As filed with the Securities and Exchange Commission on April 15, 1999
Registration No. 333-43379
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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AMENDMENT NO. 3
FORM SB-2A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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JVWEB, INC.
- - --------------------------------------------------------------------------------
(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.#)
Greg J. Micek
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 this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [ ].
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 350,000(1) $1.00 $ 72,950 $ 21.52
Class A Warrants 1,500,000(1) $1.00 $ 391,800 $ 115.58
Common Stock 1,500,000 $1.00 $1,500,000 $ 442.50
underlying Class
A Warrants
Class B Warrants 3,000,000(2) -0- -0- -0-
Common Stock 3,000,000 $2.00 $ 6,000,000 $1,770.00
underlying Class
B Warrants
Class C Warrants 3,000,000(3) -0- -0- -0-
Common Stock 3,000,000 $5.00 $15,000,000 $4,425.00
underlying Class
C Warrants
Common Stock 5,000,000(4) $1.00 $ 5,000,000 $1,475.00
Total 20,350,000 ------ $27,964,750 $8,249.60 (5)
</TABLE>
- - ---------------------
(1) Approximately 277,050 shares of Common Stock and approximately
1,108,200 Class A Warrants have already distributed to the stockholders of LS
Capital Corporation for no consideration from such stockholders. The remaining
approximately 72,950 shares of Common Stock and approximately 391,800 Class A
Warrants were retained by LS Capital Corporation for sale at prices that were
estimated to be, for purposes of fee calculation, $1.00 per share and $1.00 per
warrant.
(2) To be issued to the holders of the Class A Warrants upon the
exercise thereof for no consideration from such holders. (
3) To be issued to the holders of the Class B Warrants upon the exercise
thereof for no consideration from such holders.
(4) To be offered on a delayed or continuous basis pursuant to possible
business combination transactions in the future at prices equivalent to the then
current market price or a slight discount therefrom; for purposes of fee
calculation, determined to be $1.00 per share.
(5) $8,249.60 has previously been paid.
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 15, 1999
PROSPECTUS
JVWEB INC.
5444 Westheimer, Suite 2080
Houston, Texas 77056
Telephone: (713) 622-9287
1,500,000 Class A Warrants
3,000,000 Class B Warrants
3,000,000 Class C Warrants
7,500,000 Shares of Common Stock Underlying such Warrants
5,000,000 Shares of Common Stock for Business Combination Transactions
--------------------------
We are a comparatively new company formed to pursue electronic commerce
opportunities. We are now involved in the provision of certain Internet
services. In the future and as available funds permit, we will consider the
offering of products, services, content and advertising through sites on the
World Wide Web owned either directly or through joint ventures.
----------------------
Trading Symbol:
NASD OTC Bulletin Board - JVWB
----------------------
You should consider carefully the Risk Factors beginning on page 3
of this Prospectus.
----------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved these securities or determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
The date of this Prospectus is _________________ _____, 1999.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus.
The Company
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. The Company is now involved in the provision
of certain Internet services. In the future and as available funds permit, the
Company will consider the offering of products, services, content and
advertising through sites on the World Wide Web owned either directly or through
joint ventures.
The Offering
Securities Offered 3,000,000 Class B Warrants
3,000,000 Class C Warrants
7,500,000 Shares of Common Stock
Underlying the Company's Class A Warrants,
Class B Warrants and Class C Warrants
(collectively, "Warrants")
5,000,000 Shares of Common Stock
for Business Combination Transactions
Price Class B Warrant - Issued for no additional
consideration upon conversion of the
Company's Class A Warrants
Class C Warrant - Issued for no additional
consideration upon conversion of the
Company's Class B Warrants Shares of Common
Stock Underlying the Warrants - $1.00 per
share upon exercise of the Company's Class
A Warrants, $2.00 per share upon exercise
of the Company's Class B Warrants and $5.00
per share upon exercise of the Company's
Class C Warrants
Shares of Common Stock for Business Combination
Transactions - Such consideration as the Board
of the Directors in its discretion and
subject to its fiduciary duties shall
determine
Use of Proceeds Working capital and general corporate purposes.
OTC Bulletin Board Symbols (2)
Common Stock JVWB
Class A Warrants JVWBW
Class B Warrants (3)
Class C Warrants (3)
Risk Factors Purchase of securities being offered hereby
involves a significant degree of risk. See
"Risk Factors".
- - ------------------
(1) Assumes the exercise of all Warrants and no further issuances of the
Company's Common Stock.
(2) Although the Company will be applying for initial quotation of the
Class B Warrants and the Class C Warrants on the OTC Bulletin Board,
there can be no assurance that the Company will be approved for listing
these securities or, if approved, that it will be able to continue to
meet the requirements for continued quotation or that a public trading
market will develop or be sustained.
(3) The Company expects to obtain trading symbols for the the Class B Warrants
and the Class C Warrants at the appropriate time in the future.
Material Terms of the Warrants
Class A Warrants. A holder of a Class A Warrant may acquire one share of
Common Stock at a price of $1.00 upon the exercise of the Class A Warrant. Upon
exercise of a Class A Warrant, the exercising holder will receive two Class B
Warrants without the payment of any additional consideration. A Class A Warrant
may be exercised for a period of three years commencing May 12, 1998. The
Company may redeem a Class A Warrant at a redemption price of $.01 whenever the
closing sales price of the Company's common stock has been at least $1.25 for 10
consecutive trading days. A holder of a Class A Warrant will forfeit the right
to purchase the Common Stock represented by the Class A Warrant called for
redemption unless the Class A Warrant is exercised prior to redemption.
Class B Warrants. A holder of a Class B Warrant may acquire one share of
Common Stock at a price of $2.00 upon the exercise of the Class B Warrant. Upon
exercise of a Class B Warrant, the exercising holder will receive one Class C
Warrant without the payment of any additional consideration. A Class B Warrant
may be exercised for a period of three years commencing after the last Class B
Warrant is issued or the last Class A Warrant is redeemed, whichever occurs
earlier. The Company may redeem a Class B Warrant at a redemption price of $.01
whenever the closing sales price of the Company's common stock has been at least
$2.35 for 10 consecutive trading days. A holder of a Class B Warrant will
forfeit the right to purchase the Common Stock represented by the Class B
Warrant called for redemption unless the Class B Warrant is exercised prior to
redemption.
Class C Warrants. A holder of a Class C Warrant may acquire one share of
Common Stock at a price of $1.00 upon the exercise of the Class C Warrant. A
Class C Warrant may be exercised for a period of three years commencing after
the last Class C Warrant is issued or the last Class B Warrant is redeemed,
whichever occurs earlier. The Company may redeem a Class C Warrant at a
redemption price of $.01 whenever the closing sales price of the Company's
common stock has been at least $5.50 for 10 consecutive trading days. A holder
of a Class C Warrant will forfeit the right to purchase the Common Stock
represented by the Class C Warrant called for redemption unless the Class C
Warrant is exercised prior to redemption.
A holder of the Warrants is subject to a number of risks. For more
information about these risks, see "RISK FACTORS," particularly "- Dependence of
Warrant Holders on Maintenance of Current Registration Statement; Possible Loss
of Value of Warrants" and "-Potential Adverse Effect of Redemption of Warrants."
<PAGE>
RISK FACTORS
The securities covered by this Prospectus involve a high degree of risk.
Accordingly, they should be considered extremely speculative. You 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; Accumulated Deficit. The
Company was incorporated in October 1997. Upon incorporation, the Company
continued preliminary work commenced by the founder of the Company several
months earlier. In view of the length of its operating history, you may have
difficulty in evaluating the Company and its business and prospects. You must
consider our business and prospects in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development. This is particularly true of companies in new and rapidly evolving
markets such as electronic commerce. Such risks include an evolving and
unpredictable business model and the management of possible rapid growth. To
address these risks, we must successfully undertake most of the following
activities:
* Continue to develop the strength and quality of our operations
* Maximize the value delivered to our clients
* Enhance our current and future brands
* Develop and increase our customer bases
* Implement and successfully execute our business and marketing
strategy
* Continue to develop and upgrade our technology and transaction
-processing systems
* Respond to competitive developments
* Identify and pursue suitable electronic commerce opportunities
* Identify and enter into binding agreements with suitable joint
venture partners
* Create and constantly improve our Web sites
* Provide superior customer service and order fulfillment
* Attract, retain and motivate qualified personnel.
* Identify and consummate suitable acquisitions
There can be no assurance that we will be successful in undertaking such
activities. Our failure to address successfully our risks could materially and
adversely affect our business, prospects, financial condition and results of
operations. Moreover, the Company has incurred net losses since inception. As of
December 31, 1998, we had an accumulated deficit of $480,102.
2. Fluctuations in Operating Results. We expect that our operating
results will fluctuate in the future due to a number of factors. We do not
control many of these factors. These factors include the following:
* The level of usage of the Internet
* Demand for our products, services and advertising
* Our ability to attract new customers at a steady rate
* The productivity of our fee-for-service division
* Our ability to attract and retain personnel with the necessary
strategic, technical and creative skills required to
service clients effectively
* Our ability to pursue suitable electronic commerce
opportunities, enter into suitable joint ventures and
consummate suitable acquisitions at a steady rate
* The rate at which we add or loss advertisers
* The rate at which we or our competitors introduce new
products, services or Web sites
* Pricing changes for Web-based products, services and
advertising
* Technical difficulties affecting our Web sites
* The amount and timing of capital expenditures and other costs
relating to the expansion of our operations
* Costs relating to our marketing programs and acquisitions
* Client budgetary cycles
* Government regulation and legal developments regarding the use
of the Internet
* General economic conditions and economic conditions specific
to the Internet and Web sites.
To respond to changes in our competitive environment, we may occasionally make
certain service, marketing or supply decisions or acquisitions. We may benefit
from these decisions or acquisitions in the long run. However, in the short run,
such decisions or acquisitions could materially and adversely affect our
quarterly results of operations and financial condition. We also expect that
(like other retailers) we may experience seasonality in our businesses in the
future. Due to all of the foregoing factors, in some future quarter our
operating results may fall below the expectations of investors and any
securities analysts who follow our Common Stock. In such event, the trading
price of our Common Stock could be materially adversely affected. Further, we
believe that period-to-period comparisons of our financial results may not be
very meaningful. Accordingly, you should not conclude that such comparisons
indicate future performance.
3. Future Capital Needs; Uncertainty of Additional Financing. We
currently have no constant and continual flow of revenues. Our future liquidity
and capital requirements will depend upon numerous factors, including the
success of our existing and future services and the success of our Web sites. We
may need 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
us. Furthermore, debt financing (if available and undertaken) may involve
restrictions limiting our operating flexibility. Moreover, if we issue equity
securities to raise additional funds, the following results will or may occur:
* The percentage ownership of our existing stockholders will be
reduced
* Our stockholders may experience additional dilution in net
book value per share
* The new equity securities may have rights, preferences or
privileges senior to those of the holders of our Common Stock.
We can not now predict our additional capital requirements because of the
uncertainty of our actual growth. However, to pursue our business plan as
desired, we believe that our future capital requirements will exceed our current
financial position. We expect to finance our operations for fiscal 1999 through
cash flow from operations, proceeds from the exercise of certain outstanding
warrants and options to purchase shares of our Common Stock, and the possible
private placement of our equity securities. We are looking for sources of
additional capital. However, there can be no assurance that we will find such
sources. If adequate funds are not available on acceptable terms, we may be
prevented from pursing future opportunities or responding to competitive
pressures. The failure to purse future opportunities or respond properly to
competitive pressures could materially and adversely affect our business,
results of operations and financial condition.
4. Dependence on the Internet. Our future success substantially depends
upon continued growth in the use of the Internet and the Web. Such growth seems
necessary to support the sale of our products, services and advertising. Rapid
growth in the use of 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, if Internet use continues to grow significantly,
there can be no assurance that the Internet infrastructure will remain adequate
for supporting the increased demands placed upon it. The Internet could lose its
viability due to either:
* Delays in the development or adoption of new standards and
protocols required to handle increased levels of Internet
activity; or
* Increased governmental regulation
Changes in or insufficient availability of telecommunications services to
support the Internet also could slow response times and adversely affect usage
of the Web and our Web sites. If Internet use fails to continue to grow, or if
the Internet infrastructure fails to support effectively growth that may occur,
our business, operating results and financial condition could be materially
adversely affected.
5. Risks Associated with Technological Change. The Internet and
electronic markets involve certain characteristics that expose our existing and
future Web sites, technologies, service practices and methodologies to the risk
of obsolescence. These characteristics included the following:
* Rapid changes in technology
* Rapid changes in user and customer requirements
* Frequent new service or product introductions embodying new
technologies
* The emergence of new industry standards and practices
Our performance will partially depend on our ability to license leading
technologies, enhance our 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 we will use new technologies
effectively or adapt our Web sites to consumer, vendor, advertising or emerging
industry standards. If we are unable, for technical, legal, financial or other
reasons, to adapt in a timely manner in response to changing market conditions
or customer requirements, our business, results of operations and financial
condition could be materially adversely affected.
