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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ANYTHING INTERNET CORPORATION
---------------------------------------------
(Name OF Small Business Issuer in its Charter)
COLORADO 5961 84-1425882
---------------------- ---------------------- ----------------------
(State or jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Classification Code Identification Number)
organization) Industry Number)
3020 NORTH EL PASO, SUITE 103
COLORADO SPRINGS, CO 80907
719-227-1903
------------------------------------------------------------
(Address and Telephone Number of Principal Executive offices)
J. SCOTT SITRA
3020 NORTH EL PASO, SUITE 103
COLORADO SPRINGS, CO 80907
719-227-1903 EXT. 102
--------------------------------------------------------
(Name, Address and Telephone Number of Agent for Service)
Copies of all Communications to:
WILLIAM M. ZIERING, ESQ.
FOUR EMBARCADERO CENTER, SUITE 3400
SAN FRANCISCO, CA 94111-4187
TELEPHONE: 415-956-0161
FACSIMILE: 415-398-3249
<PAGE>
Approximate date of commencement of proposed sale to the public: As soon as
practical after this Registration Statement becomes effective and the warrants
representing the common stock being registered herein are exercised.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration 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, check
the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act please
check the following box. [X]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
Proposed Proposed
Title of Each Maximum Maximum
Class of Offering Aggregate Amount of
Securities to Amount to be Price per Offering Registration
be Registered Registered Share(1) Price(1) Fee
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
common stock,
no par value,
underlying
Outstanding
Warrants 200,000 $ 3.00 $ 600,000 $ 166.80
- -------------------------------------------------------------------------------
Total $ 166.80
<FN>
(1) The maximum offering price per share of the common stock has been
calculated pursuant to Rule 457(g).
</TABLE>
2
<PAGE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATES AS MAY BE
NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER
AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES
ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS
THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION"), ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
EXPLANATORY NOTE
We are registering the common stock to comply with contractual obligations
arising under issued and outstanding stock purchase warrants. We are
registering these shares of common stock so that these investors may sell from
time to time in the public market, should one develop, any common stock they
acquire upon the exercise of their warrants. We refer to these investors as
"selling stockholders" in this registration statement and will receive no
proceeds from the sale of these shares by such stockholders other than the
amounts received from them exercising their warrants into shares of common
stock. There will be no general offering of shares to the public. Therefore,
no underwriter is being used.
PART I
- ------
FRONT OF REGISTRATION STATEMENT AND OUTSIDE FRONT COVER PAGE OF PROSPECTUS.
ANYTHING INTERNET CORPORATION
[ANYTHING INTERNET LOGO]
PROSPECTUS
200,000 Shares of common stock
This prospectus relates to the offering by certain stockholders of Anything
Internet Corporation of 200,000 shares of our common stock.
Investing in the common stock involves a high degree of risk. You should invest
in the common stock only if you can afford to lose your entire investment. See
"Risk Factors" beginning on page 5 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
3
<PAGE>
Price to Selling Shareholders Underwriting
Discount (1) Proceeds to
Company (2)
Per Share $3.00 -0- $3.00
Total $600,000 -0- $600,000
- ---------------------------------------------------------------
(1) No underwriters are being used to conduct this offering.
(2) Before deducting expenses estimated at $26,667.
June [insert], 1999.
INSIDE FRONT AND OUTSIDE BACK COVER PAGES OF PROSPECTUS.
Table of contents
<TABLE>
<CAPTION>
Table of contents
Page
----
<S> <C>
Prospectus Summary 3
Risk Factors 5
Use of Proceeds 16
Determination of Offering Price 16
Dividend Policy 16
Capitalization 16
Dilution 17
Selected Financial
Information 18
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations 19
Business 21
Management 32
Executive Compensation 34
Certain Transactions 34
Principal Stockholders 35
Description of Securities 36
Shares Eligible For Future
Sale 38
Legal Matters 38
Experts 40
Additional Information 40
Index to Financial
Statements F-1
</TABLE>
No dealer, salesperson or any other individual has been authorized to give
any information or make any representations not contained in this prospectus in
connection with the offering covered by this prospectus. If given or made, such
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<PAGE>
information or representations must not be relied upon as having been authorized
by the Company. This prospectus does not constitute and offer to sell, or a
solicitation of any offer to buy, the common stock in any jurisdiction where, or
to any person to whom, it is unlawful to make such an offer or solicitation.
Neither the delivery of this prospectus nor any sale made hereunder shall, under
any circumstances, create an implication that there has not been any change in
the facts set forth in this prospectus or in the affairs of the Company since
the date hereof.
Until [insert], 1999, (30 days from the date of this prospectus) all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a prospectus.
RISK FACTORS
We are a development stage company with no profits to date.
We founded our company in the state of Colorado on August 15, 1997, and
opened our first Internet storefront in December 1997. Accordingly, we have a
limited operating history upon which you can evaluate our business and future
prospects. You should consider this factor in light of the risks, expenses and
difficulties that are associated with our early development stage and rapidly
evolving business model. Since our inception through March 31, 1999 we have
generated revenues of $3,058,352 and lost ($407,582). In order to be successful
and eventually post a profit or positive cash flow, we must attract more traffic
to our existing and future Internet storefronts.
Our future success depends on key persons J. Scott Sitra and Robert C. Schick.
Our future success depends, in part, on the continued services of our
senior management, particularly J. Scott Sitra, our President and Chief
Executive Officer, and Robert C. Schick, Chief Technology Officer and President
and Chief Executive Officer of our wholly-owned subsidiary, AnythingPC Internet
Corporation. Our future success also depends upon our ability to retain and
motivate key employees. The loss of the services of Mr. Sitra, Mr. Schick or
any other key employees would have a material adverse effect on our business,
results of operations and financial condition. We currently maintain key person
insurance on Mr. Schick through The New England that will provide us with
$10,000 a month for up to 24 months should Mr. Schick become incapacitated in
any way. We are exploring similar key person insurance policies for Mr. Sitra.
5
<PAGE>
None of our officers or key persons are bound by employment agreements.
Therefore, our relationships with any of these officers and key employees can be
terminated at any time.
Computer system failure could harm our business.
Our operations and computer and communications hardware systems are
vulnerable to damage or interruption from fire, flood, power loss,
telecommunications failure, break-ins, earthquake and other similar events. We
maintain mirrored communications sites in San Diego, California and Colorado
Springs, Colorado with plans to add a third such mirrored site, but cannot be
certain that, if one site were to fail, the other mirrored site would continue
working properly until any damage was repaired. We carry a $2 million general
insurance policy, but cannot be certain that this policy will adequately cover
any potential losses that may occur. Our disaster recovery plans rely heavily
on having one mirrored site up and running at all times. Losses and liabilities
arising from uninsured or underinsured events could materially affect our
business, results of operations and financial conditions.
Our market and business technology is rapidly changing.
To remain competitive, we must continue to enhance and improve the
responsiveness, functionality and features of our Internet storefronts. Internet
e-commerce is currently characterized by rapid technological change, changes in
customer requirements and preferences, frequent new product and service
introductions embodying new technologies, and the emergence of new industry
standards and practices that could render our existing Internet storefronts and
enabling technologies obsolete. If we are unable, for technical, legal,
financial or other reasons, to adapt quickly to changing market conditions and
customer requirements, our business, financial condition and results of
operations would be materially adversely affected.
Failure to maintain and develop.
We purchase the merchandise we sell via our Internet storefronts from a
variety manufacturers and distributors. We currently rely substantially on
two major distributors: Ingram Micro and Tech Data. If we fail to develop and
maintain relationships with these and other manufacturers and distributors, we
may not be able to purchase and inventory sufficient quantities of products at
acceptable costs levels which would materially adversely affect our business,
financial condition and results of operations.
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<PAGE>
We rely heavily on intellectual property.
We rely heavily on trademark and copyright law, trade secret protection,
and confidentiality and/or licensing agreements with our employees, customers,
strategic partners and others to protect our intellectual property rights. If
we fail to protect and develop our intellectual property, our business,
financial condition and results of operations could be materially adversely
affected. We may need to engage in future litigation to enforce our
intellectual property rights, to protect our trade secrets or to determine the
validity and scope of the proprietary rights of others. If we engage in such
litigation, it could result in substantial costs and diversion of management and
technical resources, either of which could materially affect our business,
financial condition and results of operations.
In addition, we can give no assurance that other parties will not assert
infringement claims against us or that such a claim will not be asserted or
prosecuted against us. If such a claim is made in the future, our business,
financial condition and results of operations could be materially adversely
affected. Defending such a claim, whether it is with or without merit, could
result in costly litigation and a diversion of management and technical
personnel, cause product shipment delays, or require us to develop
non-infringing technology or enter into royalty or licensing agreements. A
royalty or licensing agreement, if required, may not be available on terms
acceptable to us, if at all. In the event of a successful claim and our failure
or inability to develop non-infringing technology or license the technology, our
business, financial condition and results of operations would be materially
adversely affected.
Potential government regulation of the Internet and other legal uncertainties.
We are not currently subject to direct regulation by any domestic or
foreign governmental agency, other than regulations applicable to businesses
generally, export control laws and laws or regulations directly applicable to
online commerce. However, due to the increasing popularity and use of the
Internet and other online services, it is possible that a number of laws and
regulations may be adopted with respect to the Internet or other online services
covering issues such as user privacy, pricing, content, copyrights, distribution
and characteristics and quality of products and services. Furthermore, the
growth and development of the market for online commerce may prompt calls for
more stringent consumer protection laws that may impose additional burdens on
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<PAGE>
those companies conducting business online. The adoption of certain additional
laws or regulations may decrease the growth of the Internet or other online
services, which could, in turn, decrease the demand for our products and
services and increase our cost of doing business, or otherwise have a material
adverse effect on our business, financial condition and results of operations.
Because our services are available over the Internet in multiple states and
foreign countries, such jurisdictions may claim that we are required to qualify
to do business as a foreign corporation in each such state or foreign country.
We are currently qualified to do business only in Colorado and Florida. If we
fail to qualify as a foreign corporation in a jurisdiction where it is required
to do so, we could become subject to taxes and penalties for failure to qualify,
which could materially adversely affect our business, financial condition and
results of operations, and could result in our inability to enforce contracts in
such jurisdictions. Any such new legislation or regulation, the application of
laws and regulations from jurisdictions whos laws do not currently apply to our
business, or the application of existing laws and regulations to the Internet
and other online services, could materially adversely affect our business,
financial condition and results of operations.
Security risk and credit card fraud.
A significant barrier to online commerce and communications is the secure
transmission of confidential information over public networks. We rely on
licensed third party encryption and authentication technology to provide the
security and authentication necessary to effect secure transmission of
confidential information, such as customer credit card numbers. Advances in
computer capabilities, new discoveries in the field of cryptography, or other
events or developments may result in a compromise or breach of the algorithms we
use to protect our customers, transaction data or our software vendors and
products. Someone who is able to circumvent our security measures could
misappropriate proprietary information or cause interruptions in our operations.
We may be required to expend significant capital and other resources to protect
against such security breaches or alleviate problems caused by such breaches.
Such expenditures could have a material adverse effect on our business, results
of operations and financial condition.
Because we store and transmit proprietary information, such as credit card
numbers, a breach of our security could damage our reputation and expose us to
potential liability from litigation and reimbursement of losses. We can give
you no assurance that our security measures will prevent a future security
breach or that, should a security breach occur, it will not have a material
8
<PAGE>
adverse effect on our business, results of operations and financial condition.
In addition, we have incurred losses, as have other retailers who accept credit
card payments without obtaining a signature, from orders placed using fraudulent
or stolen credit card information, despite obtaining approvals from financial
institutions. Under current commercial banking and credit card practices, we
are liable for fraudulent credit card transactions. Our security measures to
date have been successful and our losses due to credit card fraud have not been
material. We can give you no assurance that our security measures will always
be successful and, as a result, could suffer from significant losses in the
future which could have a material adverse effect on our business, results of
operations and financial condition.
Potential liability of Internet content.
We could be exposed to liability for third-party information that may be
accessible through our Internet store-fronts. Such claims might assert, among
other things, that, by directly or indirectly providing links to Internet sites
operated by third parties, we should be liable for copyright or trademark
infringements or other wrongful actions by such third parties through such
Internet sites. It is also possible that, if any third party content
information provided on our Internet storefronts contain errors, consumers might
make claims against us for losses incurred in reliance on such information.
At times, we also enter into agreements with other companies under which
any revenue that results from the purchase of services through direct links to
or from our Internet sites is shared. Such arrangements may expose us to
additional legal regulation and potential liabilities to consumers of these
services, even if we do not provide the services ourselves. We cannot assure
you that any indemnification provided to us in our agreements with these
parties, if available, will be adequate. Any imposition of liability that is
not covered by insurance or is in excess of insurance coverage could have a
material adverse effect on our business, results of operations and financial
conditions.
Potential increased burdens in collecting sales and other taxes.
We do not currently collect sales and other similar taxes in respect to our
shipment of goods into states other than Colorado and Florida. However, one or
more local, state or foreign jurisdictions may seek to impose sales tax
collection obligations on out of state companies, such as ourselves, which
engage in online commerce. In addition, any new operation in states outside of
Colorado or Florida could subject shipments into such states to state sales
9
<PAGE>
taxes under current or future laws. A successful assertion by one or more
states or any foreign country that we should collect sales or other taxes on the
sale of merchandise could have a material adverse effect on our business,
prospects, financial condition and results of operations.
Our common stock could become subject to the penny stock rules.
Because there is no current market established for our common stock, we are
unsure at what price range our common stock may eventually settle into once
trading begins. While early indications from market-makers suggest our stock
will open and trade above $5.00 a share, it is important to point out that the
SEC has adopted a set of rules that regulate broker-dealer securities with a
price of less than $5.00 (other than securities registered on certain national
securities exchanges or quoted on the Nasdaq system, provided that current price
and volume information regarding transactions in such securities is provided by
the exchange or system). The penny stock rules require a broker-dealer to
deliver to the customer a standardized risk disclosure document prepared by the
SEC that provides information about penny stocks and the nature and level of
risks in the penny stock market. The broker-dealer also must provide the
customer with other information. The penny stock rules require that prior to a
transaction in a penny stock, the broker-dealer must determine in writing that
the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may reduce the level of trading activity in the secondary market for a stock
that becomes subject to the penny stock rules. If our common stock should trade
under $5.00 a share and become subject to the penny stock rules, investors in
our common stock may find it more difficult to sell their common stock.
