limited extent in electronic commerce, and to offer new forms of advertising
made available by the Internet. While the Company may pursue some of these
opportunities on its own, the Company expects that it will pursue most of these
opportunities with joint venture partners who have established businesses,
products and services. The Company intends to offer to prospective joint venture
partners technical Internet expertise (and in certain instances financial
assistance) for an ownership interest in the resulting electronic business, in
lieu of an up-front payment of cash. The Company believes that, because of the
strongly perceived need to be engaged in electronic commerce and the hesitancy
of many established businesses to pursue electronic commerce on their own (due
to their unfamiliarity with electronic commerce and the unique way of
approaching it and the concern about bearing a substantial loss from a failed
electronic commerce strategy), the Company should have for the foreseeable
future an ample array of joint venture prospects. The Company also intends to
develop a full, integrated ensemble of strategic, technical and creative skills
required for electronic commerce. Currently, the Company relies on third party
vendors to provide these skills. However, the Company intends actively to seek
acquisitions to give these skills to the Company internally.
Key components of the Company's solution to the question of capitalizing on
the anticipated growth in electronic commerce, the migration of traditional
shopping to electronic shopping, and the increase in the electronic
dissemination of content, include:
Identification and Selection of Electronic Commerce Opportunities.
Although the number of businesses engaging in electronic commerce by
means of Web sites is growing rapidly, the number of businesses that
have not yet engaged, and the number of products and services that have
not been offered and content not made available, in electronic commerce
remain very large. The Company intends to maintain an active program of
locating electronic commerce opportunities, and to select only those
opportunities that present the greatest likelihood of success.
Joint Ventures. Although the Company expects to undertake some
electronic commerce opportunities alone, the Company believes that it
will undertake most electronic commerce opportunities through joint
ventures with established, profitable businesses whose products,
services or content (in most cases) are not currently being offered
electronically. The Company would furnish expertise in electronic
commerce (and in certain instances financial assistance) for an equity
interest in the resulting electronic business, in lieu of an up-front
payment of cash. Because of the Company's willingness to enter into
such an arrangement, the Company expects to be an attractive joint
venture partner for many established business seeking to become engaged
in electronic commerce. This willingness will allow selected businesses
to enter into electronic commerce with minimal financial investment and
risk, while providing the Company with a substantial potential return
for its services and financial contributions. The Company's limited
experience thus far indicates that for the foreseeable future the
Company will have an ample array of joint venture prospects. The
Company expects that for the foreseeable future the financial
assistance that the Company will provide to a joint venture in which it
participates may range from fairly minimal amounts to approximately
$100,000 at the high end. In order to provide this financial
assistance, the Company will have to procure funds from various
sources, which are discussed in "RISK FACTORS - - Future Capital Needs;
Uncertainty of Additional Financing" above. There can be no assurance
that the Company will be successful in procuring these funds.
Electronic Store Economics. By pursuing electronic opportunities as the
Company expects, the Company will in effect become an electronic
retailer. Electronic retailers enjoy meaningful structural economic
advantages relative to traditional retailers. They enjoy significantly
improved inventory turnover, avoid investment in expensive retail real
estate and realize reduce personnel requirements. Further, electronic
retailers serve a global market through centralized operations,
allowing their investments in Web sites, content, marketing and
technology to be leveraged over a relatively large sales base. Beyond
the benefits of selection, purchasing products and services from an
electronic retailer is more convenient than shopping in a physical
retail store because the electronic retailer is open 24 hours a day and
shopping does not require a trip to a store. Products can be shipped
directly to the customer's home or office. The Company believes that
customers may buy more products and services because they have more
hours to shop and can act immediately on a purchase impulse. Because an
electronic retailer has a global reach, it can deliver an extremely
broad selection to customers in rural, international or other locations
that cannot support traditional retailers offering comparable products
and services. Web sites may include not only the content and
applications dealing directly with products and services and their
purchase, but also stimulating content to inform and entertain
customers while shopping, thus encouraging the shopper to return for
more visits and to make more purchases. Over time, the Company can
accumulate substantial preference and behavioral information that will
allow it to customize targeted sales efforts and to provide value-added
services to its customers.
Content Opportunities. The Company also expects to pursue opportunities
created by the relatively new ability to disseminate content
electronically. Many businesses that disseminate content (such as
newspapers, magazines and journals) continue to use historical delivery
methods, primarily print. Electronic dissemination of content offers
numerous advantages over historical methods of content dissemination,
such as quicker delivery, more up-to-date content, more flexible
presentation using such techniques as live video, audio and links to
related content, and much lower costs of production. Electronic content
dissemination has lead to new forms of advertising, such as banner
advertisements. In addition, providing content electronically on a
limited, sample basis is expected to increase sales of the underlying
hardcopy content. The Company intends to seek joint ventures with
existing content providers to provide their content electronically to
increase subscription and advertising revenues.
Acquisitions. The Company intends actively to seek acquisitions to
develop a full, integrated ensemble of strategic, technical and
creative skills required for electronic commerce. Currently, the
Company relies on third party vendors to provide these skills. However,
the Company foresees great benefits by being able to provide these
skills internally. While a small number of companies providing
integrated Internet skills are already well-established and growing,
management believes that the market for integrated Internet services is
currently underserved.
Strategy
The Company's objective is to take advantages of electronic commerce
opportunities. The Company plans to attain this goal through the following key
strategies:
Electronic Commerce Opportunities. The Company intends to seek
attractive electronic commerce opportunities for it to undertake on its
own or through joint ventures with established businesses. The Company
intends to maintain a program of actively seeking electronic commerce
opportunities and selecting only those opportunities that present the
greatest likelihood for success. The Company's success will depend on
its ability to identify and successful pursue electronic commerce
opportunities as they arise.
Create Customer Loyalty by Delivering a Compelling Value Proposition.
In connection with the Company's commerce-driven opportunities, the
Company's goal is to deliver to the Company's customers the benefits of
electronic commerce and by maintaining relentless customer focus. The
Company will strive to offer its customers compelling value through
innovative use of technology, broad selection, high-quality content, a
high level of customer service, competitive pricing and personalized
services. In addition, the Company will seek to offer its customers a
high-quality shopping experience through informative and entertaining
content, as well as simple and efficient navigation capabilities.
Build Strong Brand Recognition. The Company's strategy is to develop,
promote, advertise and increase the brand equity and visibility of its
products, services and advertising through excellent service and a
variety of marketing and promotional techniques, including advertising
on other Web sites and other media, conducting an ongoing public
relations campaign and developing business alliances and partnerships.
Create a Superior Economic Model. Because the Company will not be
burdened by the costs or legacy of physical store networks, related
personnel, and printing and delivering of content, the Company believes
it will have an inherent economic advantage relative to traditional
retailers and providers of content. The Company's goal is to capitalize
on this advantage by aggressively driving revenue growth to achieve
economies of scale and by incorporating technological advances
throughout its Web sites.
Maintain Technology Focus and Expertise. A state-of-the-art interactive
commerce platform is necessary to enhance the Company's service
offering, leverage the unique characteristics of retailing and
electronic content delivery, and enable a superior economic model. The
Company will be committed to developing, acquiring and implementing
technology-driven enhancements to its Web sites and
transaction-processing systems. Among other technology objectives, the
Company intends to provide increasingly valuable personalized service
programs, make user interfaces as intuitive, engaging and fast as
possible and continuously improve the efficiency of its fulfillment
activities.
Pursue Incremental Revenue Opportunities. The Company intends to
leverage its brands, electronic commerce experience, operating
infrastructures and customer bases to broaden its presence and develop
additional revenue opportunities. In addition, the Company will
consider developing incremental revenue opportunities through
affiliated or related Web sites, related product areas, geographic
expansion or acquisition of complementary businesses, products or
technologies. Finally, the Company's customer demographic and
substantial site traffic create a meaningful opportunity for
advertising sales, the sale of demographic information and the sale of
links to other sites to be featured on the Company's sites.
Strengthen Electronic Commerce Abilities. The Company intends to
continue to build a critical mass of strategic, technical and creative
talent primarily through acquisitions in order to strengthen its
electronic commerce abilities. The Company intends to continue efforts
to identify, review and integrate the latest electronic commerce
technologies and accumulating and deploying the best demonstrated
practices for developing and implementing electronic commerce
strategies.
Develop Additional Strategic Relationships. The Company has developed a
number of informal strategic relationships with advertisement agencies,
web developers, site content managers, site hosts and other persons
whose services are necessary to develop and implement an electronic
commerce strategy. None of these strategic relationships has yet
resulted in a legal binding relationship. While the Company intends to
develop the ability to render these services internally, the Company
also intends to continue developing strategic relationships so that the
Company can have adequate access to such services for the foreseeable
future. The Company expects that it may ultimately acquire some of the
firms with which it establishes strategic relationships.
Attract and Retain Exceptional Employees. The Company believes that
versatile and experienced employees provide significant advantages in
the rapidly evolving market in which it will compete. The Company is
committed to building a talented employee base and to attracting an
experienced management team.
Opportunity Selection
Management believes that opportunities in electronic commerce are either
commerce-driven or content-driven. Commerce-driven opportunities involve the
sale of products and services through electronic mediums, such as electronic
stores. Content-driven opportunities involve the provision of content (such as
that historically provided by newspapers, magazines and journals) through
electronic mediums, the attraction of consumers to such content, and the
offering of advertising (and even products and services) in connection with the
provision of such content. The Company expects to pursue both commerce-driven or
content-driven opportunities.
Currently the Company learns of all its electronic commerce opportunities
through word-of-mouth referrals. For the present, the Company has been able to
learn of a sufficient number of electronic commerce opportunities by this means.
However, in the future as the Company grows, the Company intends to advertise
for joint venture prospects primarily through the Internet, once regulatory
constraints have been complied with. Moreover, the Company may engage investment
bankers, brokers and other intermediaries to locate these prospects as well.
Once a joint venture prospect is presented, a thorough study will be
undertaken of the prospect's strategic market position, business requirements
and existing systems and capabilities, to determine the likelihood that the
prospect's business will succeed in electronic commerce. After the study, the
Company's site management team (composed of the site administrator, web
marketing consultant, financial controller and project manager) accepts or
rejects the prospect. This decision is based on a number of factors, such as the
prospect's historical or prospective ability to fulfill orders, the lack of a
clearly perceived electronic commerce strategy, the lack of perceived electronic
market interest and the need for an initial budget too high to warrant the
related risk. Currently, the Company intends to charge a $2,500 application fee
to defer the costs of screening a prospect. If the Company decides not to pursue
a joint venture with the prospect, the Company will develop a basic Web site for
the prospect in consideration of the application fee.