6. Reliance on Third Parties. Our operations will depend on a number of
third parties, some of which are specifically discussed herein. We will have
limited control over these third parties. We will probably not have many
long-term agreements with many of them. We do not own a gateway onto the
Internet. Instead, we now and presumably always will rely on a network operating
center to connect our Web sites to the Internet. We also will rely on a variety
of technology that we will license from third parties. Our loss of or inability
to maintain or obtain upgrades to any of these technology licenses could result
in delays. These delays could materially adversely affect our business, results
of operations and financial condition, until equivalent technology could be
identified, licensed or developed and integrated. Furthermore, we will depend on
hardware suppliers for prompt delivery, installation and service of servers and
other equipment used to deliver our products and services. If we are 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, our business, results of operations
and financial condition could be materially adversely affected. In addition, we
will also depend upon Web browsers for access to the products, services and
advertising that we will offer.
7. Reliance on Specific Strategic Relationship. We have developed a
critical strategic relationship with Heitmann S.A.C, a company based in the
United Kingdom, and its parent company Lernout En Hauspie, a company based in
Belgium, regarding several business relationships relating to our
fee-for-service division. We have reached informal agreements with these
companies regarding our relationship with them. However, we have not yet entered
into any legally binding agreement with either of them, although legally binding
agreements are currently being negotiated. The loss of our strategic
relationship with either Heitmann S.A.C or Lernout En Hauspie would materially
adversely affected our business, results of operations and financial condition.
8. Recruitment and Retention of Internet Professionals. Our
fee-for-service division is labor intensive. Accordingly, the success of this
division partially depends on our and our subcontractors' abilities to identify,
hire, train and retain consulting professionals who can provide the Internet
strategy, technology, marketing, audience development and creative skills
required by clients. There is currently a shortage of such personnel. This
shortage is likely to continue for the foreseeable future. We and our
subcontractors will have to compete intensely with other companies for qualified
personnel. There can be no assurance that we and our subcontractors will
attract, assimilate or retain other highly qualified technical, marketing and
managerial personnel in the future. The inability to attract and retain the
necessary technical, marketing and managerial personnel could materially and
adversely affect our business, results of operations and financial condition.
9. Dependence on Client Outsourcing. There can be no assurance that
businesses will outsource the design, development and maintenance of their Web
sites to Internet professional services firms. Companies may decide to assign
the design, development and implementation of Web sites to their internal
information technology divisions, which have ready access to both key client
decision makers and the information required to prepare proposals for such
solutions. If independent providers of Internet professional services prove to
be unreliable, ineffective or too expensive, or if software companies develop
tools that are sufficiently user-friendly and cost-effective, enterprises may
choose to design, develop or maintain all or part of their Web sites in-house.
10. Uncertain Acceptance of the Internet as a Medium for Commerce. For
our business plan to succeed, a broad base of consumers, vendors and advertisers
must adopt the Internet as a medium for commerce. We intend to target consumers,
vendors and advertisers who have historically used traditional means of commerce
to conduct business. Most of our customers, vendors and advertisers will have
only limited experience with the Web as a commercial medium and may not find the
Web as an effective medium for transacting business. Moreover, critical issues
concerning the commercial use of the Internet remain unresolved and may affect
the growth of Internet use or the attractiveness of conducting commerce by means
of Web sites. These critical issues include the following:
* Ease of access
* Security
* Reliability
* Cost and quality of service
* Development of the necessary infrastructure (such as a
reliable network backbone)
* Timely development and commercialization of performance
improvements (including high speed modems)
11. 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 considerably uncertain. There exist few proven
services and products. Since the market for electronic commerce on the Internet
is new and evolving, predictions of the size and future growth (if any) of this
market are difficult. Moreover, no standards have yet been widely accepted for
the measurement of the effectiveness of Web-based advertising. 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. Moreover, there can be
no assurance that we will effectively transition to any other forms of Web-based
advertising if they develop. Furthermore, certain advertising filter software
programs are available that limit or remove advertising from an Internet user's
desktop. If generally adopted by users, such software may materially and
adversely affect the viability of advertising on the Internet. Our business,
results of operations and financial condition could be materially adversely
affected if any of the following events occur:
* The markets for our electronic commerce fail to develop * The markets
for our electronic commerce develop more slowly than expected * The
markets for our electronic commerce become saturated with competitors *
Our electronic commerce fails to achieve market acceptance
12. Opportunity Selection. An integral part of our business strategy is
the identification and pursuit of potentially successful electronic commerce
opportunities. There can be no assurance that we will be able to identify
successful electronic commerce opportunities or that we will be able to pursue
these opportunities successfully even if identified. There is no specific
criterion for selecting electronic opportunities. Accordingly, we will have
significant flexibility in selecting such opportunities. Our failure to select
good electronic commerce opportunities could materially and adversely affect our
business, results of operations and financial condition.
13. Uncertain Acceptance of Brands. While we expect to offer the brands
of other persons, we also intend to develop our own brands. We believe 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 our brands
will depend largely on our success in establishing and maintaining a position as
a leader in Internet commerce and in providing high quality products and
services. There can be no assurance that we will succeed in this regard. To
attract and retain customers, vendors and advertisers and to promote and
maintain our brands in response to competitive pressures, we may need to
increase our marketing and advertising budgets or otherwise to increase
substantially our financial commitment to creating and maintaining brand loyalty
among vendors and consumers. Our business, results of operations and financial
condition could be materially adversely affected if any of the following events
occur:
* We are unable to provide high quality products, services and
advertising
* We otherwise fail to promote and maintain our brands
* We are unable to achieve or maintain a leading position in
Internet commerce
* We incur significant expenses in attempting to achieve or maintain a
leading position in Internet commerce or to promote and maintain
our brands
14. Content and Graphic Development. Content and (to a lesser degree)
graphic development relating to our Web sites are key elements to the success of
our brands-under-management division. If these sites fail to have solid content
(which is modified on a continual basis) and appealing graphics, we expect that
consumers, vendors and advertisers will not be attracted to, or will discontinue
to visit and utilize, the sites. We expect that (as a consequence) we will fail
to develop successfully our brands. We have relied and will continue to rely
substantially on content and graphic development efforts of third parties. There
can be no assurance that our current or future third-party providers will
effectively implement these properties, or that their efforts will result in
significant revenue to us. Any failure to develop and maintain high-quality and
successful Web sites could materially and adversely affect our business, results
of operations and financial condition.
15. Internet Commerce Security Risks. A significant barrier to
electronic commerce and communications is the secure transmission of
confidential information over public networks. We will rely on encryption and
authentication technology licensed from third parties to provide the security
and authentication necessary for 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 compromise or breach the algorithms we use to protect customer
transaction data. Any such compromise of our security could materially and
adversely affect our business, results of operations and financial condition. A
party able to circumvent our security measures could misappropriate proprietary
information or cause interruptions in our operations. We may need 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
our activities or the activities of third party contractors involve the storage
and transmission of proprietary information (such as credit card numbers),
security breaches could expose us to a risk of loss or litigation and possible
liability. There can be no assurance that our security measures will prevent
security breaches or that failure to prevent such security breaches will not
materially and adversely affect our business, results of operations and
financial condition.
16. Reliance on Merchandise Vendors and Third Party Manufacturers. We
expect that we will depend entirely upon vendors and third party manufacturers
to supply merchandise for sale through our Web sites. We expect that the
availability of merchandise is and will be unpredictable. We expect that we will
generally have no long-term contracts or arrangements with our vendors and
manufacturers that guarantee the availability of merchandise. There can be no
assurance of the following:
* That our current and future vendors and manufacturers will
continue to sell merchandise to or manufacture merchandise for
us or otherwise provide merchandise for sale through our Web
sites
* That we will be able to establish new vendor or manufacturer
relationships that ensure merchandise will be available.
We will also rely on many of our vendors, manufacturers and joint venture
partners to process and ship merchandise to customers. We will have limited
control over the shipping procedures of our vendors, manufacturers and our joint
venture partners. Shipments by these vendors, manufacturers and joint venture
partners may be subject to delays. We expect that most merchandise we will sell
will carry a warranty supplied either by the manufacturer or the vendor, and we
will not be legally obligated to accept merchandise returns. Nonetheless, we may
voluntarily accept returns from customers. We may or may not receive
reimbursements from our vendors or manufacturers for accepting such returns. Our
business, results of operations and financial condition could be materially
adversely affected by any of the following events:
* We are unable to develop and maintain satisfactory
relationships with vendors and manufacturers on acceptable
commercial terms
* We are unable to obtain sufficient quantities of merchandise
* The quality of service provided by our vendors and
manufacturers falls below a satisfactory standard
* Our level of returns exceeds our expectations
17. Risk of System Failure; Single Site. Our success largely depends
upon communications hardware and computer hardware provided 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 our security
measures, our servers are also vulnerable to computer viruses, physical or
electronic break-ins and similar disruptive problems. The occurrence of any of
these problems could lead to interruptions, delays, loss of data or cessation in
service to users of our services and products. We do not presently have
redundant systems or a formal disaster recovery plan, although we are currently
in the processing of developing these. We do not now and will not for the
foreseeable future maintain business interruption insurance. Any system failure
that interrupts or increases response times of our Web sites could result in
less traffic to such sites. If sustained or repeated, such failure could reduce
the attractiveness to consumers, vendors and advertisers of our products,
services and advertising. In addition, a key element of our strategy is to
generate a high volume of visits to and activity with respect to our Web sites.
An increase in the volume of visits to our Web sites could strain the capacity
of the software or hardware we use. This strain could lead to slower response
time or system failures. Such events could adversely affect sales of products,
services and advertising and the number of impressions received by advertising
and thus our advertising revenues.
18. Protection of Intellectual Property. The development of our brands
depends significantly on the protection of our trademarks and trade names. We
have registered the "JVWeb", "Dad & me", and "familylifestyle" trademarks in the
United States. We also claim common law trade name rights in these and other
names. Nonetheless, there can be no assurance that we will be able to secure
significant protection for these trademarks. Our current and future competitors
or others may adopt product or service names similar to our trademarks, thereby
impeding our ability to build brand identity and possibly leading to customer
confusion. Our inability to protect our trademarks and trade names might
materially and adversely affect our business, results of operations and
financial condition. In addition, in the future third parties may claim certain
aspects of our business infringe their intellectual property rights. While we
are not currently subject to any such claim, any future claim (with or without
merit) could result in one or more of the following:
* Significant litigation costs
* Diversion of resources, including the attention of management
* Our agreement to certain royalty and licensing arrangements
Any of these developments could materially and adversely affect our business,
results of operations and financial condition. In the future, we may also need
to file lawsuits to enforce our intellectual property rights, to protect our
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. Such costs and diversion could
materially and adversely affect our business, results of operations and
financial condition.
19. Regulatory Concerns. We are not currently subject to direct
regulation by any government agency in the United States, other than regulations
applicable to businesses generally. 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. Such a
development could materially and adversely affect our business, results of
operations and financial condition. In addition, because our products and
services will be available and sold over the Internet in multiple states and
foreign countries and because we expect to sell to numerous consumers resident
in such states and foreign countries, such a jurisdiction may claim that we are
required to qualify to do business as a foreign entity in such jurisdiction. We
are qualified to do business in only two states. Our failure to qualify to do
business as a foreign entity in a jurisdiction where we are required to do so
could subject us to taxes and penalties for the failure to qualify. Any
application of laws or regulations of a jurisdiction in which we are not
currently qualified could materially and adversely affect our business, results
of operations and financial condition.
20. Other Potential Liability. Certain of our services will involve the
development, implementation and maintenance of applications that are critical to
the operations of our clients' businesses. Our failure or inability to meet a
client's expectations in the performance of our services could injure our
business reputation or result in a claim for substantial damages against us,
regardless of our responsibility for such failure. We will attempt to limit
contractually our damages arising from negligent acts, errors, mistakes or
omissions in rendering our services. However, there can be no assurance that any
contractual protections will be enforceable in all instances or would otherwise
protect us from liability for damages. In addition, Internet users will be able
to download certain materials from our Web sites and subsequently distribute the
materials to others. Because of this, claims could be asserted against us (with
or without merit) in the future 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, we could be liable for
any of the following:
* Libel for any defamatory information we provided about a
person
* Any losses incurred by a person in reliance on incorrect
information we negligently provided
* Copyright and trademark infringement resulting from
information we provided
Moreover, we expect that we may agree with third parties to provide links to
such third parties' Web sites. A claimant might successfully argue that by
providing such links, we are liable for wrongful actions by such third parties
through such Web sites, for such matters as the following:
* Defamation
* Negligence
* Copyright and trademark infringement
* Losses resulting from the products and services sold by the
third party
We are in the process of procuring general liability insurance. Even if we
procure this insurance, the insurance may not cover all potential claims or may
not adequately indemnify us for all liability to which we are imposed. Any
liability or legal defense expenses not covered by insurance or exceeding our
insurance coverage could materially and adversely affect our business, operating
results and financial condition.