Forward-looking statements.
This prospectus contains certain forward-looking statements based on
current expectations that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in these forward-looking
statements as a result of many factors, including the risk factors set forth in
this prospectus. Additional risks and uncertainties not presently known to us
or that we currently deem immaterial may also impair our business, financial
condition or operating results could be materially adversely affected. In such
case, the trading price of our common stock, if a market ever develops, could
decline and you may lose part or all of your investment. The cautionary
statements made in this prospectus should be read as being applicable to all
forward-looking statements wherever they appear in this prospectus.
10
<PAGE>
USE OF PROCEEDS
We will receive proceeds from the sale of the common stock being registered
herein if and only if the warrants it underlies are exercised. Assuming all of
the warrants are exercised, the following table details how the proceeds will be
used:
<TABLE>
<CAPTION>
Use Net Proceeds Percentage of Net Proceeds
- --------------------------------- ------------- ---------------------------
<S> <C> <C>
Repayment of short-term debt $ 300,000 50.0%
Expansion of Internet storefronts 200,000 33.3%
General corporate purposes 100,000 16.7%
- --------------------------------- ------------- ---------------------------
Total $ 600,000 100.0%
</TABLE>
DETERMINATION OF OFFERING PRICE.
Our Board of Directors arbitrarily decided upon the $3.00 exercise price
for the outstanding stock purchase warrants, issued as part of a private
placement of Units in December 1998, into shares of the common stock being
registered herein. Their decision bears no price relationship to assets, book
value, earnings or other criteria of value.
DILUTION
As of January 25, 1999, there were 3,074,400 shares of the Company's common
stock issued and outstanding. The Company's common stock had a net tangible
book value per share of approximately $0.02 as of December 31, 1998, based upon
3,020,000 shares then issued and outstanding. Net tangible book value per share
represents the amount by which the Company's total tangible assets exceed its
total liabilities, divided by the number of shares of its common stock
outstanding.
After giving effect to the sale of the 200,000 shares of common stock being
offered herein and the application of the net proceeds therefrom there would be
a total of 3,274,400 shares of common stock issued and outstanding with a net
tangible book value per share of approximately $0.20. This would represent an
immediate increase in net tangible book value of $0.18 per share to existing
shareholders and an immediate dilution of $2.80, or 93.33%, of the offering
price per share to existing arrant holders. Dilution is determined by
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<PAGE>
subtracting net tangible book value per share after the warrants are exercised
from the amount paid by warrant holders for the shares of common stock.
<TABLE>
<CAPTION>
The following table illustrates the per share dilution:
<S> <C>
Offering price per share $3.00
Net tangible book value per share prior
to any warrants being exercised $0.02
Increase attributable to exercising
warrant holders $0.18
-----
New tangible book value per share after the exercise $0.20
-----
Dilution per share to exercising warrant holders $2.80
=====
</TABLE>
The following table summarizes, on a pro forma basis as of January 25,
1999, the differences between the number of shares of common stock purchased
from the Company, the total consideration paid and the average price per share
paid by existing stockholders and by new investors exercising their warrants
into common stock (at a $3.00 exercise price).
<TABLE>
<CAPTION>
Shares Purchased (1) Total Consideration(2) Average
-------------------- --------------------- Share
Number Percent Dollars Percent Price(3)
--------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Existing
Stockholders 3,074,400 93.89% $391,700 39.50% $ 0.13
New Investors 200,000 6.11% 600,000 60.50% $ 3.00
--------- --------- -------- -------- --------
Total 3,274,400 100.0% $991,700 100.0% $ 0.33
========= ========= ======== ====== ========
<FN>
(1) Assuming all outstanding options and other derivative securities are
exercised there would be a total of 3,884,400 shares of common stock issued and
outstanding, which would result in Existing Stockholders and New Investors
purchasing 79.15% and 5.15%, respectively. These figures do not take into
account any unawarded reserves for future employee grants.
(2) Assuming all outstanding options and other derivative securities are
exercised, the Company would have received total consideration of $7,896,700,
which would result in Existing Stockholders and New Investors contributing 4.97%
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and 7.6%, respectively, towards total consideration. These figures do not take
into account any unawarded reserves for future employee grants.
(3) Assuming all outstanding options and other derivative securities are
exercised, the average price paid per share by all shareholders would be $2.03.
This figure does not take into account any unawarded reserves for future
employee grants.
</TABLE>
The foregoing discussion and table assumes no exercise of outstanding
options or warrants subsequent to May 31, 1999, and excludes:
- - 500,000 options to purchase common stock at $1 a share granted to Company
founders;
- - 50,000 options to purchase common stock at $40 a share granted to J. Scott
Sitra, the Company's President and Chief Executive Officer;
- - 25,000 options to purchase common stock at $75 a share granted to J. Scott
Sitra;
- - 25,000 options to purchase common stock at $100 a share granted to J.
Scott Sitra;
- - 10,000 options to purchase common stock at $3.00 a share granted to
Richard Baron, a Company employee; and
- - 200,000 shares reserved to establish an Employee Stock Ownership Program
(ESOP).
CAPITALIZATION
The following table sets forth as of December 31, 1998 (i) the actual
capitalization of the Company and (ii) the capitalization of the Company after
the exercise of warrants into common stock, assuming all warrants are exercised.
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<TABLE>
<CAPTION>
After Warrant
Amount Outstanding Exercising (1)
------------------ --------------
<S> <C> <C>
Short-Term Debt $ 145,250 -
Total stockholders' equity
common stock, no par value;
50,000,000 shares authorized (2) $ 68,380 $ 668,380
Retained Earnings
(Accumulated Deficit) ($162,620) ($162,620)
- --------------------------------
<FN>
1. This table assumes all warrants are exercised into common stock.
2. For detailed information regarding the terms and conditions of the
Company's common stock and warrants see "Description of Securities."
</TABLE>
SELLING STOCKHOLDERS
The following table sets forth certain information as of January 25, 1999
pertaining to the beneficial ownership of the warrants that may be exercised
into the shares of common stock being registered in this registration statement.
<TABLE>
<CAPTION>
Beneficial Beneficial
Ownership Ownership Percentage
Number of Prior to After the Owned After
Warrants Warrant Warrant the Warrant
Selling Stockholder Held Exercise Exercise(1) Exercise(2)
- ----------------------------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Ludwig Francis Hangley 5,000 5,000 10,000 *
Michael G. Fountain 5,000 5,000 10,000 *
Richard Jess Baron and
Jacqueline Mary Baron
(3) 10,000 10,000 20,000 *
Andrew H. Savitt 5,000 5,000 10,000 *
Susie Shu-Chun Lin 1,000 1,000 2,000 *
Keith Boehme 5,000 5,000 10,000 *
Lloyd K. Parish, Jr. 10,000 33,146 43,146 1.31%
Matthew C. Anselmo 5,000 5,000 10,000 *
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<PAGE>
Steven Paul Fischer 45,000 45,000 90,000 2.74%
Gregory Scott Waugh 5,000 5,000 10,000 *
Michael Streiter 12,000 12,000 24,000 *
David R. Hayes and
Barbara J. Hayes 30,000 35,865 65,865 2.01%
David M. Noah 5,000 5,000 10,000 *
Jeri Elaine Steppat (4) 1,500 1,500 3,000 *
Raymond D. Schick 1,000 1,000 2,000 *
Gregory M. Thisse 2,500 2,500 5,000 *
Donald J. Horning (5) 3,000 3,200 6,200 *
Robie C. Blair (6) 4,000 4,200 8,200 *
Bradley N. Greene 12,000 12,000 24,000 *
James W. Tindell and
Louise A. Tindell 5,000 5,000 10,000 *
Paragon Communications, Ltd. 8,000 47,922 55,922 1.70%
John A. Murray, Jr. 15,000 15,000 30,000 *
Michael W. Tindell 5,000 5,000 10,000 *
- --------------------------------------------------------------------------------
As a Group 200,000 269,333 469,333 14.33%
<FN>
(*) Less than 1%.
(1) Assumes all warrants are exercised into common stock. It further
assumes that until a market develops for the common stock, if ever, it
will be extremely difficult for the Selling Stockholders to readily sell
their shares of common stock. Therefore, no immediate sales of common
stock are anticipated and the table assumes Selling Stockholders will
maintain their holdings until such a market develops, if ever.
(2) Based on total issued and outstanding shares of 3,274,400.
(3) Mr. Richard Baron is an employee of the Company.
(4) Mrs. Jeri Steppat is a former employee of the Company.
(5) Mr. Donald Horning is a former employee of the Company.
(6) Mr. Robie Blair is an employee of the Company. See "Directors,
Executive Officers, and Key Management Personnel".
</TABLE>
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<PAGE>
PLAN OF DISTRIBUTION
The shares of common stock being registered in this registration statement
are being sold for the account of the selling shareholders. Such shares may be
offered for sale from time to time at market prices prevailing at the time of
sale or at negotiated prices, and without payment of any underwriting discounts
or commissions except for the usual and customary selling commissions paid to
stockbrokers and broker-dealers. The shares of common stock covered by this
registration statement may be offered for sale on any secondary market our
common stock may trade on, should one ever develop. Selling shareholders are
under no obligation to sell their shares of common stock.
Under the Exchange Act and the regulations thereto, any person engaged in a
distribution of the shares covered by this registration statement may not
simultaneously engage in market making activities with respect to the common
stock during the applicable "cooling off" periods prior to the commencement of
such distribution. In additional, and without limiting the foregoing, the
Selling Stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including, without limitation,
Regulation M, which provisions may limit the timing of purchases and sales of
common stock by the selling shareholders.
LEGAL PROCEEDINGS
The are no material legal proceedings pending or, to the Company's
knowledge, threatened against the Company.
DIRECTORS, EXECUTIVE OFFICERS, AND KEY MANAGEMENT PERSONNEL
The directors, executive officers and key management personnel of the
Company, their ages as of April 22, 1999, and their positions with the Company
are as follows:
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<TABLE>
<CAPTION>
Name Age Position
- ----------------- --- ----------------------------------
<S> <C> <C>
President, Chief Executive Officer
and Director; Chairman, AnythingPC
J. Scott Sitra 27 Internet Corporation
Director and Chief Technology
Officer; President and Director,
Robert C. Schick 35 AnythingPC Internet Corporation
Robie Blair 31 Manager of Information Systems
Business Development Manager,
Director; Director, AnythingPC
Alfred W. Delisle 34 Internet Corporation
Secretary, Treasurer, Director;
Director, AnythingPC Internet
Cameron B. Yost 45 Corporation
Richard Baron 36 General Manager
</TABLE>
The Board of Directors of the Company is comprised of only one class of
director. Each director is elected to hold office until the next annual meeting
of shareholders and until his successor has been elected and qualified.
Officers are elected annually by the Board of Directors and hold office until
successors are duly elected and qualified. The following is a brief account of
the business experience of each director and executive officer of the Company.
There is no family relationship between any Director or Executive Officer of the
Company.
The Company has a compensation committee which was established on September
28, 1998, and consists of Alfred W. Delisle and J. Scott Sitra.
J. SCOTT SITRA, President, Chief Executive Officer and Director is also the
Chairman of AnythingPC Internet Corporation, concurrently is the President and
Chief Executive Officer of Sitra Enterprises, Inc., a privately held
international management and financial consulting firm specializing in assisting
emerging, high-growth companies evolve from the developmental stage into
profitable operating entities. Sitra Enterprises has actively participated in
the successful growth and development of several private and public companies.
Mr. Sitra has participated as a principal and executive officer in several
successful start-up and turn-around ventures, and has extensive experience
working directly with the investment community. In one such venture he took
over the offices of President and Chief Executive Officer of Lucky "S" Oil
Company, Inc., a privately held Texas oil and gas exploration company, in 1992.
Under his leadership, Lucky "S" successfully acquired 100% working interest in
13 producing horizontal oil and gas wells in Frio County, Texas through the
17
<PAGE>
United States Bankruptcy Court in San Antonio, Texas for $310,000. The wells,
which were drilled at an initial aggregate cost of $20 million, were producing
in excess of 230 barrels of oil per day (BOPD) at the time of acquisition, and
generated in excess of $80,000 in gross revenue during the first three weeks of
production under Mr. Sitra's management. Mr. Sitra has been a Director since
October 1998 and held his other positions since April 1999.
ROBERT C. SCHICK, Chief Technology Officer, Director, and President, Chief
Executive Officer and Director of AnythingPC Internet Corporation, co-founded
the Company in August 1997. Mr. Schick has over 14 years experience with the
computer industry ranging from a computer operator in the U.S. Army to an Apple
Products Manager at Tech Data Corporation where he was responsible for over $50+
million dollars a year in revenue; he was also responsible for marketing to
Apple's internal sales force as well their 35,000+ resellers. Prior to joining
the Company, Mr. Schick was the Southeast Accounts Manager for Bendata, Inc., a
software company offering help-desk solutions to corporate MIS departments at
Fortune 1000 companies, manufacturers and educational and financial
institutions. Before joining Bendata in 1996, Mr. Schick worked at Tech Data, a
wholesale electronics distributor, where he was responsible for working with
Fortune 1000 companies, negotiating vendor contracts, and overseeing purchasing
to maintain an efficient inventory matrix. Throughout his tenure at Tech Data
Mr. Schick continually exceed all of his sales and performance quotas. Mr.
Schick was President of the Company from August 1997 to April 1999 when he moved
into his current positions; he has always been a Director of the Company.
ROBIE BLAIR, Manager of Information Systems, has over 10 years of
experience in the computer industry ranging from building integrated ceramic
capacitors with Kyocera Corporation, formerly AVX Corporation, to a Technical
Coordinator for Apple Computer Corporation. Prior to joining the Company, he
held the position of Customer Applications Support Engineer at MCI
Communications. Mr. Blair has held his position since November 1998.
ALFRED W. DELISLE, Business Development Manager and Director is also a
Director of AnythingPC Internet Corporation, co-founded the Company in August
1997. Mr. Delisle has over 14 years of experience in the hardware and software
industry and more than eight years of experience in wholesale distribution with
Tech Data Corporation, the world's second largest distributor of personal
computers, peripherals, software and related components, where he has held a
variety of positions within their high-volume sales division. Prior to working
for Tech Data, Mr. Delisle was employed by Boston Micro, a reseller specializing
in establishing channel sales relationships between U.S. manufacturers and
distributors in Western Europe. Mr. Delisle left his position at Tech Data in
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<PAGE>
December 1998 to focus his full attentions to his duties at the Company. Mr.
