As filed with the Securities and Exchange Commission on March 27, 2000
Registration No. 333-43379
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
----------------------------------
POST EFFECTVE AMENDMENT NO. 3
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------------
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> <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 MARCH 27, 2000
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 now have a fee-for-service division (which provides certain
Internet services) and a brands-under-management division (which offers
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 5 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 _________________
_____, 2000.
<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 now has a
fee-for-service division (which provides certain Internet services) and a
brands-under-management division (which offers products, services, content and
advertising through sites on the World Wide Web owned either directly or through
joint ventures).
The Offering
<TABLE>
<S> <C>
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
</TABLE>
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 also 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 also 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 $5.00 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 "- The exercise
of the warrants depends on the maintenance of a current registration statement,
and warrant holders could suffer a loss in the value of the warrants if a
current registration statement is not maintained" and - "The warrants may be
redeem under certain circumstances at a low redemption price, and this
redemption feature could materially adversely affect warrant holders."
<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:
OUR EXTREMELY LIMITED OPERATING HISTORY MAKES AN EVALUATION OF US AND
OUR FUTURE EXTREMELY DIFFICULT.
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, 1999, we had an accumulated deficit of $1,872,917.
QUARTERLY, SEASONAL AND OTHER FLUCTUATIONS IN OUR BUSINESS AND
OPERATING RESULTS MAY MATERIALLY AND ADVERSELY AFFECT THE TRADING PRICE OF OUR
COMMON STOCK.
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 lose 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.
WE EXPECT TO HAVE FUTURE CAPITAL NEEDS, AND THE PROCUREMENT OF
ADDITIONAL FINANCING TO MEET THESE NEEDS IS UNCERTAIN.
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 anticipate that during the remainder of fiscal 2000 we will 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 capital requirements. 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 2000
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, responding to competitive pressures
or continuing our business as we have historically. Our failure to pursue future
opportunities, respond properly to competitive pressures or continue our
business in an appropriate manner could materially and adversely affect our
business, results of operations and financial condition.
WE DEPEND HEAVILY ON THE INTERNET, AND ANY ADVERSE DEVELOPMENT WITH
REGARD TO THE INTERNET COULD MATERIALLY ADVERSELY AFFECT US.
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. The failure of the Internet use to continue to
grow, or failure of the Internet infrastructure to support effectively growth
that may occur, could materially adversely affect our business, operating
results and financial condition.
WE ARE EXPOSED TO NUMEROUS RISKS DUE TO POTENTIAL FUTURE 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. Our inability (for technical, legal, financial or other
reasons) to adapt in a timely manner to changing market conditions or customer
requirements could materially adversely affect our business, results of
operations and financial condition.
WE RELY ON A NUMBER OF THIRD PARTIES, AND SUCH RELIANCE EXPOSES US TO A
NUMBER OF RISKS.
Our operations will depend on a number of third parties. 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. Our inability to
maintain satisfactory relationships with such third parties on acceptable
commercial terms, or the failure of such third parties to maintain the quality
of products and services they provide at a satisfactory standard, could
materially adversely affect our business, results of operations and financial
condition. In addition, we will also depend upon Web browsers for access to the
products, services and advertising that we will offer.
THE SUCCESS OF OUR BUSINESS DEPENDS TO A GREAT EXTENT ON THE
RECRUITMENT AND RETENTION OF INTERNET PROFESSIONALS, AND CURRENTLY COMPETITION
FOR THESE PROFESSIONALS IS EXTREMELY INTENSE.
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.
THE ACCEPTANCE OF THE INTERNET AS A MEDIUM FOR COMMERCE IS UNCERTAIN,
AND THE FAILURE OF THE INTERNET TO GAIN SUCH ACCEPTANCE COULD MATERIALLY
ADVERSELY AFFECT US.
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)
ELECTRONIC COMMERCE IS A DEVELOPING MARKET AND INVOLVES CONSIDERABLE
UNCERTAINTY.
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
THE SUCCESS OF OUR BUSINESS DEPENDS TO A GREAT EXTENT ON OUR ABILITY TO
SELECT EXCELLENT BUSINESS OPPORTUNITIES.
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. Some of the business opportunities that we have pursued in
the past have failed to meet our expectations and have had to be abandoned.
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.
WE HAVE NO ASSURANCE THAT OUR BRANDS WILL BE ACCEPTED.
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
OUR FAILURE TO DEVELOP APPEALING CONTENT AND GRAPHIC COULD MATERIALLY
ADVERSELY AFFECT US.
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 our Web sites, 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.
ELECTRONIC COMMERCE INVOLVES A NUMBER OF 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.
WE EXPECT TO RELY EXTENSIVELY ON MERCHANDISE VENDORS AND THIRD PARTY
MANUFACTURERS OVER WHOM WE WILL HAVE LITTLE CONTROL.
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 relation-
ships 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
WE ARE EXPOSED TO THE RISK OF SYSTEM FAILURE, AND SUCH A FAILURE COULD
MATERIALLY ADVERSELY AFFECT US.
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.
OUR SUCCESS DEPENDS TO A GREAT EXTENT ON OUR ABILITY TO PROTECT OUR
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",
"familylifestyle" and "crisis communications" 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.
WE COULD BE MATERIALLY ADVERSELY AFFECTED BY FUTURE REGULATORY CHANGES
AND CERTAIN CURRENT REGULATIONS APPLICABLE TO OUR BUSINESS.
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.
BECAUSE OF THE NATURE OF OUR BUSINESS, WE ARE EXPOSED TO A NUMBER OF
SOURCES OF OTHER POTENTIAL LIABILITIES.
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.
OUR OBLIGATION TO INDEMNIFY OUR OFFICERS AND DIRECTORS COULD PREVENT
OUR RECOVERY FOR LOSSES CAUSED BY THEM.
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 have purchased and maintain customary officer and
director insurance on behalf of certain of these persons. Such insurance may
cover certain matters for which we do not have the power to indemnify such
persons. 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 United States Securities and
Exchange Commission (the "Commission") maintains that indemnification is against
the public policy expressed in the Securities Act of 1933 (the "Act"), and is
therefore unenforceable.
WE ARE EXPOSED TO INTENSE 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 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 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.
FUTURE ACQUISITIONS COULD EXPOSE US TO NUMEROUS RISKS.
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 the
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.
WE RELY HEAVILY UPON CERTAIN DIRECTORS AND OFFICERS, AND OUR LIMITED
MANAGEMENT RESOURCES MAY NOT BE SUFFICIENT FOR THE FUTURE.
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.
OUR MANAGEMENT HAS LIMITED EXPERIENCE IN CERTAIN ASPECTS OF OUR
BUSINESS.
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 through our
brands-under-management division (either directly or through joint ventures) by
means of Web sites. 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.
A CERTAIN STOCKHOLDER OF THE COMPANY HAS CONTROL OF THE COMPANY, AND
CUMULATIVE VOTING AND PREEMPTIVE RIGHTS ARE DENIED TO STOCKHOLDERS.
Greg J. Micek, a director and the President of the Company, owns
approximately 50.4% of the outstanding Common Stock (considered on an undiluted
basis). Cumulative voting in the election of Directors is not provided for.
Accordingly, the holder or holders of a majority of the 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.
THE COMPANY'S AUTHORIZED PREFERRED STOCK EXPOSES STOCKHOLDERS TO
CERTAIN RISKS.
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 9, 2000. 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.
OUR COMMON STOCK HAS A LIMITED TRADING MARKET.
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
"PRICE RANGE OF COMMON STOCK." 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
WE HAVE OUTSTANDING A LARGE NUMBER OF SHARES OF COMMON STOCK THAT ARE
ELIGIBLE FOR SALE UNDER CERTAIN CIRCUMSTANCES, AND SALES, OR EVEN THE MERE
POSSIBILITY OF SALES, OF THESE SHARES MAY MATERIALLY ADVERSELY THE PRICE OF THE
COMMON STOCK.
Approximately 11,400,057 shares of Common Stock are issued and
outstanding. We believe that approximately 7,475,000 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 Common Stock or the average weekly trading volume
during the four calendar weeks before such sale. The vast majority 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 7,475,000 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.
WE HAVE THE ABILITY AND THE OBLIGATION TO ISSUE ADDITIONAL SHARES OF
COMMON STOCK IN THE FUTURE, AND SUCH FUTURE ISSUANCE MAY MATERIALLY ADVERSELY
AFFECT STOCKHOLDERS.
We have registered an aggregate of 5,000,000 shares of Common Stock for
issuance in possible future business combination transactions. Most of these
shares are still available for issuance in the future. Moreover, we have
registered an aggregate of 1,000,000 shares of 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 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 certain warrants to purchase shares of Common Stock. We also have
the obligation to issue additional such warrants in the future. These warrants
permit the holders to purchase shares of Common Stock at specified prices. 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 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 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.
THE TRADING PRICE OF OUR COMMON STOCK ENTAILS ADDITIONAL REGULATORY
REQUIREMENTS, WHICH MAY NEGATIVELY AFFECT SUCH TRADING PRICE.
The trading price of our Common Stock has 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 Securities Exchange Act of
1934. 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.
THE EXERCISE OF THE WARRANTS DEPENDS ON THE MAINTENANCE OF A CURRENT
REGISTRATION STATEMENT, AND WARRANT HOLDERS COULD SUFFER A LOSS IN THE VALUE OF
THE WARRANTS IF A CURRENT REGISTRATION STATEMENT IS NOT MAINTAINED.
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 with the Commission 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".
THE WARRANTS MAY BE REDEEM UNDER CERTAIN CIRCUMSTANCES AT A LOW
REDEMPTION PRICE, AND THIS REDEMPTION FEATURE COULD MATERIALLY ADVERSELY AFFECT
WARRANT HOLDERS.
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".
WE HAVE NO SPECIFIC USE OF THE PROCEEDS FROM WARRANT EXERCISES.
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.
STOCKHOLDERS HAVE NO GUARANTEE OF 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.
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 March 9, 2000, the Company had approximately 264 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)
Fiscal year ending June 30, 2000:
<S> <C> <C>
Second Quarter $ .593 $ .156
First Quarter $ .937 $ .33
Fiscal year ended June 30, 1999:
Fourth Quarter $1.81 $ .43
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.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Summary
In general, the Company 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.