21. Indemnification of Officers and Directors for Securities
Liabilities. Our Bylaws provide that we must indemnify each director, officer,
agent and/or employee to the maximum extent provided for in the General
Corporation Law of Delaware. Further, we may purchase and maintain insurance on
behalf of any such persons whether or not we have the power to indemnify such
person against the liability insured against. Consequently, because of the
actions of officers, directors, agents and employees, we could incur substantial
losses and be prevented from recovering such losses from such persons. Further,
the U.S. Securities and Exchange Commission (the "Commission") maintains that
indemnification is against the public policy expressed in the Securities
Exchange Act of 1933 (the "Act"), and is therefore unenforceable.
22. Competition. The electronic commerce market (particularly on the
Internet) is new, rapidly evolving and intensely competitive. Most of our
current and potential competitors have longer operating histories, larger
installed customer bases, longer relationships with clients and significantly
greater financial, technical, marketing and public relations resources than we
do, and could decide at any time to increase their resource commitments to our
market. We expect competition to intensify in the future. There can be no
assurance that existing or future competitors will not develop or offer services
that provide significant performance, price, creative or other advantages over
those we offer. Such a development could materially adversely affect on our
business, results of operations and financial condition. In addition, 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. As a result of their larger size, our
competitors may be able to secure merchandise from vendors on more favorable
terms than we can. Moreover, 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 we can. Any of these circumstances
could materially adversely affect our business, results of operations and
financial condition.
23. Management of Potential Growth. We believe that, given the right
business opportunities, we may expand our operations rapidly and significantly.
If rapid growth were to occur, it could place a significant strain on our
management, operational and financial resources. To manage any significant
growth of our operations, we will be required to undertake the following
successfully:
* Expand existing operations (particularly with respect to
customer service and merchandising)
* 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
* Train, manage and expand our employee base
Further, we 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
our strategic direction in a rapidly changing environment. If we are unable to
manage growth effectively, our business, results of operations and financial
condition could be materially adversely affected.
24. Potential Acquisitions. As part of our business strategy, we may
acquire complementary companies, products, services or technologies. Any
acquisition would be accompanied by the risks commonly encountered in an
transaction. Such risks include the following;
* Difficulty of assimilating the operations and personnel of th
acquired companies
* Potential disruption of our ongoing business
* Inability of management to maximize our financial and
strategic position through the successful incorporation of
acquired businesses and technologies
* Additional expenses associated with amortization of acquired
intangible assets
* Maintenance of uniform standards, controls, procedures and
policies
* Impairment of relationships with employees, customers, vendors
and advertisers as a result of any integration of new
management personnel
* Potential unknown liabilities associated with acquired
businesses
There can be no assurance that we would be successful in overcoming these risks
or any other problems encountered in connection with such acquisitions. Due to
all of the foregoing, any future acquisition may materially and adversely affect
our business, results of operations, financial condition and cash flows.
Although we do not expect to use cash for acquisitions, we may be required to
obtain additional financing if we choose to use cash in the future. There can be
no assurance that such financing will be available on acceptable terms. In
addition, if we issue stock to complete any future acquisitions, existing
stockholders will experience further ownership dilution.
25. Reliance Upon Directors and Officers and Limited Management
Resources. We substantially depend upon the efforts and skills of Greg J. Micek,
a director and the President of the Company. The loss of Mr. Micek's services,
or his inability to devote sufficient attention to our operations, could
materially and adversely affect our operations. We do 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. Our success in attracting additional
qualified personnel will depend on many factors, including our ability to
provide them with competitive compensation arrangements, equity participation
and other benefits. There is no assurance that we will be successful in
attracting highly qualified individuals in key management positions.
26. Lack of Relevant Experience by Management. We believe that we have
ample experience to manage our fee-for-service division. However, our
brands-under-management division requires management experience of a different
nature. We expect that we will generally have little or no direct experience in
the management or operation of the types of businesses represented by the
products and services we will offer by means of Web sites, either directly or
through joint ventures through our brands-under-management division. In the case
of joint ventures, we expect that our joint venture partners will have a
requisite level of experience. However, there can be no assurance that we will
be familiar enough with the joint venture's proposed business to ascertain this.
Because of our lack of experience, we may be more vulnerable than others to
certain risks. We also may be more vulnerable to errors in judgment that could
have been prevented by more experienced management. As a result, our lack of
previous experience could materially and adversely affect our future operations
and prospects.
27. Control, Cumulative Voting, and Preemptive Rights. As of March 15,
1999, Greg J. Micek, a director and the President of the Company, owned
approximately 73.1% of our 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 our outstanding shares of
Common Stock (currently Mr. Micek) may elect all of our Board of Directors after
completion of the offering. There are no preemptive rights in connection with
our Common Stock. Thus, the percentage ownership of existing stockholders may be
diluted if we issue additional shares in the future.
28. Preferred Stock. Our Certificate of Incorporation authorizes the
issuance of up to 10,000,000 shares of Preferred Stock, par value $.01 per
share. No shares of Preferred Stock were issued as of March 10, 1999. 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 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. Preferred stock authorized in series allows our Board of Directors to
hinder or discourage an attempt to gain control of the Company by a merger,
tender offer at a control premium price, proxy contest or otherwise.
Consequently, the Preferred Stock could entrench our management. The market
price of our Common Stock could be materially and adversely affected by the
existence of the Preferred Stock.
29. Limited Trading Market; Limited Float. Our Common Stock trades in
the United States only in the over-the-counter market on the OTC Electronic
Bulletin Board. Public trading of our Common Stock commenced on June 30, 1998.
Thus far, the prices at which our Common Stock has traded have fluctuated fairly
widely on a percentage basis. See "MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS." There can be no assurance as to the prices at
which our Common Stock will trade in the future, although they may continue to
fluctuate significantly. Prices for our Common Stock will be determined in the
marketplace and may be influenced by many factors, including the following:
* The depth and liquidity of the markets for our Common Stock
* Investor perception of us and the industry in which we
participate
* General economic and market conditions
In addition to the preceding, as of March 15, 1999 only approximately 25.7% of
the shares of our Common Stock outstanding are held by persons not affiliated
with the Company. This limited float may decrease the liquidity of our Common
Stock from what it would be in a more active trading market. It could also cause
holders of our 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 our Common Stock. We believe that the initial limited float will be eased to
some extent over time as, if and when the following events occur:
* Certain warrants to purchase our Common Stock are exercised
* Shares of our Common Stock subject to legal or contractual
restrictions become freely tradeable * Freely tradeable shares are
issued in connection with acquisitions * We undertake additional public
offerings of additional shares of our Common Stock
30. Potential Future Sales Pursuant to Rule 144. As of March 15, 1999
after taking into account certain anticipated issuance of Common Stock,
approximately 9,373,135 shares of our Common Stock were issued and outstanding.
We believe that approximately 6,420,000 of these shares are "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 our Common Stock or the average weekly trading volume
during the four calendar weeks before such sale. Nearly all of the restricted
shares have been outstanding for over one year and thus are 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 depress the price of our Common Stock. Also, if substantial, such sales
might also adversely affect our ability to raise additional equity capital.
However, most of the approximately 6,420,000 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.
31. Risk of Potential to Dilution Future Share Issuances; Outstanding
Warrants. We have registered an aggregate of 5,000,000 shares of our Common
Stock for issuance in possible future business combination transactions. All of
these shares are still available for issuance in the future. Moreover, we have
registered an aggregate of 1,000,000 shares of our Common Stock for issuance to
outside consultants to compensate them for services provided. Most of these
shares are still available for issuance in the future. For issuances of shares
in connection with acquisitions and issuances to consultants, our Board of
Directors will determine the timing and size of the issuances and the
consideration or services required therefor. Our Board of Directors intends to
use its reasonable business judgment to fulfill its fiduciary obligations to our
then existing stockholders in connection with any such issuance. Nonetheless,
future issuances of additional shares could cause immediate and substantial
dilution to the net tangible book value of shares of our Common Stock issued and
outstanding immediately before such transaction. Any future decrease in the net
tangible book value of such issued and outstanding shares could materially and
adversely affect the market value of the shares. In addition, we have
outstanding our Class A Warrants to purchase shares of our Common Stock. We also
have the obligation to issue in the future our Class B Warrants and Class C
Warrants to purchase shares of our Common Stock. Each of these warrants permits
the holders to purchase a share of our Common Stock at a specified price. These
purchase prices may be less than the then current market price of our Common
Stock. A total of approximately 7.5 million additional shares of our Common
Stock would be issued if all of the warrants currently outstanding (and we are
obligated to issue in the future) were exercised. Any shares of our Common Stock
issued pursuant to these warrants would further dilute the percentage ownership
of existing stockholders. The terms on which we could obtain additional capital
during the life of these warrants may be adversely affected because of such
potential dilution.
32. Dependence of Warrant Holders on Maintenance of Current
Registration Statement; Possible Loss of Value of Warrants. Before exercising
the Warrants, a current registration statement (or an exemption therefrom) must
be in effect with the Commission and with the various state securities
authorities in the states where warrant holders reside. We intend to keep
effective a registration statement covering the Warrants and underlying shares
while the Warrants are exercisable. However, we expect to incur substantial
continuing expenses for legal and accounting fees in doing so. Moreover, we have
experienced a comparatively short period of time during which a current
registration statement was not in effect. Consequently, there can be no
assurance that we will be able to maintain a current registration statement
while the Warrants are exercisable. Our inability to maintain an effective
registration statement and qualification in appropriate states (or exemptions
therefrom) covering the underlying shares would render the Warrants
unexercisable and may deprive them of all or a portion of their value. See
"DESCRIPTION OF CAPITAL STOCK--Warrants".
33. Potential Adverse Effect of Redemption of Warrants. We may redeem
each warrant comprising a class of our warrants at a price of $.01 per Warrant
after the occurrence of a certain precondition. Before we may redeem any of our
warrants, the class of which these warrants are a part must have traded above
certain stipulated levels for certain stipulated periods of time. Redemption of
the Warrants could force the warrant holders to exercise the Warrants at a time
when it may be disadvantageous for the holders to do so or to sell the Warrants
at their then current market price when the holders might otherwise wish to hold
the Warrants for possible appreciation. Any holders who do not exercise warrants
prior to their expiration or redemption, as the case may be, will forfeit the
right to purchase the shares of Common Stock underlying the Warrants. See
"DESCRIPTION OF CAPITAL STOCK--Warrants".
34. No Specific Use of Proceeds. We have not designated any specific
use for the proceeds realized from the exercise of the Warrants. We expect to
use such proceeds for general corporate purposes, including working capital.
Accordingly, we will have significant flexibility in applying such proceeds. Our
failure to apply such funds effectively could materially adversely affect our
business, results of operations and financial condition.
35. Risks Relating to Low-Priced Securities. The trading prices of our
Common Stock have been below $5.00 per share. As a result of this price level,
trading in our Common Stock is subject to the requirements of certain rules
promulgated under the Exchange Act. These rules 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, before 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 determine the suitability of the penny
stock for the purchaser and receive the purchaser's written consent to the
transaction before sale. The additional burdens imposed upon broker-dealers by
such requirements may discourage broker-dealers from effecting transactions in
our Common Stock affected. As a consequence, the market liquidity of our Common
Stock could be severely limited by these regulatory requirements.
36. No Dividends. The holders of our 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, we have paid no 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 our
business operations. If we obtain additional financing, our ability to declare
any dividends will probably be limited contractually.
37. Potential Year 2000 Problems. We believe that we have no potential
internal Year 2000 problems. Nonetheless, we recognize that the computer systems
of financial institutions and other vendors with which we will do business could
have Year 2000 problems that could adversely affect us. However, we have no
greater exposure to these types of problems than other businesses in general.
Nonetheless, we 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, we have instituted a program of
carefully screening persons and companies with which we 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. You should be aware of these
and other factors set forth in this Prospectus.
USE OF PROCEEDS
The Company expects to use proceeds from the exercise of the Warrants
for general corporate purposes. The Company will not receive any proceeds when
it issues any of the other 5,000,000 shares of Common Stock covered by this
Prospectus. However, such other shares are intended be used for business
combination transactions pursuant to which the Company will acquire direct or
indirect ownership of assets and properties.
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 February 16, 1999, the Company had approximately 243 holders of
record. Trading in the Common Stock commenced on June 30, 1998. Presented below
are the high and low closing prices of the Common Stock for the periods
indicated:
<TABLE>
<CAPTION>
High(1) Low(1)
<S> <C> <C>
Fiscal year ending June 30, 1999:
Third Quarter $ .78 $ .36
Second Quarter $ .562 $ .125
First Quarter $1.25 $ .406
Fiscal year ended June 30, 1998:
Fourth Quarter $ .75 $ .75
</TABLE>
- - ---------------
(1) Reflects sole trade to occur during fiscal 1998 on June 30, 1998, the
date trading in the Common Stock commenced.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Summary
In general, JVWeb is structured to pursue two main business activities:
1) the joint venturing of Brands that have strong on-line commerce potential,
and 2) the building of a strong fee-for-service division to deepen our
capabilities. In this past quarter, management refined its focus on building a
strong fee for service division. A significant percentage of the resources of
the company were devoted to developing a well-defined marketing campaign around
very specific consulting services that emphasized the strengths of the company.