If a prospect is accepted, the Company enters into negotiations with the
prospect to formalize an on-going joint venture relationship. The Company
expects that the joint ventures it forms will assume the form of corporations or
limited liability companies organized in Delaware (a favorable state for
corporations), Texas (the state in which the Company is headquartered), or
another favorable jurisdiction. The Company expects that it will own between 20%
to 80% of the outstanding equity interests in each joint venture depending on
the relative contributions of the venturers. The documentation governing the
joint venture will delineate the respective responsibilities of the Company and
its joint venture partner. In the case of the Company, these responsibilities
are expected to include the contribution of necessary strategic, technical and
creative skills and (in certain instances) financial assistance in developing
the joint venture's Web site. (For the present, the Company will act as the
coordinating consultant and will utilize third party vendors in providing the
foregoing skills; however, the Company intends to acquire these skills
internally, primarily through acquisitions.) The joint venture partner's
responsibilities will include the furnishing of the joint ventures' products or
services, the content for the joint ventures' Web sites, and the related
business expertise. The Company expects that it and its joint venture partner
will have management authority with respect to the respective areas for which
they have responsibility. The capital contributions of the venturers should be
fairly minimal, and will be worked out on a case-by-case basis. The Company
expects that as the joint ventures with commerce-driven Web sites receive
revenues, such revenues will be first used to reimburse the joint venture
partner for the costs of providing the joint venture's product or services, then
such revenues will be used to pay other joint venture expenses, and then the
remainder will be distributed to the venturers in accordance with their
percentage ownership. A similar scheme will be used for joint ventures with
content-driven Web sites, except that the joint ventures' revenues are expected
to result from additional advertising and additional subscription to the
underlying hardcopy publication resulting from the Web sites. The Company
expects that the documentation governing the joint venture will include a
buy-sell arrangement whereby either the Company or its joint venture partner may
terminate its relationship with the other by setting the price and terms of the
purchase of one of the venturer's interest and allowing the other venturer to
elect to sell to or buy out the venturer setting the price and terms for such
price and upon such terms. The Company also expects that the terms of the joint
ventures will be renewable on an annual basis and the documentation governing
the joint venture will provide for the sale of the joint venture's business upon
dissolution either to a third party, or to the Company or its joint venture
partner at an appraised price.
The Company expects that for the foreseeable future the financial
assistance that the Company will provide to a joint venture in which it
participates may range from fairly minimal amounts to approximately $100,000 at
the high end. In order to provide this financial assistance, the Company will
have to procure funds from various sources, which are discussed in "RISK FACTORS
- - - Future Capital Needs; Uncertainty of Additional Financing" above. There can
be no assurance that the Company will be successful in procuring these funds.
Web Sites
The proper development and implementation of a Web site for a business
involves a number of steps. First, a thorough study is undertaken to determine
the likelihood that the business will succeed in electronic commerce. Once the
study determines that the business is likely to succeed in electronic commerce,
a strategy for developing a Web site is developed by a team composed of the
business principals, advertising agency, web developer and content site manager.
A domain name is agreed upon and obtained. The Web site is then "story boarded"
or laid out conceptually and graphically. A web developer develops the structure
of the Web site, including electronic commerce systems; host integration;
implementation of third-party applications and security technologies; and
integration of hardware, software and Internet access products. A compelling
user interface is created to attract and hold the attention of the target
audience while conforming to brand images and marketing campaigns. A
relationship with a third-party vendor is established to provide secure,
state-of-the-art, high-availability Web site hosting and integrated services for
e-mail and secure electronic commerce. Once operational, a Web site requires
ongoing support services for content maintenance, site administration, technical
problems, assistance with the hosting environment, and software support. As the
Web site nears completion, electronic marketing objectives are developed to
establish and increase Web site traffic, strengthen brand awareness and generate
sales leads. Electronic media planning and purchasing, and electronic public
relations is undertaken. This is followed by efforts to optimize the Web site's
search engine presence, increase site access through hyperlink recruitment and
disseminate key messages to Internet newsgroups, mailing lists and forums.
Typically a Web site starts as a basic site costing several thousand dollars. It
can then become increasingly more complex through the addition of more Web
pages, links and commercial capability. Ultimately, an extremely complex Web
site can cost several million dollars.
Electronic Retail Stores
Many, if not most, of the Company's commerce-driven Web sites are expected
to assume the form of an electronic retail store. Customers enter an electronic
retail store through a Web site and, in addition to ordering products and
services, can conduct targeted searches, browse from among highlighted
selections, read content provided, register for personalized services,
participate in promotions and check order status.
Browsing. As a customer proceeds through the store, he or she
encounters graphic images of featured products and services. Clicking
with the mouse on any of these images pulls up more information about
the featured product and service, as well as a button which, if clicked
on, adds the product or service to the customer's order. The Company's
electronic stores are expected to offer visitors a variety of
highlighted subject areas and special features. To enhance the shopping
experience and increase sales, the Company are expected to feature
various products and services on a rotating basis throughout the store.
These images of featured products and services appear one or two at a
time, in addition to whatever material the customer specifically
requested.
Ordering. To purchase a product or service, customers simply click on a
button to add the product or service to their virtual shopping baskets.
Customers can add and subtract products and services from their
shopping baskets as they browse, prior to making a final purchase
decision, just as in a physical store. To execute orders, customers
click on the buy button and are prompted to supply shipping and credit
card details, either by e-mail, fax or telephone. This information will
be stored on a secure server and need not be provided again by repeat
customers. The personal password allows repeat customers to
automatically access their previously provided shipping and credit card
information. The Company's system will automatically confirm each order
by e-mail to the customer shortly after the order is placed and will
advise customers by e-mail shortly after orders are shipped.
Availability and Fulfillment. The Company does not expect to carry very
much inventory but will rely almost exclusively on its joint venture
partners and third party vendors and manufacturers for fulfillment of
orders. Orders will be received by the Company's site administrator,
who will then notify and direct the related joint venture partner or
third party vendor to fulfill the order. Most of the Company's products
are expected to be available for immediate shipment, while others are
available for shipment within 48 to 72 hours. Customers will be
permitted to select from a variety of delivery options, including
overnight and various international shipping options, as well as
gift-wrapping services. The Company will use e-mail to notify customers
of order status under various conditions. The Company will seek to
provide rapid and reliable fulfillment of customer orders.
Content. The Company's electronic retail stores are expected to offer
numerous forms of content to entertain and engage shoppers, enhance the
customer's shopping experience and encourage purchases. These forms
will include articles by experts on subjects in which visitors to the
Company's Web sites are expected to be interested, chat rooms in which
visitors can communicate with each other and with selected persons in
whom visitors are expected to be interested, and contests in which
visitors have a chance to win a prize.
Electronic Community. By creating an electronic community, the Company
hopes to provide customers with an inviting and familiar experience
that will encourage them to return frequently to the Company's Web
sites and to interact with other users, and that will promote loyalty
and repeat purchase. In addition to the content of the Web sites, the
Company intends to establish chat rooms in which visitors to the Web
sites, who presumably will have something in common with each other,
can communicate with each other in real time. Experts and authors of
the content featured on the Company's Web sites are expected to
participate in these chat rooms, thus giving visitors the opportunity
to engage in a dialogue and acquire information in which they are
interested.
Customer Service and Personalized Services. The Company believes that
its ability to establish and maintain long-term relationships with its
customers and encourage repeat visits and purchases depends, in part,
on the strength of its customer support and service operations and
staff. Furthermore, the Company values frequent communication with and
feedback from its customers in order to continually improve its
electronic stores and its services. The Company will offer e-mail
addresses to enable customers to request information and to encourage
feedback and suggestions. The Company will maintain a team of customer
support and service personnel for handling general customer inquiries,
answering customer questions about the ordering process, and
investigating the status of orders, shipments and payments. The Company
will also offer a toll-free line for customers who are reluctant to
enter their credit card numbers through the Web site. The Company will
automate certain of the tools used by its customer support and service
staff, and the Company intends to pursue actively on-going enhancements
to and automation of its customer support and service systems and
operations. The Company currently expects to notify its customers
electronically by e-mail as orders are received and shipped. The
Company also expects to notify its customers by e-mail of products,
services and other matters in which they may be interested. The Company
also expects to notify its customers electronically by e-mail on a
regular basis as to promotions the Company is then running.
Collaborative Filtering. The Company intends to add a collaborative
filtering service to its personalized service offerings in the future.
The collaborative filtering service will function as an expert reviewer
that develops a relationship with customers, helping them to find
products and services they may like based on their preferences.
Current Projects
Dad&me.com
The Company's first project was the development of its wholly-owned Web
site known as "www.dadandme.com." This site became operational on March 20,
1998, and continues to be developed. The Company has not yet aggressively
marketed this site, and does not intend to do so until it completes development
of the site and has entered into certain co-marketing agreements now being
negotiated. This site is dedicated to fortifying and enhancing fatherhood and
offering products sold under the "Dad & me" logo. The concept originated from a
series of children books written by Greg J. Micek, a director and the President
of the Company. All authorship rights pertaining to these books have been
assigned to a subsidiary of the Company. This www.dadandme.com site will feature
content and products addressed specifically to fathering issues. Initial
products will number approximately 20 and are expected to include T-shirts,
sweatshirts, polo shirts, pen and pencil sets, books, mugs and picture frames.
The www.dadandme.com Web site features articles on parenting and a chat room in
which visitors can communicate with each other and with an authority on
children. The Company is using www.dadandme.com as a test site for future Web
sites to be developed by the Company. Several other Web sites currently under
consideration are expected to commence full-scale development after
www.dadandme.com becomes fully operational. The Company expects that
www.dadandme.com will eventually be link with another Web site,
www.familylifestyle.com, a Web site expected (through links) to serve as a hub
for a series of commercial sites dedicated to family issues and products. In
this regard, the Company has entered into an agreement to become the exclusive
on-line distributor for "Frogletz", Chameleon Casual's line of children's play
clothing.
Wall Street Whispers
On July 31, 1998, the Company entered into an agreement (the "WSW
Agreement") to acquire all of the assets (collectively, the "Assets") comprising
a financial publication know as "Wall Street Whispers" (the "Publication"). The
Publication is an on-line daily financial publication that summarizes
information from over 15 analysts sources under contract. The WSW Agreement
provides that title to the Assets will be transferred to the Company upon full
payment of the purchase price for the Assets (the "Purchase Price"). The
Purchase Price for the Assets is $140,000. The Company made a downpayment toward
the Purchase Price in the amount of $25,000 and three additional installments
each in the amount of $10,000. The WSW Agreement provides that the Company must
pay a final balloon installment in the amount of $85,000 by October 15, 1998.
The Company does not now have funds available for the October 15th payment.
However, the Company has the ability to issue shares of the Company's common
stock to pay the outstanding amount in lieu of the payment of cash. Shares of
the Company's common stock issued as payment are credited against the
outstanding balance in the manner provided for in the WSW Agreement. There can
be no assurance that the issuance of shares will satisfy the Company's payment
obligations. The Company is also working to assure that it has cash available to
make timely the October 15th payment. The WSW Agreement provides that, if the
Company fails to pay timely the required installments when due, the sellers may
immediately terminate the WSW Agreement and be freed from their obligations to
transfer ownership of the Assets to the Company. In such event, the Company will
forfeit all payments made on the Purchase Price thus far. In addition, under the
WSW Agreement, the sellers are obligated to obtain certain third party consents
to the transfer of the Assets. If the sellers fail to obtain these consents by
the time the Company stands ready to pay the remaining balance of the Purchase
Price, the Company may immediately terminate the WSW Agreement and be freed from
its obligation to acquire ownership of the Assets. Moreover, the Company will
also be entitled to a full refund of all payments made on the Purchase Price
thus far.
Heitmann S.A.C.
The Company has formed a strategic alliance with Heitmann S.A.C.