Quarter Ended December 31, 1999
General Discussion
During this quarter, management completed its efforts at re-defining
the manner in which we would execute our business model. We successfully
separated ourselves from our overall reliance on Lernout and Hauspie for
execution support, through the addition of key management in the areas of sales
and operations. We also completed a review of our existing projects, and, a
result, established priority projects to concentrate on in the next year.
Therefore, our budget for the upcoming year relies, to a material extent, on a
successful launch of www.ihomeline.com, www.dadandme.com, www.linksxpress.com,
and other projects under development. We are also relying on the establishment
of our fee-for-service division, which offers integrated sponsorship, web
hosting and web development, and strategic consulting services to our joint
venture partners and third party clients.
Balance Sheet
Current Assets: Cash and other current assets remain at a sufficient level to
meet our obligations. The note receivable regards a loan made to AMP3.com,
which, management believes, remains as a collectible asset. AMP3 is under
various discussions for the sale of its business, at which time the note will be
paid.
Other Assets: The Company made an investment, along with Linksxpress.com, Inc.,
in the establishment of Linksxpress.co.uk, Inc., a european edition of
www.linksxpress.com. The investment gave the Company a 45% interest in this
separate entity in exchange for 600,000 shares of the Company. We are also
reporting our investment in Linksxpress.com, Inc., which is unchanged for the
quarter. Finally, we continue to report our initial investment in AMP3.com,
which, as we stated, is under various discussions to be sold.
Total Liabilities: Overall, accounts payables remain at a manageable level, as
we strive to keep a balance between incurring obligations and investing in
meeting our growth goals for the year. The note payable to related parties has
grown an additional $104,812 for the quarter, as continued investments are being
made into the Company's future.
Total Stockholders' Equity: The increase in shares outstanding was principally
due to the linksxpress.co.uk, Inc. transaction. Additional shares were issued to
consultants performing services on various projects under development. In the
quarter, stock options issued included 1,000,000 options issued to Carlo
Pellegrini and 400,000 options issued to Ken Gooley, under the Company's stock
option plan. These options, if exercised, would be converted into restricted
shares.
Income Statement
Revenues: The principal revenues for the quarter were derived from services
performed in launching www.ihomeline.com, in which the Company has a 50%
interest. Through these efforts, the Company is refining its service offering,
which will be extended to additional joint venture partners and third party
clients.
Expenses: The principal expenses for the quarter involved recorded stock
issuances to consultants engaged in various research & development projects on
behalf of the Company. Other material expenses incurred related to the launching
of ihomeline, and other projects under development. It is the policy of the
Company to take the conservative position of expensing items related to projects
under development, as opposed to setting up "work in progress" asset accounts on
the balance sheet.
Fiscal Year Ended June 30, 1999
Summary
The overall performance of the Company over the last year had a number
of disappointing elements to it. The unwinding of the Wall Street Whispers
transaction, despite management's belief as to it being the right decision at
the time, represented a loss of momentum. The considerable effort in
establishing our New York presence, initiating the web-based crisis services,
and lack of anticipated support from our European services group, combined to
cause us to fall considerably short of our goals for this program. We continue
to strive for success in this area, and do have some promising opportunities.
However, if those opportunities do not materialize into revenue generating
business, we may need to abandon this area. Our hosting facility in Phoenix,
co-located with GTE, remains a viable asset of the Company, although the
European hosting opportunities are proving difficult to acquire.
In the fourth quarter, we entered into a 5% equity position with
AMP3.com, LLC, an on-line music website. We invested considerable efforts with
that business in the fourth quarter, as they were one of the sponsors of
Woodstock held in July. As a result of that effort, the Company has gained
considerable industry and technical knowledge in the entire electronic
downloading of music phenomenon. We are presently aggressively pursuing
opportunities to capitalize on that knowledge.
Promising areas of pursuit remain our core business strategy of joint
venturing with viable brands. The www.ihomeline.com website is now completing
its demonstration site, and is expected to be available for viewing in the near
future. We are actively discussing with two other brands for similar
relationships. This area is anticipated to remain our primary pursuit for the
upcoming year. Our hosting capability in Phoenix remains a viable part of our
core strategy, and is an attraction to prospective joint venture partners as we
had anticipated.
Our lack of overall funding seriously hindered our development efforts
in pursuing our joint venture strategies. Despite that, we successfully
established the joint venture surrounding the www.ihomeline.com project. We are
continuing to look for creative strategies to establish joint ventures,
emphasizing our business strengths and core competencies. We anticipate some
success in pursuing this strategy in the upcoming year. However, we will
continue to be hampered by having access to only minimal funding capabilities.
Also as a general point of reference, the internet commerce environment
in which we operate continues to be highly volatile. Business dynamics change
almost daily. We are affected by these changing dynamics on a daily basis. For
example, the large public relations firms that we targeted in the spring and
summer clearly have a great need for our crisis services. However, as we pursued
those relationships, technology contributed to providing these agencies with
internal solutions (or at least the perception of an internal solution), which
hindered our marketing efforts.
Income Statement
Revenue. The Company generated meaningful consulting revenues in the fourth
quarter, primarily through one engagement. Unfortunately, the unpredictable
nature of internet business forces has contributed to serious questions as to
the collectibility of that invoice. Revenue for web-hosting began in April 1999,
and we are hopeful it will grow as new customers are added.
General and Administrative Expenses. A material percentage of the G&A
expenditures represented travel and other marketing costs associated with the
establishment of a presence in New York and California, as well as the research
costs with evaluating various joint venture opportunities. 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 S.E.C.
Balance Sheet
Current Assets: Cash balance reported was due primarily to shareholder
contributions. The short term note receivable was to a primary client, and was
guaranteed by a principal shareholder of that client.
Notes Payable to founding shareholder: On June 30, 1999, the founding
shareholder purchased the outstanding loans advanced to the Company by other
related parties.
Capital Requirements
As stated above, the founding shareholder has been, and continues to
provide, minimum funding requirements for the Company, although he is under no
obligation to do so. If the founding shareholder decides to discontinue funding,
the Company would be required to seek alternative financing, which would be
uncertain. Management is continually evaluating the performance of the Company
over this next fiscal year. Alternative business strategies may be considered
this next year if business operations fail to produce desired results, of if
necessary financing becomes unavailable.
<PAGE>
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. From time to time, the Company has given greater
emphasis to either one of its brands-under-management division or its
fee-for-service division over the other.
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 -We depend
heavily on the Internet, and any adverse development with regard to the Internet
could materially adversely affect us, -We are exposed to numerous risks due to
potential future technological change, -- The acceptance of the Internet as a
medium for commerce is uncertain, and the failure of the Internet to gain such
acceptance could materially adversely affect us, -- Electronic commerce is a
developing market and involves considerable uncertainty, -- Electronic commerce
involves a number of security risks, - We are exposed to the risk of system
failure, and such a failure could materially adversely affect us, -- We could be
materially adversely affected by future regulatory changes and certain current
regulations applicable to our business, and -- Because of the nature of our
business, we are exposed to a number of sources of other potential liabilities."
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 are 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.
From time to time the Company has given a greater emphasis to one of these
division over the other.
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 offers 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 four
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
While at one time the Company had planned on organizing a subsidiary that would
employ a number of strategic Internet service consultants, the Company now plans
on adding additional strategic Internet service consultants on a more gradual
basis as qualified personnel can be hired.
The second functional area of the Company's fee-for-services division
involves Web site development. As an outgrowth of the Company's Web site
development services, the Company developed a web-based communications service
for targeting Advertising and Public Relations Agencies in North America. This
service experienced limited success during its initial push, a period of
inactivity and (due to recent expressions of interests by potential customers)
recent reconsideration of reactivatation in a meaningful way. In the near
future, the Company intends to conduct a marketing campaign of the Company's web
development services, focused on the Gulf Coast region of Texas.
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 offering its Web hosting services
over the Web site "jvwebhosting.com."
The fourth functional area of the Company's fee-for-services division
involves the sale of integrated sponsorships. Integrated sponsorships are a
concept developed by the Company by which advertisers can gain simultaneous
exposure through a variety of mediums in a variety of ways. For example, an
integrated sponsorship may be a combination of banner advertising on multiple
Web sites, traditional advertising on radio programs and Web casts, the
advertiser's co-hosting of programs featured on radio programs and Web casts,
and the editing of such programs or other content for use in connection with the
advertiser's own Web site. All of these activities are undertaken simultaneously
in a coordinated fashion. The Company commenced this area of its fee-
for-services division in the middle of January 2000, and management is pleased
with the initial results.
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 have yet
resulted in legal binding relationships. 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 $250,000 at the high end. In order to
provide this financial assistance, the Company will have to procure funds from
various sources, which are discussed above in "RISK FACTORS - We expect to have
future capital needs, and the procurement of additional financing to meet these
needs is uncertain." There can be no assurance that the Company will be
successful in procuring these funds.
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.
The Company is currently undertaking several brands-under-management
projects. The first of these is the iHomeline.com project. The iHomeline.com
project involves a 50%-owned subsidiary (the "iHomeline.com Subsidiary") that
intends to create, own and operate a World Wide Web site whose objective is to
foster communities of consumers, manufacturers, services providers and
advertisers interested in the examination, purchase, sale or offer of
home-related content, products, services or advertising. The Company's partner
in the iHomeline.com project is Jim Neidner. Mr. Neidner is the President of
Neidner Construction/Remodeling Inc. based in Houston, Texas, and has over 27
years experience in the custom home construction and remodeling business. For
more than four years, Mr. Neidner has co-hosted Home Line Talk Radio, a weekly
Houston radio talk show dealing with topics of interest to homeowners. The
iHomeline.com Web site will offer relevant, informative and entertaining content
of interest to consumers of home-related products and services. The goal of this
Web site is to appeal to manufacturers, services providers and advertisers of
home-related products and services to induce them to offer products, services
and advertising on this Web site and to pay for the opportunity to do so. The
iHomeline.com Web site is expected to feature worldwide, live broadcasts of talk
shows focusing on home-related topics, do-it-yourselfers educational and
reference materials, chat rooms, auctions, a service for referrals to
home-related professionals, home plans and blueprints that can be purchased
on-line, and possibly real estate, mortgage loan, furniture and travel-related
brokerage services. The iHomeline.com Web site is now operational, has been
completed to a phase-one level and is generating revenues. It has already
syndicated its Home Line Talk Radio program to four cities in three states.