At the present time, JVWeb has no significant contracts signed as a result of
these efforts. Management anticipates seeing the benefits of this effort by the
end of fiscal 1999, although there can be no assurances in this regard.
We have established three potential profit centers within our
fee-for-service division. The first is a web-hosting service, based in Phoenix,
Arizona. The second is the web development capabilities of L&H that we market in
the U.S. The third is the strategic internet services consulting that is the
core expertise of JVWeb.
Among the resources that have been established to initiate the
marketing of a fee-for-service division are the previously announced web-hosting
facility (co-located with GTE), as well as the offices being established in New
York and San Francisco. The company continues to build on its relationship with
L&H. Management, for example, is exploring opportunities to leverage the
capabilities of L&H in the U.S., while offering its web-hosting and other
services to L&H in Europe. We are hopeful that these efforts will produce
significant revenue growth for us. However, at this time, we have not signed any
significant contracts as a result of these efforts.
Quarter ended December 31, 1998
Income statement
Revenue. Management had previously announced its first web-hosting
customer at the end of this quarter. Revenue for web-hosting will initiate in
January 1999, and we are hopeful it will grow as new customers are added.
Management also is hopeful consulting revenue will initiate by the end of fiscal
1999, although there can be no assurances in this regard.
General and Administrative Expenses. Out of the total G&A expenditures
for the quarter, 44%, or $55,000 was due to the write-off of accumulated
expenditures related to the aborted acquisition of Wall Street Whispers.
Management is continuing to have discussions with the owners of Whispers for a
joint marketing relationship around the Whispers newsletter, however, no
agreement has been reached at this time on that possibility. A material
percentage of the remaining G&A expenditures represented travel and
organizational costs associated with the establishment of a presence in New York
and California, as well as the pursuit of development with L&H in their Ipswich
(London) office. Additional expenditures were incurred in establishing the web
hosting capability in Phoenix, Arizona. Remaining G&A expenditures were related
to the costs of being a public company, including the associated costs of
maintaining a fully reporting status with the Commission.
Balance sheet
Cash. The principal shareholder and related parties, continue to fund
the minimal operations of the company on an as-needed basis.
Inventory. Inventory of $8,946 represents merchandise related to the
Dadandme and Frogletz product lines. Management continues to explore
relationships and joint venture opportunities that will support a marketing
campaign to build these on-line brands. At this time, no such talks are in
serious discussion stages.
Accounts Payable. As of February 15, 1999, a majority of the costs,
which were associated with the establishment of JVWeb as a public company, have
been paid.
Notes Payable to Related Parties. We anticipate paying off these notes
in 1999.
Inception (October 28, 1997) to December 31, 1997 and December 31, 1998
General and Administrative Expenses. G&A expenditures for the period
from inception (October 28, 1997) to December 31, 1998 totaled $479,381 compared
to $42,828 for period from inception to December 31, 1997. G&A expenditures
totaling approximately $130,000 were incurred during the first and second
quarters of 1998 primarily in connection with the filing with the Securities and
Exchange Commission to become a public company as a spin-off of an existing
public company, which became effective May 12, 1998. During the quarter ended
September 30, 1998, the Company began building its management infrastructure
while also incurring the costs of developing its first website together with
related product design and the costs of being a public company. Total G&A costs
for this quarter totaled approximately $180,000. G&A expenses during the quarter
ended December 31, 1998 totaled approximately $125,000, including $55,000 due to
the write-off of accumulated expenditures related to the aborted acquisition of
Wall Street Whispers. The remaining G&A costs were incurred in establishing of a
presence in New York and California, as well as the pursuit of developments with
L & H in their London office, together with the costs of being a public company.
Other. The Company currently has cash on hand only sufficient to
operate throughout calendar 1999 on a fairly minimal scale. In order for the
Company to pursue its business plan in the manner it prefers, the Company
anticipates that it will need to raise additional funds in amounts that cannot
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.
The Company does not anticipate performing any research and development
in the next twelve months, other 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 of any plant or significant
equipment. The Company does not anticipate any significant changes in the number
of employees, other than through possible acquisitions.
In November, 1997, the Company sold 500,000 shares of common stock and
1,500,000 shares of 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.
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.
At the time the Company was formed, electronic commerce opportunities
were expected to arise in several different ways. However, the Company expected
primarily to offer products, services, content and advertising by means of sites
on the World Wide Web (the "Web") of the Internet. The Company expected that the
products, services, content and advertising would usually be offered by joint
ventures between the Company and established businesses although occasionally
they would be offered directly by the Company itself. In the case of joint
ventures, the Company expected to contribute technical expertise and (in certain
instances) financial assistance in developing the joint ventures' Web sites,
while the joint venture partners would be responsible for furnishing the joint
ventures' products or services, the content for the joint ventures' Web sites,
and the related business expertise. This area of the Company's business is
referred to herein as the brands-under-management division. The Company also
expected secondarily to develop a fee-for-service division to sell the
technological, marketing and other abilities that the Company had acquired or in
the future may acquire. While the Company originally gave a greater emphasis to
the brands-under-management division, as the business of the Company has
developed and continues to develop, the Company is now giving a greater emphasis
to the fee-for-service division.
The Company's business continues in a developmental stage.
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.
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. Apparently, few businesses (especially small, emerging
and mid-sized businesses) 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.
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. 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. 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 "BUSINESS AND PROPERTIES - 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."
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.
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 of at least two
particular types. The first type of opportunities presented is to offer
products, services and content 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. The second type of
opportunities presented is to provide Internet services to persons offering or
proposing to offer products, services, content or advertising in electronic
commerce or offering. Because these two types of opportunities are very
distinct, the Company has established two divisions to pursue these
opportunities separately. These divisions are the Company's
brands-under-management division and the Company's fee-for-service division.
While the Company originally gave a greater emphasis to its
brands-under-management division, the Company is now giving a greater emphasis
to its fee-for-service division.
Fee-For-Services Division
The Company's fee-for-services division provides clients with the
vision, expertise and resources required to develop new strategies and improve
business processes for electronic commerce. To capitalize on the opportunity
presented by the rapid growth in electronic commerce, the Company has developed
certain internal capabilities relating to electronic commerce and Internet
services. Moreover, the Company has formed and continues to form certain
strategic relationships with third parties to supplement the Company's internal
capabilities to ensure that the Company a full, integrated ensemble of
strategic, technical and creative skills required for electronic commerce and
Internet services. In each consulting engagement, the client can contract for
the specific services it requires, depending on the nature of the engagement and
the capabilities of the client's organization. The Company expects to bill most
of its engagements on a time and materials basis, although it may work on a
fixed-price basis.
The Company's fee-for-services division has been divided into three
distinct functional areas. The first functional area of the Company's
fee-for-services division provides strategic Internet services consulting. The
services provided by this area of the fee-for-services division include the
following:
* strategy consulting regarding business and marketing
strategies best suited for pursuing the client's business in
electronic commerce
* creation of a system or process design that defines the roles
that the system or process will perform for meeting the
client's strategic requirements
* development of a testable version of the client's system
including all necessary programs and components and a
compelling user interface for the system to enable it to
attract and hold the attention of the client's target audience
while conforming to the client's brand image and marketing
campaigns
* testing of the system in preparation of deployment into a full
production system and installation of the system after all
tests are completed
* audience development to increase Web site traffic,
strengthening brand awareness and generating sales leads
* maintenance of the Web site and its content, and provision of
technical support
The Company is undertaking efforts to bolster its strategic Internet services
consulting capabilities. In this connection, the Company is in the process of
organizing a subsidiary that will employ a number of strategic Internet service
consultants. The Company has engaged a person with considerable expertise
relating to strategic Internet services to manage this subsidiary once formed.
This person has been engaged on a fairly short-term basis but has received
long-term incentives to continue with the Company. There can be no assurance
that the subsidiary will be formed or that the person engaged to manage it will
continue to provide services to the Company.
The second functional area of the Company's fee-for-services division
involves Web site development. This area developed out of a strategic alliance
that the Company formed during August 1998 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. In August 1998, Heitmann was
acquired by Lernout & Hauspie Speech Products ("L&H"), an international leader
in the development of advanced speech technology for various commercial
applications and products. The Company expects that the business operations of
Heitmann are expected to be merged into the business operations L&H, and that
the Company will continue with L&H the business relationship that it had with
Heitmann. The Company, on the one hand, and Heitmann or L&H, on the other hand,
have not entered into a legally binding agreement with regard to their
relationship, but the Company and L&H intend to explore, through their strategic
alliance, the basis for entering into a legally binding agreement in the future.
As an outgrowth of the Company's Web site development services, the
Company has developed a web-based communications service, which targets
Advertising and Public Relations Agencies in North America. The Company's
niche-marketing plan for this service was launched the first week of March 1999
from the Company's newly-established New York satellite office. Advertising and
public relations agencies headquartered in New York City are being introduced
through sales calls to the new high-tech, highly customized service. The Company
expanded the marketing plan to San Francisco in mid-March 1999, and anticipates
bringing the service to major sites across North America. L&H will be primarily
responsible for providing the actual Web site development services, while the
Company will be primarily responsible for marketing the service. The Company
expects to bill for these services on a time and materials basis. Fees received
will be split equally between the Company and L&H. The Company will offer its
web-based communication services over the Web site "crisis-communications.com",
which is now under development.
The third functional area of the Company's fee-for-services division
provides Web hosting services. In this connection, the Company has entered into
a Web hosting agreement with GTE Internetworking, a division of GTE Corporation.
Under the terms of this agreement, GTE makes available to the Company GTE's Web
Advantage Service from GTE's worldwide secure global data-center based in
Phoenix. GTE's Web Advantage Service is a high-performance, highly reliable,
cost-effective Web hosting service. Under the terms of this agreement, the
Company has access to a bandwidth of up to 10.0 Mbit/sec. This agreement allows
the Company to expand and contract its use of GTE's services as the Company's
traffic fluctuates. The charges that the Company will owe pursuant to the
agreement will depend on the Company's usage. The initial term of this agreement
is for one year. This agreement is renewable by the Company and is terminable by
the Company upon 60 days prior written notice. The Company believes that the GTE
agreement provides suitable Web hosting capacity for the foreseeable future. The
Company also believes that providing hosting services is critical because
hosting is an entry level service and creates the opportunity for offering and
selling additional services. The Company is already providing Web hosting
services to a major European government agency with a possible increase in Web
hosting work for other agencies of this government. The Company will offer its
Web hosting services over the Web site "webcatservers.com", which is now under
development.
The Company's objective regarding the fee-for-services division is to
become and remain a leading Internet services provider. The Company's strategy
to achieve this objective includes the following elements:
Strengthen Position as an Internet Services Provider. The Company is
continuing to strengthen its position as an Internet services provider
in order to provide clients with superior Internet solutions. The
Company intends to continue identifying, reviewing and integrating the
latest Internet technologies and accumulating and deploying the best
demonstrated practices for electronic commerce.
Developing Brand. In a fragmented industry that lacks brands strongly
identified with Internet services providers the Company believes that
it will need to build a well-recognized brand for its fee-for-services
division. The Company's brand development program will be designed to
reinforce the message that the Company's fee-for-services division can
provide a complete range of services to build and deploy e-commerce
solutions. The Company intends to build and differentiate its
fee-for-services division brand 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.
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. Few of these strategic relationships has yet
resulted in a legal binding relationship. While the Company intends to
develop the ability to render many of 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.
Brands-Under-Management Division
This division was formed for purposes of pursuing electronic commerce
opportunities involving the sale of products and services in electronic commerce
and the offering of content and advertising over the Internet. Although the
Company expects to undertake some of these electronic commerce opportunities
alone, the Company believes that it will undertake most of these 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
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. While the Company
originally gave a greater emphasis to this brands-under-management division, the
Company is now giving a greater emphasis to its fee-for-service division.
However, the Company intends to consider attractive joint venture electronic
commerce opportunities as they are presented and as funds are available. As of
the present, the Company does not have funds available to pursue any meaningful
joint venture electronic commerce opportunity. Nonetheless, the Company's
limited experience thus far indicates that for the foreseeable future the
Company will have an ample array of joint venture prospects to consider if and
when funds become available.
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 will consider both commerce-driven or
content-driven opportunities.
On April 14, 1999, the Company entered an exchange agreement with AMP3.com,
LLC ("AMP3"). The exchange agreement provides that the Company will exchange
200,000 shares of Common Stock for a five-percent membership interest in AMP3.