Delisle has held his positions with the Company since August 1997 and with
AnythingPC Internet Corporation since April 1999.
CAMERON B. YOST, Secretary, Treasurer and a Director is also a Director at
AnythingPC Internet Corporation, is concurrently the President and Chief
Executive Officer of Banyan Corporation, a publicly traded corporation. Banyan
designs, manufactures and markets accessory products for personal computers with
a focus on notebook computers; Banyan also retains a significant equity position
in the Company. See "Principal Shareholders". Prior to joining Banyan in 1995,
Mr. Yost worked at Vornado Air Circulation Systems as a co-founder and vice
president where he helped generate $2.8 million and $5.7 million in sales during
the first and second years of operation, respectively. Prior to Vornado, Mr.
Yost materially participated as a principal and executive officer in other
successful start-up and turnaround ventures. Mr. Yost has held his positions
with the Company since October 1998 and with AnythingPC Internet Corporation
since April 1999. Mr. Yost is currently under indictment in the U.S. District
Court for the Southern District of New York for conspiracy to commit securities
fraud, mail fraud and commercial bribery in connection with the common stock of
Banyan Corporation. Mr. Yost has been, and plans on continuing to, vigorously
deny any and all charges brought against him.
RICHARD BARON, General Manager, has over eight years of
business-to-business sales in the personal computer and electronics industry.
Prior to joining the Company he was a Senior Sales Representative at Tech Data
Corporation (NASDAQ: TECD), a full-line distributor of technology products
worldwide with annual sales of approximately $11.5 billion. At Tech Data Mr.
Baron was responsible for generating sales to value added resellers (VARs) and
dealers in excess of $100 million annually. He also won Tech Data's coveted
President's Club Award twice while there. Mr. Baron has been with the Company
since March 1999.
DIRECTOR COMPENSATION
Directors are compensated $5,000 annually, which, as determined by the
Board, may be taken in the form of cash or securities of the Company.
Additionally, the Company reimburses its Directors for reasonable out-of-pocket
expenses incurred in attending meetings of the Board of Directors.
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EXECUTIVE COMPENSATION
The following table sets forth the compensation paid during the fiscal year
ending June 30, 1998 to the Company's Chief Executive Officer and each of the
Company's officers and directors. No executive officers received any
compensation in fiscal 1998, no person received compensation equal to or
exceeding $100,000 in fiscal 1998, no bonuses were awarded during fiscal 1998,
and no persons received compensation from the Company prior to fiscal 1998.
<TABLE>
<CAPTION>
Name and Principal
Position (1) Salary Options Granted (2)
- --------------------- ------ -------------------
<S> <C> <C>
Robert C. Schick (3) None 205,000
Alfred W. Delisle (4) None 110,000
Bernard Sandoval (5) None 60,000
<FN>
(1) Directors Cameron B. Yost and J. Scott Sitra were not elected to the
Board of Directors until August 22, 1998 and were compensated,
along with Directors Robert C. Schick and Alfred W. Delisle, 5,000
shares of common stock each with an aggregate value of $800 for
services rendered through December 31, 1998.
(2) Currently fully vested, exercisable into common stock at $1.00 a share,
and expire on February 29, 2000.
(3) Served as President and a Director since co-founding the Company in
August 1997.
(4) Has served as the Business Development Manager and Director since
co-founding the Company in August 1997.
(5) Co-founded the Company in August 1997 and served as the Marketing
Director until September 1998.
</TABLE>
J. Scott Sitra, who assumed his duties as President and Chief Executive
Officer of the Company on April 1, 1999, has a first year compensation package
consisting of a salary of one-dollar ($1) and options to purchase 100,000 shares
of the Company's common stock at the following exercise prices: 50,000 at $40 a
share, 25,000 at $75 a share and 25,000 at $100 a share.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding the beneficial ownership of common stock as of April 22, 1999, by (i)
each Director of the Company, (ii) each executive officer of the Company, (iii)
all directors and executive officers as a group, and (iv) each person known to
the Company to be the beneficial owner of more than 5% of its outstanding shares
of common stock. Percentage of ownership is based on 3,074,400 shares of common
stock issued and outstanding as of April 22, 1999, and 3,274,400 shares of
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<PAGE>
common stock issued and outstanding as a result of warrant holders exercising
their warrants into shares of common stock, assuming all outstanding warrants
are exercised into common stock.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options held by that person that are currently
exercisable or become exercisable within 60 days following the date of this
prospectus are deemed outstanding, but not included in the table below. Those
shares, however, are not deemed outstanding for the purpose of computing the
percentage ownership of any other person. For J. Scott Sitra, this results in
the 100,000 shares underlying his options that are currently vested; for Robert
C. Schick, this results in 205,000 shares underlying his options that are
currently vested; for Alfred W. Delisle, this results in 110,000 shares
underlying his options that are currently vested; for Directors and Executive
Officers as a group this results in 315,000 shares underlying their options that
are currently vested; and for Raymond and Alice Schick, this results in 125,000
shares underlying their options that are currently vested. Unless otherwise
indicated in the table, the persons and entities named in the table have sole
voting and sole investment power with respect to the shares set forth opposite
the stockholder's name.
<TABLE>
<CAPTION>
Shares Beneficially Owned
-------------------------------------
Percentage Owned
------------------------
Before After
Directors and Executive Officers Shares Held Exercising Exercising
- ------------------------------------ ----------- ---------- -----------
<S> <C> <C> <C>
J. Scott Sitra
P. O. Box 50404
Austin, TX 78763 10,000 * *
Robert C. Schick
3020 North El Paso, Ste. 103
Colorado Springs, CO 80907 216,897 7.1% 6.6%
Alfred W. Delisle
4525 S. Renellie Dr.
Tampa, FL 33611-2124 120,959 3.9% 3.7%
Cameron B. Yost
4740 Forge Rd., Bldg. 112
Colorado Springs, CO 80907 38,880 1.3% 1.2%
All current directors and executive
officers as a group (4 persons) 386,736 12.6% 11.8%
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<PAGE>
Five Percent Shareholders
- ------------------------------------
Raymond D. Schick and
Alice F. Schick 126,090 4.1% 3.9%
Banyan Corporation
4740 Forge Rd., Bldg. 112
Colorado Springs, CO 80907
- ------------------------------------ 800,027 26.0% 24.4%
<FN>
* Less than 1%
</TABLE>
DESCRIPTION OF SECURITIES
GENERAL
The Company is authorized by its Articles of Incorporation, as amended, to
issue an aggregate of 50,000,000 shares of class 'A' common stock, no par value,
("common stock"); 25,000,000 shares of Class 'B' common stock, no par value,
("class B common stock"); 10,000,000 shares of class 'A' preferred stock, no par
value, ("class A Preferred Stock"); and 10,000,000 shares of class 'B' preferred
stock, no par value, ("class B preferred stock"). As of April 22, 1999 there
were 3,074,400 shares of common stock issued and outstanding, 4,086,000 on a
fully diluted basis, and no shares of class 'B" common stock, class 'A'
preferred stock or class 'B' preferred stock. There were also 200,000 stock
purchase warrants issued entitling the holder to purchase one share of common
stock for each warrant tendered at a purchase price of $3 a share and
outstanding options to purchase 610,000 shares of common stock at prices ranging
from $1.00 to $100.00 a share. The Company has also set aside a reserve of
200,000 shares of common stock for an Employee Stock Ownership Program.
COMMON STOCK
The Articles of Incorporation authorizes the Company to issue up to
50,000,000 shares of common stock, class A, no par value. The holders of common
stock are entitled to one vote for each share held of record on all matters
submitted to a vote of the shareholders. Subject to the rights and preferences
of the holders of any outstanding class 'A' preferred stock and/or class 'B'
preferred stock, the holders of common stock are entitled to receive ratably
such dividends as are declared by the Board of Directors out of funds legally
available therefor. In the event of liquidation, dissolution or winding up of
the Company, holders of common stock have the right to a ratable portion of
assets remaining after the payment of all debts and liabilities of the Company,
subject to the liquidation preferences of the holders of any outstanding class
'A' preferred stock and/or class 'B' preferred stock. Holders of common stock
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<PAGE>
have neither preemptive rights nor rights to convert their common stock into any
other securities and are not subject to future calls or assessments by the
Company. There are no redemption or sinking fund provisions applicable to the
common stock. All outstanding shares of common stock are fully paid and
non-assessable. The rights, preferences and privileges of the holders of common
stock are subject to, and may be adversely affected by, the rights of the
holders of shares of class 'A' preferred stock and/or class 'B' preferred stock
that the Company may designate and issue in the future.
CLASS 'B' COMMON STOCK
The Articles of Incorporation authorizes the Company to issue up to
25,000,000 shares of common stock, class B, no par value. As of January 25,
1999 there were no shares of common stock, Class B issued or outstanding. The
Board of Directors is authorized, subject to certain limitations prescribed by
Colorado law, without further action by the shareholders, to issues shares of
class 'B' common stock and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preferences and sinking fund terms.
The Company believes that the Board of Directors' power to set the terms of, and
the Company's ability to issue, class 'B' common stock will provide flexibility
in connection with possible financing transactions in the future. The issuance
of class 'B' common stock, however, could adversely affect the voting power of
holders of common stock and decrease the amount of any liquidation distribution
to such holders. The presence of outstanding class 'B' common stock could also
have the effect of delaying, deterring or preventing a change in control of the
Company. The Company has no present plans to issue any shares of class 'B'
common stock.
CLASS 'A' PREFERRED STOCK AND CLASS 'B' PREFERRED STOCK
The Articles of Incorporation authorizes the Company to issue up to
10,000,000 shares of each: class 'A' preferred stock, no par value, and class
'B' preferred stock, no par value. As of January 25, 1999 there were no shares
of either class 'A' preferred stock or class 'B' preferred stock issued or
outstanding. The Board of Directors is authorized, subject to certain
limitations prescribed by Colorado law, without further action by the
shareholders, to issues shares of class 'A' preferred stock and/or class 'B'
preferred stock and to fix the rights, preferences, privileges and restrictions
thereof, including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences and sinking fund terms. The Company
believes that the Board of Directors' power to set the terms of, and the
Company's ability to issue, class 'A' preferred stock and/or class 'B' preferred
stock will provide flexibility in connection with possible financing
23
<PAGE>
transactions in the future. The issuance of class 'A' preferred stock and/or
class 'B' preferred stock, however, could adversely affect the voting power of
holders of common stock and/or class 'B' common stock and decrease the amount of
any liquidation distribution to such holders. The presence of outstanding class
'A' preferred stock and/or class 'B' preferred stock could also have the effect
of delaying, deterring, or preventing a change in control of the Company. The
Company has no present plans to issue any shares of class 'A' preferred stock or
class 'B' preferred stock.
WARRANTS
As of January 25, 1999, the Company had 200,000 stock purchase warrants
issued in conjunction with a private placement of Units completed in December
1998 made in accordance with an exemption from registration under Regulation D,
Rule 504 of the Securities Act. Each outstanding warrant entitles the holder to
purchase one share of common stock at an exercise price of $3.00 per share
through January 15, 2000 at which time the warrants expire. The warrants
contain provisions that protect the holder against dilution by adjustment of the
exercise price in certain events, including, but not limited to, stock
dividends, stock splits (forward and reverse), reclassifications and/or mergers.
The holder of a warrant does not possess any rights as a shareholder of the
Company. The shares of common stock, when issued upon the exercise of the
warrants in accordance with the terms thereof, will be fully paid and
non-assessable.
The Company may redeem the warrants, at a price of $0.01 per warrant, at
any time through January 15, 2000 upon not less than 30 days, nor more than 60
days, prior written notice, provided that the closing bid quotation for the
common stock as reported by any quotation medium on which the common stock is
quoted is at least $4.00 for ten consecutive trading sessions ending on the two
days prior to the day on which notice of redemption is given.
TRANSFER AGENT AND REGISTRAR
The Company's transfer agent and registrar for the common stock is Oxford
Transfer Register. Oxford's address is 317 S.W. Alder, Ste. 1120, Portland,
Oregon 97205, and their telephone number and fax numbers are (503) 225-0375 and
(503) 273-9168, respectively.
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<PAGE>
INTEREST OF NAMED EXPERTS AND COUNSEL
The financial statements of the Company at June 30, 1998, included in this
Registration Statement, have been audited by J. Paul Keynote, CPA, P.C. as
indicated in their report with respect thereto and are included herein in
reliance upon authority of said firm as experts in giving said reports.
The Company retains William M. Ziering, Esq., of San Francisco, California
as its legal counsel in the advisement of securities related matters, including
the validity of the issuance of the securities offered hereby.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Pursuant to Colorado law, the Company's Board of Directors has the power to
indemnify officers and directors, present and former, for expenses incurred by
them in connection with any proceeding they are involved in by reason of their
being or having been an officer or director of the Company. The person being
indemnified must have acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Company. The
Company's By-Laws grant this indemnification to the Company's officers and
directors.
Insofar as indemnification for liability arising under the Securities Act
may be permitted to directors or officers of the Company pursuant to the
foregoing provisions, or otherwise, the Company has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director or officer of
the Company in the successful defense of any action, suit or proceeding) is
asserted by such director or officer in connection with the securities being
registered, the Company will, unless in the opinion of its legal counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
25
<PAGE>
DESCRIPTION OF BUSINESS
OVERVIEW
Anything Internet Corporation is an Internet e-commerce holding company
focused on building a network of successful e-commerce operating companies,
joint ventures, strategic alliances and partnerships. The anticipated outcome
of these various endeavors is the creation of the first true e-commerce
conglomerate.
Unlike most e-commerce businesses today, the Company is not limiting itself
to one specific area of e-commerce (ie. books, computers, CDs, etc.). Rather,
the Company is aggressively pursuing diversification into a variety of emerging
e-commerce venues. If successful, the Company will have:
- - minimized its exposure and risk to normal industry specific business down
cycles;
- - increased its chances of participating in one of the few expected "super
successful" Internet e-commerce ventures; and
- - created more site traffic and revenue generating opportunities by
referring potential customers to other Internet storefronts owned and
operated by the Company rather than by a third-party.