Greater development of the iHomeline.com Web site to a final, phase-two level is
planned, but is conditioned upon the procurement of adequate financing, which is
currently being sought.
The second brands-under-management project is the LinksXpress project.
This project involves LinksXpress.com, Inc. ("LinksXpress.com"), a company
formed to create, own and operate a site on the World Wide Web that will serve
as an e-commerce search engine and shopping portal serving the United States and
Canada. The initial LinksXpress.com Web site is nearing completion and should be
operational by July 1, 2000. Once this initial LinksXpress.com Web site is
operational, LinksXpress.com intends to establish a similar Web site that will
serve Great Britain. In anticipation of this, LinksXpress.com formed
LinksXpress.co.uk, Inc. The Company acquired in a securities exchange an
approximately 8% interest in LinksXpress.com (on a non-diluted basis). As part
of this tranasction, the Company received 500,000 shares of the common stock of
LinksXpress.com, warrants to purchase up to 1,000,000 shares of
LinksXpress.com's common stock at a purchase price of $2.00 per share, and
options to purchase up to 500,000 shares of LinksXpress.com's common stock at
purchase prices ranging from $.25 to $2.00 per share. In exchange for these
securities, LinksXpress.com received 150,000 shares of the Company's common
stock and an option to purchase up to 150,000 additional shares of the Company's
common stock at a purchase price of $.40 per share. In addition to the
securities exchange, LinksXpress.com has entered into a Web hosting agreement
with the Company and a right of first refusal agreement in favor of the Company
regarding LinksXpress.com's future Web development work. The Company also
acquired from LinksXpress.com approximately 35% of the outstanding stock in
LinksXpress.co.uk in exchange for 600,000 shares of the Company's common stock.
The third brands-under-management project is the Crosspointe/Great
Records project. Crosspointe Net, Inc. ("CPNI") is in the process of developing
a family of Christian-related Web sites around a suite of domain names. Great
Records, Inc. is a corporation formed by CPNI for purposes of developing a Web
site that plans on featuring the sale of the music of between five and ten
select Christian recording artists, either through downloading or traditional
compact disks (at the customer's selection). In connection with this project,
the Company entered into a stock exchange with Crosspointe Net, Inc. ("CPNI")
whereby the Company acquired a 7.5% interest in CPNI in exchange for the
issuance of 300,000 shares of the Company's common stock. The Company also
acquired a 50% interest in Great Records, Inc. in exchange for 227,000 shares of
the Company's common stock. Moreover, the Company and CPNI entered into a banner
ad sales agreement, pursuant to which the Company will sell banner ads and
corporate sponsorships onto the CPNI suite of Web sites. Also, CPNI will act as
a marketing agent to sell the Company's web development and strategic consulting
services.
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 Company had registered 5,000,000 shares of Common
Stock for this purpose. The Company does not now intend to conduct an active
acquisition program, but is considering select acquisitions on a case-by-case
basis. The Company does not now have any significant 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 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. 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. 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 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, with in-person sales calls comprising the
primary form at this time. As far as the Company's fee-for-
services division goes, the Company recently commenced a
direct sales campaign regarding its integrated sponsorships.
This campaign is achieving satisfactory initial success.
During this sales campaign, the Company found considerable
sales synergies between the Company's existing joint venture
Web sites. The Company is also planning the launch in the
near future of an aggressive direct marketing campaign
regarding its web development and hosting services. This
campaign will target the Gulf Coast region of Texas in close
proximity to the Company's corporate headquarters.
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 highly customized notices to customers at their 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 the Company's 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 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 three full-time employees. 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. The Company also
utilizes the services of five outside consultants, who each devote a
considerable amount of their business time to matters involving the Company.
Facilities
The Company currently leases a small amount of office space for its
corporate offices on a month-to-month basis and a small amount of rack space for
servers in GTE's data-center based in Phoenix on a year-to-year 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
On or about January 17, 2000, the Company was served with a Summons
with Notice dated December 30, 1999 regarding a lawsuit instituted by Louis
Ferro, a former consultant of the Company. This lawsuit was instituted in the
Supreme Court of the State of New York, County of New York (Index No. 605883)
against the Company and Greg J. Micek, a Director and the President of the
Company. (The Supreme Court of the State of New York is the initial level trial
court of the State of New York.) Under the procedural law of the State of New
York, the Summons with Notice received by the Company is not required to give
much information regarding the specifics of the claims being asserted, and no
such specifics were given. However, such Summons with Notice did indicate that
the nature of the action is breach of contract, unjust enrichment and libel, and
that Mr. Ferro is seeking $1,042,132.89 (plus interest) in damages. The Company
otherwise had until about February 17, 2000 to answer this lawsuit; however, the
Company procured an extension from Mr. Ferro's counsel, giving to the Company
the right to file its answer at any time on or prior to March 15, 2000. The
Company believes that the lawsuit is without merit and that the Company has
valid counterclaims against Mr. Ferro, having values that will more than offset
any amounts Mr. Ferro is likely to recover against the Company. Accordingly,
unless settled soon, the Company intends to answer this lawsuit, vigorously
defending against all claims asserted and asserting all available counterclaims.
Notwithstanding the preceding, to avoid the excessive costs of litigation, the
Company has reached a verbal, non-binding settlement with Mr. Ferro in which the
Company would pay to Mr. Ferro an amount extremely small in comparison to the
amount sought by him. The ultimate completion of this settlement depends on one
contingency, the outcome of which is uncertain. As a consequence, the ultimate
outcome of the proposed settlement and of this lawsuit can not now be
determined.
Available Information
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 and exhibits relating
thereto (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), of which this Prospectus is a part. This Prospectus does
not contain all the information set forth in the Registration Statement.
Reference is made to such Registration Statement for further information with
respect to the Company and the securities of the Company covered by this
Prospectus. Statements contained herein concerning the provisions of documents
are necessarily summaries of such documents, and each statement is qualified in
its entirety by reference to the copy of the related document filed with the
Commission.
The 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> <C>
Greg J. Micek 45 Director, President
Lewis E. Ball 68 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 years ended June 30, 1999 or 1998 exceeding $100,000).
Summary Compensation Table (1)
<TABLE>
<CAPTION>
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>
Greg J. Micek 6/30/99 (2) -0-
Chief Executive 6/30/98 (2) 2,000,000
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 1999 or fiscal 1998.
Stock Option Grants
The Company did not grant any stock options during the fiscal year
ended June 30, 1999.
Option Exercises/Value of Unexercised Options
The following table sets forth the number of securities underlying
options exercisable at June 30, 1999, and the value at June 30, 1999 of
exercisable in-the-money options remaining outstanding as to the Chief Executive
Officer of the Company. No SAR's of any kind have been granted.
Aggregated Option Exercises in Last
Fiscal Year and Fiscal Year End Option Values
<TABLE>
<CAPTION>
(a) d) (e)
Number of Securities
Underlying Unexercised Value of Unexercised
Options at June 30, 1999 In-the-Money Options at
(Numbers of Shares) June 30, 1999
Name Exercisable Exercisable
<S> <C> <C>
Greg J. Micek 2,000,000 $1,550,000(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
$.875 per share closing bid price of the Common Stock on the OTC
Bulletin Board on June 30, 1999.
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 10, 2000, Mr. Dotson
had been issued under his agreements options to purchase 340,000 shares of
Common Stock.
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.
Between October 1997 and early June 1999, John J. Micek, Jr. loaned
$200,000 to the Company. John J. Micek, Jr. is the father of Greg J. Micek, a
director and the President of the Company. Such loans were represented by a
number of demand promissory notes bearing interest at a rate of nine percent per
annum. During fiscal 1999, Greg J. Micek acquired from John J. Micek, Jr. all
of these promissory notes in exchange for 300,000 shares of the Company's common
stock held by him. As of December 31, 1999, the total balance owed to Greg J.
Micek on these promissory notes was approximately $359,223.
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 March 10, 2000 information
regarding the beneficial ownership of Common Stock (i) by each person who is
known by the Company to own beneficially more than 5% of the outstanding Common
Stock; (ii) by each director; and (iii) by all directors and officers as a
group.
<TABLE>
<CAPTION>
Name and Address of
Beneficial Owner Number(1) Percent
<S> <C> <C>
Greg J. Micek 7,750,000(2) 57.8%
5444 Westheimer, Suite 2080
Houston, Texas 77056
Lewis E. Ball 120,000 1.1%
6122 Valley Forge
Houston, Texas 77057
Carlo Pellegrini 1,000,000(3) 8.1%
195 High Avenue
New York, NY 10960
All directors and officers 7,870,000(2) 58.7%
as a group (two persons)
</TABLE>
(1) Includes shares Stock beneficially owned pursuant to options and
warrants exercisable within 60 days after the date of this Prospectus.
(2) Includes 5,750,000 shares owned outright and 2,000,000 shares that may
be purchased pursuant an option currently exercisable.
(3) Includes 1,000,000 shares that may be purchased pursuant an option
currently exercisable.
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 has
registered 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 no significant acquisitions currently under
consideration. 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 20, 2000, approximately
11,400,057 shares of Common Stock are 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 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. Approximately 11,400,057 shares of
Common Stock are issued and outstanding, approximately 7,475,000 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 June 30,
1999 and for the fiscal year ended at June 30, 1999 and for the period from
October 28, 1997 (inception) through June 30, 1998 have been included herein and
in the registration statement in reliance upon the report of Malone & Bailey,
PLLC, independent certified public accountants, included herein, and upon the
authority of said firm as experts in accounting and auditing.