The closing of this exchange is expected to occur in the immediate future. AMP3
is a recently-formed company engaged in the digital music distribution business.
AMP3's web site allows musicians to upload their performances in MP3 format. MP3
in a digital music format that stores audio files on a computer. Its quality is
comparable to that of compact discs. Visitors to the site can download the music
for free. In fewer than six weeks online, AMP3 had about 5 million hits to its
web site. AMP3 expects to generate revenues by selling advertising. The
beginning of each piece of music downloaded from AMP3's web site is expected to
begin with a three to five second jingle for which the related advertiser has
paid. Most of the musicians with music on AMP3's web site are unsigned by record
companies and are unknown by most music fans. A number of experts have stated
their belief that digital music distribution represents the future of music
distribution. The Company is also currently providing strategic Interest
services to AMP3 and expects to continue to do so in the future.
The Company's brands-under-management division has attempted a couple
of other projects. The first project was the development of its wholly-owned Web
site known as "www.dadandme.com." This site became operational on March 20,
1998. This site is dedicated to fortifying and enhancing fatherhood and offering
products sold under the "Dad & me" logo. The Company has decided not to
aggressively market this site at this time, although the future marketing of
this site remains a possibility. The Company used www.dadandme.com as a test
site for future Web sites to be developed by the Company. In this connection,
the Company entered into an agreement to become the exclusive on-line
distributor for "Frogletz", Chameleon Casual's line of children's play clothing.
Also, on July 31, 1998, the Company entered into an agreement to acquire all of
the assets comprising a financial publication know as "Wall Street Whispers", an
on-line daily financial publication (the "Publication"). The purchase price for
the Publication was $140,000, payable over time. On October 28, 1998 the Company
decided to abandon its proposed acquisition of the Publication. The Company had
paid a total of $55,000 towards the purchase price and was required to pay a
final balloon installment in the amount of $85,000 by October 15, 1998. The
decline in the stock market during August 1998 and the subsequent volatility
raised serious doubts as to the desirability of consummating the acquisition of
the Publication as well as the Company's ability to finance such acquisition.
After twice extending the due date for the final balloon installment of the
purchase price and after the completion of an exhaustive analysis of the
acquisition of the Publication, the Company elected to abandon such acquisition.
The agreement governing the acquisition allowed the prospective sellers to
retain all amounts of the purchase price thus far paid.
When a joint venture prospect is presented in the future, 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) will either
accept or reject the prospect. This decision will be 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 size of the initial budget in
relation to 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 will enter 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. 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.
Other Electronic Commerce Opportunities
In addition to the development of the Company's fee-for-services and
brands-under-management divisions, the Company intends to consider other
electronic commerce opportunities presented to it. The Company intends to select
only those opportunities (if any) that present the greatest likelihood of
success.
Acquisitions
The Company originally intended 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 5,000,000 shares of Common Stock covered by this
Prospectus were registered for this purpose. The Company does not now intend to
conduct an active acquisition program, but may consider select acquisitions on a
case-by-case basis. The Company does not now have any possible acquisitions
under consideration.
The Company has not developed, nor does it currently intend to develop,
a valuation model and a standardized transaction structure it will use. 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 that any
acquisition would assume the form of a merger in exchange for shares of Common
Stock.
Any acquisition is 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.
Acquisitions also a number of 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 also materially and adversely
affect 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, any individual future acquisition may materially and adversely affect
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
With respect to the Company's fee-for-service division, the Company's
marketing efforts are dedicated to demonstrating to key decision makers in
prospective clients the benefits of electronic commerce and the use of Internet
solutions, and the effectiveness of the Company's services. The Company's
marketing program strives to accomplish the following:
* Enhance the Company's Brand. The continued strengthening of
the Company's brand is crucial to the achievement of the
Company's objective of becoming a recognized provider of
Internet professional services. The Company's brand
development efforts are designed to reinforce the message that
the Company can provide a complete range of services to build
and deploy electronic commerce and Internet solutions.
* Develop Marketing and Sales Tools. The Company has developed
marketing and sales materials to be used in connection with
the Company's business generation efforts. These materials
center upon a brochure regarding the Company's web-based
web-based communication service. These materials are designed
to increase the effectiveness of the sales and marketing
efforts of the Company.
* Generate Client Leads. The Company's marketing campaigns are intended to
generate client leads through the use of multiple forms of media, currently
including direct mail, in-person sales calls and trade show programs. The
Company has recently conducted a mailing of brochures regarding its web-based
communication service to large public relations agencies based in New York. The
Company conducted follow-up sales calls regarding this mailing and is now
involved in second-round discussions with a number of prospects. The Company is
currently using a four-person sales team composed of two representatives from
the Company and two technical representatives from L&H. A program of sales calls
is now being conducted in the San Francisco area. The marketing of the Company's
web-based communication services will be used as a foundation for marketing the
other services of the Company's fee-for-services division. Furthermore, L&H has
invited the Company to participate in a program of approximately 20 trade shows
to be held over the next year.
In addition to the Company's own sales efforts, L&H will be marketing the
Company's strategic Internet consulting services overseas, primarily in England.
In the future, the Company may employ a variety of other media, program and
product development, business development and promotional activities to market
its fee-for-service division. For example, the Company may place advertisements
on various Web sites. These advertisements should usually take the form of
banners that encourage readers to click through directly to the Company's Web
sites. The Company also may 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 may engage in a coordinated program of print advertising
in specialized and general circulation newspapers and magazines. The Company
hopes that in the future it will receive free publicity such in the form of
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!
With respect to the Company's brands-under-management division, 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.
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
In general, the market for Internet professional services and
electronic commerce are relatively new, intensely competitive, rapidly evolving
and subject to rapid technological change. The Company expects competition to
persist, intensify and increase in the future. Barriers to entry are minimal,
and new competitors can enters these markets at a relatively low cost. Most of
the Company's current and potential competitors have longer operating histories,
larger installed client bases, longer relationships with clients and
significantly greater financial, technical, marketing and public relations
resources than the Company and could decide at any time to increase their
resource commitments to the Company's markets. In addition, these markets are
subject to continuing definition, and, as a result, the core business of certain
of the Company's competitors may better position them to compete in these
markets as they mature. Competition of the type described above could materially
adversely affect the Company's business, results of operations and financial
condition.
With regard to the Company's fee-for-services division, the Company
believes that the principal competitive factors in its market are strategic
expertise, technical knowledge and creative skills, brand recognition,
reliability of the delivered solution, client service and price. There can be no
assurance that existing or future competitors will not develop or offer services
that provide significant performance, price, creative or other advantages over
those offered by the Company, which could have a material adverse effect on the
Company's business, results of operations and financial condition. The Company
has no patented technology that would preclude or inhibit competitors from
entering the Internet professional services market.
With regard to the Company's brands-under-management division, 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. Nonetheless, 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. 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. 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 to ten employees within the
next year, excluding employees of any 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 an annual basis, a small amount of office space for its New
York office on a month-to-month basis and a small amount of rack space for
servers in GTE's data-center based in Phoenix on an annual 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.
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 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 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, Quarterly Reports on
Form 10-QSB, and Current Reports on Form 8-K. The Annual Reports on Form 10-KSB
will contain audited financial statements. After they are filed, these reports
can be inspected at, and copies thereof may be obtained at prescribed rates, at
the Commission's Public Reference Room located at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further
information on the Public Reference Room. 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 Company's reports can be inspected at, and copies
downloaded from, the Commission's World Wide Web.
MANAGEMENT
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Positions
<S> <C> <C>
Greg J. Micek 44 Director, President
Lewis E. Ball 67 Director, Treasurer & Secretary
Kevin Dotson 34 Key Consultant
</TABLE>
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.
Kevin Dotson has served as a key consultant to the Company since December
1, 1997. Since 1995, Mr. Dotson has owned MicroVision Solutions, an Internet
consulting and Web development company. From 1994 to 1995, he worked as a data
entry specialist for Columbia/HCA SMBC in Houston. Earlier he had served in the
United States Army for five years training military personnel on computer
systems. Mr. Dotson attended Arizona State University.
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.
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).
<TABLE>
<CAPTION>
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)
- - -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Greg J. Micek 6/30/98 (2) 2,000,000
Chief Executive
Officer and
President
</TABLE>
- - -----------------
(1) The Columns designated by the Commission 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
voluntary elected not to receive any portion of his salary during
fiscal 1998 and has not yet received any portion of his salary during
fiscal 1999.
<PAGE>
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
<TABLE>
<CAPTION>
(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
- - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Greg J. Micek 2,000,000 100% $.10 December 1, 2002
</TABLE>
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.
<TABLE>
<CAPTION>
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
<S> <C> <C>
Greg J. Micek 2,000,000 $130,000(2)
</TABLE>
- - ---------------------
(1) The Columns designated by the Commission 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 Key Personnel
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. 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.
The Company has entered into an agreement with Kevin Dotson, a person
who provides Internet consulting services to the Company. This agreement
provides that, for providing consulting services to the Company, the Company
shall issue to Mr. Dotson 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.
Dotson provides consulting services to the Company. The number of shares with
respect to which Mr. Dotson will be issued options will depend on the number of
hours of consulting services that he provides on any particular day. Mr. Dotson
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. Dotson may be granted
options pursuant to the Dotson Option Agreement, is 250,000. Each option issued
under the Dotson Option Agreement will have a term of five years after the date
it is issued. Under an additional option agreement, Mr. Dotson was granted an
option to purchase 200,000 of Common Stock at a per-share purchase price of
$.25. This option vests over a two-year period. As of March 2, 1999, Mr. Dotson
had been issued under his agreements options to purchase 340,000 shares of
Common Stock. The exact number of additional shares of Common Stock with respect
to which options will be issued to Mr.
Dotson can not now be determined.
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 terms and conditions of Mr. Micek's employment with the Company and
the grant of a stock option to him in this connection are discussed in the
subsection captioned "Compensation Agreement with Key Personnel" immediately
preceding.
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. Also, for services provided to the Company, the Company issued to
Mr. Ball an additional 20,000 shares of Common Stock.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of February 16, 1999 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.
Name and Address of
Beneficial Owner Number(1) Percent
Greg J. Micek 8,050,000(2) 57.8%
5444 Westheimer, Suite 2080
Houston, Texas 77056
Lewis E. Ball 120,000 *
6122 Valley Forge
Houston, Texas 77057
All directors and officers 8,170,000(3) 58.6%
as a group (two persons)
(1) Includes shares Stock beneficially owned pursuant to options and
warrants exercisable within 60 days after the date of this Prospectus.
(2) Includes 6,050,000 shares owned outright and 2,000,000 shares that may
be purchased pursuant an option currently exercisable.
(3) Includes 6,170,000 shares owned outright and 2,000,000 shares that may
be purchased pursuant an option currently exercisable.
* Less than one percent.
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.
Securities Being Offered.
The Company is registering with the Commission, and this Prospectus
covers, 3,000,000 Class B Warrants entitling the holders thereof to acquire an
aggregate of 3,000,000 shares of Common Stock at a per-share price of $2.00. The
Class B Warrants will be issued to the holders of the Class A Warrants upon
exercise of the Class A Warrants at rate of two Class B Warrants for each Class
A Warrant exercised, without the payment of any additional consideration. In
addition, the Company is also registering 3,000,000 Class C Warrants entitling
the holders thereof to acquire an aggregate of 3,000,000 shares of Common Stock
at a per-share price of $5.00. The Class C Warrants will be issued to the
holders of the Class B Warrants upon exercise of the Class B Warrants at rate of
one Class C Warrant for each Class B Warrant exercised, without the payment of
any additional consideration. Moreover, the Company is also registering the
7,500,000 shares of Common Stock issuable upon the exercise of the Class A
Warrants, Class B Warrants and Class C Warrants. Finally, the Company is
registering an additional 5,000,000 shares of Common Stock in order to
facilitate the Company's ability to pursue other electronic commerce
opportunities. It is anticipated that this will enable the Company to issue
registered stock in connection with any one or more acquisitions of assets or
mergers with existing businesses. The Company has not identified any
acquisitions that it currently intends to pursue. The issuance of such shares
and the consideration 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 and to fulfill its fiduciary
obligations to the Company's then existing stockholders in connection with any
issuance, it is possible that the future issuance of additional shares could
cause immediate and substantial dilution to the net tangible book value of those
shares of the Common Stock that are issued and outstanding immediately prior to
such transaction. Any future decrease in the net tangible book value of the
Company's issued and outstanding shares could have a material adverse effect on
the market value of the shares.
Common Stock.
The authorized Common Stock of the Company consists of 50,000,000
shares, par value $0.01 per share. As of March 15, 1999 after taking into
account certain anticipated issuance of Common Stock, approximately 9,373,135
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.
Warrants.