Currently the Company operates through one wholly-owned subsidiary,
AnythingPC Internet Corporation ("AnythingPC"). AnythingPC is a rapidly growing
Internet based discount retailer of over 175,000 different computer hardware,
software and peripheral products to end consumers and businesses. Through its
Internet storefronts - www.anythingpc.com, www.anythingmac.com, and
www.anythingunix.com - AnythingPC offers one-stop shopping to its customers 24
hours a day, seven days a week. In addition to its wide array of product
offerings, AnythingPC's storefronts feature competitively priced "Hot Products",
an easy-to-use graphical interface, a powerful search engine to locate any
product desired, a unique "quote monkey" for pricing assistance on hard-to-find
products, and a special "notify me" feature that automatically notifies
customers when a backordered product arrives in stock and keeps the customer
appraised of the estimated time of arrival.
Since its incorporation on August 15, 1997, under the laws of the state of
Colorado, the Company has experienced tremendous growth in both monthly revenues
and visitors to its various Internet storefronts. Monthly sales have since
climbed to over $400,000 in March 1999. Over the same period of time the number
of monthly visitors have grown to over 100,000. To enhance the Company's brand
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<PAGE>
awareness and monthly traffic to its Internet storefronts, the Company has begun
entering into strategic marketing alliances with popular Internet content
providers and sites of interest such as C|Net's Shopper.com, mySimon.com,
Priceline.com and bottomdollar.com as well as technology enablers such as
Digital River, Inc. (NASDAQ: DRIV). The Company is currently in negotiations
with several other popular content providers and sites of interest to greatly
expand the number of such strategic alliances to further enhance its Internet
storefronts' technology, expand brand awareness, monthly traffic and subsequent
revenues.
INDUSTRY/INTERNET OVERVIEW
Growth of the Internet and Online Commerce
The Internet has emerged as a significant global medium for communications,
information and commerce, enabling millions of people to share information and
conduct business electronically. The Company believes growth in Internet usage
and online commerce has been fueled by a number of factors including:
- - the large and growing installed base of advanced personal computers in the
home and office;
- - improvements in network infrastructure and bandwidth;
- - easier and cheaper access to the Internet;
- - increased awareness of the Internet among consumer and business users; and
- - the rapidly expanding availability of online content and commerce which
increases the value to users of being connected to the Internet.
Forrester Research, Inc., a market research firm, issued a report in
December 1998 predicting U.S. business trade on the Internet will explode from
$43 billion in 1998 to $1.3 trillion in 2003. Meanwhile, International Data
Corporation ("IDC"), another market research firm, estimated the number of
Internet users worldwide will grow from approximately 69 million at the end of
1997 to approximately 320 million by 2002. In addition, IDC estimates that the
percentage of such Internet users buying goods and services on the Internet will
increase from 26% in 1997 to 40% in 2002. The two largest segments of Internet
sales are expected to be computer hardware, software and consumer electronics
purchases and travel and vacation planning.
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<PAGE>
Traditional Methods of Retailing
The traditional retail industry is comprised of both store- and
catalog-based companies. The Company believes that these retailers face
inherent structural limitations that may not allow them to take full advantage
of the growing worldwide retail marketplace and their customer's increasingly
complex and busy daily schedules.
Store-based retailers have limited shelf space due to costly inventory,
store personnel and real estate considerations that limit the number of stock
keeping units (SKUs) they can offer to their customers. The Company believes
that large store-based retailers, also called warehouses or superstores,
typically carry only about 4,000 SKUs. As a result, manufacturers compete for
scarce retail shelf space and access to the large distributors that supply these
store-based retailers. Thus, manufacturers incur a significant expense to gain
this access and retailers face the risk of carrying inventory that may quickly
become obsolete. In addition, the store-based retailers' merchandising process,
which requires that the retailer physically obtain, set up, and display product
limits the speed at which these retailers can change their merchandise mix and
offer new products. Furthermore, because store-based retailers must make
significant investments in inventory, real estate and on-site personnel, they
are not able to expand quickly into new geographic regions. Personnel costs
also limit the number of hours during which store-based retailers may operate,
thereby limiting customer access and convenience. Additionally, store-based
retailers face challenges in hiring, training and retaining knowledgeable sales
staff conversant and up-to-date on the broad array of hardware and software
products.
Catalog retailers offer their customers the convenience of shopping from
home or the office and more flexible hours of operation, but they are still
constrained by catalog mailing, printing and associated expenses as to the
number of SKUs they can feature and the amount of product information they can
provide. The Company believes that a typical catalog retailer carries up to
40,000 SKUs, but typically only features 2,000 - 3,000 SKUs in any single
catalog. Furthermore, the entire catalog shopping experience is, in general,
neither interactive nor personalized, yet requires extensive personnel support
and manual intervention on behalf of the retailer to take and process orders.
The Company also believes that many catalog retailers focus primarily on the
corporate marketplace.
The Company believes that the business model of the traditional retailer
results in inefficiencies that are exacerbated by, among other things, the broad
array of products and the rapidly changing world we live in. The Company
believes that Internet-based retailers are well positioned to solve and
capitalize on these inefficiencies.
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<PAGE>
ANYTHING INTERNET'S SOLUTION
The Company understands the key business challenges of the retailing
industry and has adapted to the unique environment of the Internet to address
those and anticipated future challenges. The Company believes that the key
operating advantages of its Internet storefronts and e-commerce in general are:
Attractive Economics of the Internet Storefront -- As an Internet-only retailer,
the Company is not constrained by the inherent limitations of store- and
catalog-based retailers. The Company enjoys structural economic advantages
relative to traditional retailers, including:
- - low-cost and essentially unlimited shelf space;
- - flexible advertising and affordable merchandising opportunities;
- - lower personnel requirements;
- - scaleable technology and systems that can serve a fast-growing customer
base; and
- - the ability to serve a worldwide customer base from a single, domestic
location.
The Company intends to leverage its Internet storefronts, content provided,
marketing and technology over a growing global customer base resulting in
substantial economies of scale that the Company believes should enable it to
achieve greater operating margins, product diversification and, ultimately,
levels of profitability compared to tradition retailers.
Customer Convenience -- The Company provides enhanced customer convenience by
enabling customers to purchase products from either their home or office 24
hours a day, seven days a week. The Company believes that customers may buy
more items because they have more hours to shop, can act immediately upon
impulse, and can readily locate items that are difficult to find in retail
stores or catalogs.
Selection -- Because the Company's shelf space is low-cost and virtually
limitless, the Company is able to offer some of the most comprehensive
selections of products available. To offer such a large selection would be
economically and physically impractical to stock in a retail store or publish in
a mail-order catalog. For example, through its wholly-owned subsidiary
AnythingPC Internet Corporation, the Company currently offers more than 175,000
computer hardware, software and peripheral products.
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<PAGE>
Low-Cost Distribution Channel for Manufacturers -- Unlike traditional store or
catalog retailers that often charge manufacturers for "shelf space", the Company
can offer the same manufacturers electronic "shelf space" with no up-front cost.
This benefits the Company in better margins on certain products, the
manufacturer gains additional retail presence with no up-front costs, and the
buyer gets access to desired products at extremely competitive price.
Customer Service -- The inherent nature of the Internet allows for improved pre-
and post-sales support via both e-mail and telephone. Customers may inquire
about the status and tracking of their orders via the Company's Internet
storefronts. Also, customers can choose to be notified automatically when a
backordered product they desire has arrived in stock and is available for
shipment.
Worldwide Customer Base -- Because the Internet is worldwide in scope, the
Company can offer its entire product line to customers in domestic,
international, urban and rural locations where finding the product desired by
the customer is not always a simple task.
STRATEGY
The Company's objective is to become the first true e-commerce
conglomerate. The Company intends to capitalize on and extend its market
position as one of the first-mover e-commerce companies through the following
key strategies:
Building Brand Awareness -- The Company believes that building brand awareness
of its Internet storefronts is critical to attracting and expanding its customer
base. The Company intends to continue building brand awareness and expanding
its customer base through various marketing methods, including:
- - building strategic alliances with various Internet content providers and
sites of interest;
- - Internet marketing campaigns, including both general and direct
advertising;
- - creating as many general and specific "links" to the Company's various
Internet storefronts as possible;
- - targeted non-Internet marketing programs aimed at generating sales from
consumers and businesses; and
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- - specialized programs, including "personalization" features, directed
towards building repeat business from existing customers.
Promote Repeat Purchases -- The Company's strategy is to build customer loyalty
and thereby promote repeat buying by providing enhanced product information to
consumers, efficient site navigation and search capabilities, personalized
services and targeted communications and promotions, and a broad range of
immediately available products.
Leverage and Further Develop Strategic Relationships -- The Company intends to
continue to leverage its strategic marketing alliances with popular portals and
sites of interest such as C|Net's Shopper.com, mySimon.com, Priceline.com and
bottomdollar.com and technology enablers such as Digital River, Inc. (NASDAQ:
DRIV) to enhance its Internet storefronts' technology, expand brand recognition
and increase site traffic and subsequent customer sales. The Company also
intends to expand its online visibility and may enter into relationships with
additional Internet access providers, search engines and other high-traffic
Internet sites.
Maintain Technology Focus and Expertise -- The Company intends to continue
maximizing the unique efficiencies of the Internet, such as the ability to make
changes in merchandising and content in real-time and at low cost, to:
- - increase merchandising effectiveness;
- - personalize the customers' experiences; and
- - improve operating efficiencies.
The Company is currently developing systems and technologies to personalize
visitors' shopping and post-shopping experiences. By targeting content and
promotions such as e-mails, newsletters and store advertising, the Company can
deliver more compelling promotional programs. The Company also intends to use
such technology to lower transaction costs and improve the customer's online
shopping experience through:
- - the automation of customer service functions such as automated e-mail
responses and online in-stock status;
- - product management such as using automation to update the product
databases and create upsells and links to product reviews; and
- - communications with suppliers for purchasing and automating payment
methods for accounting.
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Strengthen First-Mover Advantages -- The Company believes that significant
barriers exist that are making it increasingly difficult to enter the online
computer products marketplace in a cost-effective manner. These barriers
include:
- - the necessary up-front investment in technology and technical
infrastructure, such as that required for real-time processing of both
payment and order fulfillment. International Data Corporation, a market
research firm, recently reported on average that it costs an average of
$6 million to establish a new e-commerce site plus an average of
$13 million annually to maintain and promote it;
- - the time and expense required to build a brand that effectively draws
customers to an Internet site;
- - the time, expense and expertise necessary to develop publisher and
distributor relationships; and
- - the need to develop strategic alliances with high-traffic, high-profile
Internet sites.
The Company intends to extend its first-mover advantages in each of these
areas.
ANYTHINGPC INTERNET CORPORATION
AnythingPC Internet Corporation, a wholly-owned subsidiary of the Company,
is a rapidly growing Internet based discount retailer of over 175,000 different
computer hardware, software and peripheral products to end consumers and
businesses. Through its Internet storefronts - www.anythingpc.com,
www.anythingmac.com, and www.anythingunix.com - AnythingPC offers one-stop
shopping to its customers 24 hours a day, seven days a week. In addition to its
wide array of product offerings, AnythingPC's storefronts feature competitively
priced "Hot Products", an easy-to-use graphical interface, a powerful search
engine to locate any product desired, a unique "quote monkey" for pricing
assistance on hard-to-find products, and a special "notify me" feature that
automatically notifies customers when a backordered product arrives in stock and
keeps the customer appraised of the estimated time of arrival.
The growth and acceptance of selling computer hardware, software and
peripherals via Internet e-commerce has been surprisingly fast. AnythingPC made
its first e-commerce sale in December 1997. Since then its monthly revenues
have climbed to more than $400,000.
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AnythingPC's Storefronts
Customers access AnythingPC's Internet storefronts through
www.anythingpc.com, www.anythingmac.com or www.anythingunix.com and are
presented with a simple, intuitive and easy to use graphical interface.
AnythingPC has learned that customers entering the storefronts generally fall
into one of two categories:
- - they are looking for specific product and wish to purchase it quickly and
at a competitive price; or
- - they are browsing the store and seeking an entertaining and informative
shopping experience.
AnythingPC's Internet storefronts are designed to satisfy both types of
customers. Just like a physical retail store, customers can browse the
departments of the store, search for specific needs, view promoted products,
obtain product information, order products, and ask for customer service.
Unlike the traditional retail store, this can all be accomplished from the
comfort and convenience of the customer's home or office.
Shoppers purchase products by simply clicking on a button to add products
to their "virtual" shopping baskets. Customers can add and/or subtract products
from their shopping baskets as they browse, prior to making a final purchasing
decision, just as in a physical retail store. To execute orders, customers
click on the buy button and are prompted to supply shipping and, in the case of
consumers, credit card details, either by e-mail or by telephone. The store
design enables purchasers to buy several products at once, rather than having to
repeat the same purchase process for each desired product. All customer
information is stored on the Company's secure server and is used to enhance
subsequent shopping experiences by the repeat customer and better enable the
AnythingPC to target special promotions. This process is highly automated, but
AnythingPC does accept orders, questions and requests for product information
via the telephone for those customers who are concerned about sending credit
card information over the Internet.
MARKETING AND PROMOTION
The Company's marketing strategy is to promote, advertise and increase its
brand visibility to attract new customers through multiple channels, including:
- - developing strategic alliances with major portal sites;
- - advertising on leading Internet sites and other media worldwide;
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- - expanding the Company's affiliates network and linking programs; and
- - direct marketing to existing and potential customers.
The Company believes that the use of multiple marketing channels reduces
reliance on any one source of customers, lowers customer acquisition costs, and
maximizes brand awareness.
Strategic Alliances -- The Company pursues strategic relationships to expand the
Company's online presence, increase its access to online customers, expand brand
recognition, and enhance the underlying technology of its Internet storefronts.
In pursuing these relationships, the Company seeks exclusive or semi-exclusive
positioning for the sales of computer related products on key screens of major
Internet sites. To date, the Company has established successful strategic
alliances with companies such as C|Net's Shopper.com, mySimon.com,
Priceline.com, bottomdollar.com and Digital River, Inc. (NASDAQ: DRIV).
Online Advertising -- In addition to its primary strategic alliances, the
Company utilizes numerous online sales and marketing techniques to increase
brand recognition and drive traffic to the Company's Internet storefronts,
including banner advertising on various high-traffic Internet sites. Such
banner advertisements can be permanently displayed for designated periods of
time or displayed when a user searches for information relating to certain
keywords (ie. "printers" or "software").