<PAGE>
<TABLE>
<CAPTION>
Page
Year Ended June 30, 1999:
<S> <C>
Report of Independent Auditors .......................................................................F-1
Balance Sheet as of June 30, 1999 ................................................................... F-2
Income Statement for the year ended June 30, 1999 and for the period
from October 28, 1997 (inception) through June 30, 1998 .............................. F-3
Statement of Stockholders' Equity for the period October 28, 1997
(inception) through June 30, 1999 ..............................................................F-4
Statement of Cash Flows for the year ended June 30, 1999 and for the period from October 28, 1997
(inception) through June 30, 1998 ............................................................ F-5
Notes to Financial Statements ........................................................................F-6
Six Months Ended December 31,1999 (unaudited):
Balance sheet as of December 31, 1999 .................................................................G-1
Income statements for the six months ended December 31, 1999 and 1998...........................G-2
Income statements for the three months ended December 31, 1999 and 1998 ..........................G-3
Statements of cash flows for the six months ended December 31, 1999 and 1998...........................G-4
Notes to financial statements..........................................................................G-5
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' 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, 1999, and the related statements of expenses,
stockholders' equity, and cash flows for year then ended. 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,
1999, and the results of its operations and its cash flows for year then ended
in conformity with generally accepted accounting principles.
MALONE & BAILEY, PLLC
Houston, Texas
October 10, 1999
F-1
<PAGE>
JVWeb, Inc.
Balance Sheet
As of June 30, 1999
ASSETS
<TABLE>
<S> <C>
Cash $ 42,724
Note receivable 50,333
Prepaid professional fees 32,713
Prepaid insurance 45,124
-----------
Total Current Assets 170,894
-----------
Office equipment and furniture (net of
$1,700 accumulated depreciation) 2,690
AMP3.com LLC Investment 100,000
-----------
Total Assets $ 273,584
===========
LIABILITIES & STOCKHOLDERS? EQUITY
Accounts payable $ 54,751
Notes payable to founding shareholder 161,638
Note payable to insurance company 34,510
-----------
Total Liabilities 250,899
-----------
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, 9,327,557 shares issued and
outstanding 93,276
Paid-in capital 1,241,236
Accumulated deficit stage (1,311,827)
----------
Total Stockholders' Equity 22,685
----------
Total Liabilities & Stockholders' Equity $ 273,584
===========
</TABLE>
See notes to financial
statements.
F-2
<PAGE>
JVWeb, Inc.
Income Statement
For the Year Ended June 30, 1999 and the Period from
October 28, 1997 (Inception)
Through June 30, 1998
<TABLE>
<CAPTION>
1999 1998
----------- ------
<S> <C> <C>
REVENUES $ 220,825 $ 190
COST OF SALES 53,286 48
----------- ---------
Gross Margin 167,539 142
EXPENSES
General and administrative 1,295,154 174,338
Depreciation 1,463 530
----------- ---------
1,296,617 174,868
----------- ---------
Operating (Loss) (1,129,078) (174,726)
INTEREST INCOME (EXPENSE) ( 8,129) 106
----------- ---------
Net Deficit $(1,137,207) $(174,620)
=========== =========
NET LOSS PER COMMON SHARE $( 0.14) $( 0.02)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 7,968,402 6,681,250
</TABLE>
See notes to financial
statements.
F-3
<PAGE>
JVWeb, Inc.
Statement of Stockholders' Equity
Period from October 28, 1997 (Inception)
Through June 30, 1999
<TABLE>
<CAPTION>
Accumulated
Deficit
During the
Common Stock Paid-in Development
Shares Amount Capital Stage Totals
--------------------------------------------------------------------------------
Shares issued at
<S> <C> <C> <C> <C> <C> <C>
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) (174,260)
------------ -------------- ------------ ----------- -----------
Balances,
June 30, 1998 7,170,000 71,700 112,816 ( 174,620) 9,896
--------- ------- ------------ ----------- ----------
Shares issued for cash 939,597 9,396 325,816 335,212
Shares issued for services 1,042,900 10,429 704,355 714,784
Deposit shares returned ( 70,000) ( 700) 700
Fractional shares issued 45,060 451 ( 451)
Shares issued for investment 200,000 2,000 98,000 100,000
Net deficit $(1,137,207) (1,137,207)
----------------- ----------- -------------- ----------- -----------
Balances,
June 30, 1999 9,327,557 $93,276 $ 1,241,236 $(1,311,827) $ 22,685
========= ======= =========== =========== ==========
</TABLE>
See notes to financial statements.
F-4
<PAGE>
JVWeb, Inc.
Statement of Cash Flows
For the Year Ended June 30, 1999 and the Period from
October 28, 1997 (Inception)
Through June 30, 1998
<TABLE>
<CAPTION>
1999 1998
---------- -------
CASH FLOW FROM OPERATIONS
<S> <C> <C>
Net deficit $(1,137,207) $(174,620)
Adjustments to reconcile net
deficit to cash provided from
operating activities
Depreciation 1,170 530
Common stock for services 714,784 60,000
Writeoff of deposit on purchase
of a subsidiary 25,000
Changes in:
Employee advances 2,550 ( 2,550)
Inventory 5,305 ( 5,305)
Prepaid expenses ( 58,337) ( 19,500)
Accounts payable 46,936 7,481
------- --------
NET CASH USED BY OPERATING ACTIVITIES (399,799) (133,964)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of office equipment & furniture ( 4,390)
Increase in loan receivable ( 50,000)
Deposit on purchase of subsidiary ( 25,000)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES ( 50,000) ( 29,390)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES
Change in notes payable
to founding shareholder 123,638 38,000
Proceeds from notes payable 34,510 1,250
Payments on notes payable ( 1,250)
Issuance of common stock 335,212 124,516
-------- --------
NET CASH FROM FINANCING ACTIVITIES 492,110 163,766
-------- --------
NET INCREASE IN CASH 42,311 412
CASH AT BEGINNING OF YEAR 412
---------
CASH AT END OF YEAR $ 42,723 $ 412
========= ========
</TABLE>
See notes to financial
statements.
F-5
<PAGE>
JVWEB, INC
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of operations. JVWeb, Inc. ("Company") was formed October 28, 1997 as a
Delaware corporation. The Company was formed to market and develop internet
sites as commercial sales outlets. The Company also provides internet consulting
services.
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.
Revenue and cost recognition. Revenue from consulting is recognized when
services are rendered. Advertising costs are expensed as incurred.
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. As of June 30, 1999, and 1998, respectively, inventory was $
0 and $5,305.
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.
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 - AMP-3.COM, LLC INVESTMENT
On April 12, 1999, the Company agreed to exchange 200,000 shares of Company
common stock for a 5% ownership interest in AMP-3.com, LLC ("AMP-3"), a Texas
limited liability start-up company providing Internet music retail sales and
promotion services to the music industry.
In April 1999, the Company agreed to provide consulting services to AMP-3.
During April through June, the Company invoiced AMP-3 $218,589 for consulting
services and related out-of-pocket expenses, with a further $9,800 in services
performed in July. AMP-3 has not paid or agreed to pay these charges. No further
services have been rendered.
On June 1, 1999, the Company loaned $50,000 to AMP-3 in exchange for an 8%
unsecured convertible subordinated promissory note due August 31, 1999. The note
was convertible into a .5% interest in AMP-3 anytime before August 31, 1999, and
no conversion was elected. The note was not paid at that time, and no
arrangements for payment have been made. Payment was guaranteed individually by
a stockholder of AMP-3.
F-6
<PAGE>
JVWEB, INC
NOTES TO FINANCIAL STATEMENTS
NOTE B - AMP-3.COM, LLC INVESTMENT (Continued)
AMP-3's financial situation is undetermined. The 5% investment is carried at
cost, as management believes the near-term collection prospects are good. The
$218,589 account receivable is fully reserved by an equivalent charge to an
allowance for bad debts, although management believes that the likelihood of
eventual collection is good. The $50,000 cash investment is carried at full
value because of the positive prospects of AMP-3 and the implied solvency of
their guaranteeing stockholder.
NOTE C - RELATED PARTY TRANSACTIONS
The founding shareholder contributed $69,516 cash for the initial common stock
issued. The founding shareholder has loaned the Company $161,638 and $23,000
individually and $0 and $15,000 from a related company as of June 30, 1999 and
1998, respectively. The balance is due upon demand and accrues interest at 9%.
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 accrued or 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 on October 30, 2002.
NOTE D - TIME FINANCIAL INVESTMENT
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
paid $55,000 ($25,000 as of June 30, 1998) in cash, and issued 70,000 returnable
shares of the Company's common stock on June 29, 1998. As of October 29, 1998,
the purchase transaction had been abandoned. The $55,000 deposit was written off
and the shares were returned to the Company.
NOTE F - NOTE PAYABLE TO INSURANCE COMPANY
The Company financed its insurance program with an insurance note payable in
nine monthly installments of $5,122, including interest at 9%, due by June 30,
1999.
F-7
<PAGE>
JVWEB, INC
NOTES TO FINANCIAL STATEMENTS
NOTE G - 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
$3,000 and $1,500 per month in the years ended June 30, 1999 and 1998,
respectively.
NOTE H - CONSULTING AGREEMENTS
The Company has entered into four consulting agreements by which options to
purchase the Company's common stock at stipulated prices ranging from $.10 to
$1.00 per share were issued. 980,000 and 250,000 options were issued during the
years ended June 30, 1999 and June 30, 1998, respectively. The options are
subject to forfeiture on a prorata basis should the services terminate prior to
the term of the agreement. Pursuant to two of the agreements, a variable monthly
cash retainer is also paid. Additionally, 140,000 shares of stock were issued to
these consultants during the year ended June 30, 1999. The Company is obligated
to issue an additional 50,000 shares of stock to one of these consultants over
the next year.
The Company has entered into five 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 stipulated rate of shares per hour. During the
years ended June 30, 1999 and 1998, respectively, 105,250 and 55,000 options
have been granted under these agreements. 20,000 shares were issued to one of
these consultants as additional compensation.
The Company entered into another consulting agreement which it canceled in
August 1998. The Company issued 20,000 and 50,000 shares during the years ended
June 30, 1999 and 1998 respectively under this agreement and has no further
liability to this consultant.
The Company entered on March 31, 1999 a two year agreement with one consultant
for business services for $25,000 per quarter, payable in shares. 75,000 S-8
shares have been issued pursuant to this agreement.