("Heitmann"), a company based in the United Kingdom. Heitmann has designed,
written, translated and communicated technical information for over 25 years,
working with some of the world's largest multinationals. Because it has a
network of 11 offices across Europe and two production facilities in the United
States and works in the world's 25 most used languages, Heitmann has a broad
geographical reach. Heitmann has a particular emphasis in new media distribution
and deploys proprietary expertise in the publishing of Internet and Intranet
technologies. Since 1994 Heitmann has produced over 2,000 successful interactive
information projects. Pursuant to their strategic alliance, Heitmann will
provide Web development and other Internet related technical services on behalf
of the Company, and the Company will market these technical capabilities on a
fee for service basis in the United States. This new strategic partnership is an
outgrowth of the relationship between the two companies that has solidified over
time with the assistance provided by Heitmann in the creation of the Company's
showcase websites www.jvweb.com and www.dadandme.com. These projects
demonstrated the ability of the two companies to use Internet tools to complete
Web projects across international boundaries. The Company and Heitmann have not
entered into a legally binding agreement with regard to their relationship, but
they intend to explore, through their strategic alliance, the basis for entering
into a legally binding agreement in the future.
Acquisitions
The Company intends to pursue an active acquisition program in an effort to
foster the Company's growth over and above the growth that can be achieved
internally. The Company believes that there are a number of potential
acquisition candidates that satisfy its acquisition objectives. The Company is
currently discussing the acquisitions of several companies. These companies are
engaged in a variety of businesses (such as advertising services, web hosting,
merchandise fulfillment and web development and integration) that would further
enable the Company to provide Internet and electronic commerce services. Each of
the companies with which the Company is currently engaged in discussions has
annual revenues of less than $250,000. The Company has not yet reached an
agreement in principle with regard to the acquisition of any of these companies.
There is no assurance that any acquisitions will result from discussions with
any of these companies. Acquisition candidates are expected to include emerging
electronic commerce companies, traditional companies with good prospects for
significant electronic commerce, and Internet service companies capable of
enhancing the Company's Internet resources. Some of these may include the
Company's joint venture partners and third party vendors.
Management will be dedicated to identifying potential acquisition
candidates. The Company may in the future retain the services of investment
bankers, brokers and other intermediaries to assist in identifying potential
acquisition candidates. Management will also engage in negotiations and due
diligence activities with each acquisition candidate to explore whether it meets
the Company's operating strategy, and will work to complete the acquisition of
suitable candidates. The Company will stress to each acquisition candidate the
advantages of merging with the Company, including the benefits of being part of
an organization committed to growth. Following the closing of each acquisition,
the Company intends to move rapidly to integrate the acquired company into the
Company's operations.
The Company has not developed, nor does it currently intend to develop, a
valuation model and a standardized transaction structure it will use on a
consistent basis for its anticipated acquisitions. Instead, the Company
anticipates considering each acquisition on a case-by-case basis. However, the
Company expects that the purchase price for acquisition candidate will be based
on quantitative factors, including historical revenues, profitability, financial
condition and contract backlog, and the Company's qualitative evaluation of the
candidate's management team, operational compatibility and customer base.
Nonetheless, the Company expects to acquire suitable candidates through mergers
in exchange for shares of Common Stock, and 5,000,000 shares of Common Stock
have been register in this connection and for this purpose.
The acquisitions are expected to be accounted for using the
pooling-of-interests method of accounting. However, some acquisitions may be
accounted for using the purchase method of accounting. Under this method of
accounting, for each acquisition, a portion of the purchase price would be
allocated to the tangible and identifiable intangible assets acquired and
liabilities assumed based on their respective fair values on the acquisition
date. This portion would include both (i) amounts allocated to in-process
technology and immediately charged to operations and (ii) amounts allocated to
completed technology and amortized on a straight-line basis over the estimated
useful life of the technology of six months. The portion of the purchase price
in excess of tangible and identifiable intangible assets and liabilities assumed
would be allocated to goodwill and amortized on a straight-line basis over the
estimated period of benefit, which ranges from one to two years. The results of
operations of the acquired entity would be consolidated with those of the
Company as of the date the Company acquires effective control of the acquired
entity, which generally would occur prior to the formal legal closing of the
transaction and the physical exchange of acquisition consideration. In addition,
the Company may grant stock options to employees of an acquired company to
provide them with an incentive to contribute to the success of the Company's
overall organization. As a result of both the purchase accounting adjustments
and charges for the stock options just described, the Company may incur
significant non-cash expenses related to its acquisitions.
The successful implementation of the Company's acquisition strategy depends
on the Company's ability to identify suitable acquisition candidates, acquire
such companies on acceptable terms and integrate their operations successfully
with those of the Company. There can be no assurance that the Company will be
able to do so. Moreover, in pursuing acquisitions the Company may compete with
companies with similar acquisition strategies. Most of these competitors will be
larger and have greater financial and other resources than the Company.
Competition for these acquisition targets could also result in increased prices
for acquisition targets and a diminished pool of companies available for
acquisition. Acquisitions also involve a number of other risks, including
adverse effects on the Company's reported operating results from increases in
goodwill amortization, acquired in-process technology, stock compensation
expense and increased compensation expenses resulting from newly hired
employees, the diversion of management attention, risks associated with the
subsequent integration of acquired businesses, potential disputes with the
sellers of one or more acquired entities and the failure to retain key acquired
personnel. Client satisfaction or performance problems with an acquired firm
could also have a material adverse impact on the reputation of the Company as a
whole, and any acquired company could significantly fail to meet the Company's
expectations. Due to all of the foregoing, the Company's pursuit of an overall
acquisition strategy or any individual completed, pending or future acquisition
may have a material adverse effect on the Company's business, results of
operations, financial condition and cash flows. If the Company issues Common
Stock to complete future acquisitions as it expects to, there will be ownership
dilution to existing stockholders. In addition, to the extent the Company
chooses to pay cash consideration in such acquisitions, the Company may be
required to obtain additional financing and there can be no assurance that such
financing will be available on favorable terms, if at all.
Intellectual Property
The Company regards its service marks, trademarks, trade dress, trade
secrets and similar intellectual property as critical to its success, and relies
on trademark law, trade secret protection and confidentiality and/or license
agreements with its employees, customers, partners and others to protect its
proprietary rights. The Company pursues the registration of its trademarks and
service marks in the U.S., and has applied for the registration of certain of
its trademarks and service marks. Effective trademark, service mark, and trade
secret protection may not be available in every country in which the Company's
products and services are made available electronically. The Company may license
to third parties in the future certain of its proprietary rights, such as
trademarks. While the Company will attempt to ensure that the quality of its
brands are maintained by such licensees, there can be no assurance that such
licensees will not take actions that might materially adversely affect the value
of the Company's proprietary rights or reputation, which could have a material
adverse effect on the Company's business, prospects, financial condition and
results of operations. There can be no assurance that the steps taken by the
Company to protect its proprietary rights will be adequate or that third parties
will not infringe or misappropriate the Company's trademarks, trade dress and
similar proprietary rights. In addition, there can be no assurance that other
parties will not assert infringement claims against the Company. The Company may
be subject to legal proceedings and claims from time to time in the ordinary
course of its business, including claims of alleged infringement of the
trademarks and other intellectual property rights of third parties by the
Company and its licensees. Such claims, even if not meritorious, could result in
the expenditure of significant financial and managerial resources.
Market and Marketing
The Company's objective is to take advantages of electronic commerce
opportunities. The Company's marketing will be focused on developing a flow of
potential electronic commerce opportunities for the Company's consideration, and
developing sales of the products, services and advertising offered through the
electronic commerce opportunities selected by the Company.
Currently, the Company learns of all of its potential electronic commerce
opportunities through word-of-mouth referrals. In the future, the Company
intends to advertise for electronic commerce opportunities on the Internet once
regulatory constraints have been complied with, and the Company may engage
intermediaries and brokers to locate these prospects as well. One way or the
other, the Company intends to maintain an active program of locating electronic
commerce opportunities.
With respect to the Company's products and services offered through Web
sites, the Company's marketing strategies will be designed to strengthen its
brand names, increase customer traffic to its Web sites, build strong customer
loyalty, maximize repeat purchases and develop incremental revenue
opportunities. The Company intends to build customer loyalty by creatively
applying technology to deliver personalized programs and service, as well as
creative and flexible merchandising. The Company will be able to provide
increasingly targeted and customized services by using the extensive customer
preference and behavioral data obtained as a result of its experience. The
Internet allows rapid and effective experimentation and analysis, instant user
feedback and efficient "redecorating of the store for each and every customer,"
all of which the Company intends to incorporate in its merchandising. In
contrast to traditional direct-marketing efforts, the Company's personalized
notification services will send customers highly customized notices at
customers' request. By offering customers a compelling and personalized value
proposition, the Company will seek to increase the number of visitors that make
a purchase, to encourage repeat visits and purchases and to extend customer
retention. Loyal, satisfied customers also generate word-of-mouth advertising
and awareness, and are able to reach thousands of other customers and potential
customers because of the reach of electronic commerce
The Company will employ a variety of media, program and product
development, business development and promotional activities to achieve these
goals. The Company intends to place advertisements on various Web sites. These
advertisements usually take the form of banners that encourage readers to click
through directly to the Company's Web sites. The Company also intends to enter
into co-marketing agreement pursuant to which links to the Company's Web sites
will be featured on other, non-Company Web sites. The Company also intends to
engage in a coordinated program of print advertising in specialized and general
circulation newspapers and magazines. In the future it may begin advertising in
other media. This activity will be undertaken with the hope of the Company being
featured in a wide variety of television shows, articles and radio programs and
widely-read portions of the Internet, such as portions included on Netscape and
Yahoo!
Technology
The Company has implemented a broad array of site management, customer
interaction, transaction-processing and fulfillment services and systems using
commercially available, licensed technologies. The Company's current strategy is
to license commercially available technology whenever possible rather than seek
internally developed solutions.
The Company will use a set of applications for accepting and validating
customer orders, organizing, placing and managing orders with vendors, receiving
product and assigning it to customer orders, and managing shipment of products
and services to customers based on various ordering criteria. These applications
will also manage the process of accepting, authorizing and charging customer
credit cards. In addition, the Company's systems will allow it to maintain
ongoing automated e-mail communications with customers throughout the ordering
process at a negligible incremental cost. These systems will automate many
routine communications entirely, facilitate management of customer e-mail
inquiries and allow customers (on a self-service basis) to check order status,
change their e-mail address or password, and check subscriptions to personal
notification services.
A group of systems administrators and network managers will monitor and
operate the Company's Web sites, network operations and transaction-processing
systems. The continued uninterrupted operation of the Company's Web sites and
transaction-processing systems is essential to its businesses, and the site
operations staff is expected to ensure, to the greatest extent possible, the
reliability of the Company's Web sites and transaction-processing systems.
Competition
The electronic commerce market is new, rapidly evolving and intensely
competitive, the Company expects such competition to intensify in the future.