Direct Marketing -- The Company believes that the demographics of Internet users
overlap one-to-one with the demographics of potential customers, especially
those seeking to purchase new computer hardware, software and peripheral
products. The Company believes that the Internet provides additional
opportunities for direct marketing to the Company's customers through a variety
of mechanisms, and is exploring such direct marketing opportunities to target
new and existing customers with customized offers such as an e-mail newsletter,
special product offers and preferred customer offers.
Linking -- The Company believes it is important to create as many Internet
"links" to its Internet storefronts as possible. The Company has begun an
aggressive program to increase the number of links from search engines,
manufacturers' Internet sites, community, affinity and basic home pages.
Customer Service -- The Company believes its ability to establish and maintain
long-term relationships with its customers and encourage repeat visits and
purchases depends, in part, on the strength of its customer support and service.
Customer support and service personnel are responsible for handling general
customer inquiries, answering customer questions about the ordering process, and
investigating the status of orders, shipments and payments. The Company has
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automated some of the tools used by its customer support and service staff,
including the tracking screens that enable its support staff to track a
transaction by any of a variety of information sources. At any point in the
purchasing process, customers can access the Company's support staff by e-mail,
fax or telephone. Customers who are reluctant to enter their credit card
numbers through the Internet site are also invited to call the Company directly
for purchases. The Company currently employees a growing staff of dedicated
customer support and service personnel.
TECHNOLOGY AND SYSTEMS
The Company uses complex proprietary and commercially licensed technology
to make both the customer experience and the management reporting process as
seamless and simple as possible with minimal human intervention necessary. To
that end, the Company has developed technologies and systems to support
scaleable, flexible and seamless online reselling in a secure and easy to use
manner. By using a combination of proprietary and commercially available
technologies, the Company has deployed systems for online content dissemination,
online transaction processing, customer service, market analysis and electronic
data interchange.
Scaleability and Flexibility -- The architecture of the Company's hardware and
software is built upon a distributed transaction-processing model which allows
the process load to be distributed among multiple parallel servers. This
architecture allows the Company to scale by either adding new servers or
increasing the capacity of existing servers. The Company's hardware and
software configuration is designed to scale to support growth while maintaining
user performance and minimizing the cost per transaction. In the rapidly
changing Internet environment, the ability to update this system in order to
stay current with new technologies is important. The system's template
technology and modular database design allow the addition or replacement of
software components, page layout templates, and search and retrieval engines
with minimal effort and disruption. This architecture also enables low-cost,
rapid deployment of additional, co-branded Internet sites that integrate with
the Company's other Internet storefronts.
Seamlessness -- The Company's multiple hardware and software systems integrate
seamlessly to manage real-time transactions with limited human intervention.
Orders for products are routed to the appropriate contact person or distributor
while the customer's credit card is charged. Orders requiring human
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intervention are automatically routed for processing by a customer service
representative.
Store Engine Architecture -- The Company's hardware and software systems are
based upon a distributed transaction-processing model that allows applications
and data to be distributed among multiple parallel servers. Many of the
software components, and the pages of the Company's Internet storefronts, are
developed in a manner that enables the separation of the page look and feel from
the individual data elements and their associated database lookups. This
separation permits frequent changes to product pricing information, reduces
software and database updates for Internet site changes, and minimizes the
engineering required to maintain a growing number of items and content. The
Company utilizes technology that also enables Internet storefronts with
different formats to integrate various elements such as search, vendor and
product pages. This technology allows the Company to maintain several Internet
storefronts over a single order processing and customer service system.
Data Warehouse -- The Company utilizes a database management system to index,
retrieve and manipulate product information, content, product catalogs, orders
and transaction and customer information. This system allows for rapid
searching, sorting, viewing and distribution of a large volume of content. The
Company deploys a data warehouse that enables it to access detailed transaction
and customer interaction data and perform proprietary market analysis. The data
warehouse provides a unified platform for the store engine and other components.
This data warehouse system incorporates commercially available hardware and
software combined with proprietary software of the Company in a configuration
developed internally.
Customer Reassurance -- A critical issue to the success of online retailing is
maintaining the integrity of information, particularly the security of customer
information such as credit card numbers. The Company believes that its existing
security systems are at least as secure as those used for traditional retail
store transactions and that it has a comprehensive security strategy. The
Company's system automatically monitors each purchase and confirms each order by
e-mail to the customer within minutes after the order is placed.
Fault Tolerance and Scaleable Internet Access -- The Company's systems are
designed for automatic transfer to "hot" spare systems in the event of failure
and are equipped with fully automated reporting tools. These tools provide
automated trouble notification and detailed event logging. A load distribution
system monitors traffic to each server. Should a system fail to respond to a
request, the automated distribution system will redistribute traffic among the
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remaining machines with no loss of user functionality. In addition, the Company
maintains redundant servers in both California and Colorado to further minimize
the chance of loss or system disruption.
Notwithstanding these precautions, there can be no assurance that either
the security mechanisms of the Company's Internet provider, the Company, or the
Company's other suppliers will prevent security breaches or service breakdowns.
Despite the implementation of network security measures by the Company, its
servers may be vulnerable to computer viruses, physical or electronic break-ins,
and other disruptions that could lead to interruptions, delays, loss of data, or
the inability to accept and fulfill customer orders and could have a material
adverse effect on the Company's finances, prospects, financial condition and
results of operation.
COMPETITION
The realm of Internet e-commerce is new, rapidly evolving, and intensely
competitive. Current and new competitors can launch new sites at a relatively
low cost. At the present time, the Company primarily competes with other
companies at a divisional level. However, the Company currently or potentially
competes with the following companies sharing similar overall visions and
Internet strategies:
- - Amazon.com (NASDAQ: AMZN) is known, or branded, as a book seller has
recently expanded into videos, CDs, prescription drugs and auctioning
products. They are anticipated to continue growing and diversifying over
the coming months and years;
- - Buy.com, a closely held company, is primarily known for selling computer
hardware, software and peripheral products, but has recently
expanded into books, videos, games, and CDs; and
- - CMGI, Inc. (NASDAQ: CMGI) is a developer and operator of Internet and
direct marketing companies. CMGI takes strategic equity positions in
Internet businesses, including Lycos, Inc. (NASDAQ: LCOS), Amazon.com
and Hollywood Entertainment Corporation (NASDAQ: HLYW).
AnythingPC competes directly with the computer products retail industry which is
intensely competitive. Through AnythingPC, the Company currently or potentially
competes with a variety of other companies. These competitors include:
- - various traditional computer retailers including CompUSA and MicroCenter;
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- - various mail-order retailers including CDW, MircoWarehouse, Insignt, PC
Connection and Creative Computers;
- - various Internet-focused computer retailers including Egghead.com,
beyond.com, Cyberian Outpost and BuyComp.com;
- - various manufacturers that sell directly over the Internet including Dell,
Gateway and Apple;
- - a number of online service providers including America Online and the
Microsoft Network that offer computer products directly or in
partnership with other retailers;
- - some non-computer retailers such as Wal*Mart that sell a limited selection
of computer products in their stores; and
- - computer products distributors which may develop direct channels to the
consumer market.
Increased competition from these and other sources could require the
Company to respond to competitive pressures by establishing pricing, marketing
and other programs or seeking out additional strategic alliances or
acquisitions, any of which could have a material adverse affect on the business,
prospects, financial condition and results of operations of the Company.
The Company believes that the principal competitive factors in its market
are brand recognition, selection, price, variety of value-added services, ease
of use, site content, fulfillment, reliability, quality of search tools,
customer service and technical expertise. Many of the Company's current and
potential competitors have longer operating histories, larger customer bases,
greater brand recognition, and significantly greater financial, marketing and
other resources than the Company. In addition, online 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
other online services increases. The Company is aware that certain of its
competitors have and may continue to adopt aggressive pricing or inventory
availability policies and devote substantially more resources to Internet site
and systems development than the Company. Increased competition may result in
reduced operating margins, loss of market share, and a diminished brand
franchise, any of which would have a material adverse effect on the Company.
Moreover, companies that control access to transactions through network access
or Web browsers currently promote, and will likely continue to promote,
competitors of the Company. There can be no assurance that the Company will be
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able to respond effectively to increasing competitive pressures or to compete
successfully with current and future competitors.
INTELLECTUAL PROPERTY
The Company claims common law trademark for its logo, corporate name, and
Internet storefronts - AnythingPC, AnythingMAC and AnythingUNIX. The Company
also has reserved the rights to hundreds of Internet domain names, including
www.anythinginternet.com, www.anythingpc.com, www.anythingmac.com,
www.anythingunix.com and www.anythingcellular.com.
EMPLOYEES
The Company believes its success depends to a significant extent on its ability
to attract, motivate and retain highly skilled management and employees. To
this end, the Company focuses on incentive programs such as employee stock
options and competitive compensation and benefits packages for its employees to
foster a corporate culture which is challenging and rewarding, yet fun. As of
May 18, 1999, the Company, including its subsidiaries, had nine employees: eight
full-time and one part-time. Currently full-time employees receive health and
dental plans after 90 days of employment. The Company also employs, from time
to time, a limited number of independent contractors and temporary employees on
a periodic basis. None of the Company's employees are represented by a labor
union and the Company considers its labor relations to be good.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Fiscal Year 1998 Ending June 30, 1998
The Company was incorporated under the laws of the State of Colorado on
August 15, 1997. June 30, 1998 marked the end of the Company's first fiscal
year, which, as a result of the ending day of the fiscal year, was a short year
for the Company.
Net sales for the fiscal year ending June 30, 1998 were $657,988. All of
these sales were a result of the Company establishing its first Internet
storefronts and generating initial customer traffic and orders through these
Internet storefronts.
Gross profits for the fiscal year ending June 30, 1998 were $44,666, or
6.8% of sales. Gross profit margins for Internet retailers have historically
been significantly lower than traditional brick-and-mortar retailers as a result
of the deep price discounts typically offered to Internet customers.
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Selling, general and administrative (SG&A) expenses for the fiscal year
ending June 30, 1998 were $69,428. The major components of these expenses for
the fiscal year were the acquisition costs of office and computer equipment and
software development costs.
The net loss for the fiscal year ending June 30, 1998 amounted to $24,762,
or $4.27 a share. There were 5,800 shares issued and outstanding as of June 30,
1998, on both a basic and fully diluted basis. The net loss was primarily
attributable to expensing initial start-up costs.
Nine-Months Ended March 31, 1999 Compared to Nine-Months Ended
March 31, 1998
Net sales for the nine-months ended March 31, 1999 were $2,403,629, an
increase of 2,325% over $99,136 for the same period a year ago. The increase in
net sales was driven primarily by increasing customer awareness of the Company's
Internet storefronts, building brand awareness, improving Internet storefront
content, and continuing to increase the number of products available through its
Internet storefronts to more than 175,000 different computer hardware, software
and peripheral products. In addition, as of March 31, 1999 the Company had sold
products to approximately 8,654 unique customers.
Gross profits for the nine-months ended March 31, 1999 were $92,226, or
3.8% of sales, compared to $5,514, or 5.6% of sales, for the same period a year
ago. The increase in gross profit was due to increased product sales as
discussed above and improved product and inventory management.
Selling, general and administrative (SG&A) expenses for the nine-months
ended March 31, 1999 were $430,397, an increase of 2,266% over $18,990 for the
same period a year ago. The dollar increase in SG&A over the prior same period
is the result of additional costs incurred in handling higher order volumes,
increased computer and technology acquisitions for handling increase Internet
storefront traffic and opening the Tampa, Florida business-to-business sales and
support office.
The net loss for the nine-months ended March 31, 1999 was ($377,861), or
($0.12) a share, an increase of 2,804f% over ($13,477), or ($1.35) a share, for
the same period a year ago. The increase in net loss is attributable to
increased SG&A expenses and on-going capital expenditures.
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The Company does not believe that inflation has had a material adverse
effect on sales or income since its inception on August 15, 1997. Increases in
product or other operating costs may adversely affect the Company's operations;
however, the Company believes it will be able to maintain its present gross
profit margins by monitoring and adjusting the prices of the products it sells
to offset increases in costs of goods sold or other operating costs.
Based on its experience to date, the Company believes that its future
operating results may be subject to quarterly variations based on a variety of
factors, including seasonal buying patterns in the computer industry. Such
effects may not be apparent in the Company's operating results during a period
of expansion. However, the Company can make no assurances that its business can
be significantly expanded under any circumstances.
Liquidity and Capital Resources
The Company's operations to date have concentrated on developing its
Internet storefronts, building brand recognition and a loyal customer following,
and securing the financing necessary to fund the development, operations and
expansion of its business.
As of March 31, 1999, the Company had $18,973 cash on hand, accounts
receivable, including some "term" sales, of $138,544, and receivable notes of
$86,023. The Company also had bank credit lines aggregating $85,000 with
$52,865 available for immediate usage. In addition, the Company had several
supplier-based revolving lines of credit, including Tech Data, $150,000; Ingram
Micro, $150,000 (as of April 22, 1999, the Company was in discussions with both
Ingram Micro and Tech Data to increase its respective credit lines further);
Merisel, $65,000; and Pinacor, $5,000. Additionally, Reseller Credit
Corporation finances corporate purchase orders on behalf of the Company for
products supplied by Ingram Micro.
As of March 31, 1999, cash used by operating activities, since its
inception on August 15, 1997, totaled ($228,129). The majority of the cash flow
used in these operating activities was the result of SG&A expenses and initial
business start-up costs.
As of March 31, 1999, cash used by investing activities, since its
inception on August 15, 1997, totaled ($112,797). All of these investments were
in office equipment, technology and software development.
As of March 31, 1999, cash provided by financing activities, since its
inception on August 15, 1997, totaled $359,900. The majority of this financing
was the result of borrowing activities, utilizing credit facilities, and
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completing a successful private placement in December 1998 which yielded net
proceeds of $200,000.
The Company expects to continue making significant investments in the
future to support its overall growth. Currently, it is anticipated that ongoing
operations will be sufficiently financed from the net proceeds of the
anticipated exercise of the warrants the common stock being registered herein
underlie, cash on hand, accounts receivable, the various credit facilities
available to the Company, and from internally generated funds. However, as
indicated in the Company's most recent financial statements available herein,
while operating activities provide some cash flow, the Company is currently cash
flow negative. There can be no assurances that the Company's ongoing operations
will begin to generate a positive cash flow or that unforeseen events may not
require more working capital than the Company currently has at its disposal.