F-8
<PAGE>
JVWEB, INC
NOTES TO FINANCIAL STATEMENTS
NOTE H - CONSULTING AGREEEMENTS (Continued)
The Company issued 96,000 options and 420,000 shares to consultants whose
agreements began and terminated during the year ended June 30, 1999.
NOTE I - STOCK OPTIONS
Beginning at inception, the Company adopted the disclosure requirements of FASB
Statement 123, Accounting for Stock Based Incentive Plans. The Company has
granted options pursuant to its stock option plan. Grants are made at
management's discretion, and are compensation for services. Additionally, the
Company issues warrants from time to time. The stock option plan and warrants
issuances are administered by the Board of Directors of the Company, who have
substantial discretion to determine which persons, amounts, time, price,
exercise terms, and restrictions, if any. Both options and warrants carry
certain anti-dilution provisions concerning stock dividends or splits, mergers
and reorganizations.
The Company uses the intrinsic value method of calculating compensation expense,
as described and recommended by Accounting Principles Board (APB) Opinion No. 25
(Accounting for Stock Issued to Employees) and permitted by FASB Statement 123.
Accordingly, no compensation expense has been recognized for the stock options
during the years ended June 30, 1999 and 1998.
Summary information on each are as follows:
<TABLE>
<CAPTION>
Weighted Weighted
Average Average
Share Share
Options Price Warrants Price
Year ended June 30, 1998:
<S> <C> <C> <C> <C>
Granted and outstanding 2,541,250 $0.12 1,500,000 $1.00
Year ended June 30, 1999:
Granted 985,000 0.53
Exercised 432,400 0.26 26,262 1.00
--------- ----- --------- -------
Outstanding at
June 30, 1999 3,093,850 $ 0.23 1,473,738 $ 1.00
========= ======== ========= =======
</TABLE>
F-9
<PAGE>
<TABLE>
ASSETS
<S> <C>
Cash $ 14,512
Accounts receivable 50,328
Note receivable 52,333
----------
Total Current Assets 117,173
----------
Office equipment and furniture (net of
$2,580 accumulated depreciation) 1,910
----------
Linksxpress.com, Inc. investment 60,000
Linksxpress.co.uk 288,000
Investment in AMP3 100,000
-------
Total Assets $ 567,083
==========
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 71,793
Accrued interest 15,883
Notes payable to related parties 359,223
----------
Total Liabilities 446,899
----------
Common stock, $0.01 par, 50,000,000 shares
authorized, 10,414,057 shares issued and
outstanding 104,141
Paid-in capital 1,888,960
Retained Earnings (1,872,917)
----------
Total Stockholders' Equity 120,184
----------
Total Liabilities & Stockholders' Equity $ 567,083
==========
</TABLE>
G-1
<PAGE>
JVWeb, Inc.
Income Statements
For the Three and Six Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
3 Months 6 Months 3 Months 6 Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1999 1998 1998
---------- ---------- ---------- -------
<S> <C> <C> <C> <C>
REVENUES $ 40,138 $ 62,971
COST OF SALES 40,459 40,459
--------- ---------
Gross Margin (321) 22,512
EXPENSES
General & administrative 325,243 576,221 $ 125,762 $ 305,043
Depreciation 98 439 244 439
--------- --------- - --------------- ---------
325,341 576,660 126,006 305,482
--------- --------- --------- ---------
Operating (Loss) (325,662) (554,148) (126,006) (305,482)
INTEREST INCOME 1,000 2,000
INTEREST EXPENSE ( 4,408) ( 8,942)
--------- --------- ----------- ----------
NET LOSS $(329,070) $(561,090) $(126,006) $(305,482)
========= ========= ========= =========
NET LOSS PER COMMON SHARE $( .04) $( .06) $( .02) $( .04)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 9,716,057 9,626,057 7,894,160 7,497,080
</TABLE>
G-2
<PAGE>
JVWeb, Inc.
Statement of Stockholders' Equity
Through December 31, 1999
<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,
1999 (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,
1999 (Unaudited) 7,974,160 $ 79,742 $295,595 $(480,102) $(104,765)
========== ========== ======== ========== ==========
</TABLE>
G-3
<PAGE>
JVWeb, Inc.
Statements of Cash Flows
For the Six Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
6 Months 6 Months
Ended Ended
Dec. 31, Dec. 31,
1999 1998
---------- -------
CASH FLOWS FROM OPERATIONS
<S> <C> <C>
Net deficit $(600,270) $(305,482)
Adjustments to reconcile net
deficit to cash provided
from operating activities
Depreciation 780 439
Common stock issued for
services 290,589 70,043
Changes in:
Accounts receivable ( 11,148)
Write off of deposits on
purchase of subsidiary 55,000
Net changes in:
Employee advance 2,550
Inventory ( 3,641)
Prepaid legal expenses 47,624 15,200
Accounts payable 30,926 11,956
--------- ---------
NET CASH USED BY OPERATING
ACTIVITIES (241,499) (153,935)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Deposit on purchase of subsidiary ( 30,000)
--------- -------
NET CASH USED BY INVESTING
ACTIVITIES ( 30,000)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in notes payable to founding
shareholder 197,585 64,500
Payments on note payable ( 24,297) ( 1,250)
Proceeds from notes payable 20,000
Issuance of common stock 20,000 120,778
--------- ---------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 213,288 184,028
--------- ---------
NET INCREASE (DECREASE) IN CASH ( 28,221) 93
CASH BEGINNING 42,733 412
--------- ---------
CASH ENDING $ 14,512 $ 505
========= =========
</TABLE>
G-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
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,1999, as reported in Form 10-KSB, have been omitted.
NOTE B - ACQUISITION OF LINKSXPRESS.COM, INC.
On September 15, 1999, the Company acquired 500,000 shares of Linksxpress.com,
Inc. in exchange for 150,000 shares of Company stock, valued at current market
price of $.40 per share.
NOTE C - ACQUISITION OF LINKSXPRESS.CO.UK
On the Company acquired shares of Linksxpress.co.uk in exchange for 600,000
shares of company stock, valued at current market value of $.48 per share.
G-5
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C>
PROSPECTUS SUMMARY ...............................................................................................2
RISK FACTORS......................................................................................................5
USE OF PROCEEDS..................................................................................................19
DIVIDEND POLICY..................................................................................................19
PRICE RANGE OF COMMON STOCK......................................................................................20
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS...................................................................................21
BUSINESS ........................................................................................................24
MANAGEMENT ......................................................................................................39
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS..................................................................40
PRINCIPAL STOCKHOLDERS ..........................................................................................42
DESCRIPTION OF CAPITAL STOCK ....................................................................................43
EXPERTS .........................................................................................................48
</TABLE>
UNTIL ___________________ _____, 2000, 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> <C>
SEC Registration Fee ...........................................................................$ 8,250.00
Blue Sky Filing Fees and Expenses ................................................................5,000.00
Legal Fees and Expense ..........................................................................27,500.00
Accounting Fees and Expenses .....................................................................2,500.00
Printing ........................................................................................11,000.00
Mailing ..........................................................................................4,000.00
Total ......................................................................................... $58,250.00
</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.
For services rendered (and agreed to be rendered in a written contract)
having a value determined to be $90,000, the Company agreed to issue to a person
providing legal services to the Company an aggregate of 80,000 shares of the
Company's common stock. This issuance is claimed to be exempt pursuant to
Regulation D under the Act.
On April 12, 1999, the Company entered into a equity exchange with
AMP3.com, LLC whereby the Company acquired a 5.0% interest in AMP3.com, in
exchange for the issuance of 200,000 shares of the Company's common stock. This
issuance is claimed to be exempt pursuant to Regulation D under the Act.
On July 22, 1999, the Company agreed to issue to a person providing
accounting services to the Company an aggregate of 50,000 shares of the
Company's common stock for an aggregate purchase price of $20,000. This issuance
is claimed to be exempt pursuant to Regulation D under the Act.
On September 15, 1999, the Company exchanged 150,000 shares of the
Company's common stock and an option to purchase up to 150,000 additional shares
of the Company's common stock at a purchase price of $.40 per share for 500,000
shares of common stock of Linksxpress.com, Inc., warrants to purchase up to
1,000,000 shares of LinksXpress.com's common stock at a purchase price of $2.00
per share, and an options to purchase up to 500,000 shares of LinksXpress.com's
common stock at purchase prices ranging from $.25 to $2.00 per share. The
issuances of the Company's common stock outright and the option is claimed to be
exempt, and the issuances of the common stock underlying the option will be
claimed to be exempt, pursuant to Regulation D under the Act.
For services rendered and agreed to be rendered, during the fiscal
quarter ended December 31, 1999, the Company granted to one person providing
services to the Company an option to purchase up to 1,000,000 shares of the
Company's common stock and to another person providing services to the Company
an option to purchase up to 400,000 such shares. The exercise price for the
1,000,000 optioned shares is $.21 per share, and the exercise price for the
400,000 optioned shares is $.50 per share. The issuances of these options are
claimed to be exempt, and the issuances of the common stock underlying the
options will be claimed to be exempt, pursuant to Regulation D under the
Securities Act of 1933.
For services rendered, during the fiscal quarter ended December 31,
1999, the Company issued to two persons providing services to the Company an
aggregate of 110,000 shares of the Company's common stock. The issuances of
these shares are claimed to be exempt pursuant to Regulation D under the
Securities Act of 1933.
On January 21, 2000, the Company entered into a stock exchange with
Crosspointe Net, Inc. ("CPNI") whereby the Company acquired a 7.5% interest in
CPNI, in exchange for the issuance of 300,000 shares of the Company's common
stock. This issuance 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 is incorporated
herein by reference from the Company's Registration Statement
on Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
Item 27, Exhibit 3.01.
3.02 Bylaws of the Company is incorporated herein by reference from the Company's Registration Statement on Form SB-2
(SEC File No. 333-41635) filed December 29, 1997, Item 27, Exhibit 3.02.
4.01 Specimen Common Stock Certificate is incorporated herein by reference from the Company's Registration Statement on
Form SB-2 (SEC File No. 333-41635) filed December 29, 1997, Item 27, Exhibit 4.01.