Barriers to entry are minimal, and current and new competitors can launch new
Web sites at a relatively low cost. The Company expects that it will encounter
fierce competition with regard to any product or service that it offers in the
future. Competitive pressures created by any current or future competitors could
have a material adverse effect on the Company's business, prospects, financial
condition and results of operations. The Company believes that the principal
competitive factors in its markets will be brand recognition, selection,
personalized services, convenience, price, accessibility, customer service,
quality of editorial and other site content and reliability and speed of
fulfillment, and the Company intends to compete vigorously in all of these
aspects. The Company expects that most of its current and potential competitors
will have longer operating histories, larger customer bases, greater brand
recognition and significantly greater financial, marketing and other resources
than the Company. In addition, electronic retailers may be acquired by, receive
investments from or enter into other commercial relationships with larger,
well-established and well-financed companies as use of the Internet and
electronic commerce increases. Certain of the Company's competitors may be able
to secure merchandise from vendors on more favorable terms, devote greater
resources to marketing and promotional campaigns, adopt more aggressive pricing
or inventory availability policies and devote substantially more resources to
their Web sites and systems development than the Company. Increased competition
may result in reduced operating margins, loss of market share and a diminished
brand franchise. There can be no assurance that the Company will be able to
compete successfully against current and future competitors, and competitive
pressures faced by the Company may have a material adverse effect on the
Company's business, prospects, financial condition and results of operations.
Further, as a strategic response to changes in the competitive environment, the
Company may from time to time make certain pricing, service or marketing
decisions or acquisitions that could have a material adverse effect on its
business, prospects, financial condition and results of operations. New
technologies and the expansion of existing technologies may increase the
competitive pressures on the Company. In addition, companies that control access
to transactions through network access or Web browsers could promote the
Company's competitors or charge the Company a substantial fee for inclusion.
Employees
The Company currently has only one employee, Greg J. Micek. Mr. Micek
currently devotes all of his business time and attention to the Company. The
Company expects that it may have as many as five employees within the next year,
excluding employees of acquired businesses. Although the competition for
employees is fairly intense, the Company does not now foresee problems in hiring
additional qualified employees to meet its labor needs.
Facilities
The Company currently leases a small amount of office space for its
corporate offices on a month-to-month basis. The Company also owns the
intellectual property rights in its domain names and Web sites. The Company does
not own any significant tangible property.
Legal Proceedings
Since the date of its organization through the date of this Prospectus, the
Company has not been involved in any legal proceedings. There can be no
assurance, however, that the Company will not in the future be involved in
litigation incidental to the conduct of its business.
MANAGEMENT
The directors and executive officers of the Company are as follows:
Name Age Positions
Greg J. Micek 43 Director, President
Lewis E. Ball 66 Director, Treasurer & Secretary
Greg J. Micek has served as a Director and President of the Company since
inception. Since 1983, Mr. Micek has been a principal of The Micek Group, a
business consulting firm. In this connection, from June 1996 to June 1997 he
served as President and Chief Executive Officer of HyperDynamics Corporation
(formerly Ram-Z Enterprises, Inc.), a publicly traded company focusing on
technology acquisitions. In addition, from 1992 to 1994 Mr. Micek served as the
Project Manager for the City of Austin's Small Contractor Support Network, and
from 1991 to 1992, he served as a business reorganization consultant for Parker
Brothers, Inc. Mr. Micek received a Bachelor of Arts and a Doctorate of
Jurisprudence from Creighton University.
Lewis E.Ball has served as a director of the Company since November 15,
1997. He has been a financial consultant to a number of companies since 1993.
From June 1996 to January 1997, Mr. Ball served as the Chief Financial Officer
of HyperDynamics Corporation (formerly Ram-Z Enterprises, Inc.). Mr. Ball has
many years of industry experience as a Chief Financial Officer and Director of
several major public companies, including Stewart & Stevenson Services, Inc. and
Richmond Tank Car Company (from 1983 to 1993). He is a Certified Public
Accountant and a Certified Management Accountant. Mr. Ball earned a Bachelor of
Business Administration in Finance from the University of Texas at Austin,
followed by post-graduate studies in accounting at the University of Houston.
The authorized number of directors of the Company is presently fixed at
two. Each director serves for a term of one year that expires at the following
annual stockholders' meeting. Each officer serves at the pleasure of the Board
of Directors and until a successor has been qualified and appointed. Currently,
directors of the Company receive no remuneration for their services as such, but
the Company will reimburse the directors for any expenses incurred in attending
any directors meeting.
There are no family relationships, or other arrangements or understandings
between or among any of the directors, executive officers or other person
pursuant to which such person was selected to serve as a director or officer.
<PAGE>
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS
Summary Compensation Table
The following table sets forth the compensation paid by the Company to its
Chief Executive Officer for services in all capacities to the Company (no
executive officer of the Company had total annual salary and bonus for the
fiscal year ended June 30, 1998 exceeding $100,000).
Summary Compensation Table (1)
Annual Long-Term
Compensation Compensation
(a) (b) (c) (g)
Fiscal
Name and Year Securities Underlying
Principal Position Ended Salary Options (number of shares)
Greg J. Micek 6/30/98 (2) 2,000,000
Chief Executive
Officer and
President
- -----------------
(1) The Columns designated by the SEC for the reporting of certain bonuses,
other annual compensation, long-term compensation, including awards of
restricted stock, long term incentive plan payouts, and all other
compensation, have been eliminated as no such bonuses, awards, payouts
or compensation were awarded to, earned by or paid to any specified
person during any fiscal year covered by the table.
(2) Mr. Micek is entitled to an annual salary of $60,000; however, he
voluntarily elected not to receive any portion of his salary during
fiscal 1998.
Stock Option Grants
The following table sets forth information pertaining to stock options
granted during the fiscal year ended June 30, 1998. The Company has not granted
stock appreciation rights ("SAR's") of any kind.
Option Grants in the Last Fiscal Year
(a) (b) (c) (d) (e)
Number of
Securities Percentage of Total
Underlying Options Granted
Options to Employees Exercise Expiration
Name Granted in Fiscal Year Price Date
Greg J. Micek 2,000,000 100% $.10 December 1, 2002
<PAGE>
Option Exercises/Value of Unexercised Options
The following table sets forth the number of securities underlying options
exercisable at June 30, 1998, and the value at June 30, 1998 of exercisable
in-the-money options remaining outstanding as to the Chief Executive Officer of
the Company. No SAR's of any kind have been granted.
Aggregated Option Exercises in Last
Fiscal Year and Fiscal Year End Option Values
(a) (d) (e)
Number of Securities
Underlying Unexercised Value of Unexercised
Options at June 30, 1998 In-the-Money Options at
(Numbers of Shares) June 30, 1998
Name Exercisable Exercisable
Greg J. Micek 2,000,000 $130,000(2)
- ---------------------
(1) The Columns designated by the SEC for the reporting of the number of
shares acquired on exercise, the value realized, and the number and
value of unexercisable options have been eliminated as no options were
exercised and no unexercisable options existed during the fiscal year
covered by the table.
(2) The price of the Common Stock used for computing this value was the
$.75 per share closing bid price of the Common Stock on the OTC
Bulletin Board on June 30, 1998.
Other Plans
The Company has no other deferred compensation, pension or retirement
plans in which executive officers participate.
Compensation Agreement with Officers
The Company has entered into an employment agreement (the "Employment
Agreement") with Greg J. Micek, a Director and the President of the Company. The
Employment Agreement has a term of three years and will expire in accordance
with its terms in November 2000. Under the Employment Agreement, Mr. Micek is to
receive an annual salary of $60,000, although as of the date of this Prospectus
he not yet received any payment from the Company on his salary. Mr. Micek is
also entitled to participate in any and all employee benefit plans hereafter
established for the employees of the Company. The Employment Agreement contains
a covenant not to compete barring Mr. Micek from engaging in the electronic
commerce business anywhere in the world for one year after the termination of
the Employment Agreement by the Company with cause or by Mr. Micek without
cause.
Certain Transactions
In connection with the organization of the Company, the Company issued to
Mr. Micek 6.2 million shares of Common Stock in consideration of a payment of
$62,000.
The Company has entered into a stock option agreement (the "Anderson Option
Agreement") with Dudley R. Anderson, the former Treasurer and Secretary of the
Company. The Anderson Option Agreement provides that, for providing consulting
services to the Company, the Company shall issue to Mr. Anderson options to
purchase shares of Common Stock, at a purchase price per share equal to the fair
market value, on any day on which Mr. Anderson provides consulting services to
the Company. The number of shares with respect to which Mr. Anderson will be
issued options will depend on the number of hours of consulting services that he
provides on any particular day. Mr. Anderson will be issued an option to
purchase 250 shares (on any day on which he consults for up to four hours), 500
shares (on any day on which he consults for more than four hours and up to eight
hours), 750 shares (on any day on which he consults for more than eight hours
and up to ten hours) and 1,000 shares (on any day on which he consults for more
than ten hours). Notwithstanding the preceding, the maximum number of shares,
with respect to which Mr. Anderson may be granted options pursuant to the
Anderson Option Agreement, is 250,000. Each option issued under the Anderson
Option Agreement will have a term of five years after the date it is issued. As
of September 14, 1998, Mr. Anderson had been issued under the Anderson Option
Agreement options to purchase 42,250 shares of Common Stock. On August 4, 1998,
Mr. Anderson resigned from his positions as Treasurer and Secretary of the
Company to pursue other opportunities. He and the Company mutually agreed to
terminate the Anderson Option Agreement.
As a finder's fee for making the introductions leading to the investment of
LS Capital in the Company and for a payment of $.01 per share, the Company
issued to Lewis E. Ball, a director of the Company, 100,000 shares of Common
Stock.
The Company has entered into an agreement with Kevin Dotson, a person who
provides Internet consulting services to the Company. In this agreement, the
Company agreed to issue options to purchase shares of Common Stock on the same
terms as provided for in the Anderson Option Agreement, including the per-share
purchase price and the maximum limit on the number of option shares. As of
September 14, 1998, Mr. Dotson had been issued under his agreement options to
purchase 340,000 shares of Common Stock. The exact number of shares of Common
Stock with respect to which options will be issued to Mr. Dotson can not now be
determined.
The Company has entered into an agreement with Cherie Dunn, who will
provide market strategy and brand development consulting services to the
Company. In this agreement, the Company agreed to issue options to purchase
5,000 shares of Common Stock at a purchase price per share of $.10 and 65,000
shares of Common Stock at a purchase price per share of $.25. Certain of the
$.25 optioned shares are subject to forfeiture upon the occurrence of certain
events.
DETERMINATION OF OFFERING PRICE
The Private Placement Shares will be offered for sale from time to time by
the Selling Stockholders. Such sales may be on the OTC Bulletin Board, elsewhere
in the over-the-counter market, in negotiated transactions or otherwise at
prices and at terms then prevailing or at prices related to the then-current
market prices or at such other prices as the Selling Stockholders may determine
in negotiated transactions.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of June 30, 1998 information regarding
the beneficial ownership of Common Stock (i) by each person who is known by the
Company to own beneficially more than 5% of the outstanding Common Stock; (ii)
by each director; and (iii) by all directors and officers as a group.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Name and Address of Prior to Offering(1) After Offering(1)
Beneficial Owner Number Percent Number Percent
<S> <C> <C> <C> <C>
Greg J. Micek 8,200,000(2) 73.1% 8,200,000(2) 73.1%
5444 Westheimer, Suite 2080
Houston,
Texas 77056
Lewis E. Ball 100,000 * 100,000 *
6122 Valley Forge
Houston, Texas 77057
All directors and officers 8,300,000(3) 74.0% 8,300,000(3) 74.0%
as a group (two persons)
</TABLE>
(1) Includes shares Stock beneficially owned pursuant to options and warrants
exercisable within 60 days after the date of this Prospectus.