Year 2000 Compliance
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. This could result in system failures or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities. As a result, many companies' software and computer systems
may need to be upgraded or replaced in order to comply with such "Year 2000"
requirements. The Company utilizes third-party equipment and software that it
believes is Year 2000 compliant. The Company is in the early stages of
conducting an audit of its third-party suppliers as to the Year 2000 compliance
of their systems. The Company does not believe it will incur significant costs
in order to comply with Year 2000 requirements. However, failure of the
Company's internal computer systems or of such third-party equipment or
software, or of systems maintained by the Company's suppliers, to operate
properly with regard to the Year 2000 and thereafter could require the Company
to incur unanticipated expenses to remedy any problems, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.
DESCRIPTION OF PROPERTY
The Company maintains its headquarters in Colorado Springs, Colorado at
3020 North El Paso in a 2,069 square foot office space through a one-year lease
that commenced on June 3, 1998. The Company pays $1,280 a month, utilities
included, for this leased office space.
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The Company also has a business-to-business sales and support office
located in Tampa, Florida. This facility encompasses approximately 1,093 square
feet and is secured by a one-year lease that commenced on February 1, 1999. The
Company pays $1,275.16 a month, utilities included, for this leased office
space.
CERTAIN TRANSACTIONS
On August 22, 1998, the Company entered into a Share Exchange Agreement
with Banyan Corporation, a publicly traded company listed on the OTC Electronic
Bulletin Board under the trading symbol "BANY". Under the terms of the Share
Exchange Agreement, the Company caused the issuance of 1,000,000 shares of its
common stock to Banyan pursuant to exemptions under Section 4(2) of the
Securities Act and Regulation D thereunder in exchange for 200,000 shares of
Banyan common stock, issued pursuant to exemptions under Section 4(2) of the
Securities Act and Rule 144 thereunder. The then market price for Banyan's
common stock was $0.20 a share, resulting in an effective price of four cents a
share for the Company's common stock.
In addition to the shares of Banyan common stock received, the Company was also
granted options to purchase 300,000 additional shares of Banyan common stock,
vested immediately, as follows: 100,000 shares at 50 cents a share, expiring
February 28, 1999; 100,000 shares at $1.00 a share, expiring August 31, 1999;
and 100,000 shares at $2.00 a share, expiring August 31, 2000.
As part of the Share Exchange Agreement, Banyan was empowered to appoint
two Directors to the Company's Board of Directors. Banyan appointed its
President and Chief Executive Officer, Cameron B. Yost, and its outside
management and financial consultant, J. Scott Sitra.
Subsequent to the Share Exchange Agreement, the Company elected to
reclassify itself from an Internal Revenue Service subchapter "S" corporate
classification to a subchapter "C" corporate classification and transition the
closing day of its fiscal year from December 31st to June 30th.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Prior to the filing of this Registration Statement there has been no market
for the Company's common stock, and there can be no assurance that a liquid and
active market will ever develop, or if developed, that it will be sustained.
Application is being made for the quotation of the Company's common stock on the
OTC Electronic Bulletin Board market under the proposed trading symbol "ANYI."
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The initial trading price of the Company's common stock, once it is
approved for trading, will be determined by the negotiation between the Company
and the initial Market Maker posting bid and ask quotations for the Company's
common stock, and will not necessarily bear any direct relationship to the
Company's assets, earnings, book value or other generally accepted criteria of
value.
As of January 25, 1999, the Company had approximately 176 shareholders of
record. This does not include shareholders who hold stock in their accounts at
broker-dealers.
DIVIDEND POLICY
The Company has never declared or paid any dividends on its capital stock.
The Company currently intends to retain all available funds and any future
earnings of its business for use in the operation of its business and does not
anticipate paying any cash or other dividends in the foreseeable future. The
declaration, payment and amount of future dividends, if any, will depend upon
the future earnings, results of operations, financial position and capital
requirements of the Company, among other factors, and will be at the sole
discretion of the Board of Directors.
SHARES ELIGIBLE FOR FUTURE SALE
The Company is authorized to issue up to 50,000,000 shares of its common
stock. If all warrants, stock options, and Employee Stock Ownership Program
reserves are exercised and released, the Company would have 4,086,000 shares
issued and outstanding (fully diluted basis). In such an event, the Company
would have approximately 45,914,000 shares of authorized, but unissued, common
stock available for issuance without further shareholder approval. Any issuance
of additional shares of common stock may cause current shareholders to suffer
significant dilution, which may adversely affect prevailing market prices,
should a market for the Company's common stock ever develop.
Additionally, in the event a market does develop for the Company's common
stock, future sales of substantial amounts of common stock into the public
market could adversely affect any prevailing market prices and the Company's
ability to raise equity capital in the future.
As of April 22, 1999, the Company had 3,074,400 shares of common stock
issued and outstanding. Of these shares, 500,400 shares are currently
restricted from resale pursuant to Section 4(2) of the Securities Act and Rule
144 thereunder. Subject to the volume and other restrictions of Rule 144,
185,000 of these shares become eligible for sale on August 22, 1999; 400 of
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these shares become eligible for sale on January 10, 2000; and 315,000 of these
shares become eligible for sale on August 22, 2000.
As of April 22, 1999, the Company had the following options to purchase
shares of common stock outstanding:
<TABLE>
<CAPTION>
No. of Options Exercise Price Vesting Period Expiration Date
- -------------- -------------- -------------- ---------------
<C> <C> <S> <C>
500,000 $ 1 Fully Vested February 29, 2000
50,000 $ 40 Fully Vested April 1, 2002
25,000 $ 75 Fully Vested April 1, 2002
25,000 $ 100 Fully Vested April 1, 2002
10,000 $ 3 Three Years March 31, 2003
- ---------------
610,000
</TABLE>
The Company has not filed any registration statements with the SEC to
register any of the common stock underlying any of these options. The Company
anticipates filing a Form S-8 registration statement with the SEC in the future
to register the common stock underlying these options, but until it files such a
registration statement any shares of common stock issued to exercising option
holders will be subject to the resale restrictions of Rule 144.
On January 10, 1999, the Company set aside a reserve of 200,000 shares of
common stock to establish an Employee Stock Ownership Program (ESOP). As of
January 25, 1999, no shares had been issued or authorized for issue under the
Company's ESOP. While it is anticipated this reserve will be sufficient to
satisfy the needs of the Company's ESOP for the next several years, it is
possible the Company could use the entire reserve at any time. common stock
issued to employees through the Company's ESOP may or may not have any
restrictions attached thereunder.
In addition, because the 800,027 shares of common stock held by Banyan
Corporation equates to an ownership level exceeding 10% of the total issued and
outstanding shares of the Company's common stock, it is deemed a "control
person" as defined in the Securities Act. While the shares of common stock
owned by Banyan are not subject to any trading restrictions per se, control
persons are always subject to the volume restrictions on sales of their holdings
as defined in Rule 144 of the Securities Act. As such, Banyan may be limited to
the number of shares it may sell during any given future period of time.
In general, under Rule 144 as currently in effect, an affiliate of the
Company or person (or persons whose shares are aggregated) who has beneficially
owned restricted shares for at least one year (two years for insiders) will be
entitled to sell in any three-month period a number of shares that does not
exceed the greater of (i) one percent of the then outstanding shares of the
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Company's common stock or (ii) the average weekly trading volume of the
Company's common stock during the four calendar weeks immediately preceding the
date on which notice of the sale is filed with the SEC. Sales made pursuant to
Rule 144 are subject to certain requirements relating to manner of sale, notice
and the availability of current public information about the Company. A person
(or persons whose shares are aggregate) who is not deemed to have been an
affiliate of the Company at any time during the 90 days immediately preceding
the sale and who has beneficially owned the shares for at least two years is
entitled to sell such shares under Rule 144(k) without regard to the limitations
described herein.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
On September 1, 1998, the Company engaged J. Paul Kenote, CPA, P.C. as its
independent public accountants. The Company had no prior independent auditor.
RECENT DEVELOPMENTS
On April 1, 1999, the Company underwent a restructuring whereby it placed
its three operating Internet storefronts - www.anythingpc.com,
www.anythingmac.com and www.anythingunix.com - into a wholly-owned subsidiary,
AnythingPC Internet Corporation. As part of this restructuring, the Company's
Board of Directors elected J. Scott Sitra as its new President and Chief
Operating Officer and elected its former President, Robert C. Schick, as the
Company's new Chief Technology Officer while appointing him President and Chief
Executive Officer of the new AnythingPC division.
Mr. Sitra's first year compensation package consists of a salary of
one-dollar ($1) and options to purchase 100,000 shares of common stock at the
following exercise prices: 50,000 at $40 a share, 25,000 at $75 a share and
25,000 at $100 a share.
On April 13, 1999, the Company formally established a new
business-to-business sales office in Tampa, Florida. The purpose of this
facility is to focus on emerging business-to-business sales opportunities and
relationships as more businesses shift their buying patterns to the Internet to
maximize new buying efficiencies and lower costs. The facility is headed by
Rich Baron, General Manager.
46
<PAGE>
FINANCIAL STATEMENTS
AUDITED FINANCIAL STATEMENTS AS OF JUNE 30, 1998 FOR THE FISCAL YEAR ENDING JUNE
30, 1998
CONTENTS
Independent Auditor's Report F-1
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Anything, Inc.
Colorado Springs, Colorado
We have audited the accompanying balance sheet of Anything, Inc. as of June 30,
1998 and the related statements of operations, changes in shareholders' equity
and cash flows for the period from August 15, 1997 to June 30, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. 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, these financial statements referred to above present, in all
material respects, the financial position of Anything, Inc. at June 30, 1998 and
the results of their operations and their cash flows for the period beginning
F-1
<PAGE>
August 15, 1997 to June 30, 1998 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company is attempting to establish itself as a player
in a very competitive market. It also has a substantial need for cash to
finance its development stage and ongoing activities. These and other factors
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also discussed in
Note 6. The accompanying financial statements do not include any adjustments
relating to the recover ability and classification of asset carrying amounts or
the amount and classification of liabilities that might result should the
Company be unable to continue as a going concern.
/s/ J. Paul Kenote
J. PAUL KENOTE, CPA, P.C.
Portland, Oregon
December 21, 1998
F-2
<PAGE>
<TABLE>
<CAPTION>
ANYTHING, INC.
(A Development Stage Company)
BALANCE SHEET
June 30, 1998
ASSETS
<S> <C>
Current assets:
Cash $42,114
Accounts receivable, trade 14,591
-------
56,705
-------
Furniture and fixtures:
Office furniture and equipment 14,461
Less accumulated depreciation 2,892
-------
11,569
-------
Other assets:
Software development costs, net of
Accumulated amortization of $4,088 21,984
Deposits 1,380
-------
23,364
-------
$91,638
=======
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
ANYTHING, INC.
(A Development Stage Company)
BALANCE SHEET
June 30, 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
<S> <C>
Notes payable (Note 2) $ 25,500
Note payable - line of credit (Note 3) 32,038
Accounts payable, trade 17,441
Accrued expenses 5,221
---------
80,200
---------
Commitment (Note 4)
Stockholders' equity:
Common stock, no par value, 1,000,000 shares
Authorized; 5,800 issued and outstanding 36,200
Deficit accumulated during development stage (Note 6) (24,762)
---------
11,438
---------
$ 91,638
=========
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
ANYTHING, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Period From August 15, 1997 to June 30, 1998
<S> <C>
Sales $ 657,988
Cost of sales 613,322
---------
Gross margin 44,666
Selling, general and administrative expenses 69,428
---------
Excess of expenditures over revenues before
income tax benefit (24,762)
Income tax benefit (Note 5) -
---------
Net loss for the period ($24,762)
=========
Earnings Per Share (basic) ($2.58)
=========
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
ANYTHING, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period From August 15, 1997 to June 30, 1998
Common Stock Issued
---------------------- Retained Total
Number Amount Deficit Equity
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance at August 15, 1997 - $ - $ - $ -
Initial issuance @ $0/sh
(Richard Volker) 4,200 - - -
Initial issuance @ $2.56/sh
(Robert Schick) 3,200 8,200 - 8,200
Initial issuance @ $5.88/sh
(Alfred Delisle) 1,700 10,000 - 10,000
Initial issuance @ $20/sh
(Bernard Sandoval)-cash 70 1,400 - 1,400
Issued for software
development costs @ $20/sh
(Bernard Sandoval) 830 16,600 - 16,600
Return and retirement of
4,200 shares @ $0/sh
(Richard Volker) (4,200) - - 36,200
Net loss for the period (24,762) 11,438
--------- --------- --------- ---------
Balance at June 30, 1998 5,800 $ 36,200 ($24,762) $ 11,438
========= ========= ========= =========
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
ANYTHING, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period From August 15, 1997 to June 30, 1998
<S> <C>
Cash flows from operating activities:
Net operating deficit ($24,762)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization expense 6,980
Net changes in operating assets and liabilities:
Accounts receivable (14,591)
Deposits (1,380)
Accounts payable and accrued expenses 22,662
---------
Net cash used by operations (11,091)
---------
Cash flows from investment activities:
Acquisition of office equipment (14,461)
Software development costs incurred (26,072)
---------
Net cash used by investment activities (40,533)
---------
Cash flows from financing activities:
Proceeds from borrowing 57,538
Sale of stock 36,200
---------
Net cash provided by financing activities 93,738
---------
Net cash increase 42,114
Cash at beginning of the period -
---------
Cash at end of the period $ 42,114
=========
Supplemental schedule of non-cash financing transactions:
Issuance of 830 shares of common stock for software
development services $ 16,600
=========
</TABLE>
F-7
<PAGE>
ANYTHING, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND LINE OF BUSINESS:
Line of business:
Anything, Inc. was organized on August 15, 1997 as a Colorado corporation to
market and distribute computers and related accessory products by using the
Internet as the exclusive distribution channel.
Software Development Costs:
It is the Company's policy to capitalize major software development
activities to reflect the value of the software over its anticipated useful
life. The Company amortizes this software over a three year period from the
implementation of the software.