4.02 Warrant Agreement dated December 15, 1997 between the Company and American Stock Transfer & Trust Company is
incorporated herein by reference from the Company's Registration Statement on Form SB-2 (SEC File No. 333-41635)
filed December 29, 1997, Item 27, Exhibit 4.02.
4.03 First Amendment to Agreement dated March 31, 1998 between the Company and American Stock Transfer Company & Trust
Company is incorporated herein by reference from Amendment No. 2 to the Company's Registration Statement on Form
SB-2/A (SEC File No. 333-41635) filed April 21, 1998, Item 27, Exhibit 4.03.
4.04 Second Amendment to Agreement dated April 15, 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/A (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 is incorporated herein by
reference from the Company's Registration Statement on Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
Item 27, Exhibit 10.01.
10.02 Employment Agreement dated December 1, 1997 by and between the Company and Greg J. Micek is incorporated herein by
reference from the Company's Registration Statement on Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
Item 27, Exhibit 10.02.
10.03 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of Greg J. Micek is incorporated
herein by reference from Amendment No. 1 to the Company's Registration Statement on Form SB-2/A (SEC File No.
333-41635) filed February 27, 1998, Item 27, Exhibit 10.03.
10.04 Stock Option Agreement dated December 17, 1997 executed by the Company in favor of Dudley R. Anderson is
incorporated herein by reference from Amendment No. 1 to the Company's Registration Statement on Form SB-2/A (SEC
File No. 333-41635) filed February 27, 1998, Item 27, Exhibit 10.04.
10.05 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of Kevin Dotson is incorporated
herein by reference from Amendment No. 1 to the Company's Registration Statement on Form SB-2/A (SEC File No.
333-41635) filed February 27, 1998, Item 27, Exhibit 10.05.
10.06 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of G-2 Advertising is incorporated
herein by reference from Amendment No. 1 to the Company's Registration Statement on Form SB-2/A (SEC File No.
333-41635) filed February 27, 1998, Item 27, Exhibit 10.06.
10.07 First Amendment dated April 14, 1998 to Agreement dated November 15, 1997 between the Company and LS Capital
Corporation is incorporated herein by reference from Amendment No. 2 to the Company's Registration Statement on
Form SB-2/A (SEC File No. 333-41635) filed April 21, 1998, Item 27, Exhibit 10.07.
10.08 Agreement dated April 20, 1998 between the Company and LS Capital Corporation is incorporated herein by reference
from Amendment No. 2 to the Company's Registration Statement on Form SB-2/A (SEC File No. 333-41635) filed April
21, 1998, Item 27, Exhibit 10.08.
10.09 Asset Purchase Agreement dated July 31, 1998 by and among
Market Data Corporation and Time Financial Services, Inc. (as
sellers) and the Company (as purchaser) is incorporated herein
by reference from the Company's (SEC File No. 0-24001) Current
Report on Form 8-K dated July 31, 1998, Item 7(c), Exhibit
10.01.
10.10 Agreement dated August 3, 1998 by and between Equitrust Mortgage Corporation and the Company is incorporated
herein by reference from the Company's Current Report on Form 8-K dated July 31, 1998 (SEC File No. 0- 24001),
Item 7(c), Exhibit 10.02.
10.11 Promissory Note dated August 3, 1998 in the original principal amount of $50,000 made payable by the Company to
the order of Equitrust Mortgage Corporation is incorporated herein by reference from the Company's Current Report
on Form 8-K dated July 31, 1998 (SEC File No. 0-24001), Item 7(c), Exhibit 10.02.
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/A (SEC File No. 333-74381) filed March 15, 1999,
Item 27, Exhibit 10.12.
10.13 Master Services Agreement dated March 1999 between the Company and Lernout & Hauspie Speech Products, S.A./N.V. is
incorporated herein by reference from the Company's (SEC File No. 0-24001) Annual Report on Form 10-KSB for the
year ended June 30, 1998 Item 13(a), Exhibit 10.13.
10.14 Exchange Agreement dated April 12, 1999 between the Company and AMP3.com, LLC is incorporated herein by reference
from the Company's (SEC File No. 0- 24001) Annual Report on Form 10-KSB for the year ended June 30, 1998 Item
13(a), Exhibit 10.14.
10.15 Agreement dated September 17, 1999 between the Company and LinksXpress.com, Inc. is incorporated herein by
reference from the Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1999 Item 6(a), Exhibit 10.1.
10.16 Stock Option Agreement dated September 17, 1999 executed by the Company in favor of LinksXpress.com, Inc. is
incorporated herein by reference from the Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1999 Item 6(a), Exhibit 10.2.
10.17 Stock Option Agreement dated September 17, 1999 executed by LinksXpress.com, Inc. in favor of the Company is
incorporated herein by reference from the Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1999 Item 6(a), Exhibit 10.3.
10.18 Warrant dated September 17, 1999 executed by LinksXpress.com, Inc. in favor of the Company is incorporated herein
by reference from the Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1999 Item 6(a), Exhibit 10.4.
10.19 Stock Purchase Agreement dated December 21, 1999 between the Company and LinksXpress.com, Inc. is incorporated
herein by reference from the Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for the quarter
ended December 31, 1999 Item 6(a), Exhibit 10.1.
10.20 Stock Purchase Agreement dated January 21, 2000 between the Company and Crosspointe Net, Inc. is incorporated
herein by reference from Amendment No. 3 to the Company's Registration Statement on Form SB-2/A (SEC File No.
333-74381) filed March 16, 2000, Item 27, Exhibit 10.20.
10.21 Stock Purchase Agreement dated September 20, 1999 between the Company and LinksXpress.com, Inc. is incorporated
herein by reference from Amendment No. 3 to the Company's Registration Statement on Form SB-2/A (SEC File No.
333-74381) filed March 16, 2000, Item 27, Exhibit 10.21.
10.22 Stock Option Agreement dated November 7, 1999 executed by the Company in favor of Carlo Pellegrini is incorporated
herein by reference from Amendment No. 3 to the Company's Registration Statement on Form SB-2/A (SEC File No.
333-74381) filed March 16, 2000, Item 27, Exhibit 10.22.
10.23 Stock Option Agreement dated December 15, 1999 between the Company and Ken Gooley.
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 Year 2000 Consultant Compensation Plan is incorporated herein by reference from the Company's
Registration Statement on Form S-8 (SEC File No. 333-96057) filed February 3, 2000, Item 8, Exhibit 4.02.
99.02 The Company's Year 2000 Non-Qualified Stock Option Plan is incorporated herein by reference from Amendment No.3 to
the Company's Registration Statement on Form SB-2/A (SEC File
No.333-74381) filed March 16, 2000, Item 27, Exhibit 99.02.
</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 March 27, 2000.
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 March 27, 2000
Greg J. Micek (Principal Executive Officer,
Principal Financial Officer, and
Principal Accounting Officer)
/s/ Lewis E. Ball Director March 27, 2000
Lewis E. Ball
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
3.01 Certificate of Incorporation of the Company is incorporated
herein by reference from the Company's Registration Statement
on Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
Item 27, Exhibit 3.01.
3.02 Bylaws of the Company is incorporated herein by reference from the Company's Registration Statement on Form SB-2
(SEC File No. 333-41635) filed December 29, 1997, Item 27, Exhibit 3.02.
4.01 Specimen Common Stock Certificate is incorporated herein by reference from the Company's Registration Statement on
Form SB-2 (SEC File No. 333-41635) filed December 29, 1997, Item 27, Exhibit 4.01.
4.02 Warrant Agreement dated December 15, 1997 between the Company and American Stock Transfer & Trust Company is
incorporated herein by reference from the Company's Registration Statement on Form SB-2 (SEC File No. 333-41635)
filed December 29, 1997, Item 27, Exhibit 4.02.
4.03 First Amendment to Agreement dated March 31, 1998 between the Company and American Stock Transfer Company & Trust
Company is incorporated herein by reference from Amendment No. 2 to the Company's Registration Statement on Form
SB-2/A (SEC File No. 333-41635) filed April 21, 1998, Item 27, Exhibit 4.03.
4.04 Second Amendment to Agreement dated April 15, 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/A (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 is incorporated herein by
reference from the Company's Registration Statement on Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
Item 27, Exhibit 10.01.
10.02 Employment Agreement dated December 1, 1997 by and between the Company and Greg J. Micek is incorporated herein by
reference from the Company's Registration Statement on Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
Item 27, Exhibit 10.02.
10.03 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of Greg J. Micek is incorporated
herein by reference from Amendment No. 1 to the Company's Registration Statement on Form SB-2/A (SEC File No.
333-41635) filed February 27, 1998, Item 27, Exhibit 10.03.
10.04 Stock Option Agreement dated December 17, 1997 executed by the Company in favor of Dudley R. Anderson is
incorporated herein by reference from Amendment No. 1 to the Company's Registration Statement on Form SB-2/A (SEC
File No. 333-41635) filed February 27, 1998, Item 27, Exhibit 10.04.
10.05 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of Kevin Dotson is incorporated
herein by reference from Amendment No. 1 to the Company's Registration Statement on Form SB-2/A (SEC File No.
333-41635) filed February 27, 1998, Item 27, Exhibit 10.05.
10.06 Stock Option Agreement dated December 1, 1997 executed by the Company in favor of G-2 Advertising is incorporated
herein by reference from Amendment No. 1 to the Company's Registration Statement on Form SB-2/A (SEC File No.
333-41635) filed February 27, 1998, Item 27, Exhibit 10.06.
10.07 First Amendment dated April 14, 1998 to Agreement dated November 15, 1997 between the Company and LS Capital
Corporation is incorporated herein by reference from Amendment No. 2 to the Company's Registration Statement on
Form SB-2/A (SEC File No. 333-41635) filed April 21, 1998, Item 27, Exhibit 10.07.
10.08 Agreement dated April 20, 1998 between the Company and LS Capital Corporation is incorporated herein by reference
from Amendment No. 2 to the Company's Registration Statement on Form SB-2/A (SEC File No. 333-41635) filed April
21, 1998, Item 27, Exhibit 10.08.