(2) Includes 6,200,000 shares owned outright and 2,000,000 shares that
may be purchased pursuant an option currently exercisable.
(2) Includes 6,300,000 shares owned outright and 2,000,000 shares that
may be purchased pursuant an option currently exercisable.
* Less than one percent.
SELLING STOCKHOLDERS
The following table sets forth certain information as of September 14, 1998
pertaining to the beneficial ownership of Common Stock by the Selling
Stockholders.
<TABLE>
<CAPTION>
Beneficial Ownership Number of Shares Beneficial Ownership
Stockholder Prior to Offering Being Offered After Offering (1),(2)
<S> <C> <C> <C>
Equitrust Mortgage 545,883(3) 500,000 45,883(4)
Corporation
LS Capital 367,219(5) 195,060 172,159(6)
Corporation
John H. Martin 71,400(7) 70,500 900(8)
William D. Lyons 31,400 31,400 -0-
Arthur Hartman 50,000 50,000 -0-
Neil Leibman 35,000 25,000 10,000
</TABLE>
(1) Assumes the offer and sale of all shares being registered.
(2) Beneficial ownership of each Selling Stockholder after the offering
less than 1% of Common Stock outstanding.
(3) Includes 400,128 shares owned outright, 100,000 shares that may be
acquired pursuant to an option that is currently exercisable and 512
shares that may purchased pursuant to the Company's Class A Warrants,
which are currently exercisable; includes 41,243 shares owned outright
and 400 shares that may purchased pursuant to the Company's Class A
Warrants, which are currently exercisable, by Kent E. Lovelace, Jr.,
President and controlling shareholder of Equitrust Mortgage
Corporation; includes 720 shares owned outright and 2,880 shares that
may purchased pursuant to the Company's Class A Warrants, which are
currently exercisable, by Cheryl Lovelace, the wife of Kent E.
Lovelace, Jr., over which Mr. Lovelace shares voting and investment
power.
(4) Includes 128 shares owned outright and 512 shares that may purchased
pursuant to the Company's Class A Warrants, which are currently
exercisable; includes 41,243 shares owned outright and 400 shares that
may purchased pursuant to the Company's Class A Warrants, which are
currently exercisable, owed by Kent E. Lovelace, Jr., President and
controlling shareholder of Equitrust Mortgage Corporation; includes 720
shares owned outright and 2,880 shares that may purchased pursuant to
the Company's Class A Warrants, which are currently exercisable, by
Cheryl Lovelace, the wife of Kent E. Lovelace, Jr., over which Mr.
Lovelace shares voting and investment power.
(5) Includes 225,060 shares owned outright and 142,159 shares that may
purchased pursuant to the Company's Class A Warrants, which are
currently exercisable.
(6) Includes 30,000 shares owned outright and 142,159 shares that may
purchased pursuant to the Company's Class A Warrants, which are
currently exercisable.
(7) Includes 70,680 shares owned outright and 720 shares that may purchased
pursuant to the Company's Class A Warrants, which are currently
exercisable; does not include 100 shares owned outright and 400 shares
that may purchased pursuant to the Company's Class A Warrants, which
are currently exercisable, by Mr. Martin's wife, the beneficial
ownership of which Mr. Martin expressly disclaims.
(8) Includes 180 shares owned outright and 720 shares that may purchased
pursuant to the Company's Class A Warrants, which are currently
exercisable; does not include 100 shares owned outright and 400 shares
that may purchased pursuant to the Company's Class A Warrants, which
are currently exercisable, by Mr. Martin's wife, the beneficial
ownership of which Mr. Martin expressly disclaims.
PLAN OF DISTRIBUTION
The Private Placement Shares are being sold for the account of the Selling
Stockholders. The Private Placement Shares may be offered for sale from time to
time at market prices prevailing at the time of sale or at negotiated prices,
and without payment of any underwriting discounts or commissions except for the
usual and customary selling commissions paid to brokers or dealers. The Private
Placement Shares may be offered for sale on the over-the-counter market, or, if
in the future the Common Stock should be listed on a national exchange, then on
such national exchange.
Under the Exchange Act and the regulations thereto, any person engaged in a
distribution of the Private Placement Shares may not simultaneously engage in
market making activities with respect to the Common Stock during the applicable
"cooling off" periods 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 thereunder, including, without limitation, Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of Common Stock by
the Selling Stockholders.
DESCRIPTION OF CAPITAL STOCK
Capital Stock.
The Company's authorized capital stock consists of 50,000,000 shares of
Common Stock, $.01 par value per share and 10,000,000 shares of Preferred Stock,
$.01 par value per share.
<PAGE>
Common Stock.
The authorized Common Stock of the Company consists of 50,000,000 shares,
par value $0.01 per share. After taking into consideration the issuance of
certain of the shares being registered, approximately 7.89 million shares of
Common Stock will be issued and outstanding. All of the shares of Common Stock
are validly issued, fully paid and nonassessable. Holders of record of Common
Stock will be entitled to receive dividends when and if declared by the Board of
Directors out of funds of the Company legally available therefor. In the event
of any liquidation, dissolution or winding up of the affairs of the Company,
whether voluntary or otherwise, after payment of provision for payment of the
debts and other liabilities of the Company, including the liquidation preference
of all classes of preferred stock of the Company, each holder of Common Stock
will be entitled to receive his pro rata portion of the remaining net assets of
the Company, if any. Each share of Common stock has one vote, and there are no
preemptive, subscription, conversion or redemption rights. Shares of Common
Stock do not have cumulative voting rights, which means that the holders of a
majority of the shares voting for the election of directors can elect all of the
directors.
Preferred Stock.
The Company's Certificate of Incorporation authorizes the issuance of up to
10,000,000 shares of the Company's $0.01 par value preferred stock (the
"Preferred Stock"). As of the date of this Prospectus, no shares of Preferred
Stock were outstanding. The Preferred Stock constitutes what is commonly
referred to as "blank check" preferred stock. "Blank check" preferred stock
allows the Board of Directors, from time to time, to divide the Preferred Stock
into series, to designate each series, to issue shares of any series, and to fix
and determine separately for each series any one or more of the following
relative rights and preferences: (i) the rate of dividends; (ii) the price at
and the terms and conditions on which shares may be redeemed; (iii) the amount
payable upon shares in the event of involuntary liquidation; (iv) the amount
payable upon shares in the event of voluntary liquidation; (v) sinking fund
provisions for the redemption or purchase of shares; (vi) the terms and
conditions pursuant to which shares may be converted if the shares of any series
are issued with the privilege of conversion; and (vii) voting rights. Dividends
on shares of Preferred Stock, when and as declared by the Board of Directors out
of any funds legally available therefor, may be cumulative and may have a
preference over Common Stock as to the payment of such dividends. The provisions
of a particular series, as designated by the Board of Directors, may include
restrictions on the ability of the Company to purchase shares of Common Stock or
to redeem a particular series of Preferred Stock. Depending upon the voting
rights granted to any series of Preferred Stock, issuance thereof could result
in a reduction in the power of the holders of Common Stock. In the event of any
dissolution, liquidation or winding up of the Company, whether voluntary or
involuntary, the holders of each series of the then outstanding Preferred Stock
may be entitled to receive, prior to the distribution of any assets or funds to
the holders of the Common Stock, a liquidation preference established by the
Board of Directors, together with all accumulated and unpaid dividends.
Depending upon the consideration paid for Preferred Stock, the liquidation
preference of Preferred Stock and other matters, the issuance of Preferred Stock
could result in a reduction in the assets available for distribution to the
holders of the Common Stock in the event of liquidation of the Company. Holders
of Preferred Stock will not have preemptive rights to acquire any additional
securities issued by the Company. Once a series has been designated and shares
of the series are outstanding, the rights of holders of that series may not be
modified adversely except by a vote of at least a majority of the outstanding
shares constituting such series.
One of the effects of the existence of authorized but unissued shares of
Common Stock or Preferred Stock may be to enable the Board of Directors of the
Company to render it more difficult or to discourage an attempt to obtain
control of the Company by means of a merger, tender offer at a control premium
price, proxy contest or otherwise and thereby protect the continuity of or
entrench the Company's management, which concomitantly may have a potentially
adverse effect on the market price of the Common Stock. If in the due exercise
of its fiduciary obligations, for example, the Board of Directors were to
determine that a takeover proposal were not in the best interests of the
Company, such shares could be issued by he Board of Directors without
stockholder approval in one or more private placements or other transactions
that might prevent or render more difficult or make more costly the completion
of any attempted takeover transaction by diluting voting or other rights of the
proposed acquirer or insurgent stockholder group, by creating a substantial
voting block in institutional or other hands that might support the position of
the incumbent Board of Directors, by effecting an acquisition that might
complicate or preclude the takeover, or otherwise.
Delaware Legislation.
The Company is a Delaware corporation and consequently is subject to
certain anti-takeover provisions of the Delaware General Corporation Law (the
"Delaware Law"). The business combination provision contained in Section 203 of
the Delaware Law ("Section 203") defines an interested stockholder of a
corporation as any person that (i) owns, directly or indirectly, or has the
right to acquire, fifteen percent (15%) or more of the outstanding voting stock
of the corporation or (ii) is an affiliate or associate of the corporation and
was the owner of fifteen percent (15%) or more of the outstanding voting stock
of the corporation at any time within the three-year period immediately prior to
the date on which it is sought to be determined whether such person is an
interested stockholder; and the affiliates and the associates of such person.
Under Section 203, a Delaware corporation may not engage in any business
combination with any interested stockholder for a period of three years
following the date such stockholder became an interested stockholder, unless (i)
prior to such date the board of directors of the corporation approved either the
business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, or (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at lease eighty-five percent (85%) of the voting
stock of the corporation outstanding at the time the transaction commenced
(excluding, for determining the number of shares outstanding, (a) shares owned
by persons who are directors and officers and (b) employee stock plans, in
certain instances), or (iii) on or subsequent to such date the business
combination is approved by the board of directors and authorized at an annual or
special meeting of the stockholders by at least sixty-six and two-thirds percent
(66 2/3%) of the outstanding voting stock that is not owned by the interested
stockholder. The restrictions imposed by Section 203 will not apply to a
corporation if (i) the corporation's original certificate of incorporation
contains a provision expressly electing not be governed by this section or (ii)
the corporation, by the action of its stockholders holding a majority of
outstanding stock, adopts an amendment to its certificate of incorporation or
by-laws expressly electing not be governed by Section 203 (such amendment will
not be effective until 12 months after adoption and shall not apply to any
business combination between such corporation and any person who became an
interested stockholder of such corporation on or prior to such adoption). The
Company has not elected out of Section 203, and the restrictions imposed by
Section 203 apply to the Company. Section 203 could, under certain
circumstances, make it more difficult for a third party to gain control of the
Company.
Shares Eligible for Future Sale.
Sales of a substantial amount of Common Stock in the public market, or the
perception that such sales may occur, could adversely affect the market price of
the Common Stock prevailing from time to time in the public market and could
impair the Company's ability to raise additional capital through the sale of its
equity securities in the future. After taking into consideration the issuance of
certain of the shares being registered, approximately 7.89 million shares of
Common Stock will be issued and outstanding, approximately 6.55 million of which
are believed to be "restricted" or "control" shares for purposes of the Act.