Revenue Recognition:
The Company recognizes income when product is shipped to customers either
from the Company's inventory or when shipped from distributors' warehouses
directly to the customer. The Company assumes the title to the product when it
is shipped either to the Company or directly to the Company's customer.
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.
NOTE 2 - NOTES PAYABLE:
Notes payable consist of the following:
Note payable to a former shareholder of
the Company in exchange for the redemption
of his stock. The note is to be paid in four
unequal installments,is non-interest bearing
and is personally guaranteed by the principal
F-8
<PAGE>
shareholder of the Company. (The shareholders'
4,200 shares of stock were retired immediately
by the Company's Board of Directors.) $15,000
Note payable to the parents of the principal
shareholder of the company, bearing interest
at 8% per annum and due on or before
December 31, 1998. The note is unsecured. 10,500
-------
$25,500
=======
NOTE 3 - LINE OF CREDIT
To help finance the cost of inventory, Nations Credit Distribution Finance, Inc.
has extended the Company, a credit line not to exceed $35,000. The interest
rate applicable to each transaction will depending upon the vendor and the
timeliness of repayment and will range from 0% to 18%. The credit line is
unsecured.
NOTE 4 - OBLIGATION UNDER LEASE COMMITMENT:
The company leases approximately 2,000 square feet of office space under a
non-cancelable lease agreement expiring May 31, 1999. The lease can be extended
based on terms and conditions to be established at that time. The lease payment
in comprised of a scheduled monthly base payment plus personal property taxes,
insurance and utilities.
Future minimum annual lease payments are as follows:
Years Ending
June 30, Amount
------------- ------
1999 14,080
------
14,080
======
Lease expense incurred for the period from August 15, 1997 to June 30, 1998 was
$4,244.
NOTE 6 - CONTINUED OPERATIONS
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is a development stage
company as defined in Financial Accounting Standard No. 7, Accounting and
Reporting by Development Stage Enterprises (FAS-7). It is devoting
F-9
<PAGE>
substantially all of its effort to raise capital, developing markets and
training personnel in order to generate significant operations. It is not
certain that the Company will be able to obtain the financing required to fund
the planned operations or retain sufficient management expertise to continue its
planned business operations. These factors raise substantial doubt about the
company's ability to continue as a going concern. The financial statements do
not include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result should the Company be unable to continue as a going concern.
NOTE 7 - CHANGES IN STOCKHOLDERS' EQUITY
Common Stock Transactions:
On August 18, 1997 the Company made its original issuance of 10,000 shares of
common stock in return for future consideration:
Robert Schick 3,200 shares
Alfred Delisle 1,700 shares
Richard Voelker 4,200 shares
Bernard Sandoval 900 shares
In September 1997, Mr. Schick provided the Company with $8,200; in October 1997,
Mr. Delisle provided $10,000; in January 1998, Mr. Sandoval provided $1,400 in
cash and additionally provided the Company with web page design and development
services which were valued at $16,600. In May 1998, the Company reached an
agreement with Mr. Voelker to pay him for certain services provided by him and
in return Mr. Voelker returned his 4,200 shares to the Company. The Board of
Directors immediately retired these shares.
Common Stock Options:
As of April 22, 1999, the Company had the following options to purchase
shares of common stock outstanding:
<TABLE>
<CAPTION>
No. of Options Exercise Price Vesting Period Expiration Date
- -------------- -------------- -------------- ---------------
<C> <C> <S> <C>
500,000 $ 1 Fully Vested February 29, 2000
50,000 $ 40 Fully Vested April 1, 2002
25,000 $ 75 Fully Vested April 1, 2002
25,000 $ 100 Fully Vested April 1, 2002
10,000 $ 3 Three Years March 31, 2003
- ---------------
610,000
</TABLE>
F-10
<PAGE>
The Company has not filed any registration statements with the SEC to
register any of the common stock underlying any of these options. The Company
anticipates filing a Form S-8 registration statement with the SEC in the future
to register the common stock underlying these options, but until it files such a
registration statement any shares of common stock issued to exercising option
holders will be subject to the resale restrictions of Rule 144.
Additionally, on January 21, 1999 the Company established an Employee Stock
Ownership Program by reserving 200,000 shares of Class A common stock for this
purpose. No awards under this program have been made.
F-11
<PAGE>
UNAUDITED 9-MONTHS INTERIM FINANCIAL STATEMENTS ENDING MARCH 31, 1999
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
(A Development Stage Company)
BALANCE SHEET
(unaudited)
March 31, 1999
ASSETS
Current assets:
<S> <C>
Cash $ 18,974
Accounts receivable, trade 48,137
Accounts receivable, terms 90,407
Inventory 60,647
Prepaid expenses and other current assets 16,730
-------
234,895
-------
Furniture and fixtures:
Office furniture and equipment 58,671
Less accumulated depreciation 10,619
-------
48,052
-------
Other assets:
Software development costs, net of
Accumulated amortization of $14,882 39,244
Notes receivable (Note 2) 86,023
Deposits 2,741
-------
128,008
-------
$410,955
========
</TABLE>
F-12
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
(A Development Stage Company)
BALANCE SHEET
(unaudited)
March 31, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
<S> <C>
Notes payable (Note 3) $ 32,135
Accounts payable 311,168
Accrued interest 58
Accrued expenses 36,174
Prepaid sales 6,145
-------
385,679
-------
Stockholders' equity:
Common stock, no par value, 50,000,000 shares
Authorized; 3,074,400 issued and outstanding 427,900
Deficit accumulated during development stage (402,624)
--------
25,276
--------
$ 410,955
========
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
(unaudited)
For the Period From July 1, 1998 to March 31, 1999
- Nine Months Ending - August 15,
March 31, March 31, 1997
1998 1999 (inception)
------------ ------------ to March 31,
unaudited unaudited 1999
------------ ------------ ------------
<S> <C> <C> <C>
Sales $ 99,136 $ 2,403,629 $ 3,058,352
Cost of sales 93,622 2,311,403 2,926,359
------------ ------------ ------------
Gross profit 5,514 92,226 131,993
Selling, general and
administrative expenses 18,991 470,087 539,575
Net loss for the period (13,477) (377,861) (407,582)
Earnings per share (basic) (1) ($1.35) (2) ($0.12) (2) ($0.13)
- ----------------------------
<FN>
(1) As of March 31, 1998, there were 10,000 shares of common stock issued
and outstanding.
(2) As of March 31, 1999, there were 3,074,400 shares of common stock issued
and outstanding.
</TABLE>
F-14
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(unaudited)
For the Period From July 1, 1998 1999 to March 31,
- Nine Months Ending - August 15,
March 31, March 31, 1997
1998 1999 (inception)
--------- --------- to March 31,
unaudited unaudited 1999
--------- --------- --------
Cash flows from operating
activities:
<S> <C> <C> <C>
Net operating deficit ($13,477) ($377,861) ($407,583)
Adjustments to
Reconcile net loss to
net cash provided:
Depreciation and
Mortgage expense - 18,521 25,501
Net changes in
operating assets
and liabilities:
Accounts receivable (1,021) (124,054) (135,280)
Deposits - (1,361) (2,741)
Other assets - (77,277) (77,377)
Notes receivable (1,862) (18,023) (18,022)
Liabilities 7,478 37,156 42,318
Accounts payable
and accrued 11,529 318,824 345,055
expenses -------- -------- --------
Net cash used by
Operations 2,647 (224,075) (228,129)
-------- -------- -------- --------
Cash flow from investment
activities:
Acquisition of office
equipment (4,399) (44,211) (58,671)
Software development - (28,054) (54,126)
costs incurred -------- -------- --------
Net cash used by
investment activities (4,399) (72,265) (112,797)
F-15
<PAGE>
Cash flow from financing
activities:
Loan repayments - (40,000) -
Loan repaid in stock - - 10,500
Sale of stock 19,600 200,000 219,600
Stock issued in lieu of
cash payments - 52,000 68,600
Related part expenses
paid in stock - 40,000 40,000
Employee stock bonuses - 400 400
Stock issued for board
of directors
compensation - 20,800 20,800
Net cash used by -------- -------- --------
Financing activities 19,600 273,200 359,900
Net increase (decrease)
in cash 17,848 (23,140) 18,974
Cash at beginning of the
period - 42,114 -
-------- -------- --------
Cash at end of the period $ 17,848 $ 18,974 $ 18,974
======== ======== ========
Supplemental schedule of
Non-cash financing
Transactions:
Issuance of 20,000 common
shares for 1998 board of
directors compensation,
valued at $0.04 a share $ 800
Issuance of 1.3 million
common shares in lieu of
cash payments, valued at
$0.04 a share 52,000
200,000 shares of Banyan
Corporation (BANY)
common stock, valued at
$0.20 a share, received
in a stock exchange and
given to original stock
holders 40,000
Stock bonus of 400 shares
issued to employees,
valued at $1 a share 400
Issuance of 20,000 common
shares for 1999 board of
directors compensation,
valued at $1.00 a share $ 20,000
Repayment of a note
payable in 1,950 shares
of common stock issued
prior to the August 22,
1998 restructuring $ 10,500
</TABLE>
F-16
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
For the Period From July 1, 1998 to March 31, 1999
Common Stock Issued
------------------ Retained Total
Number Amount Deficit Equity
------ ------ ------- ------
<S> <C> <C> <C> <C>
Balance at July 1, 1998 5,800 $ 36,200 ($24,762) $ 11,438
Debt retired for stock
@ $5.38/sh 1,950 10,500 - 21,938
Retirement of old stock (7,750) - - 21,938
Issuance of Class A common
stock for old stock in
Share Exchange Agreement 500,000 - - 21,938
Purchase of Banyan stock
@ $0.04/sh 1,000,000 40,000 - 61,938
Issued for consulting
Services @ $0.04/sh 1,300,000 52,000 - 113,938
1998 Board fees @ $0.04/sh 20,000 800 - 114,738
1999 Board fees @ $1.00/sh 20,000 20,000 - 134,738
Stock sale to investors
@ $1.00/sh 200,000 200,000 - 334,738
Stock sale to investors
@ $2.00/sh 34,000 68,000 - 402,738
F-17
<PAGE>
Shares to employees
@ $1.00/sh 400 400 - 403,138
Net loss for the period (377,861) 25,277
--------- --------- --------- --------- --------
Balance at March 31, 1999 3,074,400 $ 427,900 ($402,623) $ 25,277
========= ========= ========= ========= ========
</TABLE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
(A Development Stage Company)
EARNINGS PER SHARE DISCLOSURE
(unaudited)
Interim Period from
Year Ended July 1, 1998 to
June 30, 1998 March 31, 1999
-------------- ---------------
<S> <C> <C>
Net income (loss) ($24,762) ($377,861)
Primary earnings per
share (EPS) (Note 5) ($2.58) ($0.16)
Fully diluted earnings
per share (EPS) ($2.58) ($0.16)
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended June 30, 1998
---------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- -------
<S> <C> <C> <C>
Income (loss) before
extraordinary item and
accounting change ($24,762)
Basic EPS
Income (loss) available
To common stockholders (24,762) 9,600 ($2.58)
========
Effect of Dilutive Securities
(None) - - -
Diluted EPS
Income (loss) available to
Common stockholders plus
assumed conversions ($24,762) 9,600 ($2.58)
=========== ============== ========
</TABLE>
F-18
<PAGE>
<TABLE>
<CAPTION>
For the Interim Period Ended March 31, 1999
-------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
Income (loss) before
extraordinary item and
accounting change ($377,861)
Basic EPS
Income (loss) available
To common stockholders (377,861) 2,300,067 ($0.16)
=======
Effect of Dilutive Securities
Stock Options (500,000) (1) - 388,889
Stock Warrants (200,000) - 88,889
Diluted EPS
Income (loss) available to
Common stockholders plus
assumed conversions ($377,861) 2,300,067 ($0.16)
========= ========= =======
<FN>
(1) Does not include 100,000 options with varying exercise prices granted to J.
Scott Sitra, the Company's President and Chief Executive Officer, on
April 1, 1999; 10,000 options with a $3 exercise price granted to Richard
Baron, the Company's General Manager; nor a 200,000 share reserve for a
Future Employee Stock Ownership Program (ESOP).
</TABLE>
ANYTHING INTERNET CORPORATION
(A Development Stage Company)
NOTES TO NINE-MONTH UNAUDITED INTERIM FINANCIAL STATEMENTS
March 31, 1998
NOTE 1 - BASIS OF SIX-MONTH INTERIM FINANCIAL STATEMENT PREPARATION AND LINE OF
BUSINESS:
The information presented as of December 31, 1998, and for the nine-month
periods ending March 31, 1998 and March 31, 1999, has been prepared in
accordance with generally accepted accounting principles for interim financial
statements and has not been audited. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
F-19
<PAGE>
principles for complete financial statements. The results of operations for the
interim periods shown in this report are not necessarily indicative of expected
results for any future interim period or for the entire fiscal year. In the
opinion of management, the unaudited interim financial statements includes all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Company's financial position as of March 31, 1999, and
results of its operations and cash flows for the nine-months ending March 31,
1998 and March 31, 1999, and the stockholders' equity for the nine-months ending
March 31, 1999.
Line of business:
Anything, Inc. was organized on August 15, 1997 as a Colorado corporation
to market and distribute computers and related accessory products by using the
Internet as the exclusive distribution channel. On August 28, 1998, Anything,
Inc. changed its name to Anything Internet Corporation, which was made effective
through an amendment to its Articles of Incorporation filed with the Secretary
of State of Colorado on August 31, 1998.
Software Development Costs:
It is the Company's policy to capitalize major software development
activities to reflect the value of the software over its anticipated useful
life. The Company amortizes this software over a three year period from the
implementation of the software.
Revenue Recognition:
The Company recognizes income when product is shipped to customers either
from the Company's inventory or when shipped from distributors' warehouses
directly to the customer. The Company assumes the title to the product when it
is shipped either to the Company or directly to the Company's customer.
NOTE 2 - NOTES RECEIVABLE
On December 31, 1998, the Company loaned Robert C. Schick, President,
$18,022.72 at a rate of 3% per annum. The note matures and is payable in full
on December 31, 1999.
On January 25, 1999, the Company issued 34,000 common shares to an
investment banking firm in return for a $68,000 promissory note bearing interest
at a rate of 8% per annum. The note matures and is payable in full on December
31, 1999.