10.09 Asset Purchase Agreement dated July 31, 1998 by and among
Market Data Corporation and Time Financial Services, Inc. (as
sellers) and the Company (as purchaser) is incorporated herein
by reference from the Company's (SEC File No. 0-24001) Current
Report on Form 8-K dated July 31, 1998, Item 7(c), Exhibit
10.01.
10.10 Agreement dated August 3, 1998 by and between Equitrust Mortgage Corporation and the Company is incorporated
herein by reference from the Company's Current Report on Form 8-K dated July 31, 1998 (SEC File No. 0- 24001),
Item 7(c), Exhibit 10.02.
10.11 Promissory Note dated August 3, 1998 in the original principal amount of $50,000 made payable by the Company to
the order of Equitrust Mortgage Corporation is incorporated herein by reference from the Company's Current Report
on Form 8-K dated July 31, 1998 (SEC File No. 0-24001), Item 7(c), Exhibit 10.02.
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/A (SEC File No. 333-74381) filed March 15, 1999,
Item 27, Exhibit 10.12.
10.13 Master Services Agreement dated March 1999 between the Company and Lernout & Hauspie Speech Products, S.A./N.V. is
incorporated herein by reference from the Company's (SEC File No. 0-24001) Annual Report on Form 10-KSB for the
year ended June 30, 1998 Item 13(a), Exhibit 10.13.
10.14 Exchange Agreement dated April 12, 1999 between the Company and AMP3.com, LLC is incorporated herein by reference
from the Company's (SEC File No. 0- 24001) Annual Report on Form 10-KSB for the year ended June 30, 1998 Item
13(a), Exhibit 10.14.
10.15 Agreement dated September 17, 1999 between the Company and LinksXpress.com, Inc. is incorporated herein by
reference from the Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1999 Item 6(a), Exhibit 10.1.
10.16 Stock Option Agreement dated September 17, 1999 executed by the Company in favor of LinksXpress.com, Inc. is
incorporated herein by reference from the Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1999 Item 6(a), Exhibit 10.2.
10.17 Stock Option Agreement dated September 17, 1999 executed by LinksXpress.com, Inc. in favor of the Company is
incorporated herein by reference from the Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1999 Item 6(a), Exhibit 10.3.
10.18 Warrant dated September 17, 1999 executed by LinksXpress.com, Inc. in favor of the Company is incorporated herein
by reference from the Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1999 Item 6(a), Exhibit 10.4.
10.19 Stock Purchase Agreement dated December 21, 1999 between the Company and LinksXpress.com, Inc. is incorporated
herein by reference from the Company's (SEC File No. 0-24001) Quarterly Report on Form 10-QSB for the quarter
ended December 31, 1999 Item 6(a), Exhibit 10.1.
10.20 Stock Purchase Agreement dated January 21, 2000 between the Company and Crosspointe Net, Inc. is incorporated
herein by reference from Amendment No. 3 to the Company's Registration Statement on Form SB-2/A (SEC File No.
333-74381) filed March 16, 2000, Item 27, Exhibit 10.20.
10.21 Stock Purchase Agreement dated September 20, 1999 between the Company and LinksXpress.com, Inc. is incorporated
herein by reference from Amendment No. 3 to the Company's Registration Statement on Form SB-2/A (SEC File No.
333-74381) filed March 16, 2000, Item 27, Exhibit 10.21.
10.22 Stock Option Agreement dated November 7, 1999 executed by the Company in favor of Carlo Pellegrini is incorporated
herein by reference from Amendment No. 3 to the Company's Registration Statement on Form SB-2/A (SEC File No.
333-74381) filed March 16, 2000, Item 27, Exhibit 10.22.
10.23 Stock Option Agreement dated December 15, 1999 between the Company and Ken Gooley.
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 Year 2000 Consultant Compensation Plan is incorporated herein by reference from the Company's
Registration Statement on Form S-8 (SEC File No. 333-96057) filed February 3, 2000, Item 8, Exhibit 4.02.
99.02.1 The Company's Year 2000 Non-Qualified Stock Option Plan is incorporated herein by reference from Amendment No. 3
to the Company's Registration Statement on Form SB-2/A (SEC File No. 333-74381) filed March 16, 2000, Item 27,
Exhibit 99.02.
</TABLE>
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into as
of the 15th day of December, 1999 by and between Ken Gooley ("Consultant") and
JVWeb, Inc. (the "Company").
RECITALS:
WHEREAS, the Company desires to engage Consultant to provide to the
Company certain consulting services described hereinafter (the "Services"), and
Consultant is willing and desires to be engaged by the Company to provide the
Services to the Company, upon the terms, provisions and conditions set forth
hereinafter; and
WHEREAS, the Company and Consultant desire to set forth the terms,
provisions and conditions of
Consultant's engagement by the Company;
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged by each
of the Company and Consultant, each of the Company and Consultant hereby agrees
as follows:
l. Engagement. Subject to the terms, provisions and conditions
hereinafter stated, the Company hereby
----------
engages Consultant to provide to the Company the following services, which
are referred to hereinafter as the
"Services", and Consultant hereby accepts such engagement:
o Sale of advertising "banner ads" on various websites affiliated with JVWeb. o
Promotion of the web sites to create traffic to those sites. o Identification of
strategic partners for JVWeb and its affiliated entities.
Consultant shall also provide such other services as from time to time may be
reasonably requested by the President of the Company. In providing Services
hereunder, Consultant shall use reasonable, and Consultant's best, efforts, and
shall perform the Services in a competent, professional and good workman-like
manner of the highest caliber. Consultant shall devote all of his business time
and attention to performing his duties hereunder. During the term of this
Agreement, Consultant agrees to work exclusively for the Company and to provide
the Services to no person other than the Company. Consultant shall be based in
Harris County, Texas, or surrounding area, but shall undertake such travel as is
necessary or advisable for him to perform his duties hereunder. The Company
shall provide to Consultant the use of such facilities and services as may be
necessary for the adequate performance of his duties hereunder, all of which
facilities shall be located in Harris County, Texas, or surrounding area.
2. Compensation. As compensation for providing the Services,
Consultant shall be paid as follows:
------------
(a) JVWeb shall pay to consultant a base compensation
amount of $4,000.00 per month, starting on December
16, 1999, and continuing for a twelve month period.
(b) JVWeb shall pay an additional bonus/commission to the
Consultant equal to 15% of the first month's revenue
on the sale of banner ads or corporate sponsorships
for each corporate sponsor brought to JVWeb, or any
of its affiliated websites, by the Consultant during
the term of this Agreement with respect to which
JVWeb consummates a transaction. JVWeb shall pay an
additional bonus/commission to the Consultant of 10%
for each additional month that the corporate sponsor
remains as an advertiser.
(c) Additional compensation. Consultant will be entitled to various
stock options in JVWeb, and affiliated
entities as follows:
1. In JVWeb: Consultant shall be entitled to
300,000 stock options under the
non-qualified plan set up by JVWeb,
pursuant to the attached stock option
plan. Such options will be for a period
of three years from the date of this
agreement.
2. Bonus stock options: Consultant, from
time to time, will be involved in the
development of sites that are affiliated
to JVWeb. On occasion, and subject to the
discretion of the Board of Directors of
JVWeb, Inc., Consultant will be granted
additional stock options in JVWeb, based
on Consultants participation in the
success of those affiliated projects.
Any fees due shall be payable five days after the receipt of an invoice from
Consultant submitted to the Company at the end of a month during the term of
this Agreement. Consultant shall not be entitled to participate in any employee
benefit plan now or hereafter established by the Company unless the Company
agrees to this expressly in writing.
3. Term. Subject to Section 4 below, the term of this Agreement
shall begin on the date hereof and
----
shall continue until and through December 31, 2002.
4. Termination.
-----------
(a) For Cause. The Company may, at its election, terminate
Consultant's engagement at any time for just cause, which shall include, without
any limitations thereon, the following: (i) Consultant shall have failed or
refused to faithfully, diligently and competently perform the Services under
this Agreement or otherwise to have breached any term or provision contained
herein; (ii) Consultant shall be disabled or otherwise unable for whatever
reason to fully perform the Services hereunder for 60 consecutive days or for
more than 120 days in any twelve-month period; (iii) Consultant shall be guilty
of fraud, dishonesty, or similar acts of misconduct; or (iv) Consultant shall be
finally convicted of a felony or a misdemeanor involving moral turpitude. At any
time after the occurrence of an event permitting the Company to terminate
Consultant's engagement pursuant to this Section 4(a), the Company may elect for
termination of Consultant's engagement by notifying Consultant as to the
Company's election to terminate, and thereupon Consultant's engagement with the
Company will terminate on the date specified in the notice or (if no date is
specified) upon the delivery of the notice. Notwithstanding the preceding, upon
any an event permitting the Company to terminate Consultant's engagement
pursuant to this Section 4(a) and in lieu of terminating Consultant's
engagement, the Company may, with or without notice to Consultant, suspend the
performance of the Company's obligations under this Agreement (including,
without limitation, the Company's obligations under Section 2), and while such
an event has occurred and has not been cured, (x) the Company shall not be
obligated to fulfill, but shall be relieved of, the Company's obligations under
this Agreement (including, without limitation, the Company's obligations under
Section 2), (y) such obligations shall not accrue, and (z) Consultant shall
forfeit all rights and remedies with respect thereto. Notwithstanding anything
else contained herein, if the Company suspends any of its obligations to
Consultant pursuant to the preceding sentence, the Company may thereafter elect
to terminate Consultant's engagement in accordance with the other provisions of
this Section 4(a).
(b) By Notice. Either the Company or Consultant may terminate
Consultant's engagement hereunder without cause by giving written notice to the
other, at least 60 days prior to the proposed date of termination, of the
notifying party's desire to terminate Consultant's engagement hereunder
whereupon Consultant's engagement shall terminate on the date given in the
notice or (if no date is given) 60 days after the notice is given.
(c) Automatic. The term of this Agreement shall
automatically terminate upon Consultant's
---------
death.
(d) Effect of Termination. Upon termination of Consultant's
engagement, all rights and obligations under this Agreement shall cease except
for (i) the rights and obligations under Section 5, 6, 7A, 7B and 8 hereof, and
(ii) the rights and obligations under Section 2 hereof to the extent Consultant
has not been compensated for services performed prior to termination
(Consultant's fee to be pro rated for the portion of the pay period prior to
termination).