The Warrants are comprised of Class A Warrants, Class B Warrants and
Class C Warrants. The Class A Warrants are being issued in connection with the
Distribution, the Class B Warrants will be issued in connection with the
exercise of the Class A Warrants, and the Class C Warrants will be issued in
connection with the exercise of the Class B Warrants. The Class A Warrants, the
Class B Warrants and the Class C Warrants feature identical rights other than as
indicated herein. The Warrants will be issued in registered form under a warrant
agreement (the "Warrant Agreement") between the Company and American Stock
Transfer & Trust Company as warrant agent (the "Warrant Agent"). The following
summary of the provisions of the Warrants is qualified in its entirety by
reference to the Warrant Agreement, a copy of which is filed as an exhibit to
the registration statement of which this Prospectus is a part.
Each Warrant will be separately transferable and will entitle the
registered holder thereof to purchase one share of Common Stock, subject to
adjustment as described below. A Class A Warrant may be exercised for a period
of three years commencing May 12, 1998. A Class B Warrant may be exercised for a
period of three years commencing after the last Class B Warrant is issued or the
last Class A Warrant is redeemed, whichever occurs earlier. A Class C Warrant
may be exercised for a period of three years commencing after the last Class C
Warrant is issued or the last Class B Warrant is redeemed, whichever occurs
earlier. Subject to adjustment as described below, the purchase price for shares
of Common Stock acquired pursuant to exercises of the Warrants shall be $1.00
per share in the case of the Class A Warrants, $2.00 per share in the case of
the Class B Warrants, and $5.00 per share in the case of the Class C Warrants.
The exercise price and the number of shares of Common Stock issuable upon the
exercise of each Warrant are subject to adjustment in the event of a stock
dividend, recapitalization, merger, consolidation or certain other events.
Any or all of the Warrants may be redeemed by the Company at a price of
$.01 per Warrant, upon the giving of not less than 30 days' nor more than 60
days' written notice at any time after the date of this Prospectus, provided
that (depending on the market in which the Common Stock is traded) the closing
bid price, closing sales price or average of the closing bid and closing ask
prices has been at least $1.25 (in the case of a Class A Warrant), $2.35 (in the
case of a Class B Warrant) and $5.50 (in the case of a Class C Warrant), on each
of the ten (10) consecutive trading days ending on the third (3rd) day prior to
the day on which the redemption notice is given. The right to purchase the
Common Stock represented by the Warrants so called for redemption will be
forfeited unless the Warrants are exercised prior to the date specified in the
foregoing notice of redemption.
A holder may exercise Warrants by surrendering the certificate
evidencing the Warrants to the Warrant Agent, together with the form of election
to purchase on the reverse side of such certificate properly completed and
executed and the payment of the exercise price and any transfer tax. Upon
exercise of a Class A Warrant, the exercising holder shall be issued two Class B
Warrants without the payment of any additional consideration, and upon exercise
of a Class B Warrant, the exercising holder shall be issued one Class C Warrant
also without the payment of any additional consideration. Warrant holders will
not have any voting or other rights as stockholders of the Company unless and
until some Warrants are exercised and shares issued pursuant thereto. If fewer
than all of the warrants evidenced by a warrant certificate are exercised, a new
certificate will be issued for the remaining number of warrants. Holders of the
Warrants may sell the Warrants if a market exists rather than exercise them.
However, there can be no assurance that a market will develop or continue as to
the Warrants.
For a holder to exercise a Warrant, there must be a current
registration statement on file with the Commission and various state securities
commissions. The Company will be required to file post-effective amendments to
the registration statement when events require such amendments. While it is the
Company's intention to file post-effective amendments when necessary, there is
no assurance that the registration statement will be kept effective. If the
registration statement is not kept current for any reason, the Warrants will not
be exercisable, and holders thereof may be deprived of value. Moreover, if the
shares of Common Stock underlying the Warrants are not registered or qualified
for sale in the state in which a Warrant holder resides, such holder might not
be permitted to exercise the Warrants. If the Company is unable to qualify the
Common Stock underlying the Warrants for sale in certain states, holders of the
Warrants in those states will have no choice but to either sell the Warrants or
allow them to expire.
For the life of the Warrants, the holders thereof are given the
opportunity, at nominal cost, to profit from a rise in the market price of the
Common Stock of the Company. The exercise of the Warrants will result in the
dilution of the then book value of the Common Stock of the Company held by the
public investors and would result in a dilution of their percentage ownership of
the Company. The terms upon which the Company may obtain additional capital may
be adversely affected through the period that the Warrants remain exercisable.
The holders of these Warrants may be expected to exercise them at 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.
The Company has authorized and reserved for issuance a number of
underlying shares of Common Stock sufficient to provide for the exercise of the
Warrants. When issued, each share of Common Stock will be fully paid and
nonassessable.
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 9,373,135
shares of Common Stock will be issued and outstanding, approximately 6,420,000
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. Nearly all of
these restricted and control shares of Common Stock are now eligible for sale
under Rule 144 subject to the volume limitations of Rule 144. 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 November
10, 1997 and for the period from October 28, 1997 (inception) through November
10, 1997 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>
AUDITED FINANCIAL STATEMENTS - JUNE 30, 1998
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
Statementof Cash Flows for the period from October 28, 1997 (Date of Inception)
through June 30, 1998........................................................................ F- 5
Notes to Financial Statements..........................................................................F- 6
UNAUDITED FINANCIAL STATEMENTS - DECEMBER 31, 1998
Balance sheet as of December 31, 1998..................................................................G-1
Income statements for the three and six months ended December 31,
1998 and period from October 28, 1997 (Date of Inception) through
December 31, 1997 and from October 28, 1997 (Date of Inception) to
December 31, 1998.............................................................................G-2
Statementof stockholders' equity for the period from October 28, 1997 (Date of
Inception) through December 31, 1998 .........................................................G-3
Statements of cash flows for the nine months ended December 30, 1998 and period
from October 28, 1997 (Date of Inception) through December 31, 1997 and
period from October 28, 1997 (Date of Inception) to December 31,
1998..........................................................................................G-4
Notes to financial statements..........................................................................G-5
</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
F-1
<PAGE>
JVWeb, Inc.
(A Development Stage Company)
Balance Sheet
As of June 30, 1998
ASSETS
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
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
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
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.
(A Development Stage Company)
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 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.
F - 6
<PAGE>
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.
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.
F - 7
<PAGE>
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.
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 - 8
<PAGE>
JVWeb, Inc.
(A Development Stage Company)
Balance Sheet
As of December 31, 1998
Unaudited
ASSETS
Cash $ 505
Inventory 8,946
Prepaid legal expenses 4,300
Total Current Assets 13,751
Office equipment and furniture (net of $969
accumulated depreciation) 3,421
Total Assets $ 17,172
=========
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 19,437
Notes payable to related parties 102,500
---------
Total Liabilities 121,937
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, 7,974,160 shares issued and
outstanding 79,742
Paid-in capital 295,595
Accumulated deficit during
the development stage (480,102)
Total Stockholders' Equity (104,765)
Total Liabilities & Stockholders' Equity $ 17,172
=========
G-1
<PAGE>
JVWeb, Inc.
(A Development Stage Company)
Income Statements
For the Three and Six Months Ended December 31, 1998,
October 28, 1997 (Date of Inception) to December 31, 1997,
and the Period From October 28, 1997 (Date of Inception)
to December 31, 1998
Unaudited
<TABLE>
<CAPTION>
3 Months 6 Months Inception Inception
Ended Ended Through Through
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1998 1998 1997 1998
<S> <C> <C> <C> <C>
REVENUES $ 167 $ 190
COST OF SALES 48
Gross Margin 167 142
EXPENSES
General & administrative $ 125,762 $ 305,043 42,828 479,381
Depreciation 244 439 969
--------- --------- ---------- ---------
126,006 305,482 42,828 480,350
--------- --------- ---------- ---------
Operating (Loss) (126,006) (305,482) ( 42,661) (480,208)
INTEREST INCOME 106
Net deficit accumulated
during the development
stage $(126,006) $(305,482) $( 42,661) $(480,102)
========= ========= ========== =========
NET LOSS PER COMMON SHARE $( .02) $( .04) $( .01) $( .07)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,894,160 7,497,080 6,200,000 6,968,832
</TABLE>
G-2
<PAGE>
JVWeb, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
Period from October 28, 1997 (Date of Inception)
Through December 31, 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
for services 200,000 2,000 58,000 60,000
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 (Audited) 7,170,000 71,700 112,816 (174,620) 9,896
---------- --------- --------- --------- ---------
Shares issued:
for cash 620,240 6,202 116,976 123,178
for services 358,860 3,589 66,454 70,043
Shares returned from
subsidiary purchase
deposit ( 70,000) ( 700) 700
Fractional shares issued 45,060 451 ( 451)
Shares repurchased from
founding shareholder ( 150,000) ( 1,500) ( 900) ( 2,400)
Net deficit
(305,482) (305,482)
Balance, December 31,
1998 (Unaudited) 7,974,160 $ 79,742 $ 295,595 $(480,102) $(104,765)
========== ========= ========= ========= =========
</TABLE>
G-3
<PAGE>
JVWeb, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Six Months Ended December
31, 1998, Period from October 28, 1997(Date of
Inception)to December 31, 1997,
and the period from October 28, 1997 (Date of Inception)
to December 31, 1998
Unaudited
<TABLE>
<CAPTION>
6 Months Inception Inception
Ended Through Through
December 31, December 31, December 31,
1998 1997 1998
<S> <C> <C> <C>
CASH FLOWS FROM OPERATIONS
Net deficit $( 305,482) $( 42,661) $( 480,102)
Adjustments to reconcile net
deficit to cash provided
from operating activities
Depreciation 439 969
Common stock issued for
services 70,043 130,043
Write off of deposits on
purchase of subsidiary 55,000 55,000
Net changes in:
Employee advance 2,550
Inventory ( 3,641) ( 8,946)
Prepaid legal expenses 15,200 ( 4,300)
Accounts payable 11,956 19,437
---------- ----------
NET CASH USED BY OPERATING
ACTIVITIES ( 153,935) ( 42,661) ( 287,899)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of office equipment
and furniture ( 4,390)
Deposit on purchase of subsidiary ( 30,000) ( 55,000)
---------- ----------- ----------
NET CASH USED BY INVESTING
ACTIVITIES ( 30,000) ( 59,390)
---------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable to founding
shareholder 64,500 833 102,500
Reduction of note payable ( 1,250)
Issuance of common stock 120,778 69,516 245,294
---------- ----------- ----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 184,028 70,349 347,794
---------- ----------- ----------
NET INCREASE (DECREASE) IN CASH 93 28,688 505
CASH BEGINNING 412
---------- ----------- ----------
CASH ENDING $ 505 $ 28,688 $ 505
========== =========== ==========
</TABLE>
G-5
<PAGE>
JVWeb, Inc.
NOTES TO FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of JVWeb, Inc., a Texas
corporation ("Company"), have been prepared in accordance with generally
accepted accounting principles and the rules of the Securities and Exchange
Commission ("SEC"), and should be read in conjunction with the audited financial
statements and notes thereto contained in the Company's latest Annual Report
filed with the SEC on From 10-KSB. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year. Notes to the financial statements which would substantially
duplicate the disclosure contained in the audited financial statements for the
most recent fiscal year ended June 30, 1998, as reported in Form 10-KSB, have
been omitted.
NOTE B - DEPOSIT FORFEITURE
The Company entered into an agreement on July 31, 1998 to acquire a financial
publication known as "Wall Street Whispers" from Time Financial Services, Inc.
("Seller") for $140,000. As of December 31, 1998 $55,000 had been paid for this
purchase. Due to stock market volatility and Company concerns about overall
financing, the Company agreed to terminate the purchase obligation, and Seller
was permitted to retain the $55,000. Consequently, the Company has recorded a
loss on this acquisition attempt.
NOTE C - CONSULTING AGREEMENT
The Company entered into an agreement with a consultant on October 1, 1998. The
Company agreed to issue 120,000 options at $0.50 per share as compensation for
2 years of consulting services.
NOTE D - STOCK OPTIONS
As permitted under Statement of Financial Accounting Standards (ASFAS) No. 123
(Accounting for Stock-Based Compensation), the Company has continued to apply
Accounting Principles Board (AAPB) Opinion No. 25 (Accounting for Stock Issued
to Employees) and related interpretations. Accordingly, no compensation expense
has been recorded.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY ............................................................................................ 2
RISK FACTORS................................................................................................... 3
USE OF PROCEEDS................................................................................................17
DIVIDEND POLICY................................................................................................17
PRICE RANGE OF COMMON STOCK....................................................................................18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.................................................................................18
BUSINESS ......................................................................................................20
MANAGEMENT ....................................................................................................36
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS................................................................37
PRINCIPAL STOCKHOLDERS ........................................................................................40
DESCRIPTION OF CAPITAL STOCK ..................................................................................41
EXPERTS .......................................................................................................46
</TABLE>
UNTIL ___________________ _____, 1999, 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.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses set forth below, will be borne by the Company.