"Restricted" shares are those acquired from the Company or an "affiliate" other
than in a public offering, while "control" shares are those held by affiliates
of the Company regardless as to how they were acquired. The vast majority of
these restricted and control shares of Common Stock will be eligible for sale
under Rule 144 subject to the volume limitations of Rule 144 near the end of
October 1998. In general, under Rule 144, one year must have elapsed since the
later of the date of acquisition of restricted shares from the Company or any
affiliate of the Company. No time needs to have lapsed in order to sell control
shares. Once the restricted or control shares may be sold under Rule 144, the
holder is entitled to sell within any three-month period such number of
restricted or control shares that does not exceed the greater of 1% of the then
outstanding shares or the average weekly trading volume of shares during the
four calendar weeks preceding the date on which notice of the sale is filed with
the Commission. Sales under Rule 144 are also subject to certain restrictions on
the manner of selling, notice requirements and the availability of current
public information about the Company. Under Rule 144, if two years have elapsed
since the holder acquired restricted shares from the Company or from any
affiliate of the Company, and the holder is deemed not to have been an affiliate
of the Company at any time during the 90 days preceding a sale, such person will
be entitled to sell such Common Stock in the public market under Rule 144(k)
without regard to the volume limitations, manner of sale provisions, public
information requirements or notice requirements.
EXPERTS
The financial statements and schedules of JVWeb, Inc. as of June 30, 1998
and for the period from October 28, 1997 (inception) through June 30, 1998 have
been included herein and in the registration statement in reliance upon the
report of Malone & Bailey, PLLC, independent certified public accountants,
included herein, and upon the authority of said firm as experts in accounting
and auditing.
<PAGE>
JVWEB INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditor's Report....................................................................................F-1
Balance Sheet as of June 30, 1998 ..............................................................................F-2
Income Statement for the period from October 28, 1997
(date of inception) through June 30, 1998 .................................................................F-3
Statement of Stockholders' Equity for the period from
October 28, 1997 (date of inception) through June 30, 1998 ................................................F-4
Statement of Cash Flows for the period from October 28, 1997
(date of inception) through June 30, 1998 ....................................................................F-5
Notes to Financial Statements ..................................................................................F-6
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
JVWeb, Inc.
Houston, Texas
We have audited the accompanying balance sheet of JVWeb, Inc., a Delaware
corporation, as of June 30, 1998, and the related statements of expenses,
stockholders' equity, and cash flows for the period from inception (October 28,
1997) to June 30, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of JVWeb, Inc., as of June 30,
1998, and the results of its operations and its cash flows for the initial
period then ended in conformity with generally accepted accounting principles.
MALONE & BAILEY, PLLC
Houston, Texas
September 10, 1998
<PAGE>
JVWeb, Inc.
(A Development Stage Company)
Balance Sheet
As of June 30, 1998
ASSETS
<TABLE>
<S> <C>
Cash $ 412
Employee advance 2,550
Inventory 5,305
Prepaid legal expenses 19,500
Total Current Assets 27,767
Office equipment and furniture (net of $530
accumulated depreciation) 3,860
Deposit on purchase of subsidiary 25,000
Total Assets $ 56,627
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 7,481
Notes payable to founding shareholder 38,000
Note payable 1,250
Total Liabilities 46,731
Preferred stock, $0.01 par, 10,000,000
shares authorized, no shares issued or
outstanding -
Common stock, $0.01 par, 50,000,000 shares
authorized, 7,170,000 shares issued and
outstanding 71,700
Paid-in capital 112,816
Accumulated deficit during
the development stage
(174,620)
Total Stockholders' Equity 9,896
Total Liabilities & Stockholders' Equity $ 56,627
</TABLE>
See notes to financial statements.
F-2
<PAGE>
JVWeb, Inc.
(A Development Stage Company)
Income Statement
Period from October 28, 1997 (Date of Inception)
Through June 30, 1998
<TABLE>
<S> <C>
REVENUES $ 190
COST OF SALES 48
Gross Margin 142
EXPENSES
General and administrative 174,338
Depreciation 530
174,868
Operating (Loss) (174,726)
INTEREST INCOME 106
Net Deficit Accumulated During
Development Stage $(174,620)
NET LOSS PER COMMON SHARE $( 0.02)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,681,250
</TABLE>
See notes to financial statements.
F-3
<PAGE>
JVWeb, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
Period from October 28, 1997 (Date of Inception)
Through June 30, 1998
<TABLE>
<CAPTION>
Accumulated
Deficit
During the
Common Stock Paid-in Development
Shares Amount Capital Stage Totals
<S> <C> <C> <C> <C> <C>
Shares issued at inception
to founding shareholder
for cash 6,200,000 $ 62,000 $ 7,516 $ 69,516
Shares issued for cash 700,000 7,000 48,000 55,000
Shares issued for services 200,000 2,000 58,000 60,000
Shares issued as a deposit
on purchase of subsidiary 70,000 700 129,300 130,000
Returnable shares (130,000) (130,000)
Net (deficit) (174,620) (174,620)
Balances, June 30, 1998 7,170,000 $ 71,700 $ 112,816 $(174,620) $ 9,896
</TABLE>
See notes to financial statements.
F-4
<PAGE>
JVWeb, Inc.
(A Development Stage Company)
Statement of Cash Flows
Period from October 28, 1997 (Date of Inception)
Through June 30, 1998
<TABLE>
<S> <C>
CASH FLOW FROM OPERATIONS
Net deficit $(174,620)
Adjustments to reconcile net deficit to
cash provided from operating activities
Depreciation 530
Common stock issued for services 60,000
Increase in employee advance ( 2,550)
Increase in inventory ( 5,305)
Increase in prepaid legal expenses ( 19,500)
Increase in accounts payable 7,481
NET CASH USED BY OPERATING ACTIVITIES (133,964)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of office equipment & furniture ( 4,390)
Deposit on purchase of subsidiary ( 25,000)
NET CASH USED BY INVESTING ACTIVITIES ( 29,390)
CASH FLOW FROM FINANCING ACTIVITIES
Notes payable to founding shareholder 38,000
Note payable 1,250
Issuance of common stock 124,516
NET CASH PROVIDED BY FINANCING ACTIVITIES 163,766
NET INCREASE IN CASH 412
CASH ON JUNE 30, 1998 $ 412
</TABLE>
See notes to financial statements.
F-5
<PAGE>
JVWEB, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of operations. JVWeb, Inc. ("Company") was formed October 28, 1997 as a
Delaware corporation. The Company was formed to market and develop internet
sites as commercial sales outlets.
Use of estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Cash and cash equivalents. For purposes of the cash flow statement, the Company
considers highly liquid investments with maturities less than 90 days as cash
and cash equivalents.
Inventories consist of imprinted sportswear and ad-specialty items. Inventories
are stated at the lower of cost, determined on the first-in, first-out (FIFO)
method, or market.
Office equipment and furniture are valued at cost. Maintenance and repair costs
are charged to expense as incurred. Gains and losses on disposition of property
and equipment are reflected in income. Depreciation is computed on the
straight-line method for financial reporting purposes, based on estimated useful
lives of 3 to 5 years.
Revenue and cost recognition. Revenues from merchandise sales are recognized
when the merchandise is sold. All merchandise is sold over the internet using
credit card payments. Advertising costs are expensed as incurred.
Income taxes. Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to depreciation differences.
NOTE B - DEVELOPMENT STAGE OPERATIONS AND RELATED PARTY
TRANSACTIONS
The founding shareholder contributed $69,516 cash for the initial common stock
issued. The founding shareholder also loaned the Company $23,000 individually
and $15,000 from a related company, both of which are due upon demand and accrue
interest at 6%.
The Company entered into a three-year employment agreement with the founding
shareholder in October 1997 which named him
F-6
<PAGE>
NOTE B - DEVELOPMENT STAGE OPERATIONS AND RELATED PARTY
TRANSACTIONS (Continued)
President of the Company and provided an annual salary of $60,000. The Company
has not paid any wages to date.
In October 1997, the Company granted 2,000,000 stock options to purchase the
Company's common stock at $0.10 per share to the founding shareholder. The
options may be exercised at any time and expire in five years.
NOTE C - PREPAID LEGAL EXPENSES
In early May 1998, the Company issued 20,000 common stock options at their
estimated fair market value of $0.25 per share to its attorney for services
rendered. In late June 1998, the Company issued 50,000 shares to the same
attorney. These shares are valued at their estimated fair value of $0.75 per
share. As of June 30, 1998, $18,000 has been recorded as legal expense with the
remainder of $19,500 shown as prepaid legal expense.
NOTE D - NOTE PAYABLE
The Company borrowed $1,250 from a former consultant. The loan is due upon
demand and interest accrues at 6%.
NOTE E - OPERATING LEASES
The Company is obligated on a corporate office lease in Houston, Texas and on an
electronic web site lease in Arizona on a month-to-month basis for a total of
$1,500 per month.
NOTE F - CONSULTING AGREEMENTS
The Company has entered into two consulting agreements by which 250,000 options
to purchase the Company's common stock at $0.25 per share have been issued, and
a variable monthly cash retainer is paid. The options are subject to forfeiture
on a prorata basis should the services terminate prior to the term of the
agreement.
The Company has entered into four consulting agreements by which options to
purchase the Company's common stock at prices approximating fair market value on
the date of grant are issued at a rate of 100 shares per hour. As of June 30,
1998, 105,250 options have been granted under these agreements.
F-7
<PAGE>
NOTE F - CONSULTING AGREEMENTS (Continued)
The Company entered into another consulting agreement which it canceled in
August 1998. The Company issued 50,000 shares as compensation under this
agreement, and does not believe it is liable for any additional amounts.
NOTE G - STOCK OPTIONS
As permitted under Statement of Financial Accounting Standards (SFAS) No. 123
(Accounting for Stock-Based Compensation), the Company has continued to apply
Accounting Principles Board (APB) Opinion No. 25 (Accounting for Stock Issued to
Employees) and related interpretations. Accordingly, no compensation expense has
been recognized for the stock options. The Company has granted options pursuant
to its stock option plan. Grants are made at management's discretion, and are
compensation for services. As of June 30, 1998 a total of 4,041,250 options were
outstanding and exercisable with the following exercise prices:
2,233,250 at $ 0.10
1,500,000 at 1.00
308,000 at 0.25
Outstanding options expire in 5 years from date of grant, and are 100%
exercisable at date of grant.
NOTE H - FINANCING
As of September 10, 1998, the Company has not achieved significant sales volume.
Only temporary equity financing has been secured to date.
NOTE I - SUBSEQUENT EVENTS
The Company entered into an Asset Purchase Agreement in July 1998 with Time
Lending Services, Inc. to purchase all the assets of a publication called "Wall
Street Whispers." The purchase price of the publication is $140,000. The Company
has paid $45,000 ($25,000 as of June 30, 1998) in cash, and issued 70,000 shares
of the Company's common stock on June 29, 1998. The balance of the purchase
price, $95,000, is due by October 15, 1998. Any proceeds realized from the sale
of the common stock by the seller will be deducted from the balance due, and any
shares not sold will be returned to the Company once the balance due has been
paid in full.