5. Noncompetition Agreement.
------------------------
(a) Agreement. For a period of one year(s) after the
expiration of this Agreement or the termination of this Agreement by the Company
with just cause or Consultant voluntarily, Consultant shall not, directly or
indirectly, acting alone or as a member of a partnership, or as an officer,
director, shareholder, employee, consultant, or representative of any
corporation or in any other capacity with any other business entity: (i) engage
in the Strategic Internet Services Businesss (such business is referred to
hereinafter as the "Restricted Business") in electronic commerce (such area is
referred to hereinafter as the "Restricted Area"); (ii) solicit, deal,
negotiate, enter into an arrangement or contract, or attempt to do any of the
foregoing, in any manner with respect to the Restricted Business in the
Restricted Area with respect to any person that was a client of the Company at
any time during the two-year period prior to the date of expiration or
termination, or attempt to cause any such person to not continue the business
relationship that it has with the Company; or (iii) induce or attempt to
influence, directly or indirectly, any person employed by or under contract with
the Company at the date of expiration or termination, to terminate his or her
engagement or contractual relationship with the Company.
(b) Permitted Exception. Notwithstanding the foregoing
provisions of this section, Consultant shall be permitted to own up to five
percent of the publicly-traded securities, registered under Section 12 or 15(d)
of the Securities Exchange Act of 1934, of any competitor of the Company.
(c) Reasonableness. Consultant hereby specifically
acknowledges and agrees that the temporal and other restrictions contained in
this section are reasonable and necessary to protect the business of the
Company, and that the enforcement of the provisions of this section will not
work an undue hardship on Consultant.
(d) Reformation. Consultant further agrees that in the event
either the length of time or any other restriction, or portion thereof, set
forth in Section 5(a) above is held to be overly restrictive and unenforceable
in any court proceeding, the court may reduce or modify such restrictions to
those which it deems reasonable and enforceable under the circumstances and the
parties agree that the restrictions of Section 5(a) will remain in full force
and effect as reduced or modified.
(e) Sole Remedy. Company and Consultant hereby agree and
acknowledges that the Company's sole remedy for breach of
this provision is the forfeiture by consultant of all
stock and stock options vested or to be vested while
engaged by the Company.
(f) Severability. Consultant further agrees, in the event that
any provision of Section 5(a) is held to be invalid or against public policy,
the remaining provisions of Section 5(a) and the remainder of this Agreement
shall not be affected thereby.
6. Confidentiality.
---------------
(a) "Confidential Information" means and refers to information
and materials belonging to the Company that are not generally known outside the
Company, including, without limitation, customers and customer lists, pricing
policies, operational procedures, sources of supply, methods, formulae,
processes, software programs, hardware configurations, know-how, computer
programs and access codes, technological information, information relating to
the cost of its products and services, marketing strategies, financial
statements and projections, and any other information which bears a logical
relationship to the Confidential Information described above such that
Consultant knows or should logically conclude that the Company regards the
information to be Confidential Information. Confidential Information shall not
include any knowledge or information that Consultant already knows as of the
date of this Agreement, that is already known to the general public as of the
date of this Agreement or that becomes known to the general public after the
date of this Agreement through no breach of Consultant's confidentiality
obligations.
(b) Consultant hereby recognizes and acknowledges that
Consultant may receive information from, or may develop information on the
behalf of, the Company Confidential Information. Consultant hereby agrees to
maintain on a confidential basis all Confidential Information, and Consultant
agrees that Consultant shall not, without the prior express written consent of
the Company, use for Consultant's or anyone else's benefit or disclose to any
other person any Confidential Information, except in connection with
Consultant's work on behalf of the Company. Consultant hereby acknowledges that,
as between the Company and Consultant, the Company has the complete, sole and
full right, title and interest in and to the Confidential Information, and that
Consultant has no rights, expressed or implied, with respect to the foregoing
other than those expressly provided for to the contrary in a writing signed by
both the Company and Consultant. Consultant further agrees that Consultant
shall, immediately upon the Company's request, return to the Company all written
Confidential Information and all writings regarding oral Confidential
Information whether such writings were authorized or not. Consultant hereby
agrees that the confidentiality agreement provided for hereby shall last with
respect to any Confidential Information for five years after such Confidential
Information is disclosed by the Company to Consultant or developed by Consultant
on behalf of the Company, as the case may be.
7A. Assignment of Inventions.
------------------------
(a) For purposes of this Section 7A, the term "Inventions"
shall mean discoveries, concepts, and ideas, whether patentable or copyrightable
or not, including, but not limited to, improvements, know-how, data, processes,
methods, formulae and techniques, as well as improvements thereof, or know-how
related thereto, concerning any past, present, or prospective activities of the
Company, which Consultant makes, discovers or conceives (whether or not during
the hours of Consultant's engagement or with the use of the Company's
facilities, materials, or personnel), either solely or jointly with others
during Consultant's engagement by the Company. All Inventions shall be the sole
property of the Company, and Consultant agrees to perform the provisions of this
Section 7A with respect thereto without the payment by the Company of any
royalty or any consideration therefor, other than the regular compensation paid
to Consultant in his capacity as a consultant of the Company.
(b) Consultant shall apply, at the Company's request and
expense, for United States and foreign letters patent or copyrights, either in
Consultant's name or otherwise as the Company shall desire.
(c) Consultant hereby assigns to the Company all of
Consultant's rights to the Inventions and to applications for United States
and/or foreign letters patent or copyrights and to United States and/or foreign
letters patent or copyrights granted in respect of the Inventions.
(d) Consultant shall acknowledge and deliver promptly to the
Company, without charge to the Company, but at the Company's expense, such
written instruments (including applications and assignments) and do such other
acts, such as giving testimony in support of Consultant's inventorship, as may
be necessary in the opinion of the Company to obtain, maintain, extend, reissue,
and enforce United States and/or foreign letters patent and copyrights relating
to the Inventions and to vest the entire right and title thereto in the Company
or its nominee. Consultant acknowledges and agrees that any copyright developed
or conceived of by Consultant during the term of Consultant's engagement which
is related to the business of the Company shall be a "work for hire" under the
copyright law of the United States and other applicable jurisdictions.
(e) The Company shall also have the royalty-free right to use
in its business, and to make, use, and sell products, processes, and/or services
derived from any inventions, discoveries, concepts, and ideas, whether or not
patentable, including, but not limited to, processes, methods, formulas, and
techniques, as well as improvements thereof or know-how related thereto,
concerning any past, presents, or prospective activities of the Company, which
are not within the scope of Inventions as defined in Section 7A(a) hereof, but
which are conceived or made by Consultant during the period that Consultant is
engaged by the Company with the use or assistance of the Company's facilities,
materials, or personnel.
(f) Consultant represents that Consultant's performance of all
of the terms of this Agreement and as a consultant of the Company does not and
will not breach any trust relationship existing prior to Consultant's engagement
by the Company. Consultant agrees not to enter into any agreement, either
written or oral, in conflict herewith and represents and agrees that Consultant
has not brought and will not bring with Consultant to the Company or use in the
performance of Consultant's responsibilities at the Company any materials or
documents of a former employer or client which are not generally available to
the public, unless Consultant has obtained written authorization from the former
employer or client for their possession and use, and Consultant has provided a
copy of such written authorization to the Company.
7B. Property of the Company. In addition to the provisions of Section 6
above, Consultant agrees that, upon the expiration or termination of
Consultant's engagement with the Company, Consultant will immediately surrender
to the Company all property, equipment, funds, lists, books, records, and other
materials of the Company or any affiliate thereof in the possession of or
provided to Consultant.
8. Indemnification. Consultant shall protect, indemnify and hold
harmless the Company and each affiliate of the Company (including, without
limitation, the Company's shareholders, directors, officers, employees, agents,
attorneys and accountants) from any and all demands, threats, claims, suits,
proceedings, actions, causes of actions, damages, injuries, judgements,
liabilities, obligations, expenses and costs (including costs of litigation and
attorneys' fees), arising from (a) any breach by Consultant of any agreement,
covenant, promise, representation or warranty made by Consultant in this
Agreement, or (b) any action or omission constituting negligence or willful
misconduct of Consultant in the course of, or connected with, the performance of
the Services pursuant hereto.
9. Law Governing. THIS AGREEMENT HAS BEEN ENTERED INTO IN THE
STATE OF TEXAS AND SHALL BE GOVERNED BY
--------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
10. Notices. Any notice or request herein required or permitted to be
given to any party hereunder shall be given in writing and shall be personally
delivered or sent to such party by prepaid mail at the address set forth below
the signature of such party hereto or at such other address as such party may
designate by written communication to the other party to this Agreement. Each
notice given in accordance with this paragraph shall be deemed to have been
given, if personally delivered, on the date personally delivered, or, if mailed,
on the third day following the day on which it is deposited in the United States
mail, certified or registered mail, return receipt requested, with postage
prepaid.
11. Headings. The headings of the paragraphs of this Agreement
have been inserted for convenience of
--------
reference only and shall in no way restrict or modify any of the terms or
provisions hereof.
12. Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement and the remaining
provisions of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
Agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and enforceable.
13. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings, whether written or
oral, relating to the subject matter hereof.
14. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of each party hereto and his, her or its respective
successors, heirs, assigns, and legal representatives, but neither this
Agreement nor any rights hereunder may be assigned by any party hereto without
the consent in writing of the other party.
15. Remedies. No remedy conferred by any of the specific provisions of
this Agreement is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise. The election of any one or more remedies by any party hereto shall
not constitute a waiver of the right to pursue other available remedies.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the undersigned have set their hands hereunto as of
the first date written above.
"COMPANY"
JVWEB, INC.
By:_______________________________________
Greg J. Micek, President
Address: 5444 Westheimer, Suite 2080
Houston, Texas 77056
"CONSULTANT"
------------------------------------------
Name:_____________________________________
Address: _______________________________
-------------------------------
EXHIBIT 23.01 - Consent of Malone & Bailey, PLLC
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of JVWeb, Inc. on Form
SB-2/A, Amendment No. 3 of our report dated October 10, 1999 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
March 15, 2000