<TABLE>
<CAPTION>
Item Amount
<S> <C>
SEC Registration Fee ......................................................................$ 8,250.00
Blue Sky Filing Fees and Expenses ........................................................ .......5,000.00
Legal Fees and Expense ..........................................................................25,000.00
Accounting Fees and Expenses .....................................................................1,500.00
Printing .........................................................................................9,000.00
Mailing ..........................................................................................4,000.00
Total ......................................................................................... $52,750.00
</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. In consideration of services provided to the
Company, the Company issued to Mr. Ball 20,000 shares of Common Stock. Because
Mr. Ball is a director, these issuances of Common Stock to him are 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 March 10, 1999, 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
Corporation ("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. In this connection,
Equitrust also purchased 300,000 additional shares of Common Stock for an
aggregate purchase price of $75,000. The issuances of the convertible promissory
note, the shares of Common Stock into which it was converted, and the 300,000
additional shares of Common Stock are 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 $132,675, 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.
In consideration of the release of amounts actually or possibly owed by the
Company to an individual, the Company issued to such individual 20,000 shares of
Common Stock. This issuance is claimed to be exempt pursuant to Regulation D
under the Act.
For services rendered (and agreed to be rendered in a written contract)
having a value determined to be $65,000, the Company has agreed to issue to a
person providing services to the Company an aggregate of 60,000 shares of Common
Stock outright and up to 200,000 shares of Common Stock upon the occurrence of
certain stipulated events. Moreover, the Company granted to this service
provider options to purchase 430,000 shares of Common Stock at per-share
purchase prices of $.25 (for 130,000 of the optioned shares), $.50 (for 100,000
of the optioned shares), $.75 (for 100,000 of the optioned shares) and $1.00
(for 100,000 of the optioned shares). The issuances of Common Stock and the
options are claimed, and the issuances of the Common Stock underlying the
options will be claimed, to be exempt pursuant to Regulation D under the Act.
The Company issued to AMP3.COM, LLC 200,000 shares of Common Stock in
consideration of AMP3.COM's issuance of a five-percent membership interest in
it. This issuance of Common Stock is 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 *
3.02 Bylaws of the Company *
4.01 Specimen Common Stock Certificate *
4.02 Warrant Agreement dated December 15, 1997 between the Company and American Stock Transfer & Trust Company *
4.03 First Amendment to Agreement dated March 31, 1998 between the Company and American Stock Transfer Company &
Trust Company *
4.04 Second Amendment to Agreement dated April, 1998 between the Company and American Stock Transfer Company &
Trust Company is incorporated herein by reference from the Company's Registration Statement on Form SB-2
(SEC File No. 333-74381) filed March 15, 1999, Item 27, Exhibit 4.04.
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 *
10.02 Employment Agreement dated December 1, 1997 by and between the Company and Greg J. Micek *
10.03 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of Greg J. Micek *
10.04 Stock Option Agreement dated December 17, 1997 executed by the Company in favor of Dudley R. Anderson *
10.05 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of Kevin Dotson *
10.06 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of G-2 Advertising *
10.07 First Amendment dated April 14, 1998 to Agreement dated November 15, 1997 between the Company and LS
Capital Corporation *
10.08 Agreement dated April 20, 1998 between the Company and LS Capital Corporation
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.
10.12 Consulting Services Agreement dated February 15, 1999 by and between the Company and Tanye Capital Corp. is
incorporated herein by reference from the Company's Registration Statement on Form SB-2 (SEC File No.
333-74381) filed March 15, 1999, Item 27, Exhibit 10.12.
10.13 Exchange Agreement dated April 12, 1999 by and between the Company and AMP3.COM, LLC.
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.
* Previously filed
</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 April 15, 1999.
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 April 15, 1999
Greg J. Micek (Principal Executive Officer,
Principal Financial Officer, and
Principal Accounting Officer)
/s/ Lewis E. Ball Director April 15, 1999
Lewis E. Ball
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
3.01 Certificate of Incorporation of the Company *
3.02 Bylaws of the Company *
4.01 Specimen Common Stock Certificate *
4.02 Warrant Agreement dated December 15, 1997 between the Company and American Stock Transfer & Trust Company *
4.03 First Amendment to Agreement dated March 31, 1998 between the Company and American Stock Transfer Company &
Trust Company *
4.04 Second Amendment to Agreement dated April, 1998 between the Company and American Stock Transfer Company &
Trust Company is incorporated herein by reference from the Company's Registration Statement on Form SB-2
(SEC File No. 333-74381) filed March 15, 1999, Item 27, Exhibit 4.04.
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 *
10.02 Employment Agreement dated December 1, 1997 by and between the Company and Greg J. Micek *
10.03 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of Greg J. Micek *
10.04 Stock Option Agreement dated December 17, 1997 executed by the Company in favor of Dudley R. Anderson *
10.05 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of Kevin Dotson *
10.06 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of G-2 Advertising *
10.07 First Amendment dated April 14, 1998 to Agreement dated November 15, 1997 between the Company and LS
Capital Corporation *
10.08 Agreement dated April 20, 1998 between the Company and LS Capital Corporation
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.
10.12 Consulting Services Agreement dated February 15, 1999 by and between the Company and Tanye Capital Corp. is
incorporated herein by reference from the Company's Registration Statement on Form SB-2 (SEC File No.
333-74381) filed March 15, 1999, Item 27, Exhibit 10.12.
10.13 Exchange Agreement dated April 12, 1999 by and between the Company and AMP3.COM, LLC.
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.
* Previously filed
</TABLE>
EXHIBIT 10.13
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "Agreement") is made and entered into as
of this the 12th day of April, 1999 ("effective date") by and between AMP3.COM,
LLC, a Texas limited liability company (the "Company"), and JVWeb, Inc. a
Delaware corporation ("JVWeb").
Recitals:
WHEREAS, the Company desires to issue and sell to JVWeb shares
representing a five percent (5%) membership interest in the Company at the time
of issue ("Interest") in consideration and exchange for an aggregate of 200,000
shares ("Shares") of $.01 par value common stock of JVWeb ("Common Stock"), and
JVWeb desires to acquire the Company Interest in exchange for issuance of the
Shares by JVWeb, upon the terms, provisions and conditions set forth herein; and
WHEREAS, the Company and JVWeb desire to set forth in writing the
terms, provisions and conditions pertaining to the sale and issuance of Units to
JVWeb and the exchange and issuance of the Shares to the Company;
Agreement:
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and other good and valuable consideration (the receipt, adequacy and
sufficiency of which are hereby acknowledged by each of the parties hereto),
each of the Company and JVWeb hereby agrees as follows:
1. The Exchange. Subject to the terms and conditions of this Agreement,
at the Closing (i) the Company shall issue and sell the Interest to JVWeb, and
JVWeb shall purchase and accept the Interest from the Company; and (ii) in
consideration and exchange for the Interest JVWeb shall issue and sell the
Shares to the Company, and the Company shall purchase and accept the Shares from
JVWeb.
2. Closing. The purchase, sale and exchange of the Interest and the
Shares, respectively, shall take place simultaneously with the execution of this
Agreement at the offices of J. Rolfe Johnson, P.C., 1900 West Loop South, Suite
1174, Houston, Texas 77027, at 10:00 am. local time, on April ___, 1999, or at
such other time and place as the Company and JVWeb shall mutually agree (which
time and place are referred to in this Agreement as the "Closing"). At the
Closing, the Company shall deliver, or cause to be delivered, duly executed by
the Company, to JVWeb the following:
(a) This Agreement; and
(b) A certificate evidencing the Interest in the name of
JVWeb; and JVWeb shall deliver, or cause to be delivered, duly executed as
appropriate, to the Company the following:
(a) This Agreement;
(b) A stock certificate evidencing the Shares in the name
of the Company; and
(c) An amendment to or counterpart of the Regulations of
the Company.
3. General Representations and Warranties.
(a) JVWeb hereby represents and warrants to the Company that
JVWeb has been duly organized, is validly existing and is in good standing in
the jurisdiction in which it was incorporated; JVWeb has full right, power and
authority to execute and deliver this Agreement and all other agreements,
documents and instruments to be executed in connection herewith and perform
JVWeb's obligation hereunder and thereunder; the execution and delivery by JVWeb
of this Agreement and all other agreements, documents and instruments to be
executed by JVWeb in connection herewith have been authorized by all necessary
corporate action by JVWeb; when this Agreement and all other agreements,
documents and instruments to be executed by JVWeb in connection herewith are
executed by JVWeb and delivered to the Company, this Agreement and such other
agreements, documents and instruments will constitute the valid and binding
agreements of JVWeb enforceable against JVWeb in accordance with their
respective terms; neither the execution and delivery of this Agreement or any
other agreements, documents and instruments to be executed in connection
herewith nor the consummation of the transactions contemplated hereby or thereby
will (i) violate, conflict with or result in the breach or termination of; or
otherwise give any other contracting party the right to terminate, or constitute
a default (by way of substitution, novation or otherwise) under the terms of;
any contract to which JVWeb is a party or by which JVWeb is bound or by which
any of the assets of JVWeb is bound or affected, (ii) violate any judgment
against, or binding upon, JVWeb or upon the assets of JVWeb, (iii) result in the
creation of any lien, charge or encumbrance upon any assets of JVWeb pursuant to
the terms of any such contract, or (iv) violate any provision in the charter
documents, bylaws or any other agreement affecting the governance and control of
JVWeb; there are no actions, suits, claims or legal, administrative or
arbitration proceedings or investigations pending or threatened against,
involving or affecting any of the assets of JVWeb, this Agreement, or the
transactions contemplated hereby, and there are no outstanding orders, writs,
injunctions or decrees of any court, governmental agency or arbitration tribunal
against, involving or affecting any assets of JVWeb, this Agreement, or the
transactions contemplated hereby; no consent or approval from any person on the
part of JVWeb is required in connection with the execution and delivery of this
Agreement other than board of director approval of JVWeb, which has already been
obtained; that JVWeb has delivered to the Company copies of certain documents
and reports as filed by JVWeb with the Securities and Exchange Commission
("Commission") and other disclosure documents listed and described on Exhibit A
attached hereto and made a part hereof; which together provide all material
information concerning JVWeb and do not omit any material information necessary
to make information provided not misleading; that when issued and delivered to
the Company, the Shares shall be duly authorized, validly issued, fully paid and
non-assessable Shares of Common Stock of JVWeb; and the representations and
warranties made immediately above and elsewhere herein are material to the
Company and are being relied upon by the Company in connection with its decision
to issue and sell the Interest to JVWeb pursuant to this Agreement.
(b) The Company hereby represents and warrants to JVWeb that
the Company has full right, power and authority to execute and deliver this
Agreement and all other agreements, documents and instruments to be executed by
the Company in connection herewith and perform the Company's obligation
hereunder and thereunder; the Company has been duly organized, and is validly
existing and in good standing as a limited liability company in the State of
Texas; the execution and delivery by the Company of this Agreement and all other
agreements, documents and instruments to be executed by the Company in
connection herewith have been authorized by all necessary entity action; when
this Agreement and all other agreements, documents and instruments to be
executed by the Company in connection herewith are executed by the Company and
delivered to JVWeb, this Agreement and such other agreements, documents and
instruments will constitute the valid and binding agreements of the Company
enforceable against the Company in accordance with their respective terms;
neither the execution and delivery of this Agreement or any other agreements,
documents and instruments to be executed in connection herewith nor the
consummation of the transactions contemplated hereby or thereby will (i)
violate, conflict with or result in the breach or termination of; or otherwise
give any other contracting party the right to terminate, or constitute a default
(by way of substitution, novation or otherwise) under the terms of; any contract
to which the Company is a party or by which the Company is bound or by which any
of the assets of the Company is bound or affected, (ii) violate any judgment
against, or binding upon, the Company or upon the Company's assets, (iii) result
in the creation of any lien, charge or encumbrance upon any of the Company's
assets pursuant to the terms of any such contract, or (iv) violate any provision
in the charter documents, bylaws or any other agreement affecting the governance
and control of it; there are no actions, suits, claims or legal, administrative
or arbitration proceedings or investigations pending or threatened against,
involving or affecting any of the Company's assets, this Agreement, or the
transactions contemplated hereby, and there are no outstanding orders, writs,
injunctions or decrees of any court, governmental agency or arbitration tribunal
against, involving or affecting any of the Company's assets, this Agreement, or
the transactions contemplated hereby; no consent or approval from any person is
required on the part of the Company in connection with the execution and
delivery of this Agreement other than approval by the managers and members of
the Company, which has been obtained; and when issued to JVWeb pursuant to this
Agreement, the Interest shall be duly authorized, validly issued, fully paid and
non-assessable (except as provided in the Regulations of the Company) at the
time of issue; and the representations and warranties made immediately above and
elsewhere herein are material to JVWeb and are being relied upon by JVWeb in
connection with JVWeb's decision to purchase the Interest pursuant to this
Agreement.