F-8
<PAGE>
NOTE I - SUBSEQUENT EVENTS (Continued)
The Company received $50,000 in August 1998 from Equitrust Mortgage Corporation
("Equitrust") pursuant to an agreement dated August 3, 1998 which states if the
Company files a registration statement (SB-2) within 90 days from the date of
the loan, the note will automatically convert into 200,000 shares of the
Company's common stock. Further, upon registration, Equitrust will purchase
another 200,000 shares for $50,000. The Company received a $5,000 deposit on
this transaction in August 1998. Further, Equitrust has an option to purchase an
additional 100,000 shares of common stock for $25,000.
The Company entered into two consulting agreements in July 1998. The term of
both agreements is six months, and 75,000 shares will be issued as payment for
the consulting services.
The Company entered into two consulting agreements in August 1998. The term of
both agreements is one year, and a total of 101,900 shares will be issued in
monthly installments as payment for the consulting services.
In August 1998, the Company agreed to issue an additional 45,060 shares of its
common stock to an existing corporate shareholder without additional
compensation. The shareholder had distributed shares of the Company to its
shareholders as a dividend, which resulted in short positions which the Company
agreed to cover.
F-9
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION ............................................................................................ 2
RISK FACTORS .................................................................................................... 3
USE OF PROCEEDS ................................................................................................. 12
DIVIDEND POLICY ................................................................................................. 12
PRICE RANGE OF COMMON STOCK ..................................................................................... 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ........................................................................ 14
BUSINESS ....................................................................................................... 16
MANAGEMENT ................................................................................................... 30
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS ............................................................... 32
DETERMINATION OF OFFERING PRICE ................................................................................ 34
PRINCIPAL STOCKHOLDERS .......................................................................................... 34
SELLING STOCKHOLDERS ............................................................................................ 35
PLAN OF DISTRIBUTION ............................................................................................. 36
DESCRIPTION OF CAPITAL STOCK .................................................................................... 36
EXPERTS .......................................................................................................... 39
</TABLE>
UNTIL ___________________ _____, 1998, ALL DEALERS EFFECTING TRANSACTIONS
IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION,
MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATIONS
OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that, to the fullest
extent authorized by the Delaware Law, the Company shall indemnify each person
who was or is made a party or is threatened to be made a party to or is involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding") because he is or was a director or officer of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against all expenses, liabilities and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) actually and reasonably incurred
or suffered by him in connection with such Proceeding.
Under Section 145 of the Delaware Law, a corporation may indemnify a
director, officer, employee or agent of the corporation against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with any threatened,
pending or completed Proceeding (other than an action by or in the right of the
corporation) if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. In the case of an action brought by or in the
right of the corporation, the corporation may indemnify a director, officer,
employee or agent of the corporation against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of any threatened, pending or completed action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that a
court determines upon application that, in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.
The Company's Certificate of Incorporation also provides that expenses
incurred by a person in his capacity as director of the Company in defending a
Proceeding may be paid by the Company in advance of the final disposition of
such Proceeding as authorized by the Board of Directors of the Company in
advance of the final disposition of such Proceeding as authorized by the Board
of Directors of the Company upon receipt of an undertaking by or on behalf of
such person to repay such amounts unless it is ultimately determined that such
person is entitled to be indemnified by the Company pursuant to the Delaware
Law. Under Section 145 of the Delaware Law, a corporation must indemnify a
director, officer, employee or agent of the corporation against expenses
(including attorneys' fees) actually and reasonably incurred in by him in
connection with the defense of a Proceeding if he has been successful on the
merits or otherwise in the defense thereof.
The Company's Certificate of Incorporation provides that a director of the
Company shall not be personally liable to the Company of its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for breach of a director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware Law for the willful or negligent unlawful payment of dividends,
stock purchase or stock redemption or (iv) for any transaction from which a
director derived an improper personal benefit.
The Company intends to attempt to procure directors' and officers'
liability insurance which insures against liabilities that directors and
officers of the Company may incur in such capacities.
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND OFFERING. The estimated expenses set
forth below, will be borne by the Company.
<TABLE>
<CAPTION>
Item Amount
<S> <C> <C>
SEC Registration Fee .................................................................................$225
Legal Fees and Expense .............................................................................$5,000
Accounting Fees and Expenses .......................................................................$2,000
Printing ...........................................................................................$1,000
Total ..............................................................................................$8,225
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In connection with the formation of the Company, the Company issued to Greg
J. Micek, a director and the President of the Company, 6.2 million shares of the
Company's common stock (the "Common Stock"), in consideration of $62,000.
Moreover, pursuant to an agreement between the Company and Mr. Micek, the
Company granted to Mr. Micek options to purchase 2,000,000 shares of Common
Stock at a per-share purchase price of $.10. The options have a term of five
years. Because Mr. Micek is a director and President of the Company, the
issuance of Common Stock and the options is claimed, and the issuances of the
Common Stock underlying the option will be claimed, to be exempt pursuant to
Section 4(2) of the Act under the Act.
As a finder's fee for making the introductions leading to the investment of
LS Capital Corporation ("LS Capital") in the Company and for a payment of $.01
per share, the Company issued to Lewis E. Ball, a director of the Company,
100,000 shares of Common Stock. Because Mr. Ball is a director, the issuance of
Common Stock to him is claimed to be exempt pursuant Section 4(2) of the Act.
Pursuant to an agreement between the Company and LS Capital dated November
15, 1997 (as amended), the Company issued to LS Capital 500,000 shares of Common
Stock and 1,500,000 Class A warrants, in consideration of $5,000.00. The Company
also issue to LS Capital 45,060 shares of Common Stock to settle possible claims
to additional shares of Common Stock that LS Capital may have had against the
Company. All of these issuances are claimed to be exempt pursuant to Regulation
D under the Act.
Pursuant to agreements between the Company and several important service
providers, the Company agreed to issue options to purchase shares of Common
Stock to such providers, at a purchase price per share equal to fair market
value, on any day on which the providers provide services to the Company. The
number of shares with respect to which the providers will be issued options
depends on the amount of services provided. As of September 14, 1998, these
providers had been issued options to purchase 382,250 shares of Common Stock.
The exact number of shares of Common Stock with respect to which options will be
issued to such providers can not now be determined. The issuances of the options
is claimed, and the issuances of the underlying Common Stock will be claimed, to
be exempt pursuant to Section 4(2) of the Act and Regulation D under the Act.
Pursuant to a subscription agreement, the Company issued to Universal
Warranty, Inc. 200,000 shares of Common Stock in consideration of $50,000. This
issuance is claimed to be exempt pursuant to Regulation D under the Act.
The Company issued a convertible promissory note to Equitrust Mortgage
("Equitrust") in consideration of a loan by Equitrust to the Company in the
amount of $50,000. Subsequently, this convertible promissory note was
automatically converted into 200,000 shares of Common Stock. Equitrust has also
agreed to purchase in the immediate future an additional 200,000 shares of
Common Stock for an aggregate purchase price of $50,000. The Company has also
granted an option in Equitrust's favor to purchase an additional 100,000 shares
of Common Stock for an aggregate purchase price of $25,000. The issuances of the
convertible promissory note, the shares of Common Stock into which it was
converted, and the option for 100,000 additional shares of Common Stock are
claimed, and the issuances of the 200,000 additional shares of Common Stock to
be issued in the immediate future and the 100,000 shares of Common Stock
underlying the option will be claimed, to be exempt pursuant to Regulation D
under the Act.
For services rendered (and agreed to be rendered in written contracts)
having a value determined to be $66,338, the Company issued to four persons
providing services to the Company an aggregate of 176,900 shares of Common
Stock. This issuance is claimed to be exempt pursuant to Regulation D under the
Act.
The Company has also issued to seven persons providing various services to
the Company options to purchase an aggregate of 176,000 shares of Common Stock
at per-share exercise prices ranging from $.10 to $.25. The issuances of the
options are claimed, and the issuances of the underlying Common Stock will be
claimed, to be exempt pursuant to Regulation D under the Act.
ITEM 27. EXHIBITS
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
3.01 Certificate of Incorporation of the Company is incorporated herein by reference from the
Company's Registration Statement on Form SB-2 (SEC File No. 333-41635) filed December
29, 1997, Item 27, Exhibit 3.01.
3.02 Bylaws of the Company is incorporated herein by reference from the Company's
Registration Statement on Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
Item 27, Exhibit 3.02.
4.01 Specimen Common Stock Certificate is incorporated herein by reference from the Company's
Registration Statement on Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
Item 27, Exhibit 4.01.
4.02 Warrant Agreement dated December 15, 1997 between the Company
and American Stock Transfer & Trust Company is incorporated
herein by reference from the Company's Registration Statement
on Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
Item 27, Exhibit 4.02.
4.03 First Amendment to Agreement dated March 31, 1998 between the Company and American Stock
Transfer Company & Trust Company is incorporated herein by reference from Amendment
No. 2 to the Company's Registration Statement on Form SB-2/A (SEC File No. 333-41635)
filed April 21, 1998, Item 27, Exhibit 4.03.
5.01 Opinion and Consent of Randall W. Heinrich, Of Counsel to Gillis & Slogar, as to the
legality of securities being registered.
10.01 Agreement dated November 15, 1997 between the Company and LS Capital Corporation is
incorporated herein by reference from the Company's Registration Statement on Form
SB-2 (SEC File No. 333-41635) filed December 29, 1997, Item 27, Exhibit 10.01.
10.02 Employment Agreement dated December 1, 1997 by and between the Company and Greg J.
Micek is incorporated herein by reference from the Company's Registration Statement on
Form SB-2 (SEC File No. 333-41635) filed December 29, 1997, Item 27, Exhibit 10.02.
10.03 Stock Option Agreement dated December 1, 1997 executed by the
Company in favor of Greg J. Micek is incorporated herein by
reference from Amendment No. 1 to the Company's Registration
Statement on Form SB-2/A (SEC File No. 333-41635) filed
February 27, 1998, Item 27, Exhibit 10.03.
10.04 Stock Option Agreement dated December 17, 1997 executed by the Company in favor of
Dudley R. Anderson is incorporated herein by reference from Amendment No. 1 to the
Company's Registration Statement on Form SB-2/A (SEC File No. 333-41635) filed
February 27, 1998, Item 27, Exhibit 10.04.
10.05 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of
Kevin Dotson is incorporated herein by reference from Amendment No. 1 to the Company's
Registration Statement on Form SB-2/A (SEC File No. 333-41635) filed February 27,
1998, Item 27, Exhibit 10.05.
10.06 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of G-2
Advertising is incorporated herein by reference from Amendment No. 1 to the Company's
Registration Statement on Form SB-2/A (SEC File No. 333-41635) filed February 27,
1998, Item 27, Exhibit 10.06.
10.07 First Amendment dated April 14, 1998 to Agreement dated
November 15, 1997 between the Company and LS Capital
Corporation is incorporated herein by reference from Amendment
No. 2 to the Company's Registration Statement on Form SB-2/A
(SEC File No. 333-41635) filed April 21, 1998, Item 27,
Exhibit 10.07.
10.08 Agreement dated April 20, 1998 between the Company and LS
Capital Corporation is incorporated herein by reference from
Amendment No. 2 to the Company's Registration Statement on
Form SB-2/A (SEC File No. 333-41635) filed April 21, 1998,
Item 27, Exhibit 10.08.