F-20
<PAGE>
NOTE 3 - LINE OF CREDIT
To help finance the cost of inventory, Nations Credit Distribution Finance,
Inc. has extended the Company, a credit line not to exceed $35,000. The
interest rate applicable to each transaction will depending upon the vendor and
the timeliness of repayment and will range from 0% to 18%. The credit line is
unsecured.
The Company has also established a $50,000 line of credit with US Bank of
Colorado Springs, Colorado. Payments are due on the 15th of each month and
interest accrues at a rate of 10.45% per annum.
NOTE 4 - CHANGES IN STOCKHOLDERS' EQUITY
Common Stock Transactions:
On August 18, 1997 the Company made its original issuance of 10,000 shares
of common stock in return for future consideration to:
Number of
Stockholder Shares Issued
------------------ --------------
Robert Schick 3,200
Alfred Delisle 1,700
Richard Voelker 4,200
Bernard Sandoval 900
The Company received the following compensation for these shares issuances:
in September 1997, Mr. Schick provided the Company with $8,200; in October 1997,
Mr. Delisle provided the Company with $10,000; in January 1998, Mr. Sandoval
provided the Company with $1,400 and web page design and development services
valued at $16,600. Additionally, in May 1998, the Company reached an agreement
with Mr. Voelker to pay him for certain services provided by him and in return
Mr. Voelker returned his 4,200 common shares to the Company. The Board of
Directors immediately retired these shares.
In August 1998, the Company exchanged 1,950 shares of common stock with
Raymond Schick and in return Mr. Schick agreed to cancel of a promissory note
for $10,500. Later, on August 22, 1998, the Company retired all existing shares
of common stock in exchange for new Class A common shares as follows:
F-21
<PAGE>
Number of Number of
Shares Class A Common
Retired Shares Issued
--------- ---------------
Robert Schick 3,200 205,000
Raymond Schick 1,950 125,000
Alfred Delisle 1,700 110,000
Bernard Sandoval 900 60,000
========= ===============
7,750 500,000
Also on August 22, 1998, the Company purchased 200,000 shares of Class A
common stock from Banyan Corporation in exchange for 1,000,000 shares of Class A
common stock of the Company; the Banyan common stock was then issued to the
Company's shareholders. In addition Banyan Corporation also granted the Company
options to purchase 300,000 shares of Class A common stock, with 100,000 shares
at $0.50 per share expiring on February 28, 1999 which was extended to now
expire on August 31, 1999, 100,000 shares at $1.00 expiring on August 31, 1999
and 100,000 shares at $2.00 per share expiring on August 31, 2000. This
transaction was valued at $40,000. Also on the same day, the Company also issued
1,300,000 shares of Class A common stock in exchange for management consulting,
legal and investor relations services; these shares were issued to parties
non-related to Banyan and the Company. In September 1998, the Company issued to
the members of its Board of Directors 20,000 shares of Class A common stock
(5,000 shares apiece) for services rendered. Finally in December 1998, the
Company sold 200,000 shares of Class A common stock in a private placement. In
January 1999, the Company issued 200 shares of Class A common stock to certain
employees. The Company also issued 20,000 shares of Class A common stock to
members of its Board of Directors (5,000 shares apiece) in January 1999 for
services rendered in 1999. And lastly, in January 1999, the Company issued
34,000 shares to an investment banking firm for a $68,000 promissory note
bearing interest at a rate of 8% per annum.
Common Stock Options:
As of April 22, 1999, the Company had the following options to purchase
shares of common stock outstanding:
F-22
<PAGE>
<TABLE>
<CAPTION>
No. of Options Exercise Price Vesting Period Expiration Date
- -------------- -------------- -------------- ---------------
<C> <C> <S> <C>
500,000 $ 1 Fully Vested February 29, 2000
50,000 $ 40 Fully Vested April 1, 2002
25,000 $ 75 Fully Vested April 1, 2002
25,000 $ 100 Fully Vested April 1, 2002
10,000 $ 3 Three Years March 31, 2003
- --------------
610,000
</TABLE>
The Company has not filed any registration statements with the SEC to
register any of the common stock underlying any of these options. The Company
anticipates filing a Form S-8 registration statement with the SEC in the future
to register the common stock underlying these options, but until it files such a
registration statement any shares of common stock issued to exercising option
holders will be subject to the resale restrictions of Rule 144.
Additionally, on January 21, 1999 the Company established an Employee Stock
Ownership Program by reserving 200,000 shares of Class A common stock for this
purpose. No awards under this program have been made.
NOTE 5 - EARNINGS PER SHARE DISCLOSURE
Primary earnings per share were computed by dividing net income by the
weighted-average number of common shares during the year. All warrants and
stock options were considered anti-dilutive and not added to the number of
common shares outstanding. The stock options and warrants cannot be used to
repurchase stock as per FASB statement No. 128 because the stock, as of this
time, is non-trading and has no declared value.
F-23
<PAGE>
PART II
- -------
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company grants indemnification to the Company's officers and
directors, present and former, for expenses incurred by them in connection with
any proceeding that they are involved in by reason of their being or having been
an officer or director of the Company. The person being indemnified must have
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Company.
Insofar as indemnification for liability arising under the Securities Act
may be permitted to directors or officers the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director or officer of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director or officer in connection with the securities being registered, the
Company will, unless in the opinion of its legal counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Other expenses in connection for the issuance and distribution of the
securities being registered hereby are set in the following table:
<TABLE>
<CAPTION>
ITEM AMOUNT
- ---- -------
<S> <C>
SEC Registration Fee. . . . . . . . . $ 167
Transfer Agent Fees.. . . . . . . . . 350
State Securities Laws (Blue Sky) Fees 9,000
Accounting Fees . . . . . . . . . . . 10,000
Legal Fees. . . . . . . . . . . . . . 5,000
Printing and Engraving Costs. . . . . 150
Miscellaneous . . . . . . . . . . . . 2,000
Total. . . . . . . . . . . . . . $26,667
</TABLE>
II-1
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On August 22, 1998, the Company underwent a capital restructuring whereby
existing shareholders exchanged their original stock certificates for new stock
certificates aggregating 500,000 shares of common stock and were awarded options
to purchase an additional aggregate of 500,000 shares of common stock at $1.00 a
share; all options expire on February 29, 2000. The common shares and options
were distributed on a pro-rata basis; there were no changes in ownership
percentages. These transactions were exempt from registration under Section
4(2) of the Securities Act and Rule 144 thereunder. Stock issued under these
exemptions carries certain resale restrictions and the stock certificates bear
restrictive legends.
On August 22, 1998, the Company entered into a Share Exchange Agreement
with Banyan Corporation, a publicly traded company listed on the OTC Electronic
Bulletin Board under the trading symbol "BANY". Under the terms of the Share
Exchange Agreement, the Company caused the issuance of 1,000,000 shares of its
common stock to Banyan pursuant to exemptions under Section 4(2) of the
Securities Act and Regulation D thereunder in exchange for 200,000 shares of
Banyan common stock, issued pursuant to exemptions under Section 4(2) of the
Securities Act and Rule 144 thereunder as a transaction not involving a public
offering. The then market price for Banyan's common stock was $0.20 a share,
resulting in an effective price of four cents a share for the Company's common
stock.
In addition to the shares of Banyan common stock received, the Company was also
granted options to purchase 300,000 additional shares of Banyan common stock,
vested immediately, as follows: 100,000 shares at 50 cents a share, expiring
February 28, 1999; 100,000 shares at $1.00 a share, expiring August 31, 1999;
and 100,000 shares at $2.00 a share, expiring August 31, 2000.
On August 22, 1998, the Company issued 1.3 million shares of its common
stock to consultants for services rendered in connection with the formation of
the Company, Internet market research and the preparation of the Company's
business and marketing plan; these shares were issued to parties non-related to
Banyan and the Company. The aggregate value of these services was $52,000, or
$0.04 a share. These issuances were in transactions exempt from registration
under Section 4(2) of the Securities Act and Regulation D, Rule 504 thereunder
as transactions made to "sophisticated" Internet-savvy consultants by an issuer
not involving a public offering.
On September 28, 1998, the Company issued 20,000 shares of common stock to
the members of its Board of Directors (5,000 shares to each of the Company's
four directors) for their services as directors to the Company through December
31, 1998. Each share of common stock was issued at a price of $0.04 a share, or
II-2
<PAGE>
valued at $200 per director for an aggregate issuance of $800. These issuances
were in transactions exempt from registration under Section 4(2) of the
Securities Act and Regulation D, Rule 504 thereunder made to "sophisticated"
Internet-savvy persons by an issuer not involving a public offering.
In December 1998, the Company issued 200,000 "Units" at a price of $1.00
per Unit. Each Unit consisted of (i) one share of the Company's common stock
and (ii) one redeemable stock purchase warrant entitling the holder to purchase
one share of the Company's common stock at an exercise price of $3.00 a share.
The Company may redeem the warrants upon not less than 30 days, nor more than 60
days, prior notice at any time prior to the warrants' expiration on December 31,
1999 at a price of $0.01 a warrant, provided that the closing bid quotation for
the Company's common stock as reported by any quotation medium on which the
Company's common stock is quoted is at least $4.00 for ten consecutive trading
sessions ending on the two days prior to the day on which notice of the
redemption is given. This transaction was exempt from registration under
Section 4(2) of the Securities Act and Regulation D, Rule 504 thereunder as a
limited offering made to 23 "sophisticated" and "accredited" investors. This
private placement was made by the Company's officers, directors and employees
without the use of an underwriter or placement agent; all prospective investors
were supplied with a full disclosure private placement memorandum prior to their
investments being accepted by the Company.
On January 10, 1999, the Company issued 200 shares of common stock to each
Donald Horning and Robie Blair, employees of the Company. Should their
employment continue at the Company, each will receive an additional 100 shares
each quarter for the next eight quarters for an aggregate of 1,000 shares of
common stock each. These transactions were and are anticipated to be exempt
from registration under Section 4(2) of the Securities Act and Rule 144
thereunder. Stock issued under these exemptions carries certain resale
restrictions and the stock certificates bear restrictive legends.
On January 10, 1999, the Company set aside a reserve of 200,000 shares of
common stock to establish an Employee Stock Ownership Program. This reserve,
and its subsequent issuances, is exempt from registration under Section 4(2) of
the Securities Act and Regulation D, Rule 504 thereunder as a transaction by an
issuer not involving a public offering.
On January 21, 1999, the Company issued 20,000 shares of common stock to
the members of its Board of Directors (5,000 shares to each of the Company's
four directors) for their services as directors to the Company through December
31, 1999. Each share of common stock was issued at a price of $1.00 a share, or
valued at $5000 per director for an aggregate issuance of $20,000. These
II-3
<PAGE>
issuances were in transactions exempt from registration under Section 4(2) of
the Securities Act and Regulation D, Rule 504 thereunder made to "sophisticated"
Internet-savvy persons by an issuer not involving a public offering.
On January 25, 1999, the Company issued 34,000 shares of common stock in
exchange for $68,000, or $2.00 a share. This transaction was exempt from
registration under Section 4(2) of the Securities Act and Regulation D, Rule 504
thereunder made to an "accredited" investor as a transaction involving a limited
offering.
ITEM 27. EXHIBITS
The following is a complete list of exhibits filed as part of this
Registration Statement, which are incorporated herein.
Exhibit
Number Description
- ------- ---------------------------------------------------------------------
3.1* Articles of Incorporation
3.2* Amendment to Articles of Incorporation
3.3* Certificate of Incorporation
3.4* By-Laws
4.1* Specimen copy of stock certificate for common stock, no par value
4.2* Specimen copy of Stock Purchase Warrant Certificate underlying the
common shares being registered in this Registration Statement
5.1* Opinion and Consent of William M. Ziering, Esq.
10.1* Lease Agreement for 3020 North El Paso, Ste. 103, Colorado Springs, CO
80907, dated June 2, 1998
10.2** Lease Agreement for 1111 N. Westshore Blvd., Ste. 408, Tampa, FL
33607, dated January 20th, 1999
10.3** Equity Exchange Agreement between Banyan Corporation and Anything,
Inc., dated August 19, 1998.
23.1*** May 15, 1999 consent of J. Paul Kenote, CPA, P.C.
23.2* Consent of William M. Ziering, Esq. (included in Exhibit 5.1 herein)
27.1* Financial Data Schedule for fiscal year ending June 30, 1998
27.2* Interim Financial Data Schedule for six-months ending December 31,
1998.
27.3** Interim Financial Data Schedule for nine-months ending March 31,
1999.
- --------------------------------------------------------------------------------
* Incorporated by reference to registration statement on Form SB-2 (No.
333-71785) filed February 4, 1999.
** Incorporated by reference to registration statement on Form SB-2
Amendment No. 1 (No. 333-71785) filed April 23, 1999.
*** Incorporated by reference to registration statement on Form SB-2
Amendment No. 2 (No. 333-71785) filed May 19, 1999.
II-4
<PAGE>
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes as follows:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events arising after the
effective date of which, individually or together, represent a
fundamental change in the information in the registration statement;
and
(iii)Include any additional or changed material information on the plan of
distribution.
2. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described above in Item 24, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction of the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
3. The undersigned Registrant will, for purposes of determining liability
under the Securities Act, treat each post-effective amendment as a new
registration statement of securities offered, and the offering of the
securities at that time to be the initial bona fide offering.
II-5
<PAGE>
4. For purposes of determining liabilities arising under the Securities Act,
the information omitted from the form of the prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant under Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time the SEC declares it effective.
5. The undersigned Registrant will file a post-effective amendment to remove
from registration any of the securities that remain unsold at the end of
the offering.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Colorado Springs, State of Colorado on this 12th day
of June, 1999.
Anything Internet Corporation
By: /s/ J. Scott Sitra
-------------------------------------
J. Scott Sitra
President, Chief Executive Officer and
Director
II-6
<PAGE>
In accordance with 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 stated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ J. Scott Sitra
- ---------------------- President, Chief
J. Scott Sitra . . . . Executive Officer and
Director June 12, 1999
/s/ Robert C. Schick
- ----------------------
Robert C. Schick . . . Chief Technology
Officer and Director June 12, 1999
/s/ Cameron B. Yost
- ----------------------
Cameron B. Yost. . . . Secretary, Treasurer
and Director June 12, 1999
/s/ Alfred W. Delisle
- ----------------------
Alfred W. Delisle. . . Business Development
Manager and Director June 12, 1999
</TABLE>
II-7
<PAGE>