4. Securities Representations and Warranties.
(a) JVWeb hereby represents and warrants to the Company that
it is familiar with the business and financial condition, properties, operations
and prospects of the Company, it has been given full access to all material
information concerning the condition, properties, operations and prospects of
the Company, it has had an opportunity to ask such questions of and to receive
such information from, the Company as it has desired and to obtain any
additional information necessary to verify the accuracy of the information and
data received, and it is satisfied that there is no material information
concerning the condition, properties, operations and prospects of the Company,
of which it is unaware; JVWeb has such knowledge, skill and experience in
business, financial and investment matters so that it is capable of evaluating
the merits and risks of an acquisition of its Shares of Common Stock; JVWeb has
reviewed its financial condition and commitments and that, based on such review,
it is satisfied that it (i) has adequate means of providing for contingencies,
(ii) has no present or contemplated future need to dispose of all or any of the
Interest acquired to satisfy existing or contemplated undertakings, needs or
indebtedness, (iii) is capable of bearing the economic risk of the ownership of
the Interest to be issued to it for the indefinite future, including recognition
of any tax allocations to JVWeb as a member of the Company, and (iv) has assets
or sources of income which, taken together, are more than sufficient so that it
could bear the loss of the entire value of the Interest being issued to it;
JVWeb is acquiring the Interest solely for its own beneficial account, for
investment purposes, and not with a view to, or for resale in connection with,
any distribution of the Interest; JVWeb understands that the Interest has not
been registered under the Securities Act of 1933 (the "Act") or any state
securities laws and therefore the Interest is and shall be "restricted" under
such laws; JVWeb has not offered or sold any portion of the Interest and has no
present intention of reselling or otherwise disposing of any portion of the
Interest either currently or after the passage of a fixed or determinable period
of time or upon the occurrence or non-occurrence of any predetermined event or
circumstance; that there is no obligation on the part of the Company to register
the Interest except as provided herein; that there is no market for the Interest
and none is likely to develop; and that transfer of the Interest is further
restricted by the terms of the Regulations of the Company.
(b) The Company hereby represents and warrants to JVWeb that
it has been given full access to all information concerning the condition,
properties, operations and prospects of JVWeb that it has requested, it has had
an opportunity to ask such questions of and to receive such information from,
JVWeb as it has desired and to obtain any additional information necessary to
verify the accuracy of the information and data received; the Company has such
knowledge, skill and experience in business, financial and investment matters so
that it is capable of evaluating the merits and risks of an acquisition of its
shares of JVWeb Common Stock; the Company has reviewed its financial condition
and commitments and that, based on such review, it is satisfied that it (i) has
adequate means of providing for contingencies, (ii) has no present or
contemplated future need to dispose of all or any of its Shares of JVWeb Common
Stock to satisfy existing or contemplated undertakings, needs or indebtedness,
(iii) is capable of bearing the economic risk of the ownership of the Shares of
JVWeb Common Stock to be issued to it for the indefinite future, and (iv) has
assets or sources of income which, taken together, are more than sufficient so
that it could bear the loss of the entire value of the Shares of JVWeb Common
Stock being issued to it; the Company is acquiring its Shares of JVWeb Common
Stock solely for its own beneficial account, for investment purposes, and not
with a view to, or for resale in connection with, any distribution of its Shares
of JVWeb Common Stock; the Company understands that its Shares of JVWeb Common
Stock have not been registered under the Act or any state securities laws and
therefore its Shares of JVWeb Common Stock are "restricted" under such laws
until such time as they are registered; and the Company has not offered or sold
any portion of its Shares of JVWeb Common Stock and has no present intention of
reselling or otherwise disposing of any portion of its shares of JVWeb Common
Stock either currently or after the passage of a fixed or determinable period of
time or upon the occurrence or non-occurrence of any predetermined event or
circumstance (other than the registration thereof).
5. Securities Registration. The following provisions set forth the
agreement and circumstances under which each of the Company and JVWeb,
respectively (the Company and JVWeb being herein severally referred to as the
"Registrant," as the case may be), shall be required to register the Company
shares evidencing the Interest or the JVWeb Shares of Common Stock,
respectively, (the Interest and the Shares being herein severally referred to as
the "Registrable Securities," as the case may be) with the Commission under the
Act for resale ("registration") by or at the request of JVWeb or the Company, as
holder of the Securities as the case may be (herein respectively referred to as
the "Holder"):
(a) Company Registration. If at any time after the effective
date hereof, the Registrant shall determine to register any of its securities
(including any shares evidencing the membership interests of the Company or any
shares of Common Stock of JVWeb, or any other securities into which such
securities may have been or may be converted or exchanged, collectively herein
referred to as "Securities," for its own account or for the account of others
(on Form SB-2, Form S-1 or Form S-3 or any similar form of general applicability
promulgated by the Commission), other than a registration relating solely to
employee benefit plans or a Rule 145 transaction, or a registration on any
registration form which does not include substantially the same information as
would be required to be included in a registration statement covering the sale
of the Registrable Securities, the Registrant shall:
(i) Promptly give to the Holder written notice
thereof; and
(ii) Use its best efforts to include in such
registration (and any necessary qualification under state
securities laws reasonably requested by the Holder), and in
any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made
within twenty (20) days after the mailing of such written
notice from the Registrant, by the Holder.
(b) Underwriting. If the registration of which the Registrant
gives notice is for a registered public offering involving an underwriting, then
the right of any Holder to registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting . Notwithstanding any other provision
of this Section, if the representative of the underwriters in good faith advises
the Registrant in writing that marketing factors require a limitation on the
number of shares to be underwritten, the representative may exclude all or part
of the Registrable Securities to be included in, the registration and
underwriting.
(c) Expenses of Registration. The expenses of registration,
including, without limitation, all registration and filing fees, printing
expenses, fees and expenses of counsel for the Registrant and the Holder, and
accountants fees incurred in connection with any registration shall be borne by
the Registrant. Holder shall bear any underwriting discounts and selling
expenses applicable to the sale of Registrable Securities of such Holder.
(d) Indemnification by Holders. The Holder shall protect,
indemnify and hold the Registrant, and its officers, directors, shareholders,
attorneys, accountants, employees, affiliates, successors and assigns, harmless
from any and all demands, claims, actions, causes of actions, lawsuits,
proceedings, investigations, judgments, losses, damages, injuries, liabilities,
obligations, expenses and costs (including costs of litigation and attorneys'
fees), arising out of or based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in or incorporated by reference into
the registration statement under which the Registrable Securities are
registered, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any material violation by the
Holder of any rule or regulation promulgated under Act applicable to the Holder
and relating to action or inaction by the Holder in connection with any such
registration; provided, however, that the liability of the Holder shall be
limited to liabilities arising solely out of a misrepresentation or alleged
misrepresentation with respect to information concerning the Holder furnished in
writing by the Holder for inclusion in the registration statement, and not
otherwise.
(e) Indemnification by Registrant. The Registrant shall
protect, indemnify and hold the Holder and its officers, directors,
shareholders, attorneys, accountants, employees, affiliates, successors and
assigns, harmless from any and all demands, claims, actions, causes of actions,
lawsuits, proceedings, investigations, judgments, losses, damages, injuries,
liabilities, obligations, expenses and costs (including costs of litigation and
attorneys' fees), arising out of or based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in or incorporated by
reference into the registration statement under which Registrable Securities are
registered, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any material violation by
Registrant of any rule or regulation promulgated under the Act applicable to
Registrant and relating to action or inaction by Registrant in connection with
any such registration; provided, however, that Registrant shall have no
liability to the Holder to the extent that any such liability shall arise solely
out of a misrepresentation or alleged misrepresentation with respect to
information concerning the Holder furnished to Registrant by the Holder for
inclusion in the registration statement.
(f) Indemnification Procedure. Promptly after receipt by an
indemnified party of notice of the threat or commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party hereunder, notify each such indemnifying party in writing
thereof, but the omission so to notify an indemnifying party shall not relieve
it from any liability which it may have to any indemnified party to the extent
that the indemnifying party is not prejudice as a result thereof In case any
such action shall be brought against any indemnified party and it shall notify
an indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of investigation
and of liaison with counsel so elected; provided, however, that, if the
defendants in any such action include both an indemnified party and an
indemnifying party and the related indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be believed to conflict
with the interests of the indemnifying party, the indemnified party shall have
the right to select separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred. No indemnifying party
will be subject to any liability for any settlement made without consent which
shall not be unreasonably withheld. No indemnifying party will consent to the
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability with respect to such claim or
litigation.
(g) Registrant Reporting Obligations. With a view to making
available the benefits of certain rules and regulations of the Commission which
may at any time permit the sale of the Registrable Securities to the public
without registration, including Rule 144 promulgated under the Act, the
Registrant agrees to:
(i) Use its best efforts to facilitate the sale
of the Registrable Securities to the public, without registration
under the Act, pursuant to Rule 144 under the Act;
(ii) Use its best efforts to make and keep public
information available, as those terms are understood and defined in
Rule 144 under the Act at all times;
(iii) Use its best efforts to file with the
Commission in a timely manner all reports and other documents required
of the Registrant under the Act and the Securities Exchange Act of
1934, as amended.
(iv) Take action to enable the Holder to utilize
Form S-3 for the sale of Registrable Securities; and
(v) So long as the Holder owns any Registrable
Securities to furnish to the Holder forthwith upon request a written
statement by the Registrant as to its compliance with the reporting
requirements of said Rule 144, and of the Act and the Exchange Act, a
copy of the most recent annual or quarterly report of the Registrant,
and such other reports and documents so filed by the Registrant as the
Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such
securities without registration.
The Company shall not have any obligation as a Registrant pursuant to this
paragraph, unless and until after the initial registration statement has been
duly filed under the Act or the Exchange Act and the Company has otherwise
become subject to the reporting requirements referred to in this paragraph.
(h) Transfer of Registration Rights. The rights of Holder
hereunder, including the right to cause the Registrant to register Registrable
Securities granted herein, is personal to the Holder and may not be assigned or
otherwise conveyed by any Holder, without the prior written consent of the
Registrant, except to a successor in interest resulting from reorganization of
the Holder.
6. General Indemnification.
(a) All representations and warranties made herein by a party
hereto shall survive all transactions provided for or contemplated herein.
(b) The Company shall protect, indemnify and hold JVWeb, and
its officers, directors, shareholders, attorneys, accountants, employees,
affiliates, successors and assigns, harmless from any and all demands, claims,
actions, causes of actions, lawsuits, proceedings, judgments, losses, damages,
injuries, liabilities, obligations, expenses and costs (including costs of
litigation and attorneys' fees), arising from any breach of any agreement,
representation or warranty made by the Company in this Agreement.
(c) JVWeb shall protect, indemnity and hold the Company, and
its officers, directors, shareholders, attorneys, accountants, employees,
affiliates, successors and assigns, harmless from any and all demands, claims,
actions, causes of actions, lawsuits, proceedings, judgments, losses, damages,
injuries, liabilities, obligations, expenses and costs (including costs of
litigation and attorneys' fees), arising from any breach of any agreement,
representation or warranty made by JVWeb in this Agreement.
7. General.
(a) THIS AGREEMENT AND ALL QUESTIONS RELATING TO ITS VALIDITY,
INTERPRETATION, PERFORMANCE, AND ENFORCEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
(b) Any controversy arising out of or relating to this
Agreement or any modification or extension thereof, including any claims for
breach, for damages, and/or for recision or reformation, shall be settled by
binding arbitration in Harris County, Texas according to the rules and
regulations of the American Arbitration Association, Commercial Arbitration
Rules.
(c) This Agreement contains the entire understanding among the
parties hereto with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements and understandings, inducements, or
conditions, express or implied, oral or written, except as herein contained.
This Agreement may not be modified or amended other than by an agreement in
writing signed by all parties affected.
(d) The express terms hereof control and supersede any course
of performance and/or usage of the trade inconsistent with any of the terms
hereof. The section headings in this Agreement are for convenience only; they
form no part of this Agreement and shall not affect its interpretation.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
(f) The parties hereto hereby agree that time is of the
essence for all purposes of this Agreement.
(g) Any notices to be given hereunder by any party to the
other parties may be effected either by personal delivery in writing, or by
mail, registered or certified, postage prepaid with return receipt requested,
addressed to the one or more parties to be notified at the addresses set forth
beneath such parties' respective signatures below.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of, though not necessarily on, the effective date.
AMP3.COM, LLC, JVWeb, Inc.,
a Texas limited liability company a Delaware corporation
By: /s/ Michael A. Sharp By: /s/ Greg J. Micek
Michael A. Sharp, President Greg J. Micek, President
Address: 1525 Lakeville Address: 5444 Westheimer
Suite 108 Suite 2080
Kingwood, Texas 77339 Houston, Texas 77056
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of JVWeb, Inc. on Form SB-2
of our report dated September 10, 1998 relating to the financial statement
schedules appearing elsewhere in this Registration Statement.
We also consent to the reference to us under the heading "Experts".
MALONE & BAILEY, PLLC
Houston, Texas
April 14, 1999