10.09 Asset Purchase Agreement dated July 31, 1998 by and among
Market Data Corporation and Time Financial Services, Inc. (as
sellers) and the Company (as purchaser) is incorporated herein
by reference from the Company's (SEC File No. 0-24001) Current
Report on Form 8-K dated July 31, 1998, Item 7(c), Exhibit
10.01.
10.10 Agreement dated August 3, 1998 by and between Equitrust Mortgage Corporation and the
Company is incorporated herein by reference from the Company's Current Report on Form
8-K dated July 31, 1998 (SEC File No. 0-24001), Item 7(c), Exhibit 10.02.
10.11 Promissory Note dated August 3, 1998 in the original principal
amount of $50,000 made payable by the Company to the order of
Equitrust Mortgage Corporation is incorporated herein by
reference from the Company's Current Report on Form 8-K dated
July 31, 1998 (SEC File No. 0-24001), Item 7(c), Exhibit
10.02.
21.01 Subsidiaries of Registrant
23.01 Consent of Malone & Bailey, PLLC
23.2 Consent of Randall W. Heinrich, Of Counsel to Gillis & Slogar, contained in
Exhibit 5.01.
25.1 Power of Attorney (included on the signature page thereto)
99.01 The Company's 1998 Consultant Compensation Plan is incorporated herein by reference
from the Company's Registration Statement on Form S-8 (SEC File No. 333-55979) filed
June 3, 1998, Item 8, Exhibit 4.2.
</TABLE>
ITEM 28. UNDERTAKINGS
A. The undersigned Registrant will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to include
any prospectus required by section 10(a)(3) of the Securities Act, reflect in
the prospectus any facts or events which, individually or together, represent a
fundamental change in the information in the registration statement, and include
any additional or changed material information on the plan of distribution.
(2) For the purpose of determining any liability under the
Securities Act, treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of such securities at that
time to be the initial bona fide offering thereof.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
B. (1) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer 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.
(2) In the event that a claim for indemnification against such
liabilities (other than the payment by the small business issuer of expenses
incurred or paid by a director, officer or controlling person of the small
business issuer 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 small business issuer 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirement for filing on Form SB-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas on September 17, 1998.
JVWEB INC.
By: /s/ Greg J. Micek
Greg J. Micek
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Name Title Date
/s/ Greg. J. Micek Director and President September 17, 1998
Greg J. Micek (Principal Executive Officer
and Principal Financial Officer)
/s/ Lewis E. Ball Director September 17, 1998
Lewis E. Ball
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
3.01 Certificate of Incorporation of the Company is incorporated herein by reference from the
Company's Registration Statement on Form SB-2 (SEC File No. 333-41635) filed December
29, 1997, Item 27, Exhibit 3.01.
3.02 Bylaws of the Company is incorporated herein by reference from the Company's
Registration Statement on Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
Item 27, Exhibit 3.02.
4.01 Specimen Common Stock Certificate is incorporated herein by reference from the Company's
Registration Statement on Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
Item 27, Exhibit 4.01.
4.02 Warrant Agreement dated December 15, 1997 between the Company
and American Stock Transfer & Trust Company is incorporated
herein by reference from the Company's Registration Statement
on Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
Item 27, Exhibit 4.02.
4.03 First Amendment to Agreement dated March 31, 1998 between the Company and American Stock
Transfer Company & Trust Company is incorporated herein by reference from Amendment
No. 2 to the Company's Registration Statement on Form SB-2/A (SEC File No. 333-41635)
filed April 21, 1998, Item 27, Exhibit 4.03.
5.01 Opinion and Consent of Randall W. Heinrich, Of Counsel to Gillis & Slogar, as to the
legality of securities being registered.
10.01 Agreement dated November 15, 1997 between the Company and LS Capital Corporation is
incorporated herein by reference from the Company's Registration Statement on Form
SB-2 (SEC File No. 333-41635) filed December 29, 1997, Item 27, Exhibit 10.01.
10.02 Employment Agreement dated December 1, 1997 by and between the Company and Greg J.
Micek is incorporated herein by reference from the Company's Registration Statement on
Form SB-2 (SEC File No. 333-41635) filed December 29, 1997, Item 27, Exhibit 10.02.
10.03 Stock Option Agreement dated December 1, 1997 executed by the
Company in favor of Greg J. Micek is incorporated herein by
reference from Amendment No. 1 to the Company's Registration
Statement on Form SB-2/A (SEC File No. 333-41635) filed
February 27, 1998, Item 27, Exhibit 10.03.
10.04 Stock Option Agreement dated December 17, 1997 executed by the Company in favor of
Dudley R. Anderson is incorporated herein by reference from Amendment No. 1 to the
Company's Registration Statement on Form SB-2/A (SEC File No. 333-41635) filed
February 27, 1998, Item 27, Exhibit 10.04.
10.05 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of
Kevin Dotson is incorporated herein by reference from Amendment No. 1 to the Company's
Registration Statement on Form SB-2/A (SEC File No. 333-41635) filed February 27,
1998, Item 27, Exhibit 10.05.
10.06 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of G-2
Advertising is incorporated herein by reference from Amendment No. 1 to the Company's
Registration Statement on Form SB-2/A (SEC File No. 333-41635) filed February 27,
1998, Item 27, Exhibit 10.06.
10.07 First Amendment dated April 14, 1998 to Agreement dated
November 15, 1997 between the Company and LS Capital
Corporation is incorporated herein by reference from Amendment
No. 2 to the Company's Registration Statement on Form SB-2/A
(SEC File No. 333-41635) filed April 21, 1998, Item 27,
Exhibit 10.07.
10.08 Agreement dated April 20, 1998 between the Company and LS
Capital Corporation is incorporated herein by reference from
Amendment No. 2 to the Company's Registration Statement on
Form SB-2/A (SEC File No. 333-41635) filed April 21, 1998,
Item 27, Exhibit 10.08.
10.09 Asset Purchase Agreement dated July 31, 1998 by and among
Market Data Corporation and Time Financial Services, Inc. (as
sellers) and the Company (as purchaser) is incorporated herein
by reference from the Company's (SEC File No. 0-24001) Current
Report on Form 8-K dated July 31, 1998, Item 7(c), Exhibit
10.01.
10.10 Agreement dated August 3, 1998 by and between Equitrust Mortgage Corporation and the
Company is incorporated herein by reference from the Company's Current Report on Form
8-K dated July 31, 1998 (SEC File No. 0-24001), Item 7(c), Exhibit 10.02.
10.11 Promissory Note dated August 3, 1998 in the original principal
amount of $50,000 made payable by the Company to the order of
Equitrust Mortgage Corporation is incorporated herein by
reference from the Company's Current Report on Form 8-K dated
July 31, 1998 (SEC File No. 0-24001), Item 7(c), Exhibit
10.02.
21.01 Subsidiaries of Registrant
23.01 Consent of Malone & Bailey, PLLC
23.02 Consent of Randall W. Heinrich, Of Counsel to Gillis & Slogar, contained in Exhibit
5.01.
25.1 Power of Attorney (included on the signature page thereto)
99.01 The Company's 1998 Consultant Compensation Plan is incorporated herein by reference
from the Company's Registration Statement on Form S-8 (SEC File No. 333-55979) filed
June 3, 1998, Item 8, Exhibit 4.2.
</TABLE>
September 17, 1998
Securities and Exchange Commission
450 Fifth Avenue, N.W.
Washington, D.C. 20549
RE: Registration Statement on Form SB-2
Under the Securities Act of 1933
(the "Registration Statement") of JVWeb,
Inc., a Delaware corporation (the "Company")
Gentlemen:
I have acted as counsel for the Company in connection with the registration
(pursuant to the Registration Statement) of 871,960 shares (the "Shares") of the
common stock, par value $.01 per share, of the Company. In such capacity, I have
examined originals, or copies certified or otherwise identified to my
satisfaction, of the following documents:
1. Certificate of Incorporation of the Company, as amended to
date;
2. Bylaws of the Company, as amended to date;
3. Agreement (the "Equitrust Agreement") dated August 3, 1998
between the Company and Equitrust Mortgage Corporation
("Equitrust") and related promissory note also dated
August 3, 1998 in the original principals amount of
$50,000 made payable by the Company to the order of
Equitrust (the "Note");
4. Equity Research Distribution and Promotion Agreement dated
August 28, 1998 between the Company and John H. Martin (the
"Martin Agreement");
5. Research Coverage Agreement between the Company and William
D. Lyons dated August 28, 1998 (the "Lyons Agreement");
6. Letter agreement between the Company and Arthur Hartman
dated July 27, 1998 (the "Hartman Agreement");
7. Letter agreement between the Company and Neil Leibman
dated July 27, 1998 (the "Leibman Agreement");
8. The Registration Statement, together with all exhibits
attached thereto;
9. The records of corporate proceedings relating to the issuance
of the Shares; and
10. Such other instruments and documents as I have believed
necessary for the purpose of rendering the following
opinion.
For purposes hereof, the Equitrust Agreement, the Note, the Martin Agreement,
the Lyons Agreement, the Hartman Agreement and the Leibman Agreement are
referred to hereinafter collectively as the "Operative Agreements."
In such examination, I have assumed the authenticity and completeness of
all documents, certificates and records submitted to me as originals, the
conformity to the original instruments of all documents, certificates and
records submitted to me as copies, and the authenticity and completeness of the
originals of such instruments. As to certain matters of fact relating to this
opinion, I have relied on the accuracy and truthfulness of certificates of
officers of the Company and on certificates of public officials, and have made
such investigations of law as I have believed necessary and relevant.
Based on the foregoing, and having due regard for such legal considerations
as I believe relevant, I am of the opinion that the Shares (when issued in
accordance with the Operative Agreements) will be validly issued, fully paid and
non-assessable.
I hereby consent to the filing of this opinion with the Commission as
Exhibit 5.01 to the Registration Statement.
Very truly yours,
/S/ Randall W. Heinrich
SUBSIDIARIES OF THE REGISTRANT
dadandme, inc.
CONSENT OF MALONE & BAILEY, PLLC, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration
Statement (Form SB-2) of our report dated September 10, 1998 for
the fiscal year ended June 30, 1998 and for the period from
October 28, 1997 (date of inception) through June 30, 1998.
MALONE & BAILEY, PLLC
Houston, Texas
September 17, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM PART 1
OF FORM SB-2 DATED SEPTEMBER 15, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001051902
<NAME> JVWEB, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> OCT-28-1997
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 412
<SECURITIES> 0
<RECEIVABLES> 2550
<ALLOWANCES> 0
<INVENTORY> 5305
<CURRENT-ASSETS> 27767
<PP&E> 4390
<DEPRECIATION> (530)
<TOTAL-ASSETS> 56627
<CURRENT-LIABILITIES> 46731
<BONDS> 0
0
0
<COMMON> 71700
<OTHER-SE> (61804)
<TOTAL-LIABILITY-AND-EQUITY> 56627
<SALES> 190
<TOTAL-REVENUES> 190
<CGS> 48
<TOTAL-COSTS> 48
<OTHER-EXPENSES> 174868
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 106
<INCOME-PRETAX> (174620)
<INCOME-TAX> 0
<INCOME-CONTINUING> (174620)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (174620)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
